Exhibit 10.9


 


EXECUTION VERSION


 


FIRST LIEN CREDIT AND GUARANTY AGREEMENT


 


DATED AS OF OCTOBER 26, 2007


 


AMONG


 


CHEM RX CORPORATION,


 


CERTAIN SUBSIDIARIES OF CHEM RX CORPORATION,

AS GUARANTORS,


 


VARIOUS LENDERS,


 


CIBC WORLD MARKETS CORP.,

AS SOLE LEAD ARRANGER AND SOLE BOOK RUNNER,


 


AND


 


CANADIAN IMPERIAL BANK OF COMMERCE,


NEW YORK AGENCY


AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT


 


$125,000,000 FIRST LIEN SENIOR SECURED CREDIT FACILITIES


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE ONE DEFINITIONS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
  Section 1.02

  	
   

  	
  Accounting Terms

  	
   

  	
  33

  
	
  Section 1.03

  	
   

  	
  Interpretation, etc.

  	
   

  	
  34

  
	
  Section 1.04

  	
   

  	
  Construction

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWO LOANS AND LETTERS OF CREDIT

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
   

  	
  Term Loan Commitments

  	
   

  	
  34

  
	
  Section 2.02

  	
   

  	
  Borrowing Mechanics for Term Loans

  	
   

  	
  35

  
	
  Section 2.03

  	
   

  	
  Revolving Commitments

  	
   

  	
  36

  
	
  Section 2.04

  	
   

  	
  Borrowing Mechanics for Revolving Loans

  	
   

  	
  36

  
	
  Section 2.05

  	
   

  	
  Swing Line Loans Commitments

  	
   

  	
  37

  
	
  Section 2.06

  	
   

  	
  Borrowing Mechanics for Swing Line Loans

  	
   

  	
  37

  
	
  Section 2.07

  	
   

  	
  Letters of Credit

  	
   

  	
  38

  
	
  Section 2.08

  	
   

  	
  Notice of Issuance

  	
   

  	
  39

  
	
  Section 2.09

  	
   

  	
  Responsibility of Issuing Bank with Respect
  to Requests for Drawings and Payments

  	
   

  	
  39

  
	
  Section 2.10

  	
   

  	
  Reimbursement by Borrower of Amounts Drawn
  or Paid Under Letters of Credit

  	
   

  	
  40

  
	
  Section 2.11

  	
   

  	
  Lenders’ Purchase of Participations in
  Letters of Credit

  	
   

  	
  40

  
	
  Section 2.12

  	
   

  	
  Obligations Absolute

  	
   

  	
  41

  
	
  Section 2.13

  	
   

  	
  Indemnification

  	
   

  	
  41

  
	
  Section 2.14

  	
   

  	
  Pro Rata Shares

  	
   

  	
  42

  
	
  Section 2.15

  	
   

  	
  Availability of Funds

  	
   

  	
  42

  
	
  Section 2.16

  	
   

  	
  Use of Proceeds

  	
   

  	
  42

  
	
  Section 2.17

  	
   

  	
  Lenders’ Evidence of Debt

  	
   

  	
  43

  
	
  Section 2.18

  	
   

  	
  Notes

  	
   

  	
  43

  
	
  Section 2.19

  	
   

  	
  Interest Rate on Loans

  	
   

  	
  43

  
	
  Section 2.20

  	
   

  	
  Interest Rate

  	
   

  	
  43

  
	
  Section 2.21

  	
   

  	
  Conversion/Continuation

  	
   

  	
  45

  
	
  Section 2.22

  	
   

  	
  Default Interest

  	
   

  	
  45

  
	
  Section 2.23

  	
   

  	
  Fees

  	
   

  	
  46

  
	
  Section 2.24

  	
   

  	
  Scheduled Installments

  	
   

  	
  47

  
	
  Section 2.25

  	
   

  	
  Voluntary Prepayments

  	
   

  	
  48

  
	
  Section 2.26

  	
   

  	
  Voluntary Commitment Reductions

  	
   

  	
  49

  
	
  Section 2.27

  	
   

  	
  Mandatory Prepayments

  	
   

  	
  49

  
	
  Section 2.28

  	
   

  	
  Mandatory Commitment Reductions of
  Revolving Loans

  	
   

  	
  51

  
	
  Section 2.29

  	
   

  	
  Prepayment Certificate

  	
   

  	
  51

  
	
  Section 2.30

  	
   

  	
  Application of Prepayments/Reductions

  	
   

  	
  51

  
	
  Section 2.31

  	
   

  	
  General Provisions Regarding Payments

  	
   

  	
  52

  
	
  Section 2.32

  	
   

  	
  Sharing of Payments by Lenders

  	
   

  	
  53

  
	
  Section 2.33

  	
   

  	
  Making or Maintaining Eurodollar Rate Loans

  	
   

  	
  53

  
	
  Section 2.34

  	
   

  	
  Compensation For Increased Costs

  	
   

  	
  55

  
	
  Section 2.35

  	
   

  	
  Capital Requirements; Certificates for
  Reimbursement; Delay in Requests

  	
   

  	
  56

  
	
  Section 2.36

  	
   

  	
  Taxes

  	
   

  	
  56

  
	
  Section 2.37

  	
   

  	
  Mitigation Obligations; Replacement of
  Lenders

  	
   

  	
  58

  



 


i

















 


	
  Section 2.38

  	
   

  	
  Defaulting Lenders

  	
   

  	
  59

  
	
  Section 2.39

  	
   

  	
  Incremental Revolving Facility

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE THREE CONDITIONS PRECEDENT

  	
   

  	
  61

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
   

  	
  Closing Date

  	
   

  	
  61

  
	
  Section 3.02

  	
   

  	
  Conditions to Each Credit Extension

  	
   

  	
  64

  
	
  Section 3.03

  	
   

  	
  Conditions to the Credit Extension of
  Delayed Draw Term Loans

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE FOUR REPRESENTATIONS AND WARRANTIES

  	
   

  	
  65

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
   

  	
  Organization; Requisite Power and
  Authority; Qualification

  	
   

  	
  65

  
	
  Section 4.02

  	
   

  	
  Capital Stock and Ownership

  	
   

  	
  66

  
	
  Section 4.03

  	
   

  	
  Due Authorization

  	
   

  	
  66

  
	
  Section 4.04

  	
   

  	
  No Conflict

  	
   

  	
  66

  
	
  Section 4.05

  	
   

  	
  Governmental Consents

  	
   

  	
  66

  
	
  Section 4.06

  	
   

  	
  Binding Obligation

  	
   

  	
  66

  
	
  Section 4.07

  	
   

  	
  Historical Financial Statements

  	
   

  	
  67

  
	
  Section 4.08

  	
   

  	
  Projections

  	
   

  	
  67

  
	
  Section 4.09

  	
   

  	
  No Material Adverse Effect

  	
   

  	
  67

  
	
  Section 4.10

  	
   

  	
  Adverse Proceedings, etc.

  	
   

  	
  67

  
	
  Section 4.11

  	
   

  	
  Payment of Taxes

  	
   

  	
  67

  
	
  Section 4.12

  	
   

  	
  Properties

  	
   

  	
  68

  
	
  Section 4.13

  	
   

  	
  Environmental Matters

  	
   

  	
  68

  
	
  Section 4.14

  	
   

  	
  No Defaults

  	
   

  	
  69

  
	
  Section 4.15

  	
   

  	
  Material Contracts

  	
   

  	
  69

  
	
  Section 4.16

  	
   

  	
  Governmental Regulation

  	
   

  	
  69

  
	
  Section 4.17

  	
   

  	
  Margin Stock

  	
   

  	
  69

  
	
  Section 4.18

  	
   

  	
  Employee Matters

  	
   

  	
  69

  
	
  Section 4.19

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  70

  
	
  Section 4.20

  	
   

  	
  Solvency

  	
   

  	
  70

  
	
  Section 4.21

  	
   

  	
  Compliance with Statutes, etc.

  	
   

  	
  71

  
	
  Section 4.22

  	
   

  	
  Disclosure

  	
   

  	
  71

  
	
  Section 4.23

  	
   

  	
  Health Care Matters

  	
   

  	
  71

  
	
  Section 4.24

  	
   

  	
  Intellectual Property

  	
   

  	
  73

  
	
  Section 4.25

  	
   

  	
  No Default

  	
   

  	
  73

  
	
  Section 4.26

  	
   

  	
  Investigations, Audits, Etc.

  	
   

  	
  73

  
	
  Section 4.27

  	
   

  	
  Patriot Act

  	
   

  	
  73

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE FIVE AFFIRMATIVE COVENANTS

  	
   

  	
  73

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
   

  	
  Financial Statements and Other Reports

  	
   

  	
  73

  
	
  Section 5.02

  	
   

  	
  Existence

  	
   

  	
  77

  
	
  Section 5.03

  	
   

  	
  Payment of Taxes and Claims

  	
   

  	
  77

  
	
  Section 5.04

  	
   

  	
  Maintenance of Properties

  	
   

  	
  78

  
	
  Section 5.05

  	
   

  	
  Insurance

  	
   

  	
  78

  
	
  Section 5.06

  	
   

  	
  Inspections

  	
   

  	
  78

  
	
  Section 5.07

  	
   

  	
  Lenders’ Meetings

  	
   

  	
  78

  
	
  Section 5.08

  	
   

  	
  Compliance with Laws

  	
   

  	
  79

  
	
  Section 5.09

  	
   

  	
  Environmental Disclosure

  	
   

  	
  79

  
	
  Section 5.10

  	
   

  	
  Hazardous Materials Activities, etc.

  	
   

  	
  80

  
	
  Section 5.11

  	
   

  	
  Subsidiaries

  	
   

  	
  80

  
	
  Section 5.12

  	
   

  	
  Additional Material Real Estate Assets

  	
   

  	
  80

  
	
  Section 5.13

  	
   

  	
  Interest Rate Protection

  	
   

  	
  81

  



 


ii

















 


	
  Section 5.14

  	
   

  	
  Further Assurances

  	
   

  	
  81

  
	
  Section 5.15

  	
   

  	
  Cash Management Systems

  	
   

  	
  81

  
	
  Section 5.16

  	
   

  	
  Books and Records

  	
   

  	
  81

  
	
  Section 5.17

  	
   

  	
  Performance of Leases, Related Documents
  and Other Material Agreements

  	
   

  	
  81

  
	
  Section 5.18

  	
   

  	
  Compliance Program

  	
   

  	
  82

  
	
  Section 5.19

  	
   

  	
  Condition of Participation in Third Party
  Payor Programs

  	
   

  	
  82

  
	
  Section 5.20

  	
   

  	
  Certain Post-Closing Obligations

  	
   

  	
  82

  
	
  Section 5.21

  	
   

  	
  Maintenance of Ratings

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE SIX NEGATIVE COVENANTS

  	
   

  	
  82

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
   

  	
  Indebtedness

  	
   

  	
  83

  
	
  Section 6.02

  	
   

  	
  Liens

  	
   

  	
  84

  
	
  Section 6.03

  	
   

  	
  No Further Negative Pledges

  	
   

  	
  86

  
	
  Section 6.04

  	
   

  	
  Restricted Junior Payments

  	
   

  	
  86

  
	
  Section 6.05

  	
   

  	
  Restrictions on Subsidiary Distributions

  	
   

  	
  88

  
	
  Section 6.06

  	
   

  	
  Investments

  	
   

  	
  88

  
	
  Section 6.07

  	
   

  	
  Financial Covenants

  	
   

  	
  89

  
	
  Section 6.08

  	
   

  	
  Fundamental Changes; Disposition of Assets;
  Acquisitions

  	
   

  	
  92

  
	
  Section 6.09

  	
   

  	
  Disposal of Subsidiary Interests

  	
   

  	
  92

  
	
  Section 6.10

  	
   

  	
  Sales and Lease-Backs

  	
   

  	
  93

  
	
  Section 6.11

  	
   

  	
  Transactions with Shareholders and
  Affiliates

  	
   

  	
  93

  
	
  Section 6.12

  	
   

  	
  Conduct of Business

  	
   

  	
  93

  
	
  Section 6.13

  	
   

  	
  Amendments or Waivers of Certain Related
  Agreements

  	
   

  	
  93

  
	
  Section 6.14

  	
   

  	
  Amendments or Waivers of the Second Lien
  Credit Agreement

  	
   

  	
  94

  
	
  Section 6.15

  	
   

  	
  Fiscal Year

  	
   

  	
  94

  
	
  Section 6.16

  	
   

  	
  No Foreign Subsidiaries

  	
   

  	
  94

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE SEVEN GUARANTY

  	
   

  	
  94

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
   

  	
  Guaranty of the Obligations

  	
   

  	
  94

  
	
  Section 7.02

  	
   

  	
  Contribution by Guarantors

  	
   

  	
  94

  
	
  Section 7.03

  	
   

  	
  Payment by Guarantors

  	
   

  	
  95

  
	
  Section 7.04

  	
   

  	
  Liability of Guarantors Absolute

  	
   

  	
  95

  
	
  Section 7.05

  	
   

  	
  Waivers by Guarantors

  	
   

  	
  97

  
	
  Section 7.06

  	
   

  	
  Guarantors’ Rights of Subrogation,
  Contribution, etc.

  	
   

  	
  98

  
	
  Section 7.07

  	
   

  	
  Subordination of Other Obligations

  	
   

  	
  98

  
	
  Section 7.08

  	
   

  	
  Continuing Guaranty

  	
   

  	
  98

  
	
  Section 7.09

  	
   

  	
  Authority of Guarantors or Borrower

  	
   

  	
  99

  
	
  Section 7.10

  	
   

  	
  Financial Condition of Borrower

  	
   

  	
  99

  
	
  Section 7.11

  	
   

  	
  Bankruptcy, etc.

  	
   

  	
  99

  
	
  Section 7.12

  	
   

  	
  Discharge of Guaranty upon Sale of
  Guarantor

  	
   

  	
  100

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE EIGHT EVENTS OF DEFAULT

  	
   

  	
  100

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
   

  	
  Events of Default

  	
   

  	
  100

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE NINE AGENTS

  	
   

  	
  103

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
   

  	
  Appointment and Authority

  	
   

  	
  103

  
	
  Section 9.02

  	
   

  	
  Rights as a Lender

  	
   

  	
  103

  
	
  Section 9.03

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  103

  
	
  Section 9.04

  	
   

  	
  Reliance by Administrative Agent and the
  Collateral Agent

  	
   

  	
  104

  
	
  Section 9.05

  	
   

  	
  Delegation of Duties

  	
   

  	
  104

  
	
  Section 9.06

  	
   

  	
  Resignation of Administrative Agent

  	
   

  	
  105

  



 


iii

















 


	
  Section 9.07

  	
   

  	
  Non-Reliance on Agents and Other Lenders

  	
   

  	
  106

  
	
  Section 9.08

  	
   

  	
  No Other Duties, etc.

  	
   

  	
  106

  
	
  Section 9.09

  	
   

  	
  Collateral Documents and Guaranty

  	
   

  	
  106

  
	
  Section 9.10

  	
   

  	
  Withholding Taxes

  	
   

  	
  107

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TEN MISCELLANEOUS

  	
   

  	
  107

  
	
   

  	
   

  	
   

  
	
  Section 10.01

  	
   

  	
  Notices; Effectiveness; Electronic
  Communication

  	
   

  	
  107

  
	
  Section 10.02

  	
   

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  	
  108

  
	
  Section 10.03

  	
   

  	
  Right of Set-Off

  	
   

  	
  110

  
	
  Section 10.04

  	
   

  	
  Amendments and Waivers

  	
   

  	
  110

  
	
  Section 10.05

  	
   

  	
  Execution of Amendments, etc.

  	
   

  	
  112

  
	
  Section 10.06

  	
   

  	
  Successors and Assigns; Participations

  	
   

  	
  112

  
	
  Section 10.07

  	
   

  	
  Independence of Covenants

  	
   

  	
  115

  
	
  Section 10.08

  	
   

  	
  Survival of Representations, Warranties and
  Agreements

  	
   

  	
  115

  
	
  Section 10.09

  	
   

  	
  No Waiver; Remedies Cumulative

  	
   

  	
  115

  
	
  Section 10.10

  	
   

  	
  Marshalling; Payments Set Aside

  	
   

  	
  115

  
	
  Section 10.11

  	
   

  	
  Severability

  	
   

  	
  115

  
	
  Section 10.12

  	
   

  	
  Obligations Several; Independent Nature of
  Lenders’ Rights

  	
   

  	
  116

  
	
  Section 10.13

  	
   

  	
  Headings

  	
   

  	
  116

  
	
  Section 10.14

  	
   

  	
  Governing Law; Jurisdiction; Etc.

  	
   

  	
  116

  
	
  Section 10.15

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  117

  
	
  Section 10.16

  	
   

  	
  Treatment of Certain Information;
  Confidentiality

  	
   

  	
  117

  
	
  Section 10.17

  	
   

  	
  Usury Savings Clause

  	
   

  	
  117

  
	
  Section 10.18

  	
   

  	
  Counterparts; Integration; Effectiveness

  	
   

  	
  118

  
	
  Section 10.19

  	
   

  	
  Entire Agreement

  	
   

  	
  118

  
	
  Section 10.20

  	
   

  	
  Electronic Execution of Assignments

  	
   

  	
  118

  
	
  Section 10.21

  	
   

  	
  Patriot Act Notification

  	
   

  	
  118

  
	
  Section 10.22

  	
   

  	
  Release on Payment in Full

  	
   

  	
  119

  
	
  Section 10.23

  	
   

  	
  Lender Addendum

  	
   

  	
  119

  



 


iv

















 


	
  SCHEDULES:

  
	
  1.01A:

  	
   

  	
  Certain
  Adjustments to Financial Definitions

  
	
  1.01B:

  	
   

  	
  Existing Letters
  of Credit

  
	
  4.01:

  	
   

  	
  Jurisdictions of
  Organization and Qualification

  
	
  4.02:

  	
   

  	
  Capital Stock and
  Ownership

  
	
  4.12:

  	
   

  	
  Real Estate
  Assets

  
	
  4.15:

  	
   

  	
  Material
  Contracts

  
	
  4.23:

  	
   

  	
  Health Care
  Matters

  
	
  5.15:

  	
   

  	
  Cash Management
  Systems

  
	
  6.01:

  	
   

  	
  Certain
  Indebtedness

  
	
  6.02:

  	
   

  	
  Certain Liens

  
	
  6.06:

  	
   

  	
  Certain
  Investments

  
	
  6.11:

  	
   

  	
  Certain Affiliate
  Transactions

  



 


	
  EXHIBITS:

  
	
  A-1:

  	
   

  	
  Funding Notice

  
	
  A-2:

  	
   

  	
  Conversion/Continuation
  Notice

  
	
  A-3:

  	
   

  	
  Issuance Notice

  
	
  B-1:

  	
   

  	
  Initial Term Loan
  Note

  
	
  B-2:

  	
   

  	
  Delayed Draw Term
  Loan Note

  
	
  B-3:

  	
   

  	
  Revolving Loan
  Note

  
	
  B-4:

  	
   

  	
  Swing Line Note

  
	
  C:

  	
   

  	
  Compliance
  Certificate

  
	
  D:

  	
   

  	
  Assignment and
  Assumption Agreement

  
	
  E-1:

  	
   

  	
  Closing Date
  Certificate

  
	
  E-2:

  	
   

  	
  Solvency
  Certificate

  
	
  F:

  	
   

  	
  Counterpart Agreement

  
	
  G:

  	
   

  	
  Pledge and
  Security Agreement

  
	
  H:

  	
   

  	
  Landlord
  Collateral Access Agreement

  
	
  I:

  	
   

  	
  Intercreditor
  Agreement

  
	
  J:

  	
   

  	
  Lender Addendum

  
	
  K:

  	
   

  	
  Administrative
  Questionnaire

  
	
  L:

  	
   

  	
  Joinder Agreement

  
	
  M:

  	
   

  	
  Prepayment Notice

  



 


v

















 


FIRST LIEN CREDIT AND GUARANTY AGREEMENT


 


This
FIRST LIEN CREDIT AND GUARANTY AGREEMENT, dated as of October 26, 2007, is
entered into by and among CHEM RX CORPORATION (formerly Paramount Acquisition
Corp.), a Delaware corporation (“Borrower”), CERTAIN SUBSIDIARIES OF
BORROWER, as Guarantors, the Lenders party hereto from time to time, CIBC WORLD
MARKETS CORP. (“CIBC WM”), as Sole Lead Arranger and Sole Book Runner (in
such respective capacities, “Lead Arranger” and “Book Runner”), and
CANADIAN IMPERIAL BANK OF COMMERCE, New York Agency (“CIBC”), as
Administrative Agent and Collateral Agent (in such respective capacities, “Administrative
Agent” and “Collateral Agent”).


 


RECITALS


 


WHEREAS, capitalized terms
used in these Recitals shall have the respective meanings set forth for such
terms in Section 1.01 hereof;


 


WHEREAS, pursuant to the
Stock Purchase Agreement, the Merger Agreement and the Unit Redemption
Agreement, Borrower has agreed to acquire, directly or indirectly, all of the
outstanding capital stock of B.J.K., Inc., a  New York corporation  doing
business as Chem Rx  (“Chem Rx”)
and its affiliates Chem Rx New Jersey, LLC, a New Jersey limited liability
company (“Chem Rx-NJ”), and Chem Rx/Salerno’s, LLC, a Pennsylvania
limited liability company (“Chem Rx-PA”);


 


WHEREAS, after the
consummation of the Transactions, Borrower will own all of the Capital Stock of
Chem Rx;


 


WHEREAS, Lenders have agreed
to extend certain first lien credit facilities to Borrower, in an aggregate
amount not to exceed $125,000,000, consisting of $80,000,000 aggregate
principal amount of Initial Term Loans, $20,000,000 aggregate principal amount
of Delayed Draw Term Loan Commitments, and up to $25,000,000 aggregate
principal amount of Revolving Commitments;


 


WHEREAS, the proceeds of
such credit facilities will be used, together with the Second Lien Term Loans, to (i) to finance, in part, the
Acquisition, (ii) to pay fees and expenses incurred in connection with the
Transactions, (iii) to repay the outstanding principal amount of Existing
Indebtedness, and (iv) to provide ongoing working capital and Permitted
Acquisition financing and for other general corporate purposes of Borrower and
its Subsidiaries;


 


WHEREAS, Borrower has agreed
to secure all of its Obligations by granting to Collateral Agent, for the
benefit of Secured Parties, a First Priority Lien on substantially all of its
assets, including a pledge of all of the Capital Stock of each of its Subsidiaries
(including Chem Rx); and


 


WHEREAS, Guarantors
(including Chem Rx) have agreed to guarantee the obligations of Borrower
hereunder and to secure their respective Obligations by granting to Collateral
Agent, for the benefit of Secured Parties, a First Priority Lien on
substantially all of their respective assets, including a pledge of all of the
Capital Stock of each of their respective Subsidiaries.


 


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


 

















 


ARTICLE ONE

DEFINITIONS


 


Section 1.01         Definitions.


 


The following terms used
herein, including in the preamble, recitals, exhibits and schedules hereto,
shall have the following meanings:


 


“Act” as defined in Section 4.27.


 


“Acquisition” means (i) the
purchase by Borrower of all the Capital Stock of Chem Rx from Jerry Silva,
Steven Silva, The Jody R. Silva Trust and The Jerry Silva 2007 Annuity Trust
(the “Sellers”) pursuant to the Stock Purchase Agreement, (ii) the
concurrent acquisition of Chem Rx-NJ in connection with the merger of a
Subsidiary of Borrower with Chem Rx-NJ pursuant to the Merger Agreement and (iii) the
concurrent purchase of a minority interest in Chem Rx-PA from Benny Salerno (“Salerno”)
pursuant to the Unit Redemption Agreement.


 


“Adjusted Eurodollar Rate”
means, for any Interest Rate Determination Date with respect to an Interest
Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (i) the
rate per annum (a) as calculated by the British Bankers’ Association and
obtained by the Administrative Agent through a nationally recognized service
such as the Dow Jones Market Service (Telerate) or Reuters (the “Service”)
(or on any successor or substitute page of such Service, or any successor
to or substitute for such service, providing rate quotations comparable to
those currently provided on such page of Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market)
for deposits (for delivery on the first day of such period) with a term
equivalent to such period in Dollars, determined as of approximately 11:00 a.m.
(London, England time) on such Interest Rate Determination Date, or (b) in
the event the rates referenced in the preceding clause (a) is not
available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the
offered quotation rate to first class banks in the London interbank market)
by CIBC for deposits (for delivery on the first day of the relevant period) in
Dollars of amounts in same day funds comparable to the principal amount of the
applicable Loan of Administrative Agent, in its capacity as a Lender, for which
the Adjusted Eurodollar Rate is then being determined with maturities
comparable to such period as of approximately 11:00 a.m. (London, England
time) on such Interest Rate Determination Date, by (ii) an amount equal to
(a) one minus (b) the Applicable Reserve Requirement.


 


“Administrative Agent”
as defined in the preamble hereto.


 


“Administrative
Questionnaire” means an Administrative Questionnaire in substantially the form of
Exhibit K.


 


“Adverse Proceeding”
means any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation, audit or arbitration (whether or not
purportedly on behalf of Borrower or any of its Subsidiaries) at law or in
equity, or before or by any Governmental Authority, domestic or foreign
(including any Environmental Claims), whether pending or, to the knowledge of
Borrower or any of its Subsidiaries, threatened against or affecting Borrower
or any of its Subsidiaries or any property of Borrower or any of its
Subsidiaries.


 


“Affected Lender” as
defined in Section 2.33(b).


 


“Affected Loans” as
defined in Section 2.33(b).


 


2

















 


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


 


“Agent” means each of
Syndication Agent, Administrative Agent, Collateral Agent, Documentation Agent
or any other agent appointed by the Lead Arranger pursuant to Section 9.01
hereof.


 


“Aggregate Payments”
as defined in Section 7.02.


 


“Agreement” means
this First Lien Credit and Guaranty Agreement, dated as of October 26,
2007, as it may be amended, supplemented, restated or otherwise modified
from time to time.


 


“Applicable Margin”
and “Applicable Revolving Commitment Fee Percentage” mean (a) from
the Closing Date until the date of delivery of the Compliance Certificate and
the financial statements for the second full Fiscal Quarter ending after the
Closing Date, a percentage, per annum, equal to (i) for Revolving Loans
that are Eurodollar Rate Loans, 4.00% per annum, (ii) for Revolving Loans
and Swing Line Loans that are Base Rate Loans, 3.00% per annum; (iii) with
respect to Term Loans that are Eurodollar Rate Loans, 4.00% per annum, (iv) with
respect to Term Loans that are Base Rate Loans, 3.00% per annum and (v) with
respect to the Applicable Revolving Commitment Fee Percentage, 0.50% per annum;
(b) thereafter, with respect to Revolving Loans, Swing Line Loans and the
Applicable Revolving Commitment Fee Percentage, a percentage, per annum,
determined by reference to the Total Leverage Ratio in effect from time to time
as set forth below:


 


	
  TOTAL

  LEVERAGE

  RATIO

  	
   

  	
  APPLICABLE MARGIN FOR

  REVOLVING LOANS

  (EURODOLLAR LOANS)

  	
   

  	
  APPLICABLE MARGIN

  FOR REVOLVING

  LOANS (BASE RATE

  LOANS)

  	
   

  	
  APPLICABLE

  REVOLVING

  COMMITMENT FEE

  PERCENTAGE

  	
   

  
	
  > 3.75:1.00

  	
   

  	
  4.00

  	
  %

  	
  3.00

  	
  %

  	
  0.50

  	
  %

  
	
  < 3.75:1.00 

  > 3.00:1.00

  	
   

  	
  3.75

  	
  %

  	
  2.75

  	
  %

  	
  0.50

  	
  %

  
	
  < 3.00:1.00

  	
   

  	
  3.50

  	
  %

  	
  2.50

  	
  %

  	
  0.375

  	
  %

  



 


No change in the Applicable
Margin or Applicable Revolving Commitment Fee Percentage shall be effective
until three (3) Business Days after the date on which Administrative Agent
shall have received the applicable financial statements and a Compliance
Certificate pursuant to Section 5.01(d) calculating the Total
Leverage Ratio. At any time the Borrower has not submitted to Administrative
Agent the applicable information as and when required under Section 5.01(d),
the Applicable Margin and the Applicable Revolving Commitment Fee Percentage
shall be determined as if the Total Leverage Ratio were in excess of 3.75:1.00.
Promptly after receipt of the applicable information under Section 5.01(d),
Administrative Agent shall give each Lender telefacsimile or telephonic notice
(confirmed in writing) of the Applicable Margin and the Applicable Revolving
Commitment Fee Percentage in effect from such date.


 


In the event that any
financial statement delivered pursuant to Section 5.01 or certificate
delivered pursuant to Section 5.01(d) is shown to be inaccurate, and
such inaccuracy, if corrected, would have led to the application of a higher
Applicable Margin or Applicable Revolving Commitment Fee Percentage for any
period (an “Applicable Period”) than the Applicable Margin or Applicable
Revolving Commitment Fee Percentage applied for such Applicable Period, then (i) the
Borrower shall promptly deliver to the Administrative Agent a correct
certificate for such Applicable Period, (ii) the Applicable Margin and the
Applicable Revolving Commitment Fee Percentage shall be determined as if the
Total 


 


3

















 


Leverage Ratio was as set
forth in the correct certificate for such Applicable Period, and (iii) the
Borrower shall promptly pay to the Administrative Agent the accrued additional
interest or fees, as applicable, that would have been due and payable at such
time as a result of such increased Applicable Margin or Applicable Revolving
Commitment Fee Percentage for such Applicable Period.


 


“Applicable Percentage”
means with respect to any Lender, the percentage of the total Commitments
represented by such Lender’s Commitment. If the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the
Commitments most recently in effect, giving effect to any assignments.


 


“Applicable Reserve
Requirement” means, at any time, for any Eurodollar Rate Loan, the maximum
rate, expressed as a decimal, at which reserves (including any basic marginal,
special, supplemental, emergency or other reserves) are required to be
maintained with respect thereto against “Eurocurrency liabilities” (as such
term is defined in Regulation D) under regulations issued from time to time by
the Board of Governors of the Federal Reserve System or other applicable
banking regulator. Without limiting the effect of the foregoing, the Applicable
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks with respect to (i) any category of liabilities which
includes deposits by reference to which the applicable Adjusted Eurodollar Rate
or any other interest rate of a Loan is to be determined, or (ii) any
category of extensions of credit or other assets which include Eurodollar Rate
Loans. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without
benefits of credit for proration, exceptions or offsets that may be
available from time to time to the applicable Lender. The rate of interest on
Eurodollar Rate Loans shall be adjusted automatically on and as of the
effective date of any change in the Applicable Reserve Requirement.


 


“Appointing Sub-Agent”
as defined in Section 9.05.


 


“Approved Fund” means
any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.


 


“Assessments” as
defined in Section 4.23(g).


 


“Asset Sale” means a
sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment,
conveyance, exclusive license (as licensor or sublicensor), transfer or other
disposition to, or any exchange of property with, any Person (other than
Borrower or any Guarantor), in one transaction or a series of
transactions, of all or any part of Borrower’s or any of its Subsidiaries’
businesses, assets or properties of any kind, whether real, personal, or mixed
and whether tangible or intangible, whether now owned or hereafter acquired,
leased or licensed, including the Capital Stock of any of Borrower’s
Subsidiaries, other than (i) inventory sold or leased in the ordinary
course of business, (ii) sales of Cash or Cash Equivalents for fair market
value; and (iii) sales, leases or licenses out of other assets for
aggregate consideration of less than $250,000 with respect to any transaction
or series of related transactions and less than $1,000,000 in the
aggregate during any Fiscal Year.


 


“Assignment and
Assumption Agreement” means an Assignment and Assumption Agreement entered
into by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by Section 10.06), and accepted by Administrative
Agent, in substantially the form of Exhibit D or any other form approved
by Administrative Agent.


 


4

















 


“Authorized Officer”
means, as applied to any Person, any individual holding the position of
chairman of the board (if an officer), chief executive officer, chief operating
officer or president, and such Person’s chief financial officer or treasurer.


 


“Available Equity Credit”
means, as at any date of determination, the aggregate amount equal to (i) the
fair market value of the common Capital Stock of the Borrower used by the
Borrower as consideration to consummate a Permitted Acquisition or other
permitted Investment plus (ii) the net cash proceeds received by
Borrower from an offering of common Capital Stock of Borrower to the extent not
required to prepay the Loans pursuant to Section 2.27(c) for such
Fiscal Year minus (iii) the aggregate amount of the Available
Equity Credit applied to make Permitted Acquisitions, Investments permitted
pursuant to Section 6.06, Initial Earnout Payments and Milestone Payments
pursuant to Section 6.04(d) and excluded from Consolidated Capital
Expenditures, in each case using such credit from the Closing Date and on or
prior to such date of determination.


 


“Available Warrant Credit”
means, with respect to the amount of Permitted Acquisitions, as at any date of
determination, (a) the aggregate amount of net cash proceeds received by
Borrower from the exercise of the Warrants during the period from the Closing
Date to and including such date of determination minus (b) the sum
of (i) the aggregate amount of the Available Warrant Credit applied to
make Permitted Acquisitions from the Closing Date and on or prior to such date
of determination plus (ii) the aggregate amount of the prepayments
required pursuant to Section 2.27(f) to be made prior to or
concurrently with the making of Permitted Acquisitions utilizing the Available
Warrant Credit from the Closing Date and on or prior to such date of
determination.


 


“Bankruptcy Code”
means Title 11 of the United States Code entitled “Bankruptcy,” as now and
hereafter in effect, or any successor statute.


 


“Base Rate” means,
for any day, a rate per annum equal to the greater of (i) the Prime Rate
in effect on such day and (ii) the Federal Funds Effective Rate in effect
on such day plus 1⁄2 of 1%. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective day of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.


 


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


 


“Beneficiary” means
each Agent, Issuing Bank, Lender and Lender Counterparty.


 


“Board of Directors”
means (i) in the case of a Person that is a limited partnership, the
general partner or any committee authorized to act therefor, (ii) in the
case of a Person that is a corporation, the board of directors of such Person
or any committee authorized to act therefor, (iii) in the case of a Person
that is a limited liability company, the board of managers or members of such
Person or such Person’s manager or any committee authorized to act therefor and
(iv) in the case of any other Person, the board of directors, management
committee or similar governing body or any authorized committee thereof
responsible for the management of the business and affairs of such Person.


 


“Book Runner” as
defined in the preamble hereto.


 


“Borrower” as defined
in the preamble hereto.


 


“Business Day” means (i) any
day excluding Saturday, Sunday and any day which is a legal holiday under the
laws of the State of New York or is a day on which banking institutions located
in 


 


5

















 


such state are authorized or
required by law or other governmental action to close and (ii) with
respect to all notices, determinations, fundings and payments in connection
with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, the term “Business
Day” shall mean any day which is a Business Day described in clause (i) and
which is also a day for trading by and between banks in Dollar deposits in the
London interbank market.


 


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


 


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


 


“Cash” means money,
currency or a credit balance in any demand or Deposit Account.


 


“Cash Equivalents” means,
as at any date of determination, (i) marketable securities (a) issued
or directly and unconditionally guaranteed as to interest and principal by the
United States Government or (b) issued by any agency of the United States
the obligations of which are backed by the full faith and credit of the United
States, in each case maturing within one year after such date; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within one year after such date and having, at the time
of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1
from Moody’s; (iii) commercial paper maturing no more than one year from
the date of creation thereof and having, at the time of the acquisition
thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates
of deposit or bankers’ acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia that (a) is at least “adequately capitalized” (as defined in the
regulations of its primary Federal banking regulator) and (b) has Tier 1
capital (as defined in such regulations) of not less than $100,000,000; and (v) shares
of any money market mutual fund that (a) has substantially all of its
assets invested continuously in the types of investments referred to in clauses
(i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody’s.


 


“Change in Law” means
the occurrence, after the date of this Agreement, of any of the following:  (a) the adoption or taking effect of any
law, rule, regulation or treaty, (b) any change in any law, rule,
regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any
request, guideline or directive (whether or not having the force of law) by any
Governmental Authority.


 


“Change of Control”
means, at any time, (i) any Person or “group” (within the meaning of Rules 13d-3
and 13d-5 under the Exchange Act) other than Management Investors (a) shall
have acquired beneficial ownership of 35% or more on a fully diluted basis of
the voting and/or economic interest in the Capital Stock of Borrower or (b) shall
have obtained the power (whether or not exercised) to elect a majority of the
members of the Board of Directors of Borrower; (ii) the majority of the
seats (other than vacant seats) on the Board of Directors of Borrower cease to
be occupied by Persons who either (a) were members of the Board of
Directors of Borrower on the Closing Date or (b) were nominated for
election by the Board of Directors of Borrower, a majority of whom were
directors on the Closing Date or whose election or nomination for election was
previously approved by a majority of such 


 


6

















 


directors; or (iii) Borrower
shall cease to beneficially own and control 100% on a fully diluted basis of
the economic and voting interest in the Capital Stock of Chem Rx.


 


“Chem Rx” as defined
in the recitals hereto.


 


“Chem Rx-NJ” as
defined in the recitals hereto.


 


“Chem Rx-PA” as
defined in the recitals hereto.


 


“CIBC” as defined in
the preamble hereto.


 


“CIBC WM” as defined
in the preamble hereto.


 


“Class” means (i) with
respect to Lenders, each of the following classes of Lenders:  (a) Lenders having Initial Term Loan
Exposure, (b) Lenders having Delayed Draw Term Loan Exposure, and (c) Lenders
having Revolving Exposure (including Swing Line Lender) and (ii) with
respect to Loans, each of the following classes of Loans:  (a) Initial Term Loans, (b) Delayed
Draw Term Loans and (c) Revolving Loans (including Swing Line Loans). Notwithstanding
the foregoing, Delayed Draw Term Loans shall be deemed a separate Class of
Commitments or Loans, respectively, hereunder, unless such Delayed Draw Term
Loans are deemed an increase to the Initial Term Loan Commitment (as
contemplated by Section 2.01(c)), in which case the Delayed Draw Term Loan
Commitments and Delayed Draw Term Loans shall constitute part of the
Initial Term Loan Commitments or Initial Term Loans, as applicable.


 


“Closing Date” means
the date on which the Term Loans are made.


 


“Closing Date Certificate”
means a Closing Date Certificate substantially in the form of Exhibit E-1.


 


“Collateral” means,
collectively, all of the real, personal and mixed property (including Capital
Stock) in which Liens are purported to be granted pursuant to the Collateral
Documents as security for the Obligations.


 


“Collateral Agent” as
defined in the preamble hereto.


 


“Collateral Documents”
means the Intercreditor Agreement, the Lien Subordination Agreement, the Pledge
and Security Agreement, the Mortgages, the Landlord Collateral Access
Agreements, Control Agreements, IP Security Agreements, if any, and all other
instruments, documents and agreements delivered by any Loan Party pursuant to
this Agreement or any of the other Loan Documents in order to grant to
Collateral Agent, for the benefit of Lenders, a Lien on any real, personal or
mixed property of that Loan Party as security for the Obligations.


 


“Collateral Questionnaire”
means a certificate in form reasonably satisfactory to the Collateral
Agent that provides information with respect to the personal or mixed property
of each Loan Party.


 


“Commitment” means
any Revolving Commitment or Term Loan Commitment.


 


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


 


7
















 


“Consent Subsidiary”
means any Subsidiary formed or acquired after the date hereof, in respect of
which (a) the consent of any Person other than Borrower or any Wholly
Owned Subsidiary is required by applicable law or the terms of any
organizational document of such Subsidiary or other agreement of such
Subsidiary or any Affiliate of such Subsidiary in order for such Subsidiary to
become a Guarantor or in order for Capital Stock of such Subsidiary to be
pledged under the Collateral Documents, as the case may be, and (b) Borrower
endeavored in good faith to obtain such consents and such consents shall not
have been obtained.


 


“Consolidated Adjusted
EBITDA” means, for any period, an amount determined for Borrower and its
Subsidiaries on a consolidated basis equal to (i) the sum, without
duplication, of the amounts for such period of (a) Consolidated Net
Income, (b) Consolidated Interest Expense, (c) provisions for Taxes
based on income, (d) total depreciation expense, (e) total
amortization expense, (f) Transaction Costs incurred and paid in the
period (to the extent expensed), including, without limitation, bonus payments
paid to employees in connection with the Acquisition in an amount not to exceed
$5,350,000, and (g) other non-cash items reducing Consolidated Net Income
(excluding any such non-cash item to the extent that it represents an accrual
or reserve for potential cash items in any future period or amortization of a
prepaid cash item that was paid in a prior period) minus (ii) other
non-cash items increasing Consolidated Net Income for such period (excluding (A) any
such non-cash item to the extent it represents the reversal of an accrual or
reserve for potential cash items in any prior period and (B) any such
non-cash item to the extent it will result in the receipt of cash payments in
any future period or in respect of which cash was received in a prior period); provided
that with respect to any calculation period ending prior to the first
anniversary of the Closing Date the foregoing shall be subject to adjustment as
set forth in Schedule 1.01A.


 


“Consolidated Adjusted
EBITDAR” means, for any period, Consolidated Adjusted EBITDA for such
period plus Consolidated Lease Expense for such period.


 


“Consolidated Capital
Expenditures” means, for any period, the aggregate of all expenditures of
Borrower and its Subsidiaries during such period determined on a consolidated
basis that, in accordance with GAAP, are or should be included in “purchase of
property and equipment” or similar items reflected in the consolidated
statement of cash flows of Borrower and its Subsidiaries. For purposes of Section 6.07,
the following shall be excluded from Consolidated Capital Expenditures: (i) the
principal amount of Indebtedness incurred to finance such expenditures, but including
principal payments or prepayments of any such Indebtedness incurred during such
period or any prior period, (ii) expenditures made using the proceeds of
the issuance of Capital Stock, to the extent such proceeds are not required to
prepay the Loans pursuant to Section 2.27(c) and (iii) expenditures
made using the proceeds of asset sales, insurance settlements, condemnation
awards and other settlements in respect of lost, destroyed, damaged or
condemned assets, equipment or other property to the extent such expenditures
are reinvested or committed to be reinvested pursuant to Section 2.27(a) or
(b).


 


“Consolidated Cash
Interest Expense” means, for any period, Consolidated Interest Expense for
such period, excluding any amount not payable in cash for such period and
excluding any Earnout Interest; provided  that, with respect to
any calculation period ending prior to the first anniversary of the Closing
Date the foregoing shall be subject to adjustment as set forth in Schedule 1.01A.


 


“Consolidated Current
Assets” means, as at any date of determination, the total assets of
Borrower and its Subsidiaries on a consolidated basis that may properly be
classified as current assets in conformity with GAAP, excluding Cash and Cash
Equivalents; provided, that Consolidated Current Assets shall include
all trade receivables, whether or not classified as a current asset.


 


8

















 


“Consolidated Current
Liabilities” means, as at any date of determination, the total liabilities
of Borrower and its Subsidiaries on a consolidated basis that may properly
be classified as current liabilities in conformity with GAAP, excluding the
current portion of long term debt.


 


“Consolidated Excess Cash
Flow” means, for any period, an amount (if positive) equal to:  (i) the sum, without duplication, of the
amounts for such period of (a) Consolidated Adjusted EBITDA, plus (b) the
Consolidated Working Capital Adjustment, minus (ii) the sum,
without duplication, of the amounts for such period of (a) voluntary and
scheduled repayments of Consolidated Total Debt (excluding repayments of
Revolving Loans or Swing Line Loans except to the extent the Revolving
Commitments are permanently reduced in connection with such repayments), (b) Consolidated
Capital Expenditures, (c) Consolidated Cash Interest Expense, and (d) provisions
for current taxes based on income of Borrower and its Subsidiaries and payable
in cash with respect to such period.


 


“Consolidated Fixed
Charges” means, for any period, the sum, without duplication, of the
amounts determined for Borrower and its Subsidiaries on a consolidated basis
equal to (i) Consolidated Cash Interest Expense (excluding for the
avoidance of doubt, amortization expense with respect to deferred financing
fees), (ii) scheduled payments of principal on Consolidated Total Debt and
(iii) Consolidated Lease Expense; provided  that, with
respect to any calculation period ending prior to the first anniversary of the
Closing Date, the foregoing shall be subject to adjustment as set forth in Schedule 1.01A.


 


“Consolidated Interest
Expense” means, for any period, total interest expense (including that
portion attributable to Capital Leases in accordance with GAAP and capitalized
interest and after giving effect to any net payments made or received with
respect to Interest Rate Agreements) of Borrower and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Borrower and
its Subsidiaries, including all commissions, discounts and other fees and charges
owed with respect to letters of credit and net termination costs under Interest
Rate Agreements, but excluding, however, any amounts referred to in Section 2.23(f) or
Section 2.23(a) of Second Lien Credit Agreement payable on or before
the Closing Date; provided  that, with respect to any calculation
period ending prior to the first anniversary of the Closing Date, the foregoing
shall be subject to adjustment as set forth in Schedule 1.01A.


 


 “Consolidated Lease Expense” means, for
any period, the aggregate amount of fixed and contingent rentals payable by
Borrower and its Subsidiaries for such period with respect to leases of real
and personal property, determined on a consolidated basis in accordance with
GAAP.


 


“Consolidated Net Income”
means, for any period, (i) the net income (or loss) of Borrower and its
Subsidiaries on a consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP, minus (ii) (a) the
income (or loss) of any Person (other than a Loan Party) in which any other
Person (other than a Loan Party) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to a Loan Party by
such Person during such period, (b) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of Borrower or is merged into or
consolidated with Borrower or any of its Subsidiaries or that Person’s assets
are acquired by Borrower or any of its Subsidiaries, (c) the income of any
Subsidiary of Borrower to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (d) any after-tax gains or
losses attributable to Asset Sales or returned surplus assets of any Pension
Plan, and (e) (to the extent not included in clauses (a) through (d) above)
any net extraordinary gains or net extraordinary losses.


 


9

















 


“Consolidated Total Debt”
means, as at any date of determination, the aggregate stated balance sheet
amount of all Indebtedness of Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP (without giving effect to original
issue discount).


 


“Consolidated Working
Capital” means, as at any date of determination, the excess of Consolidated
Current Assets over Consolidated Current Liabilities.


 


“Consolidated Working
Capital Adjustment” means, for any period on a consolidated basis, the
amount (which may be a negative number) by which Consolidated Working
Capital as of the beginning of such period exceeds (or is less than)
Consolidated Working Capital as of the end of such period.


 


“Contractual Obligation”
means, as applied to any Person, any provision of any Security issued by that
Person or of any indenture, mortgage, deed of trust, contract, undertaking,
agreement or other instrument to which that Person is a party or by which it or
any of its properties is bound or to which it or any of its properties is
subject.


 


“Contributing Guarantors”
as defined in Section 7.02.


 


“Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.


 


“Control Agreements”
means each control agreement executed and delivered to the Collateral Agent for
the benefit of the Secured Parties, a securities intermediary or depositary
bank and by the applicable Loan Party on or after the Closing Date and each
control agreement to be executed and delivered by the Collateral Agent, a
securities intermediary or depository bank and the applicable Loan Party
pursuant to the terms of the Pledge and Security Agreement with such
modifications as the Collateral Agent may reasonably request or approve,
in each case, to the extent permitted by and in accordance with applicable law.


 


“Conversion/Continuation
Date” means the effective date of a continuation or conversion, as the case
may be, as set forth in the applicable Conversion/Continuation Notice.


 


“Conversion/Continuation
Notice” means a Conversion/Continuation Notice substantially in the form of


Exhibit A-2.


 


“Counterpart Agreement”
means a Counterpart Agreement substantially in the form of Exhibit F
delivered by a Loan Party pursuant to Section 5.11.


 


“Credit Date” means
the date of a Credit Extension.


 


“Credit Extension”
means the making of a Loan or the issuing of a Letter of Credit.


 


“Default” means a
condition or event that, after notice or lapse of time or both, would
constitute an Event of Default.


 


“Default Excess”
means, with respect to any Defaulting Lender, the excess, if any, of such
Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal
amount of Loans of all Lenders (calculated as if all Defaulting Lenders
(including such Defaulting Lender) had funded all of


 


10

















 


their respective Defaulted
Loans) over the aggregate outstanding principal amount of all Loans of such
Defaulting Lender.


 


“Default Period”
means, with respect to any Defaulting Lender, the period commencing on the date
of the applicable Funding Default and ending on the earliest of the following
dates:  (i) the date on which all
Commitments are cancelled or terminated and/or the Obligations are declared or
become immediately due and payable, (ii) the date on which (a) the
Default Excess with respect to such Defaulting Lender shall have been reduced
to zero (whether by the funding by such Defaulting Lender of any Defaulted
Loans of such Defaulting Lender or by the non-pro rata application of any
voluntary or mandatory prepayments of the Loans in accordance with the terms of
Sections 2.25, 2.26, 2.27 and 2.28 or by a combination thereof) and (b) such
Defaulting Lender shall have delivered to Borrower and Administrative Agent a
written reaffirmation of its intention to honor its obligations hereunder with
respect to its Commitments, and (iii) the date on which Borrower,
Administrative Agent and Requisite Lenders waive all Funding Defaults of such
Defaulting Lender in writing.


 


“Defaulted Loan” as
defined in Section 2.38.


 


“Defaulting Lender”
as defined in Section 2.38.


 


“Delayed Draw Term Loan”
means a delayed draw term loan made by a Lender to Borrower pursuant to Section 2.01(a)(ii).


 


“Delayed Draw Term Loan
Commitment” means the commitment of a Lender to make or otherwise fund the
Delayed Draw Term Loans and “Delayed Draw Term Loan Commitments” means such
commitments of all Lenders in the aggregate. The amount of each Lender’s
Delayed Draw Term Loan Commitment, if any, is set forth in the Lender Addendum
or in the applicable Assignment and Assumption Agreement, subject to any
adjustment or reduction pursuant to the terms and conditions hereof. The
aggregate amount of the Delayed Draw Term Loan Commitments as of the Closing Date
is $20,000,000.


 


“Delayed Draw Term Loan
Commitment Period” means the time period commencing on the date of receipt
by Administrative Agent of the audited financial statements for the Fiscal Year
ending December 31, 2007 through and including the Delayed Draw Term Loan
Commitment Termination Date.


 


“Delayed Draw Term Loan
Commitment Termination Date” means the earliest to occur of (i) the
date the Delayed Draw Term Loan Commitments are permanently reduced to zero
pursuant to Section 2.26, (ii) the date of the termination of the
Commitments pursuant to Section 8.01 and (iii) July 31, 2008.


 


“Delayed Draw Term Loan
Credit Date” means any date of funding of Delayed Draw Term Loans after the
Closing Date.


 


“Delayed Draw Term Loan
Exposure” means, with respect to any Lender, as of any date of
determination, the outstanding principal amount of the Delayed Draw Term Loans
of such Lender; provided that at any time prior to the making of the Delayed
Draw Term Loans, the Delayed Draw Term Loan Exposure of any Lender shall be
equal to such Lender’s Delayed Draw Term Loan Commitment.


 


“Delayed Draw Term Loan
Maturity Date” means the earlier of (i) the sixth anniversary of the
Closing Date, and (ii) the date that all Delayed Draw Term Loans shall
become due and payable in full hereunder, whether by acceleration or otherwise.


 


11

















 


“Delayed Draw Term Loan
Note” means a promissory note in the form of Exhibit B-2, as it may be
amended, supplemented, restated or otherwise modified from time to time.


 


“Deposit Account”
means a demand, time, savings, passbook or like account with a bank, savings
and loan association, credit union or like organization, other than an account
evidenced by a negotiable certificate of deposit.


 


“Documentation Agent”
shall mean a documentation agent appointed by the Lead Arranger pursuant to Section 9.01.


 


“Dollars” and the
sign “$” mean the lawful money of the United States of America.


 


“Domestic Subsidiary”
means any Subsidiary organized under the laws of the United States of America,
any State thereof or the District of Columbia.


 


“Earnout Interest”
means the interest payable pursuant to Section 1.8(c) of the Stock
Purchase Agreement.


 


“Earnout Seller Notes”
means any Indebtedness of the Borrower in favor of the Sellers (or their family
members or to a trust, partnership or other entity formed for the benefit of
the Sellers or such family members primarily for estate or family planning
purposes) incurred to enable Borrower to make the Initial Earnout Payments and
Milestone Payments; provided that (i) such Indebtedness is
unsecured and not guaranteed by any of Borrower’s Subsidiaries, (ii) such
Indebtedness does not bear interest (other than payment-in-kind interest) and
is not subject to commissions, charges, expenses, fees, attorneys’ fees or
disbursements, indemnities or other amounts (other than any amounts that may not
be paid until the Termination Date has occurred), (iii) such Indebtedness
shall be subordinated to the Obligations in a manner reasonably acceptable to
the Administrative Agent and (iv) the maturity date of such Indebtedness
shall be no earlier than six months following the maturity date of the Second
Lien Term Loans and such Indebtedness shall not be subject to amortization or
prepayment prior to such date; provided  further that such
Indebtedness may be required to be prepaid on or after the Termination
Date if on or prior to such date, Borrower shall have received at least
$30,000,000 of net cash proceeds from the exercise of the Warrants or any
equity offering.


 


“Eligible Assignee”
means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, or (d) any other Person (other than a natural person)
approved by (i) Administrative Agent, (ii) in the case of any
assignment of a Revolving Commitment, the Issuing Bank and Swing Line Lender,
and (iii) unless an Event of Default has occurred and is continuing or the
primary syndication period is continuing (which will end not later than six
months after the Closing Date), Borrower (each such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include Borrower’s Affiliates or
Subsidiaries or any natural person; provided  further that
promptly following the termination of the primary syndication period, the
Administrative Agent shall provide written notice thereof to the Borrower.


 


“Employee Benefit Plan”
means any material “employee benefit plan” as defined in Section 3(3) of
ERISA which is or was sponsored, maintained or contributed to by, or required
to be contributed by, Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates.


 


“Environmental Claim”
means any investigation, notice, notice of violation, claim, action, suit,
proceeding, demand, abatement order or other order or directive (conditional or
otherwise), by any Governmental Authority or any other Person, arising (i) pursuant
to or in connection with any actual or alleged violation of any Environmental
Law; (ii) in connection with any Release of, or exposure


 


12

















 


to, Hazardous Material or
any actual or alleged Hazardous Materials Activity; or (iii) in connection
with any actual or alleged damage, injury, threat or harm to health, safety, natural
resources or the environment.


 


“Environmental Laws”
means any and all foreign or domestic, federal or state (or any subdivision of
either of them), statutes, ordinances, orders, rules, regulations, judgments,
Governmental Authorizations, or any other requirements of Governmental
Authorities relating to (i) environmental matters, including those
relating to any Hazardous Materials Activity; (ii) the generation, use,
storage, transportation or disposal of Hazardous Materials; or (iii) occupational
safety and health, industrial hygiene or the protection of human, plant or
animal health or welfare, in any manner applicable to Borrower or any of its
Subsidiaries or any Facility.


 


“Equity Contribution”
means the release of at least $42,300,000 in proceeds from the Borrower’s
initial public offering being held in trust to the Borrower and a rollover of
equity by the Sellers and by Michael Segal in an amount not less than 17.0% of
the pro forma capitalization of the Borrower after consummation of the
Acquisition.


 


“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and any successor thereto.


 


“ERISA Affiliate”
means, as applied to any Person, (i) any corporation which is a member of
a controlled group of corporations within the meaning of Section 414(b) of
the Internal Revenue Code of which that Person is a member; (ii) any trade
or business (whether or not incorporated) which is a member of a group of
trades or businesses under common control within the meaning of Section 414(c) of
the Internal Revenue Code of which that Person is a member; and (iii) any
member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause
(ii) above is a member. Any former ERISA Affiliate of Borrower or any of
its Subsidiaries shall continue to be considered an ERISA Affiliate of Borrower
or any such Subsidiary within the meaning of this definition with respect to
the period such entity was an ERISA Affiliate of Borrower or such Subsidiary
and with respect to liabilities arising after such period for which Borrower or
such Subsidiary could be liable under the Internal Revenue Code or ERISA.


 


“ERISA Event” means (i) a
“reportable event” within the meaning of Section 4043 of ERISA and the
regulations issued thereunder with respect to any Pension Plan (excluding those
for which the provision for 30-day notice to the PBGC has been waived by
regulation); (ii) the failure to meet the minimum funding standard of Section 412
of the Internal Revenue Code with respect to any Pension Plan (whether or not
waived in accordance with Section 412(d) of the Internal Revenue
Code) or the failure to make by its due date a required installment under Section 412(m)
of the Internal Revenue Code with respect to any Pension Plan or the failure to
make any required contribution to a Multiemployer Plan; (iii) the
provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of
ERISA of a notice of intent to terminate such plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the withdrawal by
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in material liability to Borrower, any of
its Subsidiaries or any of their respective Affiliates pursuant to Section 4063
or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
could reasonably be expected to constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan; (vi) the imposition of material liability on Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or
4069 of ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal of Borrower, any of its Subsidiaries or any of
their


 


13

















 


respective ERISA Affiliates
in a complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Multiemployer Plan if there is any potential liability
therefore, or the receipt by Borrower, any of its Subsidiaries or any of their
respective ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4041A or 4042
of ERISA; (viii) the occurrence of an act or omission which could
reasonably be expected to give rise to the imposition on Borrower, any of its
Subsidiaries or any of their respective ERISA Affiliates of fines, penalties,
taxes or related charges under Chapter 43 of the Internal Revenue Code or under
Section 409, Section 502(c), (i) or (l), or Section 4071 of
ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a
material claim (other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (x) receipt from the Internal
Revenue Service of notice of the failure of any Pension Plan (or any other
Employee Benefit Plan intended to be qualified under Section 401(a) of
the Internal Revenue Code) to qualify under Section 401(a) of the
Internal Revenue Code, or the failure of any trust forming part of any
Pension Plan to qualify for exemption from taxation under Section 501(a) of
the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any
Pension Plan.


 


“Eurodollar Rate Loan”
means a Loan bearing interest at a rate determined by reference to the Adjusted
Eurodollar Rate.


 


“Event of Default”
means each of the conditions or events set forth in Section 8.01.


 


“Exchange Act” means
the Securities Exchange Act of 1934, as amended from time to time, and any
successor statute.


 


“Excluded Taxes”
means, with respect to Administrative Agent, any Lender, the Swing Line Lender,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of Borrower hereunder, (a) taxes imposed on or
measured by its overall net income (however denominated), and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America and (c) in the case
of a Foreign Lender (other than an assignee pursuant to a request by Borrower
under Section 2.37), any United States withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes
a party hereto (or designates a new lending office) or is attributable to such
Foreign Lender’s failure or inability (other than as a result of a Change in
Law) to comply with Section 2.36(e), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from Borrower with respect to such withholding tax pursuant to Section 2.36(a).


 


“Existing Indebtedness”
means (i) Indebtedness and other obligations outstanding under  that certain Credit Agreement dated as of November 15,
2006 between Chem Rx and Bank of America, N.A., as amended prior to the Closing
Date and (ii) up to $7,500,000 of Indebtedness and other obligations owed
by Chem Rx-NJ and Jerry Silva.


 


“Existing Letters of
Credit” means the letters of credit outstanding on the Closing Date and set
forth on Schedule 1.01B.


 


14

















 


“Facility” means any
real property (including all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore owned, leased, operated or used by
Borrower or any of its Subsidiaries or any of their respective predecessors or
Affiliates.


 


“Fair Share” as
defined in Section 7.02.


 


“Fair Share Contribution
Amount” as defined in Section 7.02.


 


“Fair Share Shortfall”
as defined in Section 7.02.


 


“Federal Funds Effective
Rate” means for any day, the rate per annum equal to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided, (i) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (ii) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to Administrative Agent, in its  capacity as a Lender, on such day on such
transactions as determined by Administrative Agent.


 


“Financial Officer
Certification” means, with respect to the financial statements for which
such certification is required, the certification of the chief financial
officer of Borrower that such financial statements fairly present, in all
material respects, the financial condition of Borrower and its Subsidiaries as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and normal
year-end or quarter-end adjustments, as applicable.


 


“Financial Plan” as
defined in Section 5.01(h).


 


“First Priority”
means, with respect to any Lien purported to be created in any Collateral
pursuant to any Collateral Document, that such Lien is the only Lien to which
such Collateral is subject, other than Permitted Liens.


 


“Fiscal Quarter”
means a fiscal quarter of any Fiscal Year.


 


“Fiscal Year” means
the fiscal year of Borrower and its Subsidiaries ending on December 31 of
each calendar year.


 


“Fixed Charge Coverage
Ratio” means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated
Adjusted EBITDAR for the four-Fiscal Quarter period then ending, minus
Consolidated Capital Expenditures for such four-Fiscal Quarter period, to (ii) Consolidated
Fixed Charges for such four-Fiscal Quarter period.


 


“Flood Hazard Property”
means any Real Estate Asset subject to a Mortgage in favor of Collateral Agent,
for the benefit of Secured Parties, and located in an area designated by the
Federal Emergency Management Agency as having special flood or mud slide
hazards.


 


“Foreign Lender”
means any Lender that is not a “United States person” as defined in Section 7701(a)(30)
of the Internal Revenue Code.


 


15

















 


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


 


“Funding Default” as
defined in Section 2.38.


 


“Funding Guarantor”
as defined in Section 7.02.


 


“Funding Notice”
means a notice substantially in the form of Exhibit A-1.


 


“GAAP” means, subject
to the limitations on the application thereof set forth in Section 1.02,
United States generally accepted accounting principles in effect as of the date
of determination thereof.


 


“Governmental Acts”
means any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority.


 


“Governmental Authority”
means the government of the United States of America or any other nation, or of
any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).


 


“Governmental
Authorization” means any permit, license, approval, agreement, provider
number, registration, certificate, filing, consent, authorization, plan,
directive, consent order, consent decree or other permission (including any
supplements or amendments thereto) of or from any Governmental Authority.


 


“Governmental Third Party
Payor” as defined in Section 4.23(c).


 


“Governmental Third Party
Payor Programs” as defined in Section 4.23(c).


 


“Grantor” as defined
in the Pledge and Security Agreement.


 


“Guaranteed Obligations”
as defined in Section 7.01.


 


“Guarantor” means
each Subsidiary of Borrower other than a Consent Subsidiary.


 


“Guaranty” means the
guaranty of each Guarantor set forth in Article Seven.


 


“Hazardous Materials”
means any chemical, material or substance, exposure to which is prohibited,
limited or regulated by any Governmental Authority or which may or could
pose a hazard to the health and safety of the owners, occupants or any Persons
in the vicinity of any Facility or to the indoor or outdoor environment.


 


“Hazardous Materials
Activity” means any past or current activity, event or occurrence involving
any Hazardous Materials, including the use, manufacture, possession, storage,
holding, presence, existence, location, Release, threatened Release, discharge,
placement, generation, transportation, processing, construction, treatment,
abatement, removal, remediation, disposal, disposition or handling of any
Hazardous Materials, and any corrective action or response action with respect
to any of the foregoing.


 


16

















 


“Health Care Laws”
means (a) the federal Anti-kickback Statute (42 U.S.C. § 1320a-7b(b)),
the Stark Anti-Self-Referral Law (42 U.S.C. § 1395nn), the civil False Claims Act (31 U.S.C. §§ 3729
et seq.), the administrative False
Claims Law (42 U.S.C. § 1320a-7b(a)), the exclusion laws (42 U.S.C. § 1320a-7), the civil monetary penalty laws (42
U.S.C. § 1320a-7a), the regulations promulgated pursuant to such statutes
and any comparable state laws, (b) the Health Insurance Portability and
Accountability Act of 1996 (42 U.S.C. §§ 1320d et seq.),
the regulations promulgated thereunder and any comparable state laws, (c) the
Federal Food, Drug and Cosmetic Act (21 U.S.C. §§ 301 et seq.) and the regulations promulgated thereunder, (d) the
Controlled Substances Act (21 U.S.C. §§ 801 et seq.),
the regulations promulgated thereunder and any comparable state laws, (e) Medicare, (f) Medicaid, (g) the
Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Pub. L. No. 108-173)
and the regulations promulgated thereunder, and (h) any other state or
federal law or regulation which regulates patient or program charges,
recordkeeping, claims process, documentation requirements, medical necessity,
referrals, the hiring of employees or acquisition of services or supplies from
those who have been excluded from government health care programs, quality,
safety, privacy, security, pharmacy practice and compounding, licensure,
accreditation or any other aspect of providing health care or pharmacy
services.


 


“Hedge Agreement”
means an Interest Rate Agreement entered into with a Lender Counterparty in
order to satisfy the requirements of this Agreement or otherwise in the
ordinary course of Borrower’s or any of its Subsidiaries’ businesses.


 


“Highest Lawful Rate”
means the maximum lawful interest rate, if any, that at any time or from time
to time may be contracted for, charged, or received under the laws
applicable to any Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in
effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.


 


“HIPAA” means the
Health Insurance Portability and Accountability Act of 1996, as the same may be
amended, modified or supplemented from time to time, any successor statute
thereto, any and all rules or regulations promulgated from time to time
thereunder, and any comparable state laws.


 


“HIPAA Compliance Plan”
as defined in Section 4.23(g).


 


“HIPAA Compliant”
means that to the extent applicable, each of Borrower and its Subsidiaries (a) is
in material compliance with any and all of the applicable requirements of HIPAA
and (b) is not subject to, and could not reasonably be expected to become
subject to, any civil or criminal penalty or any investigation, claim or
process that could reasonably be expected to cause a Material Adverse Effect in
connection with any violation by Borrower or any Subsidiary of the then
effective requirements of HIPAA.


 


“Historical Financial
Statements” means as of the Closing Date, (i) the audited financial
statements of Chem Rx for the immediately preceding three Fiscal Years,
consisting of balance sheets and the related consolidated statements of income,
stockholders’ equity and cash flows for such Fiscal Years, and (ii) the
unaudited monthly (with respect to Chem Rx only) and quarterly consolidated
financial statements of the Borrower, Chem Rx and their respective Subsidiaries
as at any Fiscal Quarter following December 31, 2006 that is ended 45 days
prior to the Closing Date and for any month following December 31, 2006
that is ended 30 days prior to the Closing Date, consisting of a balance sheet
and the related consolidated statements of income, stockholders’ equity and
cash flows for the one-, three- or six-month period, as applicable, ending on
such date, and, in the case of clauses (i) and (ii), certified by the
chief executive officer of Borrower or the chief financial officer of Chem Rx,
as applicable, that they fairly present, in all material respects, the
financial condition of Chem Rx and their respective 


 


17

















 


Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments.


 


“Increased Amount Date”
as defined in Section 2.39.


 


“Indebtedness”, as
applied to any Person, means, without duplication, (i) all indebtedness of
such Person for borrowed money; (ii) that portion of obligations of such Person
with respect to Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP; (iii) notes payable and drafts
accepted by such Person representing extensions of credit whether or not
representing obligations for borrowed money; (iv) any obligation owed for
all or any part of the deferred purchase price of property or services
(excluding any such obligations incurred under ERISA), which purchase price is (a) due
more than six (6) months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar written instrument; (v) all
indebtedness of a third party secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is nonrecourse to the credit of that
Person; provided that the amount of such nonrecourse indebtedness shall
be deemed not to exceed the value of the property on which the Lien is
attached; (vi) the face amount of any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings; (vii) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse to such Person, or sale with
recourse to such Person of the indebtedness of another; (viii) any
obligation of such Person the primary purpose or intent of which is to provide
assurance to an obligee that the indebtedness of the obligor thereof will be
paid or discharged, or any agreement relating thereto will be complied with, or
the holders thereof will be protected (in whole or in part) against loss in
respect thereof; (ix) any liability of such Person for the indebtedness of
another through any agreement (contingent or otherwise) (a) to purchase,
repurchase or otherwise acquire such indebtedness or any security therefor, or
to provide funds for the payment or discharge of such indebtedness (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise) or (b) to maintain the solvency or any balance sheet item,
level of income or financial condition of another if, in the case of any
agreement described under subclauses (a) or (b) of this clause (ix),
the primary purpose or intent thereof is as described in clause (viii) above;
and (x) obligations of such Person in respect of any exchange traded or
over the counter derivative transaction, including any Interest Rate Agreement,
whether entered into for hedging or speculative purposes; provided, in
no event shall obligations under any Interest Rate Agreement be deemed “Indebtedness”
for any purpose under Section 6.07.


 


“Indemnified Taxes”
means Taxes other than Excluded Taxes.


 


“Indemnitee” as
defined in Section 10.02(b).


 


“Initial Earnout Payments”
means (i) the 2007 Cash Earn Out (as defined in Section 1.8(a)(i) of
the Stock Purchase Agreement on the date hereof), together with any Earnout
Interest payable thereon, (ii) any portion of the 2007 Earn Out Shares (as
defined in Section 1.8(a)(i) of the Stock Purchase Agreement on the
date hereof) that is paid in cash pursuant to Section 1.12 of the Stock
Purchase Agreement on the date hereof and (iii) any portion of the shares
issuable to the Sellers pursuant to Section 1.9(a)(i) of the Stock
Purchase Agreement on the date hereof that is paid in cash pursuant to Section 1.12
of the Stock Purchase Agreement on the date hereof; provided that any
such payments shall be made in Capital Stock of the Borrower to the maximum
extent allowable pursuant to the Stock Purchase Agreement on the date hereof
and, in any event, made to the maximum extent possible while still preserving
an election under Section 338(h)(10) of the Internal Revenue Code.


 


18

















 


“Initial Seller Notes”
means any Indebtedness of Borrower in favor of the Sellers (or their family
members or to a trust, partnership or other entity formed for the benefit of
the Sellers or such family members primarily for estate or family planning
purposes) issued on the Closing Date in the amount of $8,258,748.47; provided
that (i) such Indebtedness shall accrue interest quarterly at a rate not
to exceed 13.0% per annum in kind, (ii) such Indebtedness is unsecured and
not guaranteed by any of Borrower’s Subsidiaries, (iii) such Indebtedness
does not bear interest (other than the payment-in-kind interest described in
clause (i)) and is not subject to commissions, charges, expenses, fees,
attorneys’ fees or disbursements, indemnities or other amounts (other than any
amounts that may not be paid until the Termination Date has occurred), (iv) such
Indebtedness shall be subordinated to the Obligations in a manner reasonably
acceptable to the Administrative Agent and (v) the maturity date of such
Indebtedness shall be no earlier than six months following the maturity date of
the Second Lien Term Loans and such Indebtedness shall not be subject to
amortization or prepayment prior to such date; provided  further
that such Indebtedness may be required to be prepaid on or after the
Termination Date if on or prior to such date, Borrower shall have received at
least $30,000,000 of net cash proceeds from the exercise of the Warrants or any
equity offering..


 


“Initial Term Loan”
means a term loan made by a Lender to Borrower pursuant to Section 2.01(a)(i).


 


“Initial Term Loan
Commitment” means the commitment of a Lender to make or otherwise fund an
Initial Term Loan and “Initial Term Loan Commitments” means such commitments of
all Lenders in the aggregate. The amount of each Lender’s Initial Term Loan
Commitment, if any, is set forth on the Lender Addendum or in the applicable
Assignment and Assumption Agreement, subject to any adjustment or reduction
pursuant to the terms and conditions hereof. The aggregate amount of the
Initial Term Loan Commitments as of the Closing Date is $80,000,000.


 


“Initial Term Loan
Exposure” means, with respect to any Lender, as of any date of
determination, the outstanding principal amount of the Initial Term Loans of
such Lender; provided at any time prior to the making of the Initial
Term Loans, the Initial Term Loan Exposure of any Lender shall be equal to such
Lender’s Initial Term Loan Commitment.


 


“Initial Term Loan
Maturity Date” means the earlier of (i) the sixth anniversary of the
Closing Date, and (ii) the date that all Initial Term Loans shall become
due and payable in full hereunder, whether by acceleration or otherwise.


 


“Initial Term Loan Note”
means a promissory note in the form of Exhibit B-1, as it may be
amended, supplemented, restated or otherwise modified from time to time.


 


“Installment” as
defined in Section 2.24.


 


“Installment Date” as
defined in Section 2.24.


 


“Intellectual Property”
means (a) all inventions and discoveries (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all trademarks, service marks, trade dress,
logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith, (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (d) all
broadcast rights, (e) all mask works and all applications, registrations
and renewals in connection therewith, (f) all know-how, trade secrets and
confidential business information, whether patentable or unpatentable and


 


19

















 


whether or not reduced to
practice (including ideas, research and development, know-how, formulas,
compositions and manufacturing and production process and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information and business and marketing plans and proposals), (g) all
computer software (including data and related documentation), (h) all
other proprietary rights, (i) all copies and tangible embodiments thereof
(in whatever form or medium) and (j) all licenses and agreements in
connection therewith.


 


“Intercreditor Agreement”  means an Intercreditor Agreement substantially
in the form of Exhibit I, as it may be amended, supplemented or
otherwise modified from time to time.


 


“Interest Payment Date”
means with respect to (i) any Base Rate Loan, the last Business Day of
each of the months of March, June, September and December of each
year, commencing on the first such date to occur after the Closing Date and the
final maturity date of such Loan; and (ii) any Eurodollar Rate Loan, the
last day of each Interest Period applicable to such Loan; provided, in
the case of each Interest Period of longer than three months “Interest Payment
Date” shall also include each date that is three months, or an integral
multiple thereof, after the commencement of such Interest Period.


 


“Interest Period”
means, in connection with a Eurodollar Rate Loan, an interest period of one-,
two-, three- or six-months and, to the extent available to each applicable
Lender, nine- or twelve-months, as selected by Borrower in the applicable
Funding Notice or Conversion/Continuation Notice, (i) initially,
commencing on the Credit Date or Conversion/Continuation Date thereof, as the
case may be; and (ii) thereafter, commencing on the day on which the
immediately preceding Interest Period expires; provided, (a) if an
Interest Period would otherwise expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day unless no
further Business Day occurs in such month, in which case such Interest Period
shall expire on the immediately preceding Business Day; (b) any Interest
Period that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall, subject to clauses (c) and (d), of
this definition, end on the last Business Day of a calendar month; (c) no
Interest Period with respect to any portion of any Class of Term Loans
shall extend beyond such Class’s Term Loan Maturity Date; and (d) no
Interest Period with respect to any portion of the Revolving Loans shall extend
beyond the Revolving Commitment Termination Date.


 


“Interest Rate Agreement”
means any interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedging agreement or other similar agreement
or arrangement, each of which is for the purpose of hedging the interest rate
exposure associated with Borrower’s and its Subsidiaries’ operations and not
for speculative purposes.


 


“Interest Rate
Determination Date” means, with respect to any Interest Period, the date
that is two Business Days prior to the first day of such Interest Period.


 


“Internal Revenue Code”
means the Internal Revenue Code of 1986, as amended to the date hereof and from
time to time hereafter, and any successor statute.


 


“Investment” means (i) any
direct or indirect purchase or other acquisition by Borrower or any of its
Subsidiaries of, or of a beneficial interest in, any of the Securities of any
other Person (other than a Guarantor); (ii) any direct or indirect
redemption, retirement, purchase or other acquisition for value, by any
Subsidiary of Borrower from any Person (other than Borrower or any Guarantor),
of any Capital Stock of such Person; and (iii) any direct or indirect
loan, advance (other than advances to employees for moving, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by Borrower or any of its
Subsidiaries to any other Person (other than Borrower or any Guarantor), including
all indebtedness and accounts receivable from


 


20

















 


that other Person that are
not current assets or did not arise from sales to that other Person in the
ordinary course of business. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.


 


“IP Security Agreement”
means each First Lien Trademark Security Agreement, First Lien Patent Security
Agreement or First Lien Copyright Security Agreement by and among Borrower,
each Guarantor and the Collateral Agent, as each may be amended, modified
or supplemented in accordance with the terms hereof and thereof.


 


“Issuance Notice”
means an Issuance Notice substantially in the form of Exhibit A-3.


 


“Issuing Bank” means
CIBC as Issuing Bank hereunder, together with its permitted successors and
assigns in such capacity or such other Lender from time to time designated by
Borrower and CIBC, which has agreed in writing to act as Issuing Bank
hereunder.


 


“Joinder Agreement”
means an agreement substantially in the form of Exhibit L.


 


“Joint Venture” means
a joint venture, partnership or other similar arrangement, whether in
corporate, partnership or other legal form; provided, in no event shall
any corporate Subsidiary of any Person be considered to be a Joint Venture to
which such Person is a party.


 


“knowledge” means the
actual knowledge of a Responsible Officer of Borrower or any of its
Subsidiaries.


 


“Landlord Collateral
Access Agreement” means a Landlord Collateral Access Agreement
substantially in the form of Exhibit H with such amendments or
modifications as may be approved by Collateral Agent in its reasonable
discretion.


 


“Landlord Consent and
Estoppel” means, with respect to any Leasehold Property, a letter,
certificate or other instrument in writing from the lessor under the related
lease, pursuant to which, among other customary things, the landlord consents
to the granting of a Mortgage on such Leasehold Property by the Loan Party
tenant and certifies to such other matters under the related lease as are
reasonably requested by the Collateral Agent, such Landlord Consent and Estoppel
to be in form and substance acceptable to the Collateral Agent in its
reasonable discretion, but in any event sufficient for the Collateral Agent to
obtain a title policy with respect to such Mortgage.


 


“Lead Arranger” as
defined in the preamble hereto.


 


“Leasehold Property”
means any leasehold interest of any Loan Party as lessee under any lease of
real property, other than any such leasehold interest designated from time to
time by Collateral Agent in its reasonable discretion as not being required to
be included in the Collateral because the costs of including such leasehold
interest in the Collateral are excessive in relation to the security to be
provided thereby.


 


“Lender” means each
financial institution that has become a party hereto pursuant to a Lender
Addendum or Joinder Agreement as a Lender, and any other Person that becomes a
party hereto pursuant to an Assignment and Assumption Agreement and including,
as the context requires, the Swing Line Lender.


 


21

















 


“Lender Addendum”
means with respect to any Lender on the Closing Date, a lender addendum in the form of
Exhibit J, to be executed and delivered by such Lender on the Closing Date
as provided in Section 10.23.


 


“Lender Counterparty”
means each Lender, each Agent and each of their respective Affiliates’
counterparty to a Hedge Agreement (including any Person who is an Agent or a
Lender or any Affiliate thereof at the time of entering into a Hedge Agreement,
but thereafter ceases to be a Lender or an Agent).


 


“Letter of Credit”
means a standby or trade letter of credit issued or to be issued by Issuing
Bank pursuant to this Agreement.


 


“Letter of Credit
Sublimit” means the lesser of (i) $2,500,000 and (ii) the
aggregate unused amount of the Revolving Commitments then in effect.


 


“Letter of Credit Usage”
means, as at any date of determination, the sum of (i) the maximum
aggregate amount which is, or at any time thereafter may become, available
for drawing under all Letters of Credit then outstanding, and (ii) the
aggregate amount of all drawings under Letters of Credit honored by Issuing
Bank and not theretofore reimbursed by or on behalf of Borrower.


 


“Lien” means (i) any
lien, mortgage, pledge, assignment as security, security interest, charge or
encumbrance of any kind (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, and any lease in the
nature thereof) and any option, trust or other preferential arrangement having
the practical effect of any of the foregoing and (ii) in the case of
Securities, any purchase option, call or similar right of a third party with
respect to such Securities.


 


“Lien Subordination
Agreement”  means each Lien
Subordination Agreement among the Administrative Agent, the administrative
agent under the Second Lien Credit Agreement, the Loan Parties and the
applicable vendor, as it may be amended, supplemented or otherwise
modified from time to time.


 


“Loan” means an
Initial Term Loan, a Delayed Draw Term Loan, a Revolving Loan, and a Swing Line
Loan.


 


“Loan Document” means
any of this Agreement, the Notes, if any, the Collateral Documents, any
documents or certificates executed by Borrower in favor of Issuing Bank
relating to Letters of Credit, and all other documents, instruments or
agreements executed and delivered by a Loan Party for the benefit of any Agent,
Issuing Bank or any Lender in connection herewith.


 


“Loan Party” means
each Person (other than any Agent, Issuing Bank or any Lender or any other
representative thereof) from time to time party to a Loan Document.


 


“Management Investors”
means (i) Jerry Silva and Steven Silva, and (ii) any trust,
corporation, partnership or other entity Controlled by any Person described in
the immediately preceding clause (i), in each case, who have been, are or
become investors in, or shareholders of, the Borrower.


 


“Margin Stock” as
defined in Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.


 


“Material Adverse Effect”
means (i) as of the Closing Date, any change, circumstance, development,
state of facts, event or effect (a) that has had or would reasonably be
expected to have a


 


22

















 


material adverse change or
effect (taken alone or in the aggregate with any other adverse change or
effect) in or with respect to the business, assets, condition (financial or
otherwise) or results of operations of Chem Rx and its Subsidiaries, taken as a
whole or (b) that could reasonably be expected to prevent or materially
delay the consummation by the Sellers or Chem Rx of the transactions
contemplated by the Stock Purchase Agreement and the other Transaction
Agreements (as defined in the Stock Purchase Agreement), excluding, in each
case, any such change or effect that arises out of or is related to:  (A) changes in (x) general
economic, regulatory or political conditions or (y) financial or
securities markets in general, (B) the announcement or public disclosure
of the Stock Purchase Agreement or the other Transaction Agreements (as defined
in the Stock Purchase Agreement), or (C) the institutional pharmacy or
pharmaceutical industries in general and not specifically related to Chem Rx;
and (ii) any time thereafter, a material adverse effect on (a) the business,
operations, properties, assets, or financial condition of Borrower and its
Subsidiaries taken as a whole; (b) the ability of the Loan Parties to
fully and timely perform their material Obligations; (c) the
legality, validity, binding effect or enforceability against a Loan Party of a
material Loan Document to which it is a party; or (d) the material rights,
remedies and benefits available to, or conferred upon, any Agent and any Lender
or any Secured Party under the Loan Documents.


 


“Material Contract”
means any contract or other arrangement to which Borrower or any of its
Subsidiaries is a party (other than the Loan Documents or the Second Lien
Credit Agreement and the documents related thereto) for which breach,
nonperformance, cancellation or failure to renew could reasonably be expected
to have a Material Adverse Effect.


 


“Material Real Estate
Asset” means (i) all Leasehold Properties other than those with
respect to which the aggregate payments under the terms of the lease are less
than $150,000 per annum or (ii) any Real Estate Asset acquired after the
Closing Date and that (a) is a fee-owned Real Estate Asset having a fair
market value in excess of $1,000,000 as of the acquisition of such Real Estate
Asset, (b) is a Leasehold Property with aggregate payments under the term
of the lease of at least $150,000 per annum or (c) the Requisite Lenders
have determined in their reasonable discretion is material to the business,
operations, properties, assets or financial condition of Borrower and its Subsidiaries,
taken as a whole; provided that, as of the Closing Date, the Leasehold
Properties at (A) 750 Park Place, Long Beach, New York 11561, (B) 4041
M. Hadley Road, South Plainfield, New Jersey 07080 and (c) HCR 1, Box 30,
Route 209, Bossardsville Road, Sciota, Pennsylvania 18354 are the only Material
Real Estate Assets.


 


“Medicaid” means
collectively, the healthcare assistance program established by Title XIX of the
Social Security Act (42 U.S.C. §§1396 et seq.) and
any statutes succeeding thereto, and all laws, rules, regulations, manuals,
orders, guidelines or requirements pertaining to such program, including (a) all
federal statutes (whether set forth in Title XIX of the Social Security Act or
elsewhere) affecting such program, (b) all state statutes and plans for
medical assistance enacted in connection with such program and federal rules and
regulations promulgated in connection with such program, and (c) all
applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement, guidelines and requirements of all government
authorities promulgated in connection with such program (whether or not having
the force of law), in each case as the same may be amended, supplemented
or otherwise modified from time to time.


 


“Medicare” means
collectively, the health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act (42 U.S.C. §§1395 et seq.) and any statutes succeeding thereto, and all laws,
rules, regulations, manuals, orders or guidelines pertaining to such program,
including (a) all federal statutes (whether set forth in Title XVIII of
the Social Security Act or elsewhere) affecting such program, and (b) all
applicable provisions of all rules, regulations, manuals, orders and administrative,
reimbursement, guidelines and requirements of all governmental authorities 


 


23

















 


promulgated in connected with such program (whether or not having the
force of law), in each case as the same may be amended, supplemented or
otherwise modified from time to time.


 


“Merger Agreement”
means the agreement and plan of merger, dated as of June 15, 2007, among
Borrower, Paramount Merger Sub, Inc., Chem Rx-NJ, Chem Rx and the members
of Chem Rx-NJ.


 


“Milestone Payments”
means any holdback and contingent payments in cash and stock that may be
payable pursuant to Sections 1.8, 1.9, 1.10 and 1.12 of the Stock Purchase
Agreement on the date hereof; provided that any such payments shall be
made in Capital Stock of the Borrower to the maximum extent allowable pursuant
to the Stock Purchase Agreement on the date hereof and, in any event, made to
the maximum extent possible while still preserving an election under Section 338(h)(10) of
the Internal Revenue Code.


 


“Moody’s” means Moody’s
Investor Services, Inc.


 


“Mortgage” means a
fee mortgage in a form to be agreed between Administrative Agent and
Borrower, as it may be amended, supplemented, restated or otherwise
modified from time to time in accordance with Section 10.04(a).


 


“Multiemployer Plan”
means any Employee Benefit Plan which is a “multiemployer plan” as defined in

Section 3(37) of ERISA.


 


“Narrative Report”
means, with respect to the financial statements for which such narrative report
is required, a narrative report describing the operations of Borrower and
its Subsidiaries in the form prepared for presentation to senior
management or the Board of Directors thereof for the applicable month, Fiscal
Quarter or Fiscal Year and for the period from the beginning of the then
current Fiscal Year to the end of such period to which such financial
statements relate, which shall include a summary of operating metrics for the
applicable period and a detailed summary of accounts receivable aging.


 


“Net Asset Sale Proceeds”
means, with respect to any Asset Sale, an amount equal to:  (i) cash payments (including any cash
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) received by Borrower
or any of its Subsidiaries from such Asset Sale, minus (ii) any
bona fide direct costs incurred in connection with such Asset Sale, including (a) income
or gains taxes payable by the seller as a result of any gain recognized in
connection with such Asset Sale, (b) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness (other
than the Loans) that is secured by a Lien on the stock or assets in question
and that is required to be repaid under the terms thereof as a result of such
Asset Sale, (c) a reasonable reserve for any indemnification payments
(fixed or contingent) attributable to seller’s indemnities and representations
and warranties to purchaser in respect of such Asset Sale undertaken by
Borrower or any of its Subsidiaries in connection with such Asset Sale and (d) any
legal, accounting, investment banking, title and recording fees, and other
expenses incurred in connection with such Asset Sale.


 


“Net
Insurance/Condemnation Proceeds” means an amount equal to:  (i) any cash payments or proceeds
received by Borrower or any of its Subsidiaries (a) under any casualty
insurance policy in respect of a covered loss thereunder or (b) as a
result of the taking of any assets of Borrower or any of its Subsidiaries by
any Person pursuant to the power of eminent domain, condemnation or otherwise,
or pursuant to a sale of any such assets to a purchaser with such power under
threat of such a taking, minus (ii) (a) any actual and
reasonable costs incurred by Borrower or any of its Subsidiaries in


 


24

















 


connection with the
adjustment or settlement of any claims of Borrower or such Subsidiary in
respect thereof, (b) any bona fide direct costs incurred in connection
with any sale of such assets as referred to in clause (i)(b) of this
definition, including income taxes payable as a result of any gain recognized
in connection therewith and (c) any legal, accounting, investment banking,
title and recording fees, and other expenses incurred in connection with the
payments or proceeds referred to in clause (i) of this definition.


 


“New Revolving Loan
Commitments” as defined in Section 2.39.


 


“New Revolving Loan
Lender” as defined in Section 2.39.


 


“New Revolving Loans”
as defined in Section 2.39.


 


“Non-Guarantor” means
any Subsidiary of Borrower that is not a Guarantor.


 


“Note” means an
Initial Term Loan Note, a Delayed Draw Term Loan Note, a Revolving Loan Note or
a Swing Line Note.


 


“Notice” means a
Funding Notice, an Issuance Notice, or a Conversion/Continuation Notice.


 


“Obligations” means
all obligations of every nature of each Loan Party from time to time owed to
the Agents (including former Agents), the Lenders or any of them and Lender
Counterparties, under any Loan Document or Hedge Agreement, whether for
principal, interest (including interest which, but for the filing of a petition
in bankruptcy with respect to such Loan Party, would have accrued on any
Obligation, whether or not a claim is allowed against such Loan Party for such
interest in the related bankruptcy proceeding), reimbursement of amounts drawn
under Letters of Credit, payments for early termination of Hedge Agreements,
fees, expenses, indemnification or otherwise.


 


“Obligee Guarantor”
as defined in Section 7.07.


 


“Organizational Documents”
means (i) with respect to any corporation, its certificate or articles of
incorporation or organization, as amended, and its bylaws, as amended, (ii) with
respect to any limited partnership, its certificate of limited partnership, as
amended, and its partnership agreement, as amended, (iii) with respect to
any general partnership, its partnership agreement, as amended, and (iv) with
respect to any limited liability company, its articles of organization, as
amended, and its operating agreement, as amended. In the event any term or
condition of this Agreement or any other Loan Document requires any
Organizational Document to be certified by a secretary of state or similar
governmental official, the reference to any such “Organizational Document”
shall only be to a document of a type customarily certified by such
governmental official.


 


“Other Taxes” means
all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made
hereunder or under any other Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document, including any interest, additions to tax or penalties applicable
thereto.


 


“Participant” as
defined in Section 10.06(d).


 


“PBGC” means the
Pension Benefit Guaranty Corporation or any successor thereto.


 


25
















 


“Pension Plan” means
any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to
Section 412 of the Internal Revenue Code or Section 302 of ERISA.


 


“Permitted Acquisition”
means any acquisition by Borrower or any of its Wholly Owned Subsidiaries,
whether by purchase, merger or otherwise, of all or substantially all of the
assets of, all of the Capital Stock of, or a business line or unit or a
division of, any Person (the “Target”); provided,


 


(a)                                  immediately
prior to, and after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing or would result therefrom;


 


(b)                                 all
transactions in connection therewith shall be consummated, in all material
respects, in accordance with all applicable laws and in conformity with all
applicable Governmental Authorizations;


 


(c)                                  in the case of
the acquisition of Capital Stock, all of the Capital Stock (except for any such
Securities in the nature of directors’ qualifying shares required pursuant to
applicable law) acquired or otherwise issued by the Target or any newly formed
Subsidiary of Borrower in connection with such acquisition shall be owned 100%
by Borrower or a Guarantor thereof, and Borrower shall have taken, or caused to
be taken, as of the date such Person becomes a Subsidiary of Borrower, each of
the actions set forth in Sections 5.11 and/or 5.12, as applicable;


 


(d)                                 Borrower and
its Subsidiaries shall be in compliance with the financial covenants set forth
in Section 6.07 on a pro forma basis after giving effect to such
acquisition as of the last day of the Fiscal Quarter most recently ended for
which financial statements have been provided pursuant to Section 5.01 (as
determined in accordance with Section 6.07(d));


 


(e)                                  Borrower shall
have delivered to Administrative Agent at least ten (10) Business Days
prior to such proposed acquisition (or such shorter period consented to by the
Administrative Agent), a Compliance Certificate evidencing compliance with Section 6.07
as required under clause (d) above, together with all relevant
financial and other information with respect to such acquired assets reasonably
requested by the Administrative Agent, including the aggregate consideration
for such acquisition;


 


(f)                                    the Target
shall be in same or related business or lines of business in which Borrower
and/or its Subsidiaries are engaged as of the Closing Date;


 


(g)                                 at the time of
such acquisition and after giving effect thereto, the amount, if any, by which (i) the
Revolving Commitment exceeds (ii) the sum of the Total Utilization of
Revolving Commitments shall not be less than $5,000,000;


 


(h)                                 the Purchase
Price to be paid in respect of the Target (i) when aggregated with the
Purchase Price paid in respect of all prior acquisitions made in the applicable
period is less than an amount equal to (A) in respect of the period from
the Closing Date to December 31, 2008, $15,000,000 and (B) in each
Fiscal Year thereafter, $10,000,000, in each case plus the Available Warrant
Credit and the Available Equity Credit at such time and (ii) when
aggregated with the Purchase Price paid in respect of all prior acquisitions
made from the Closing Date to the


 


26

















 


date
of determination is less than an aggregate amount equal to $40,000,000 plus the
Available Warrant Credit and the Available Equity Credit at such time; and


 


(i)                                     after giving
effect to an acquisition, Borrower shall demonstrate a pro forma Total Leverage
Ratio of at least twenty-five (25) basis points less than the then applicable
Total Leverage Ratio required by Section 6.07.


 


“Permitted Investments” means each of the Investments permitted
pursuant to Section 6.06.


 


“Permitted Liens”
means each of the Liens permitted pursuant to Section 6.02.


 


“Permitted Refinancing”
means (i) renewals and extensions expressly provided for in the agreements
evidencing any Indebtedness as the same are in effect on the date of this
Agreement and (ii) refinancings, renewals, replacements and extensions of
any such Indebtedness if the terms and conditions thereof are not materially
less favorable to the obligor thereon or to the Lenders than the Indebtedness
being refinanced, renewed, replaced or extended, and the average life to
maturity thereof is greater than or equal to that of the Indebtedness being
refinanced, renewed, replaced or extended, and the final maturity thereof is
equal to or later than the Indebtedness being refinanced, renewed, replaced or
extended; provided  that (a) such
Indebtedness permitted under the immediately preceding clause (i) or (ii) above
shall not (A) include Indebtedness of an obligor that was not an obligor
with respect to the Indebtedness being refinanced, renewed, replaced or
extended, (B) exceed in a principal amount the principal amount of
Indebtedness being refinanced, renewed, replaced or extended plus interest,
premium and reasonable transaction costs and fees and expenses, if any, paid in
connection with such refinancing, renewal, replacement or extension or (C) be
incurred, created or assumed if any Default or Event of Default has occurred
and is continuing or would result therefrom and (b) if the Indebtedness
being refinanced, renewed, replaced or extended is subordinated in right of
payment to the Obligations, such refinancing, renewal, replacement or extension
is subordinated in right of payment to the Obligations on terms at least as
favorable to the Lenders as those contained in the documentation governing the
Indebtedness being refinanced, renewed, replaced or extended.


 


“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.


 


“Pledge and Security
Agreement” means the First Lien Pledge and Security Agreement to be
executed by Borrower and each Guarantor substantially in the form of Exhibit G,
as it may be amended, supplemented, restated or otherwise modified from
time to time.


 


“Prepayment Notice”
means a notice substantially in the form of Exhibit M.


 


“Prime Rate” means
the rate of interest per annum that CIBC announces from time to time as its
prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. CIBC or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.


 


“Principal Office”
means, for each of Administrative Agent, Swing Line Lender and Issuing Bank,
such Person’s “Principal Office” as set forth in Section 10.01, or such
other office as such Person may from time to time designate in writing to
Borrower, Administrative Agent and each Lender.


 


“Privacy and Security
Rules” as defined in Section 4.23(g).


 


27

















 


“Private Third Party
Payor” as defined in Section 4.23(c).


 


“Private Third Party
Payor Programs” as defined in Section 4.23(c).


 


“Pro Rata Share”
means (i) with respect to all payments, computations and other matters
relating to the Initial Term Loan of any Lender, the percentage obtained by
dividing (a) the Initial Term Loan Exposure of that Lender by (b) the
aggregate Initial Term Loan Exposure of all Lenders; (ii) with respect to
all payments, computations and other matters relating to the Delayed Draw Term
Loans of any Lender, the percentage obtained by dividing (a) the Delayed
Draw Term Loan Exposure of that Lender by (b) the aggregate Delayed Draw
Term Loan Exposure of all Lenders; and (iii) with respect to all payments,
computations and other matters relating to the Revolving Commitment or
Revolving Loans of any Lender or any Letters of Credit issued or participations
purchased therein by any Lender or any participations in any Swing Line Loans
purchased by any Lender, the percentage obtained by dividing (a) the
Revolving Exposure of that Lender by (b) the aggregate Revolving Exposure
of all Lenders. For all other purposes with respect to each Lender, “Pro Rata
Share” means the percentage obtained by dividing (A) an amount equal to
the sum of the Initial Term Loan Exposure, Delayed Draw Term Loan Exposure and
the Revolving Exposure of such Lender, by (B) an amount equal to the sum
of the aggregate Initial Term Loan Exposure, the aggregate Delayed Draw Term
Loan Exposure and the aggregate Revolving Exposure.


 


“Projections” as
defined in Section 4.08.


 


“Purchase Money
Indebtedness” as defined in Section 6.01(k).


 


“Purchase Price”
means, without duplication, with respect to any Permitted Acquisition, an
amount equal to the sum of (a) the aggregate consideration, whether cash,
property or securities (including any Indebtedness incurred pursuant to Section 6.01,
including potential earnout payments, and the fair market value of any
Investments used as consideration pursuant to Section 6.06(m)), paid or
delivered by the Borrower and the Subsidiaries in connection with such
acquisition less (b) the aggregate net proceeds received by
Borrower and the Subsidiaries from sales of assets of a Target for fair market
value within one year following the acquisition thereof.


 


“Real Estate Asset”
means, at any time of determination, any interest (fee, leasehold or otherwise)
then owned by any Loan Party in any real property.


 


“Record Document”
means, with respect to any Leasehold Property, (i) the lease evidencing
such Leasehold Property or a memorandum thereof, executed and acknowledged by
the owner of the affected real property, as lessor, or (ii) if such
Leasehold Property was acquired or subleased from the holder of a Recorded
Leasehold Interest, the applicable assignment or sublease document, executed
and acknowledged by such holder, in each case in form sufficient to give
such constructive notice upon recordation and otherwise in form reasonably
satisfactory to Collateral Agent.


 


“Recorded Leasehold
Interest” means a Leasehold Property with respect to which a Record
Document has been recorded in all places necessary, in Collateral Agent’s
reasonable judgment, to give constructive notice of such Leasehold Property to
third-party purchasers and encumbrancers of the affected real property.


 


“Refunded Swing Line
Loans” as defined in Section 2.06(d).


 


“Register” as defined
in Section 10.06(c).


 


28

















 


“Regulation D”
means Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.


 


“Reimbursement Date”
as defined in Section 2.10.


 


“Related Agreements”
means, collectively:


 


(a)                                  the Stock Purchase Agreement;


 


(b)                                 the Merger Agreement;


 


(c)                                  the Unit Redemption Agreement;


 


(d)                                 the Second Lien Credit Agreement;


 


(e)                                  the Initial Seller Notes; and


 


(f)                                    the Earnout Seller Notes.


 


“Related Parties”
means, with respect to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents and advisors of such Person and of such
Person’s Affiliates.


 


“Release” means any
release, spill, emission, leaking, pumping, pouring, injection, escaping,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of any
Hazardous Material into the indoor or outdoor environment (including the
abandonment or disposal of any barrels, containers or other closed receptacles
containing any Hazardous Material), including the movement of any Hazardous
Material through the air, soil, surface water or groundwater.


 


“Requisite Class Lenders”
means, at any time of determination, (i) for the Class of Lenders
having Initial Term Loan Exposure, Lenders holding more than 50% of the
aggregate Initial Term Loan Exposure of all Lenders, (ii) for the Class of
Lenders having Delayed Draw Term Loan Exposure, Lenders holding more than 50%
of the aggregate Delayed Draw Term Loan Exposure of all Lenders, and (iii) for
the Class of Lenders having Revolving Exposure, Lenders holding more than
50% of the aggregate Revolving Exposure of all Lenders.


 


“Requisite Lenders” means
one or more Lenders having or holding Initial Term Loan Exposure, Delayed Draw
Term Loan Exposure and/or Revolving Exposure and representing more than 50% of
the sum of (i) the aggregate Initial Term Loan Exposure of all Lenders, (ii) the
aggregate Delayed Draw Term Loan Exposure of all Lenders and (iii) the
aggregate Revolving Exposure of all Lenders.


 


“Responsible Officer”
means, as to any Person, any individual holding the position of chairman of the
board (if an officer), chief executive officer, president or one of its vice
presidents (or the equivalent thereof), and such Person’s chief financial
officer, secretary or treasurer.


 


“Restricted Junior
Payment” means (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of stock of Borrower or
any Subsidiary of Borrower now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock to the holders of that
class; (ii) any redemption, retirement, sinking fund or similar payment, purchase
or other acquisition for value, direct or indirect, of any shares of any class of
stock of Borrower or any Subsidiary of Borrower now or hereafter outstanding; (iii) any
payment made to retire, or to obtain the surrender of, any


 


29

















 


outstanding warrants,
options or other rights to acquire shares of any class of stock of
Borrower or any Subsidiary of Borrower now or hereafter outstanding; (iv) any
Initial Earnout Payment and the Milestone Payments (other than any such payment
payable in common stock of Borrower), and (v) any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, the Second Lien Credit Agreement, the
Initial Seller Notes and the Earnout Seller Notes.


 


“Revolving Commitment”
means the commitment of a Lender to make or otherwise fund any Revolving Loan
and to acquire participations in Letters of Credit and Swing Line Loans
hereunder and “Revolving Commitments” means such commitments of all Lenders in
the aggregate. The amount of each Lender’s Revolving Commitment, if any, is set
forth in the Lender Addendum or in the applicable Assignment and Assumption
Agreement subject to any adjustment or reduction pursuant to the terms and
conditions hereof. The aggregate amount of the Revolving Commitments as of the
Closing Date is $25,000,000.


 


“Revolving Commitment
Period” means the period from the Closing Date to but excluding the
Revolving Commitment Termination Date.


 


“Revolving Commitment
Termination Date” means the earliest to occur of (i) if the Term Loans
are not made on or before such date, the Closing Date; (ii) the fifth
anniversary of the Closing Date, (iii) the date the Revolving Commitments
are permanently reduced to zero pursuant to Section 2.26, 2.27 or 2.28,
and (iv) the date of the termination of the Revolving Commitments pursuant
to Section 8.01.


 


“Revolving Exposure”
means, with respect to any Lender as of any date of determination, (i) prior
to the termination of the Revolving Commitments, that Lender’s Revolving
Commitment; and (ii) after the termination of the Revolving Commitments,
the sum of (a) the aggregate outstanding principal amount of the Revolving
Loans of that Lender, (b) in the case of Issuing Bank, the aggregate
Letter of Credit Usage in respect of all Letters of Credit issued by that
Lender (net of any participations by Lenders in such Letters of Credit), (c) the
aggregate amount of all participations by that Lender in any outstanding
Letters of Credit or any unreimbursed drawing under any Letter of Credit, (d) in
the case of Swing Line Lender, the aggregate outstanding principal amount of
all Swing Line Loans (net of any participations therein by other Lenders), and (e) the
aggregate amount of all participations therein by that Lender in any
outstanding Swing Line Loans.


 


“Revolving Loan”
means a Loan made by a Lender to Borrower pursuant to Section 2.03 and/or Section 2.38.


 


“Revolving Loan Note”
means a promissory note in the form of Exhibit B-3, as it may be
amended, supplemented, restated or otherwise modified from time to time.


 


“S&P” means
Standard & Poor’s Ratings Group, a division of The McGraw Hill
Corporation.


 


“Second Lien Credit
Agreement” means the Second Lien Credit and Guaranty Agreement dated as of
the Closing Date among the Borrower, certain Subsidiaries of Borrower, as
guarantors, CIBC WM, as sole lead arranger and sole bookrunner, CIBC, as
administrative agent, and the
other agents and lenders party thereto as it may be amended, modified,
renewed, refunded, replaced or refinanced from time to time pursuant to Section 6.14.


 


“Second Lien Term Loans”
means the Second Lien Term Loans in an aggregate principal amount of
$37,000,000 made on the Closing Date under the Second Lien Credit Agreement.


 


30

















 


“Secured Parties” has
the meaning assigned to that term in the Pledge and Security Agreement.


 


“Securities” means
any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates
of interest, shares or participations in temporary or interim certificates for
the purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.


 


“Securities Act”
means the Securities Act of 1933, as amended from time to time, and any
successor statute.


 


“Sellers” as defined
in the definition of Acquisition.


 


“Solvency Certificate”
means a Solvency Certificate of the chief financial officer of Borrower
substantially in the form of Exhibit E-2.


 


“Solvent” means, with
respect to any Loan Party, that as of the date of determination both (i) (a) the
sum of such Loan Party’s debt (including contingent liabilities) does not
exceed the present fair saleable value of such Loan Party’s present assets; (b) such
Loan Party’s capital is not unreasonably small in relation to its business as
contemplated on the Closing Date and reflected in the Projections or with
respect to any transaction contemplated or undertaken after the Closing Date;
and (c) such Person has not incurred and does not intend to incur, or
believe (nor should it reasonably believe) that it will incur, debts beyond its
ability to pay such debts as they become due (whether at maturity or
otherwise); and (ii) such Person is “solvent” within the meaning given
that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standard No. 5).


 


“Stock Purchase Agreement”
means the Stock Purchase Agreement, dated as of June 1, 2007, entered into
by Borrower, Chem Rx and the Sellers, as it may be amended, supplemented,
restated or otherwise modified from time to time in accordance with the
provisions of Section 6.13 hereof.


 


“Subject Transaction”
as defined in Section 6.07(d).


 


“Subsidiary” means,
with respect to any Person, any corporation, partnership, limited liability
company, association, joint venture or other business entity of which more than
50% of the total voting power of shares of stock or other ownership interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of the Person or Persons (whether directors, managers, trustees or
other Persons performing similar functions) having the power to direct or cause
the direction of the management and policies thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof; provided, in
determining the percentage of ownership interests of any Person controlled by
another Person, no ownership interest in the nature of a “qualifying share” of
the former Person shall be deemed to be outstanding.


 


“Swing Line Lender”
means CIBC Inc. in its capacity as Swing Line Lender hereunder, together with
its permitted successors and assigns in such capacity.


 


31

















 


“Swing Line Loan”
means a Loan made by Swing Line Lender to Borrower pursuant to Section 2.05.


 


“Swing Line Note”
means a promissory note in the form of Exhibit B-4, as it may be
amended, supplemented or otherwise modified from time to time.


 


“Swing Line Sublimit”
means the lesser of (i) $2,500,000, and (ii) the aggregate unused
amount of Revolving Commitments then in effect.


 


“Syndication Agent”
shall mean a syndication agent appointed by the Lead Arranger pursuant to Section 9.01.


 


“Target” as defined
in the definition of Permitted Acquisition.


 


“Target Sale” as
defined in Section 6.08(c).


 


“Taxes” means all
present or future taxes, levies, imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by any Governmental Authority,
including any interest, additions to tax or penalties applicable thereto.


 


“Term Loan” means an
Initial Term Loan or a Delayed Draw Term Loan.


 


“Term Loan Commitment”
means the Initial Term Loan Commitment or the Delayed Draw Term Loan
Commitment, and “Term Loan Commitments” means such commitments of all Lenders
in the aggregate.


 


“Term Loan Maturity Date”
means the Initial Term Loan Maturity Date or the Delayed Draw Term Loan
Maturity Date.


 


“Term Loan Exposure”
means, with respect to any Lender, as of any date of determination, the
outstanding principal amount of the Term Loans of such Lender; provided
at any time prior to the making of the Term Loans, the Term Loan Exposure of
any Lender shall be equal to such Lender’s Term Loan Commitment.


 


“Termination Date”
means the date on which all Commitments have been reduced to zero, the
principal of and interest on all Loans and all fees payable hereunder have been
paid in full, and all Letters of Credit shall have expired, been cancelled or
cash collateralized (to the reasonable satisfaction of the Issuing Bank) in
accordance herewith or shall no longer constitute Obligations hereunder.


 


“Title Policy” as
defined in Section 5.12(b)(iv).


 


“Total Leverage Ratio”
means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated
Total Debt as of such day (other than any Initial Seller Notes, Earnout Seller
Notes, Initial Earnout Payments and Milestone Payments) to (ii) Consolidated
Adjusted EBITDA for the four-Fiscal Quarter period ending on such date.


 


“Total Utilization of
Revolving Commitments” means, as at any date of determination, the sum of (i) the
aggregate principal amount of all outstanding Revolving Loans (other than
Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or
reimbursing Issuing Bank for


 


32

















 


any amount drawn under any
Letter of Credit, but not yet so applied), (ii) the aggregate principal
amount of all outstanding Swing Line Loans, and (iii) the Letter of Credit
Usage.


 


“Transaction Costs”
means the fees, costs and expenses payable by Borrower or any of Borrower’s
Subsidiaries on or before the Closing Date in connection with the transactions
contemplated by the Loan Documents and the Related Agreements.


 


“Transactions” means
the Acquisition, the Equity Contribution, the entering into and funding of the
Term Loans and the Revolving Loans, the entering into and funding of the Second
Lien Term Loans, the repayment of
certain Existing Indebtedness and all related transactions.


 


“Transactions Rule”
as defined in Section 4.23(g).


 


“Type of Loan” means (i) with
respect to either Term Loans or Revolving Loans, a Base Rate Loan or a
Eurodollar Rate Loan, and (ii) with respect to Swing Line Loans, a Base
Rate Loan.


 


“UCC” means the Uniform Commercial
Code (or any similar or equivalent legislation) as in effect in any applicable
jurisdiction.


 


“Unit Redemption
Agreement” means the agreement dated as of October 1, 2007 between
Chem Rx and Salerno, pursuant to which Chem Rx will acquire the 8.82352%
interest owned by Salerno in Chem Rx-PA.


 


“Warrant” means each
warrant to purchase one share of common Capital Stock of Borrower on or prior
to October 20, 2009 that was issued in connection with the initial public
offering of Paramount Acquisition Corp. (now Chem Rx Corporation) or that may be
issued pursuant to the exercise of the unit purchase option granted to
EarlyBirdCapital, Inc.


 


“Wholly Owned Subsidiary”
of any Person means a Subsidiary of such Person of which securities (except for
directors’ qualifying shares) or other ownership interests representing 100% of
the Capital Stock are, at the time any determination is being made, owned,
controlled or held by such Person or one or more Wholly Owned Subsidiaries of
such Person or by such Person and one or more Wholly Owned Subsidiaries of such
Person.


 


“750 Park Place”
means 750 Park Place Realty Co., LLC, owner of the facility leased by Chem Rx
in Long Beach, New York.


 


Section 1.02                            Accounting
Terms.


 


Except as otherwise
expressly provided herein, all accounting terms not otherwise defined herein
shall have the meanings assigned to them in conformity with GAAP. Financial
statements and other information required to be delivered by Borrower to
Lenders pursuant to Sections 5.01(a), 5.01(b) and 5.01(c) shall be
prepared in accordance with GAAP as in effect at the time of such preparation. Subject
to the foregoing, calculations in connection with the definitions, covenants
and other provisions hereof shall utilize accounting principles and policies in
conformity with those used to prepare the Historical Financial Statements. To
the extent there are any changes in GAAP from the date of this Agreement, if at
any time such change in GAAP would affect the computation of any financial
ratio or requirement set forth in any Loan Document, and Borrower or
Administrative Agent shall so request, Administrative Agent and Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP; provided  that,
until so amended,


 


33

















 


such ratio or requirement
shall continue to be computed in accordance with such GAAP prior to such change
therein.


 


Section 1.03                            Interpretation,
etc.


 


The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation.”  The word “will” shall be
construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights. For the avoidance of doubt, references to “Borrower
and its Subsidiaries” herein shall exclude 750 Park Place.


 


Section 1.04                            Construction.


 


Each of the parties hereto
acknowledges that (i) it has been represented by counsel in the
negotiation and documentation of the terms of this Agreement; (ii) it has
had full and fair opportunity to review and revise the terms of this Agreement;
(iii) this Agreement has been drafted jointly by all of the parties
hereto; and (iv) neither Administrative Agent nor any Lender has any
fiduciary relationship with or duty to Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the relationship
between Administrative Agent and the Lenders, on the one hand, and Borrower, on
the other hand, in connection herewith or therewith is solely that of debtor
and creditor. Accordingly, each of the parties hereto acknowledges and agrees
that the terms of this Agreement shall not be construed against or in favor of
another party.


 


ARTICLE TWO

LOANS AND
LETTERS OF CREDIT


 


Section 2.01                            Term
Loan Commitments.


 


(a)                                  Subject to the terms and conditions hereof,


 


(i)                                     each Lender severally agrees to make, on the Closing Date, a
Initial Term Loan to Borrower in an amount equal to such Lender’s Initial Term
Loan Commitment; and


 


(ii)                                  during the Delayed Draw Term Loan Commitment Period, each
Lender holding a Delayed Draw Term Loan Commitment severally agrees to make, on
the applicable Delayed Draw Term Loan Credit Dates, Delayed Draw Term Loans to
Borrower in an amount equal to such Lender’s Delayed Draw Term Loan Commitment.


 


34

















 


(b)                                 Borrower may make only one borrowing under the Initial
Term Loan Commitment which shall be on the Closing Date. Borrower may make
two borrowings under the Delayed Draw Term Loan Commitment during the Delayed
Draw Term Loan Commitment Period, and Delayed Draw Term Loans that are (i) Base
Rate Loans shall be made in an aggregate minimum amount of $1,000,000 and
integral multiples of $100,000 in excess of that amount and (ii) Eurodollar
Rate Loans shall be in an aggregate minimum amount of $5,000,000 and integral
multiples of $100,000 in excess of that amount. Any amount borrowed under this Section 2.01
and subsequently repaid or prepaid may not be reborrowed. Subject to
Sections 2.26, 2.27 and 2.28, all amounts owed hereunder with respect to (i) the
Initial Term Loans shall be paid in full no later than the Initial Term Loan
Maturity Date and (ii) the Delayed Draw Term Loans shall be paid in full
no later than the Delayed Draw Term Loan Maturity Date. Each Lender’s Initial
Term Loan Commitment shall terminate immediately and without further action on
the Closing Date after giving effect to the funding of such Lender’s Initial
Term Loan Commitment on such date. A portion of each Lender’s Delayed Draw Term
Loan Commitment shall terminate immediately and without further action after
giving effect to the funding of such portion of such Lender’s Delayed Draw Term
Loan Commitment on the applicable Delayed Draw Term Loan Credit Date.


 


(c)                                  The Delayed Draw Term Loans may be effected, in the sole
discretion of the Administrative Agent, through an increase in the Initial Term
Loans, in which case (w) any Delayed Draw Term Loan Lender not already an
Initial Term Loan Lender hereunder shall become an Initial Term Loan Lender,
(x) anything in Section 2.14 to the contrary notwithstanding, the
Loans made pursuant to the Delayed Draw Term Loan Commitment shall be made
solely by the Delayed Draw Term Loan Lenders (but thereafter the provisions of Section 2.14
shall be applicable to such Loans), (y) the initial Loans made pursuant to
the Delayed Draw Term Loan Commitment shall be either Base Rate Loans or
Eurodollar Rate Loans with an Interest Period ending on the last day of the
earliest expiring then-outstanding Interest Period for Initial Term Loans
(notwithstanding any requirement herein that Interest Periods be one, two,
three, six, nine or 12 months) and (z) as promptly as practicable
following the making of such Delayed Draw Term Loans (but in any event not
later than the last day of such earliest-expiring then-outstanding Interest
Period for Initial Term Loans), the Delayed Draw Term Loans shall be
coordinated with all Initial Term Loans so that all outstanding Initial Term
Loans of each Type are allocated ratably among the Initial Term Loan Lenders
(including any Delayed Draw Term Loan Lenders that have become Initial Term
Loan Lenders) as required by Section 2.14, but in no event shall such
reallocation result in a change to the interest periods of the Initial Term
Loans that would cause Borrower to be liable for compensation to any Lender
pursuant to Section 2.33(c) for any losses, expenses or liabilities.


 


Section 2.02                            Borrowing
Mechanics for Term Loans.


 


Borrower shall deliver to
Administrative Agent a fully executed Funding Notice at least three Business
Days in advance of the Closing Date or a Delayed Draw Term Loan Credit Date, as
applicable, in the case of a Eurodollar Rate Loan, and at least one Business
Day in advance of the Closing Date or a Delayed Draw Term Loan Credit Date, as
applicable, in the case of a Base Rate Loan. Promptly upon receipt by
Administrative Agent of such Funding Notice, Administrative Agent shall notify
each Lender of the proposed borrowing; provided that in the case of the
Initial Term Loans, Borrower shall have delivered to the Administrative Agent a
funding indemnity letter reasonably satisfactory to the Administrative Agent
concurrently with the Funding Notice.


 


Each Lender shall make its
Initial Term Loan available to Administrative Agent not later than 12:00 p.m.
(New York City time) on the Closing Date, by wire transfer of same day funds in
Dollars, at Administrative Agent’s Principal Office. Upon satisfaction or
waiver of the conditions precedent specified herein, Administrative Agent shall
make the proceeds of the Term Loans available to Borrower


 


35

















 


on the Closing Date by
causing an amount of same day funds in Dollars equal to the proceeds of all
such Loans received by Administrative Agent from Lenders to be credited to the
account of Borrower at Administrative Agent’s Principal Office or to such other
account as may be designated in writing to Administrative Agent by
Borrower.


 


Section 2.03                            Revolving
Commitments.


 


During the Revolving
Commitment Period, subject to the terms and conditions hereof, each Lender with
a Revolving Commitment severally agrees to make Revolving Loans to Borrower in
the aggregate amount up to but not exceeding such Lender’s Revolving
Commitment; provided, after giving effect to the making of any Revolving
Loans, in no event shall the Total Utilization of Revolving Commitments exceed
the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.03
may be repaid and reborrowed during the Revolving Commitment Period. Each
Lender’s Revolving Commitment shall expire on the Revolving Commitment
Termination Date and all Revolving Loans and all other amounts owed hereunder
with respect to the Revolving Loans and the Revolving Commitments shall be paid
in full no later than such date.


 


Section 2.04                            Borrowing
Mechanics for Revolving Loans.


 


(a)                                  Except pursuant to Section 2.10, Revolving Loans that
are Base Rate Loans shall be made in an aggregate minimum amount of $250,000
and integral multiples of $100,000 in excess of that amount, and Revolving
Loans that are Eurodollar Rate Loans shall be in an aggregate minimum amount of
$500,000 and integral multiples of $100,000 in excess of that amount.


 


(b)                                 Whenever Borrower desires that Lenders make Revolving Loans,
Borrower shall deliver to Administrative Agent a fully executed and delivered
Funding Notice no later than 10:00 a.m. (New York City time) at least
three Business Days in advance of the proposed Credit Date in the case of a
Eurodollar Rate Loan, and at least one Business Day in advance of the proposed
Credit Date in the case of a Revolving Loan that is a Base Rate Loan. Except as
otherwise provided herein, a Funding Notice for a Revolving Loan that is a
Eurodollar Rate Loan shall be irrevocable on and after the related Interest
Rate Determination Date, and Borrower shall be bound to make a borrowing in
accordance therewith.


 


(c)                                  Notice of receipt of each Funding Notice in respect of
Revolving Loans, together with the amount of each Lender’s Pro Rata Share
thereof, if any, together with the applicable interest rate, shall be provided
by Administrative Agent to each applicable Lender by telefacsimile with reasonable
promptness, but (provided Administrative Agent shall have received such notice
by 10:00 a.m. (New York City time)) not later than 2:00 p.m. (New
York City time) on the same day as Administrative Agent’s receipt of such
Notice from Borrower.


 


(d)                                 Each Lender with a Revolving Commitment shall make the amount
of its Revolving Loan available to Administrative Agent not later than 12:00 p.m.
(New York City time) on the applicable Credit Date by wire transfer of same day
funds in Dollars, at the Administrative Agent’s Principal Office. Except as
provided herein, upon satisfaction or waiver of the conditions precedent
specified herein, Administrative Agent shall make the proceeds of such
Revolving Loans available to Borrower on the applicable Credit Date by causing
an amount of same day funds in Dollars equal to the proceeds of all such
Revolving Loans received by Administrative Agent from Lenders to be credited to
an account of Borrower as may be designated in writing to Administrative
Agent by Borrower.


 


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Section 2.05                            Swing
Line Loans Commitments.


 


During the Revolving
Commitment Period, subject to the terms and conditions hereof, Swing Line
Lender hereby agrees to make Swing Line Loans to Borrower in the aggregate
amount up to but not exceeding the Swing Line Sublimit; provided, after
giving effect to the making of any Swing Line Loan, in no event shall the Total
Utilization of Revolving Commitments exceed the Revolving Commitments then in
effect. Amounts borrowed pursuant to this Section 2.05 may be repaid
and reborrowed during the Revolving Commitment Period. Swing Line Lender’s
Revolving Commitment shall expire on the Revolving Commitment Termination Date
and all Swing Line Loans and all other amounts owed hereunder with respect to
the Swing Line Loans and the Revolving Commitments shall be paid in full no
later than such date.


 


Section 2.06                            Borrowing
Mechanics for Swing Line Loans.


 


(a)                                  Swing Line Loans shall be made in an aggregate minimum amount
of $100,000 and integral multiples of $50,000 in excess of that amount.


 


(b)                                 Whenever Borrower desires that Swing Line Lender make a Swing
Line Loan, Borrower shall deliver to Administrative Agent a Funding Notice no
later than 12:00 p.m. (New York City time) on the proposed Credit Date.


 


(c)                                  Swing Line Lender shall make the amount of its Swing Line
Loan available to Administrative Agent not later than 2:00 p.m. (New York
City time) on the applicable Credit Date by wire transfer of same day funds in
Dollars, at the Administrative Agent’s Principal Office. Except as provided
herein, upon satisfaction or waiver of the conditions precedent specified
herein, Administrative Agent shall make the proceeds of such Swing Line Loans
available to Borrower on the applicable Credit Date by causing an amount of
same day funds in Dollars equal to the proceeds of all such Swing Line Loans
received by Administrative Agent from Swing Line Lender to be credited to an
account of Borrower as may be designated in writing to Administrative Agent
by Borrower.


 


(d)                                 With respect to any Swing Line Loans which have not been
voluntarily prepaid by Borrower pursuant to Section 2.25, Swing Line
Lender may at any time in its sole and absolute discretion, deliver to
Administrative Agent (with a copy to Borrower), no later than 11:00 a.m.
(New York City time) at least one (1) Business Day in advance of the
proposed Credit Date, a notice (which shall be deemed to be a Funding Notice
given by Borrower) requesting that each Lender holding a Revolving Commitment
make Revolving Loans that are Base Rate Loans to Borrower on such Credit Date
in an amount equal to the amount of such Swing Line Loans (the “Refunded
Swing Line Loans”) outstanding on the date such notice is given which the
Swing Line Lender requests Lenders holding a Revolving Commitment to prepay. Anything
contained in this Agreement to the contrary notwithstanding, (1) the
proceeds of such Revolving Loans made by the Lenders holding Revolving
Commitments other than Swing Line Lender shall be immediately delivered by the
Administrative Agent to Swing Line Lender (and not to Borrower) and applied to
repay a corresponding portion of the Refunded Swing Line Loans and (2) on
the day such Revolving Loans are made, Swing Line Lender’s Pro Rata Share of
the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a
Revolving Loan made by Swing Line Lender to Borrower, and such portion of the
Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing
Line Loans but shall instead constitute part of Swing Line Lender’s
outstanding Revolving Loans to Borrower and shall be due under the Revolving
Loan Note issued by Borrower to Swing Line Lender. Borrower hereby authorizes
Administrative Agent and Swing Line Lender to charge Borrower’s accounts with
Administrative Agent and Swing Line Lender (up to the amount available in each
such account) in order to immediately pay Swing Line Lender the amount of the
Refunded Swing Line Loans to the extent the proceeds of such Revolving Loans made
by


 


37

















 


Lenders,
including the Revolving Loan deemed to be made by the Swing Line Lender, are
not sufficient to repay in full the Refunded Swing Line Loans. If any portion
of any such amount paid (or deemed to be paid) to Swing Line Lender should be
recovered by or on behalf of Borrower from Swing Line Lender in bankruptcy, by
assignment for the benefit of creditors or otherwise, the loss of the amount so
recovered shall be ratably shared among all Lenders holding Revolving
Commitments in the manner contemplated by Section 2.32.


 


(e)                                  If for any reason Revolving Loans are not made pursuant to Section 2.06(d) in
an amount sufficient to repay any amounts owed to Swing Line Lender in respect
of any outstanding Swing Line Loans on the Business Day after demand for
payment thereof by Swing Line Lender, each Lender holding a Revolving
Commitment shall be deemed to, and hereby agrees to, have purchased a
participation in such outstanding Swing Line Loans, and in an amount equal to
its Pro Rata Share of the applicable unpaid amount together with accrued
interest thereon. Upon one (1) Business Day’s notice from Swing Line
Lender, each Lender holding a Revolving Commitment shall deliver to Swing Line
Lender an amount equal to its respective participation in the applicable unpaid
amount in same day funds at the Principal Office of Swing Line Lender. In order
to evidence such participation each Lender holding a Revolving Commitment
agrees to enter into a participation agreement at the request of Swing Line
Lender in form and substance reasonably satisfactory to Swing Line Lender.
In the event any Lender holding a Revolving Commitment fails to make available
to Swing Line Lender the amount of such Lender’s participation as provided in
this paragraph, Swing Line Lender shall be entitled to recover such amount on
demand from such Lender together with interest thereon for three Business Days
at the rate customarily used by Swing Line Lender for the correction of errors
among banks and thereafter at the Base Rate, as applicable.


 


(f)                                    Notwithstanding anything contained herein to the contrary, (1) each
Lender’s obligation to make Revolving Loans for the purpose of repaying any
Refunded Swing Line Loans pursuant to the second preceding paragraph and each
Lender’s obligation to purchase a participation in any unpaid Swing Line Loans
pursuant to the immediately preceding paragraph shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
set-off, counterclaim, recoupment, defense or other right which such Lender may have
against Swing Line Lender, any Loan Party or any other Person for any reason
whatsoever; (B) the occurrence or continuation of a Default or Event of
Default; (C) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of any Loan Party; (D) any
breach of this Agreement or any other Loan Document by any party thereto; or (E) any
other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing; provided  that such obligations of each
Lender are subject to the condition that Swing Line Lender believed in good
faith that all conditions under Section 3.02 to the making of the
applicable Refunded Swing Line Loans or other unpaid Swing Line Loans, were
satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans
were made, or the satisfaction of any such condition not satisfied had been
waived by Requisite Lenders prior to or at the time such Refunded Swing Line
Loans or other unpaid Swing Line Loans were made; and (2) Swing Line
Lender shall not be obligated to make any Swing Line Loans (A) if it has
elected not to do so after the occurrence and during the continuation of a Default
or Event of Default or (B) at a time when a Funding Default exists unless
Swing Line Lender has entered into arrangements satisfactory to it and Borrower
to eliminate Swing Line Lender’s risk with respect to the Defaulting Lender’s
participation in such Swing Line Loan, including by cash collateralizing such
Defaulting Lender’s Pro Rata Share of the outstanding Swing Line Loans.


 


Section 2.07                            Letters
of Credit.


 


During the Revolving
Commitment Period, subject to the terms and conditions hereof,  Issuing Bank agrees to issue Letters of
Credit for the account of Borrower in the aggregate amount up to


 


38

















 


but not exceeding the Letter
of Credit Sublimit; provided, (i) each Letter of Credit shall be
denominated in Dollars; (ii) the stated amount of each Letter of Credit
shall not be less than $100,000 or such lesser amount as is acceptable to
Issuing Bank; (iii) after giving effect to such issuance, in no event
shall the Total Utilization of Revolving Commitments exceed the Revolving
Commitments then in effect; (iv) after giving effect to such issuance, in
no event shall the Letter of Credit Usage exceed the Letter of Credit Sublimit
then in effect; and (v) in no event shall any Letter of Credit have an
expiration date later than the earlier of (1) five (5) days prior to
the Revolving Commitment Termination Date and (2) the date which is one
year from the date of issuance of such Letter of Credit. Subject to the
foregoing, Issuing Bank may agree that a Letter of Credit will
automatically be extended for one or more successive periods not to exceed one
year each, unless Issuing Bank elects not to extend for any such additional
period; provided Issuing Bank shall not extend any such Letter of Credit
if it has received written notice that an Event of Default has occurred and is
continuing at the time Issuing Bank must elect to allow such extension; provided
further in the event a Funding Default exists, Issuing Bank shall not be
required to issue any Letter of Credit unless Issuing Bank has entered into
arrangements satisfactory to it and Borrower to eliminate Issuing Bank’s risk
with respect to the participation in Letters of Credit of the Defaulting
Lender, including by cash collateralizing such Defaulting Lender’s Pro Rata
Share of the Letter of Credit Usage.


 


Section 2.08                            Notice
of Issuance.


 


Whenever Borrower desires
the issuance of a Letter of Credit, it shall deliver to Administrative Agent an
Issuance Notice no later than 12:00 p.m. (New York City time) at least three
Business Days, or such shorter period as may be agreed to by Issuing Bank
in any particular instance, in advance of the proposed date of issuance. Upon
satisfaction or waiver of the conditions set forth in Section 3.02,
Issuing Bank shall issue the requested Letter of Credit only in accordance with
Issuing Bank’s standard operating procedures. Upon the issuance of any Letter
of Credit or amendment or modification to a Letter of Credit, Issuing Bank
shall promptly notify each Lender with a Revolving Commitment of such issuance
and the amount of such Lender’s respective participation in such Letter of
Credit pursuant to Section 2.11.


 


Section 2.09                            Responsibility
of Issuing Bank with Respect to Requests for Drawings and Payments.


 


In determining whether to
honor any drawing under any Letter of Credit by the beneficiary thereof,
Issuing Bank shall be responsible only to examine the documents delivered under
such Letter of Credit with reasonable care so as to ascertain whether they
appear on their face to be in accordance with the terms and conditions of such
Letter of Credit. As between Borrower and Issuing Bank, Borrower assumes all
risks of the acts and omissions of, or misuse of the Letters of Credit issued
by Issuing Bank, by the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, Issuing Bank shall not be
responsible for:  (i) 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 such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (iii) failure of the
beneficiary of any such Letter of Credit to comply fully with any conditions
required in order to draw upon such Letter of Credit; (iv) 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) errors in interpretation of technical terms; (vi) any
loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of


 


39

















 


Credit of the proceeds of
any drawing under such Letter of Credit; or (viii) any consequences
arising from causes beyond the control of Issuing Bank, including any
Governmental Acts; none of the above shall affect or impair, or prevent the
vesting of, any of Issuing Bank’s rights or powers hereunder. Without limiting
the foregoing and in furtherance thereof, any action taken or omitted by
Issuing Bank under or in connection with the Letters of Credit or any documents
and certificates delivered thereunder, if taken or omitted in good faith, shall
not give rise to any liability on the part of Issuing Bank to Borrower. Notwithstanding
anything to the contrary contained in this Section 2.09, Borrower shall
retain any and all rights it may have against Issuing Bank for any
liability arising solely out of the gross negligence or willful misconduct of
Issuing Bank.


 


Section 2.10                            Reimbursement
by Borrower of Amounts Drawn or Paid Under Letters of Credit.


 


In the event Issuing Bank
has determined to honor a drawing under a Letter of Credit, it shall
immediately notify Borrower and Administrative Agent, and Borrower shall
reimburse Issuing Bank on or before the Business Day immediately following the
date on which such drawing is honored (the “Reimbursement Date”) in an
amount in Dollars and in same day funds equal to the amount of such honored
drawing; provided, anything contained herein to the contrary
notwithstanding, (i) unless Borrower shall have notified Administrative
Agent and Issuing Bank prior to 10:00 a.m. (New York City time) on the
date such drawing is honored that Borrower intends to reimburse Issuing Bank
for the amount of such honored drawing with funds other than the proceeds of
Revolving Loans, Borrower shall be deemed to have given a timely Funding Notice
to Administrative Agent requesting Lenders with a Revolving Commitment to make
Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount
in Dollars equal to the amount of such honored drawing, and (ii) subject
to satisfaction or waiver of the conditions specified in Section 3.02,
Lenders with a Revolving Commitment shall, on the Reimbursement Date, make
Revolving Loans that are Base Rate Loans in the amount of such honored drawing,
the proceeds of which shall be applied directly by Administrative Agent to
reimburse Issuing Bank for the amount of such honored drawing; and provided
further, if for any reason proceeds of Revolving Loans are not received
by Issuing Bank on the Reimbursement Date in an amount equal to the amount of
such honored drawing, Borrower shall reimburse Issuing Bank, on demand, in an
amount in same day funds equal to the excess of the amount of such honored
drawing over the aggregate amount of such Revolving Loans, if any, which are so
received. Nothing in this Section 2.10 shall be deemed to relieve any
Lender with a Revolving Commitment from its obligation to make Revolving Loans
on the terms and conditions set forth herein, and Borrower shall retain any and
all rights it may have against any Lender with a Revolving Commitment
resulting from the failure of such Lender to make such Revolving Loans under
this Section 2.10.


 


Section 2.11                            Lenders’
Purchase of Participations in Letters of Credit.


 


Immediately upon the
issuance of each Letter of Credit, each Lender having a Revolving Commitment
shall be deemed to have purchased, and hereby agrees to irrevocably purchase,
from Issuing Bank a participation in such Letter of Credit and any drawings
honored thereunder in an amount equal to such Lender’s Pro Rata Share (with
respect to the Revolving Commitments) of the maximum amount which is or at any
time may become available to be drawn thereunder. In the event that
Borrower shall fail for any reason to reimburse Issuing Bank on the
Reimbursement Date as provided in Section 2.10, Issuing Bank shall
promptly notify each Lender with a Revolving Commitment of the unreimbursed
amount of such honored drawing and of such Lender’s respective participation
therein based on such Lender’s Pro Rata Share of the Revolving Commitments. Each
Lender with a Revolving Commitment shall make available to Issuing Bank an
amount equal to its respective participation, in Dollars and in same day funds,
at the office of Issuing Bank specified in such notice, not later than 2:00 p.m.
(New York City time) on the same business day (under the laws of the
jurisdiction in which such office of Issuing


 


40

















 


Bank is located) notified by
Issuing Bank. In the event that any Lender with a Revolving Commitment fails to
make available to Issuing Bank on such business day the amount of such Lender’s
participation in such Letter of Credit as provided in this Section 2.11,
Issuing Bank shall be entitled to recover such amount on demand from such
Lender together with interest thereon for three Business Days at the rate
customarily used by Issuing Bank for the correction of errors among banks and
thereafter at the Base Rate. Nothing in this Section 2.11 shall be deemed
to prejudice the right of any Lender with a Revolving Commitment to recover
from Issuing Bank any amounts made available by such Lender to Issuing Bank
pursuant to this Section in the event that it is determined that the
payment with respect to a Letter of Credit in respect of which payment was made
by such Lender constituted gross negligence or willful misconduct on the part of
Issuing Bank. In the event Issuing Bank shall have been reimbursed by other
Lenders pursuant to this Section 2.11 for all or any portion of any
drawing honored by Issuing Bank under a Letter of Credit, such Issuing Bank
shall distribute to each Lender which has paid all amounts payable by it under
this Section 2.11 with respect to such honored drawing such Lender’s Pro
Rata Share of all payments subsequently received by Issuing Bank from Borrower
in reimbursement of such honored drawing when such payments are received. Any
such distribution shall be made to a Lender at its primary address set forth in
Section 10.01 or at such other address as such Lender may request.


 


Section 2.12                            Obligations
Absolute.


 


The obligation of Borrower
to reimburse Issuing Bank for drawings honored under the Letters of Credit
issued by it and to repay any Revolving Loans made by Lenders pursuant to Section 2.10
and the obligations of Lenders under Section 2.11 shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms hereof
under all circumstances including any of the following circumstances:  (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim,
set-off, defense or other right which Borrower or any Lender may have at
any time against a beneficiary or any transferee of any Letter of Credit (or
any Persons for whom any such transferee may be acting), Issuing Bank,
Lender or any other Person or, in the case of a Lender, against Borrower,
whether in connection herewith, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between Borrower or
one of its Subsidiaries and the beneficiary for which any Letter of Credit was
procured); (iii) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; (iv) payment
by Issuing Bank under any Letter of Credit against presentation of a draft or
other document which does not substantially comply with the terms of such
Letter of Credit; (v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Borrower
or any of its Subsidiaries; (vi) any breach hereof or any other Loan
Document by any party thereto; (vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing; or (viii) the
fact that an Event of Default or a Default shall have occurred and be
continuing; provided, in each case, that payment by Issuing Bank under
the applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of Issuing Bank under the circumstances in question.


 


Section 2.13                            Indemnification.


 


Without duplication of any
obligation of Borrower under Section 10.02, in addition to amounts payable
as provided herein, Borrower hereby agrees to protect, indemnify, pay and save
harmless Issuing Bank from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which Issuing Bank may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by Issuing
Bank, other than as a result of (1) the gross negligence or willful
misconduct of Issuing Bank or (2) the wrongful dishonor by Issuing Bank of
a


 


41

















 


proper demand for payment
made under any Letter of Credit issued by it, or (ii) the failure of
Issuing Bank to honor a drawing under any such Letter of Credit as a result of
any Governmental Act.


 


Section 2.14                            Pro
Rata Shares.


 


All Loans shall be made, and
all participations purchased, by Lenders simultaneously and proportionately to
their respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in such other Lender’s
obligation to make a Loan requested hereunder or purchase a participation
required hereby nor shall any Term Loan Commitment or any Revolving Commitment
of any Lender be increased or decreased as a result of a default by any other
Lender in such other Lender’s obligation to make a Loan requested hereunder or
purchase a participation required hereby.


 


Section 2.15                            Availability
of Funds.


 


(a)                                  Funding by Lenders; Presumption by Administrative Agent. Unless Administrative Agent shall have received notice from
a Lender prior to the applicable Credit Date that such Lender will not make
available to Administrative Agent such Lender’s share of such Loans,
Administrative Agent may assume that such Lender has made such share
available on such applicable Credit Date and may, in reliance upon such
assumption, make available to Borrower a corresponding amount. In such event,
if a Lender has not in fact made its share of the applicable Loans available to
Administrative Agent, then the applicable Lender and Borrower severally agree
to pay to Administrative Agent forthwith on demand such corresponding amount
with interest thereon, for each day from and including the date such amount is
made available to Borrower to but excluding the date of payment to
Administrative Agent, at (i) in the case of a payment to be made by such
Lender, the greater of the Federal Funds Effective Rate and a rate determined
by Administrative Agent in accordance with banking industry rules on
interbank compensation and (ii) in the case of a payment to be made by
Borrower, the interest rate applicable to Base Rate Loans. If Borrower and such
Lender shall pay such interest to Administrative Agent for the same or an
overlapping period, Administrative Agent shall promptly remit to Borrower the
amount of such interest paid by Borrower for such period. If such Lender pays
such amount to Administrative Agent, then such amount shall constitute such
Lender’s Loan included on such Credit Date. Any payment by Borrower shall be
without prejudice to any claim Borrower may have against a Lender that
shall have failed to make such payment to Administrative Agent.


 


(b)                                 Payments by Borrower; Presumptions by Administrative Agent. Unless Administrative Agent shall have received notice from
Borrower prior to the date on which any payment is due to Administrative Agent
for the account of the Lenders or the Issuing Bank hereunder that Borrower will
not make such payment, Administrative Agent may assume that Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders or the Issuing Bank, as the case may be,
the amount due. In such event, if Borrower has not in fact made such payment,
then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to Administrative Agent forthwith on demand the
amount so distributed to such Lender or the Issuing Bank, with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to Administrative Agent, at the greater
of the Federal Funds Effective Rate and a rate determined by Administrative
Agent in accordance with banking industry rules on interbank compensation.


 


Section 2.16                            Use
of Proceeds.


 


The proceeds of the Initial
Term Loans and up to $4,000,000 of the Revolving Loans made on the Closing Date
shall be applied by Borrower to finance the Acquisition and the repayment of


 


42

















 


the Existing Indebtedness
and to pay the Transaction Costs. The proceeds of the Delayed Draw Term Loans
shall be applied by Borrower to finance Initial Earnout Payments and the
Milestone Payments and for no other purpose. The proceeds of the Revolving
Loans, Swing Line Loans and Letters of Credit made after the Closing Date shall
be applied by Borrower for working capital and general corporate purposes of
Borrower and its Subsidiaries, including Permitted Acquisitions. No portion of
the proceeds of any Credit Extension shall be used in any manner that causes or
might cause such Credit Extension or the application of such proceeds to
violate Regulation T, Regulation U or Regulation X of the Board
of Governors of the Federal Reserve System or any other regulation thereof or
to violate the Exchange Act.


 


Section 2.17                            Lenders’
Evidence of Debt.


 


Each Lender shall maintain
on its internal records an account or accounts evidencing the Indebtedness of
Borrower to such Lender, including the amounts of the Loans made by it and each
repayment and prepayment in respect thereof. Any such recordation shall be
conclusive and binding on Borrower, absent manifest error; provided,
failure to make any such recordation, or any error in such recordation, shall
not affect any Lender’s Revolving Commitments or Borrower’s Obligations in
respect of any applicable Loans; and provided  further, in the
event of any inconsistency between the Register and any Lender’s records, the
recordations in the Register shall govern.


 


Section 2.18                            Notes.


 


If so requested by any
Lender by written notice to Borrower (with a copy to Administrative Agent) at
least two Business Days prior to the Closing Date, or at any time thereafter,
Borrower shall execute and deliver to such Lender (and/or, if applicable and if
so specified in such notice, to any Person who is an assignee of such Lender
pursuant to Section 10.06) on the Closing Date (or, if such notice is delivered
after the Closing Date, promptly after Borrower’s receipt of such notice) a
Note or Notes to evidence such Lender’s Initial Term Loan, Delayed Draw Term
Loan, Revolving Loan or Swing Line Loan, as the case may be.


 


Section 2.19                            Interest
Rate on Loans.


 


Except as otherwise set
forth herein, each Class of Loan shall bear interest on the unpaid
principal amount thereof from the date made through repayment (whether by
acceleration or otherwise) thereof as follows:


 


(a)                                  if a Base Rate Loan, at the Base Rate plus the Applicable
Margin; or


 


(b)                                 if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate
plus the Applicable Margin.


 


Section 2.20                            Interest
Rate.


 


(a)                                  The basis for determining the rate of interest with respect
to any Loan (except a Swing Line Loan which can be made and maintained as Base
Rate Loans only), and the Interest Period with respect to any Eurodollar Rate
Loan, shall be selected by Borrower and notified to Administrative Agent and
Lenders pursuant to the applicable Funding Notice or Conversion/Continuation
Notice, as the case may be. If on any day a Loan is outstanding with
respect to which a Funding Notice or Conversion/Continuation Notice has not
been delivered to Administrative Agent in accordance with the terms hereof
specifying the applicable basis for determining the rate of interest, then for
that day such Loan shall be a Base Rate Loan.


 


43
















 


(b)           In connection with Eurodollar Rate Loans there shall be no
more than eight (8) Interest Periods outstanding at any time. In the event
Borrower fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in
the applicable Funding Notice or Conversion/Continuation Notice, such Loan (if
outstanding as a Eurodollar Rate Loan) will be automatically converted into a
Base Rate Loan on the last day of the then-current Interest Period for such
Loan (or if outstanding as a Base Rate Loan will remain as, or (if not then
outstanding) will be made as, a Base Rate Loan). In the event Borrower fails to
specify an Interest Period for any Eurodollar Rate Loan in the applicable
Funding Notice or Conversion/Continuation Notice, Borrower shall be deemed to
have selected an Interest Period of one month. As soon as practicable after
10:00 a.m. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) the interest
rate that shall apply to the Eurodollar Rate Loans for which an interest rate
is then being determined for the applicable Interest Period and shall promptly
give notice thereof (in writing or by telephone promptly confirmed in writing)
to Borrower and each Lender.


 


(c)           Interest payable pursuant to Section 2.19(a) shall be
computed (i) in the case of Base Rate Loans on the basis of a 365-day or
366-day year, as the case may be, and (ii) in the case of Eurodollar Rate
Loans, on the basis of a 360-day year, in each case for the actual number of
days elapsed in the period during which it accrues. In computing interest on
any Loan, the date of the making of such Loan or the first day of an Interest
Period applicable to such Loan or, with respect to a Base Rate Loan being
converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided,
if a Loan is repaid on the same day on which it is made, one day’s interest
shall be paid on that Loan.


 


(d)           Except as otherwise set forth herein, interest on each Loan
shall be payable in arrears on and to (i) each Interest Payment Date
applicable to that Loan; (ii) any prepayment of that Loan, whether
voluntary or mandatory, to the extent accrued on the amount being prepaid; and
(iii) at maturity, including final maturity; provided, however,
with respect to any voluntary prepayment of a Base Rate Loan, accrued interest
shall instead be payable on the applicable Interest Payment Date.


 


(e)           Borrower agrees to pay to Issuing Bank, with respect to
drawings honored under any Letter of Credit, interest on the amount paid by
Issuing Bank in respect of each such honored drawing from the date such drawing
is honored to but excluding the date such amount is reimbursed by or on behalf
of Borrower at a rate equal to (i) for the period from the date such
drawing is honored to but excluding the applicable Reimbursement Date, the rate
of interest otherwise payable hereunder with respect to Revolving Loans that
are Base Rate Loans, and (ii) thereafter, a rate which is 2% per annum in
excess of the rate of interest otherwise payable hereunder with respect to
Revolving Loans that are Base Rate Loans.


 


(f)            Interest payable pursuant to Section 2.20(e) shall be
computed on the basis of a 365/366-day year for the actual number of days
elapsed in the period during which it accrues, and shall be payable on demand
or, if no demand is made, on the date on which the related drawing under a
Letter of Credit is reimbursed in full. Promptly upon receipt by Issuing Bank
of any payment of interest pursuant to Section 2.20(e), Issuing Bank shall
distribute to each Lender, out of the interest received by Issuing Bank in
respect of the period from the date such drawing is honored to but excluding
the date on which Issuing Bank is reimbursed for the amount of such drawing
(including any such reimbursement out of the proceeds of any Revolving Loans),
the amount that such Lender would have been entitled to receive in respect of
the letter of credit fee that would have been payable in respect of such Letter
of


 


44

















 


Credit for such period if no drawing
had been honored under such Letter of Credit. In the event Issuing Bank shall
have been reimbursed by Lenders for all or any portion of such honored drawing,
Issuing Bank shall distribute to each Lender which has paid all amounts payable
by it under Section 2.11 with respect to such honored drawing such Lender’s Pro
Rata Share of any interest received by Issuing Bank in respect of that portion
of such honored drawing so reimbursed by Lenders for the period from the date
on which Issuing Bank was so reimbursed by Lenders to but excluding the date on
which such portion of such honored drawing is reimbursed by Borrower.


 


Section 2.21         Conversion/Continuation.


 


(a)           Subject to Section 2.33 and so long as no Default or Event of
Default shall have occurred and then be continuing, Borrower shall have the
option:


 


(i)            to
convert at any time all or any part of any (x) Term Loan equal to
$5,000,000 and integral multiples of $1,000,000 in excess of that amount or
(y) Revolving Loan equal to $500,000 and integral multiples of $250,000 in
excess of that amount from one Type of Loan to another Type of Loan; provided
a Eurodollar Rate Loan may only be converted on the expiration of the Interest
Period applicable to such Eurodollar Rate Loan unless Borrower shall pay all
amounts due under Section 2.33 in connection with any such conversion; or


 


(ii)           upon
the expiration of any Interest Period applicable to any Eurodollar Rate Loan,
to continue all or any portion of such Loan, if (x) a Term Loan, equal to
$5,000,000 and integral multiples of $1,000,000 in excess of that amount and,
if (y) a Revolving Loan, equal to $500,000 and integral multiples of
$250,000 in excess of that amount, as a Eurodollar Rate Loan.


 


(b)           Borrower shall deliver a Conversion/Continuation Notice to
Administrative Agent no later than 10:00 a.m. (New York City time) at least
three Business Days in advance of the proposed conversion date (in the case of
a conversion to a Base Rate Loan) and at least three Business Days in advance
of the proposed conversion/continuation date (in the case of a conversion to,
or a continuation of, a Eurodollar Rate Loan). Except as otherwise provided
herein, a Conversion/Continuation Notice for conversion to, or continuation of,
any Eurodollar Rate Loans shall be irrevocable on and after the related
Interest Rate Determination Date, and Borrower shall be bound to effect a
conversion or continuation in accordance therewith.


 


Section 2.22         Default Interest.


 


Upon the occurrence and during the continuance of an
Event of Default, the principal amount of all Loans outstanding and, to the
extent permitted by applicable law, any interest payments on the Loans or any
fees or other amounts owed hereunder, shall thereafter bear interest (including
post-petition interest in any proceeding under the Bankruptcy Code or other
applicable bankruptcy laws) payable on demand at a rate that is 2% per annum in
excess of the interest rate otherwise payable hereunder with respect to the
applicable Loans (or, in the case of any such fees and other amounts, at a rate
which is 2% per annum in excess of the interest rate otherwise payable
hereunder for Base Rate Loans); provided, in the case of Eurodollar Rate
Loans, upon the expiration of the Interest Period in effect at the time any
such increase in interest rate is effective such Eurodollar Rate Loans shall
thereupon become Base Rate Loans and shall thereafter bear interest payable
upon demand at a rate which is 2% per annum in excess of the interest rate
otherwise payable hereunder for Base Rate Loans. Payment or acceptance of the
increased rates of interest provided for in this Section 2.22 is not a
permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent or any Lender.


 


45

















 


Section 2.23         Fees.


 


(a)           Borrower agrees to pay to Lenders having Revolving Exposure:


 


(i)            commitment
fees equal to (1) the average of the daily difference between (A) the
Revolving Commitments, and (B) the sum of (x) the aggregate principal
amount of outstanding Revolving Loans (but not any outstanding Swing Line
Loans) plus (y) the Letter of Credit Usage, times (2) the Applicable
Revolving Commitment Fee Percentage; and


 


(ii)           letter
of credit fees equal to (1) the Applicable Margin for Revolving Loans that
are Eurodollar Rate Loans, times (2) the average aggregate daily maximum
amount available to be drawn under all such Letters of Credit (regardless of
whether any conditions for drawing could then be met and determined as of the
close of business on any date of determination).


 


All fees referred to in this
Section 2.23(a) shall be paid to Administrative Agent at its Principal Office
and upon receipt, Administrative Agent shall promptly distribute to each Lender
its Pro Rata Share thereof.


 


(b)           Borrower agrees to pay directly to Issuing Bank, for its own
account, the following fees:


 


(i)            a
fronting fee equal to 0.25%, per annum, times the average aggregate daily
maximum amount available to be drawn under all Letters of Credit (determined as
of the close of business on any date of determination); and


 


(ii)           such
documentary and processing charges for any issuance, amendment, transfer or
payment of a Letter of Credit as are in accordance with Issuing Bank’s standard
schedule for such charges and as in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.


 


(c)           Prior to the Delayed Draw Term Loan Commitment Termination
Date, Borrower agrees to pay to Lenders having Delayed Draw Term Loan Exposure
commitment fees equal to (1) the average of the daily difference between
(A) the Delayed Draw Term Loan Commitments, and (B) the aggregate
principal amount of outstanding Delayed Draw Term Loans, times (2) 1.25%
per annum.


 


(d)           All fees referred to in Section 2.23(a) and 2.23(b)(i) shall
be calculated on the basis of a 360-day year and the actual number of days
elapsed and shall be payable quarterly in arrears on the last Business Day of
each of the months of March, June, September and December of each year
during the Revolving Commitment Period, commencing on the first such date to
occur after the Closing Date, and on the Revolving Commitment Termination Date.


 


(e)           All fees referred to in Section 2.23(c) shall be calculated
on the basis of a 360-day year and the actual number of days elapsed and shall
be payable quarterly in arrears on the last Business Day of each of the months
of March, June, September and December of each year during the Delayed Draw Term
Loan Commitment Period, commencing on the first such date to occur after the
Closing Date and terminating on the Delayed Draw Term Loan Commitment
Termination Date. All fees referred to in Section 2.23(c) shall be paid to
Administrative Agent at its Principal Office and upon receipt, Administrative
Agent shall promptly distribute to each Lender its Pro Rata Share thereof.


 


46

















 


(f)            In addition to any of the foregoing fees, Borrower agrees to
pay to Agents (i) all accrued fees and expenses of each Agent, the Lead
Arranger and the Lenders (including the reasonable fees and expenses of counsel
for each Agent and Lead Arranger and any local counsel for Administrative Agent
and Lead Arranger), and (ii) such other reasonable fees in the amounts and
at the times separately agreed upon.


 


Section 2.24         Scheduled Installments.


 


The principal amounts of the Initial Term Loans and
Delayed Draw Term Loans shall be repaid in consecutive quarterly installments
(each, an “Installment”) in the aggregate percentages (in the case of
the Initial Term Loans, based on the aggregate Initial Term Loans on the
Closing Date, and subject to Section 2.01(c), in the case of the Delayed Draw
Term Loans, based on the aggregate Delayed Draw Term Loans on the applicable
Delayed Draw Term Loan Credit Date) set forth below on the last day of each
Fiscal Quarter or, if such day is not a Business Day, the immediately preceding
Business Day (each, an “Installment Date”), commencing March 31, 2008 in
the case of the Initial Term Loans, and commencing September 30, 2008, in the
case of each applicable Delayed Draw Term Loan:


 


	
  FISCAL
  QUARTER

  	
   

  	
  INITIAL TERM
  LOAN AND DELAYED DRAW

  TERM LOAN INSTALLMENTS

  	
   

  
	
  March 31,
  2008

  	
   

  	
  0.625

  	
  %

  
	
  June 30,
  2008

  	
   

  	
  0.625

  	
  %

  
	
  September
  30, 2008

  	
   

  	
  0.625

  	
  %

  
	
  December 31,
  2008

  	
   

  	
  0.625

  	
  %

  
	
  March 31,
  2009

  	
   

  	
  0.625

  	
  %

  
	
  June 30,
  2009

  	
   

  	
  0.625

  	
  %

  
	
  September
  30, 2009

  	
   

  	
  0.625

  	
  %

  
	
  December 31,
  2009

  	
   

  	
  0.625

  	
  %

  
	
  March 31,
  2010

  	
   

  	
  0.625

  	
  %

  
	
  June 30,
  2010

  	
   

  	
  0.625

  	
  %

  
	
  September
  30, 2010

  	
   

  	
  0.625

  	
  %

  
	
  December 31,
  2010

  	
   

  	
  0.625

  	
  %

  
	
  March 31,
  2011

  	
   

  	
  1.25

  	
  %

  
	
  June 30,
  2011

  	
   

  	
  1.25

  	
  %

  
	
  September
  30, 2011

  	
   

  	
  1.25

  	
  %

  
	
  December 31,
  2011

  	
   

  	
  1.25

  	
  %

  
	
  March 31,
  2012

  	
   

  	
  1.25

  	
  %

  



 


47

















 


	
  FISCAL
  QUARTER

  	
   

  	
  INITIAL TERM
  LOAN AND DELAYED DRAW

  TERM LOAN INSTALLMENTS

  	
   

  
	
  June 30,
  2012

  	
   

  	
  1.25

  	
  %

  
	
  September
  30, 2012

  	
   

  	
  1.25

  	
  %

  
	
  December 31,
  2012

  	
   

  	
  1.25

  	
  %

  
	
  March 31,
  2013

  	
   

  	
  1.25

  	
  %

  
	
  June 30,
  2013

  	
   

  	
  1.25

  	
  %

  
	
  September
  30, 2013

  	
   

  	
  1.25

  	
  %

  
	
  Initial Term
  Loan Maturity Date and Delayed Draw Term Loan Maturity Date, as applicable

  	
   

  	
  All remaining unpaid principal amounts of
  the Initial Term Loans and Delayed Draw Term Loans, as applicable

  	
   

  



 


Notwithstanding the foregoing, (x) such
Installments shall be reduced in connection with any voluntary or mandatory
prepayments of the Initial Term Loans  or
the Delayed Draw Term Loans, as the case may be, in accordance with
Sections 2.25 and 2.27, as applicable; and (y) the Initial Term Loans
and the Delayed Draw Term Loans, together with all other amounts owed hereunder
with respect thereto, shall, in any event, be paid in full no later than the
Initial Term Loan Maturity Date and the Delayed Draw Term Loan Maturity Date,
respectively.


 


Section 2.25         Voluntary Prepayments.


 


(a)           Any time and from time to time, subject to Section 2.33, in
whole or in part, without premium or penalty:


 


(i)            with
respect to Base Rate Loans, Borrower may prepay any such Loans on any Business
Day in whole or in part, if in part in an aggregate minimum amount of
(x) $1,000,000 and integral multiples of $100,000 in excess of that amount
in respect of Term Loans and (y) $250,000 and integral multiples of
$100,000 in excess of that amount in respect of Revolving Loans;


 


(ii)           with
respect to Eurodollar Rate Loans, Borrower may prepay any such Loans on any
Business Day in whole or in part, if in part in an aggregate minimum amount of
(x) $5,000,000 and integral multiples of $100,000 in excess of that amount
in respect of Term Loans and (y) $500,000 and integral multiples of
$100,000 in excess of that amount in respect of Revolving Loans; and


 


(iii)          with
respect to Swing Line Loans, Borrower may prepay any such Loans on any Business
Day in whole or in part, if in part in an aggregate minimum amount of $100,000,
and integral multiples of $50,000 in excess of that amount.


 


(b)           All such prepayments shall be made:


 


(i)            upon
not less than one Business Day’s prior written notice in the case of Base Rate
Loans;


 


48

















 


(ii)           upon
not less than three Business Days’ prior written notice in the case of Eurodollar
Rate Loans, unless Borrower compensates each Lender pursuant to Section 2.33(c)
for any losses, expenses or liabilities resulting from making such prepayments
on shorter notice; and


 


(iii)          upon
written notice on the date of prepayment, in the case of Swing Line Loans;


 


in each case given in the
form of a Prepayment Notice to Administrative Agent or Swing Line Lender, as
the case may be, by 12:00 p.m. (New York City time) on the date required (and
Administrative Agent will promptly transmit such notice for Term Loans or
Revolving Loans, as the case may be, by telefacsimile or telephone to each
Lender) or Swing Line Lender, as the case may be. Upon the giving of any such
notice, the principal amount of the Loans specified in such notice shall become
due and payable on the prepayment date specified therein; provided that
if a notice of prepayment is given in connection with a conditional notice of
reduction of all Commitments to zero as contemplated by Section 2.26(c), then
such notice of prepayment may be revoked if such notice of reduction is revoked
in accordance with Section 2.26(c).


 


Section 2.26         Voluntary Commitment
Reductions.


 


(a)           Borrower may, upon not less than three Business Days’ prior
written notice to Administrative Agent (which notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each applicable Lender), at
any time and from time to time terminate in whole or permanently reduce in
part, without premium or penalty, (i) the Revolving Commitments in an
amount up to the amount by which the Revolving Commitments exceed the Total
Utilization of Revolving Commitments at the time of such proposed termination
or reduction, or (ii) the undrawn Delayed Draw Term Loan Commitments;
provided, any such partial reduction of the Revolving Commitments shall be in
an aggregate minimum amount of $500,000 and integral multiples of $100,000 in
excess of that amount.


 


(b)           Borrower’s notice to Administrative Agent shall designate the
date (which shall be a Business Day) of such termination or reduction and the
amount of any partial reduction, and such termination or reduction of the
Revolving Commitments or the Delayed Draw Term Loan Commitments, as applicable,
shall be effective on the date specified in Borrower’s notice and shall reduce
the Revolving Commitment or the Delayed Draw Term Loan Commitments, as
applicable, of each Lender proportionately to its Pro Rata Share thereof.


 


(c)           Any notice of reduction of Commitments to zero may state that
such notice is conditioned upon the effectiveness of other credit facilities or
financings, in which case such notice may be revoked by Borrower (by notice to
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied.


 


Section 2.27         Mandatory Prepayments.


 


(a)           Asset Sales. No later
than the second Business Day following the date of receipt by Borrower or any
of its Subsidiaries of any Net Asset Sale Proceeds, Borrower shall prepay the
Loans as set forth in Section 2.30(b) in an aggregate amount equal to such Net
Asset Sale Proceeds; provided, so long as no Default or Event of Default
shall have occurred and be continuing, Borrower shall have the option, directly
or through one or more of its Subsidiaries, within 365 days after receipt
thereof to consummate a Permitted Acquisition using such Net Asset Sale
Proceeds or to invest any Net Asset Sale Proceeds in assets of the general type
used in the business of Borrower and its Subsidiaries; provided


 


49

















 


further, notwithstanding any plan to make any such investment, all
such Net Asset Sale Proceeds shall be applied not later than the second
Business Day following the date of receipt by Borrower to prepay Revolving
Loans to the extent outstanding (without a reduction in Revolving Commitments).


 


(b)           Insurance/Condemnation Proceeds. No later than the second Business Day following the date of
receipt by Borrower or any of its Subsidiaries, or Administrative Agent as loss
payee, of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the
Loans as set forth in Section 2.30(b) in an aggregate amount equal to such Net
Insurance/Condemnation Proceeds; provided, so long as no Default or
Event of Default shall have occurred and be continuing, Borrower shall have the
option, directly or through one or more of its Subsidiaries, within 365 days
after receipt thereof, to invest any Net Insurance/Condemnation Proceeds in
assets of the general type used in the business of Borrower and its
Subsidiaries, which investment may include the repair, restoration or
replacement of the applicable assets thereof; provided  further,
notwithstanding any plan to make any such investment, all such Net
Insurance/Condemnation Proceeds, as the case may be, shall be applied not later
than the second Business Day following the date of receipt by Borrower to
prepay Revolving Loans to the extent outstanding (without a reduction in
Revolving Commitments).


 


(c)           Issuance of Equity Securities.
Not later than the second Business Day following receipt by Borrower of any
cash proceeds from a capital contribution to, or the issuance of any Capital
Stock of, Borrower or any of its Subsidiaries (other than pursuant to (i) any
employee stock or stock option compensation plan or an employment agreement or
(ii) the issuance of common Capital Stock of Borrower upon the exercise of the
Warrants to the extent such issuance results in cash proceeds in excess of the
amount of the Restricted Junior Payment permitted to be paid to the holders of
such Warrants pursuant to Section 6.04(g)), Borrower shall prepay the Loans as
set forth in Section 2.30(b) in an aggregate amount equal to 50% of such
proceeds, net of underwriting discounts and commissions and other reasonable
costs and expenses associated therewith, including reasonable legal fees and
expenses.


 


(d)           Issuance of Debt. On the
date of receipt by Borrower or any of its Subsidiaries of any cash proceeds
from incurrence of any Indebtedness of Borrower or any of its Subsidiaries
(other than with respect to any Indebtedness permitted to be incurred pursuant
to Section 6.01), Borrower shall prepay the Loans as set forth in Section
2.30(b) in an aggregate amount equal to 100% of such proceeds, net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses.


 


(e)           Consolidated Excess Cash Flow.
In the event that there shall be Consolidated Excess Cash Flow for any Fiscal
Year (commencing with Fiscal Year 2008), Borrower shall, no later than 105 days
after the end of such Fiscal Year, prepay the Loans as set forth in Section
2.30(b) in an aggregate amount equal to 75% of such Consolidated Excess Cash
Flow; provided that if on the last day of such Fiscal Year (commencing
with Fiscal Year 2009) the Total Leverage Ratio (determined for any such period
by reference to the most recent Compliance Certificate delivered pursuant to
Section 5.01(d) calculating the Total Leverage Ratio) shall be 3.75:1.00
or less, Borrower shall only be required to make the prepayments and/or
reductions otherwise required hereby in an amount equal to 50% of such
Consolidated Excess Cash Flow.


 


(f)            Available Warrant Credit. In the event
that the Borrower elects to utilize the Available Warrant Credit in order to
make a Permitted Acquisition, Borrower shall, no later than concurrently with
the making of such Permitted Acquisition, prepay the Loans as set forth in
Section 2.30(b) in an aggregate amount equal to the amount of the Available
Warrant Credit being utilized to make such Permitted Acquisition pursuant to
clause (h) of the definition of “Permitted Acquisition”; provided that,
three Business Days prior to the making of such Permitted Acquisition, Borrower
shall deliver to the Administrative Agent a certificate of an Authorized
Officer of Borrower stating the


 


50

















 


aggregate consideration necessary to consummate such
Permitted Acquisition and setting forth a calculation of the Available Warrant Credit
immediately before and immediately after such Permitted Acquisition and the
repayment required pursuant to this Section 2.27(f).


 


Section 2.28         Mandatory Commitment
Reductions of Revolving Loans.


 


Borrower shall from time to time prepay first, the Swing Line Loans, and second,
the Revolving Loans to the extent necessary so that the Total Utilization of
Revolving Commitments shall not at any time exceed the Revolving Commitments
then in effect.


 


Section 2.29         Prepayment Certificate.


 


Concurrently with any prepayment of the Loans and/or
reduction of the Revolving Commitments pursuant to Section 2.27, Borrower shall
deliver to Administrative Agent a certificate of an Authorized Officer
demonstrating the calculation of the amount of the applicable net proceeds or
Consolidated Excess Cash Flow, as the case may be. In the event that Borrower
shall subsequently determine that the actual amount received exceeded the
amount set forth in such certificate, Borrower shall promptly make an
additional prepayment of the Loans and/or the Revolving Commitments shall be
permanently reduced in an amount equal to such excess, and Borrower shall
concurrently therewith deliver to Administrative Agent a certificate of an
Authorized Officer demonstrating the derivation of such excess.


 


Section 2.30         Application of
Prepayments/Reductions.


 


(a)           Application of Voluntary Prepayments by Type of Loans. Any prepayment of any Loan pursuant to Section 2.25 shall
be applied as specified by Borrower in the applicable Prepayment Notice; provided,
in the event Borrower fails to specify the Loans to which any such prepayment
shall be applied, such prepayment shall be applied as follows:


 


First, to repay
outstanding Swing Line Loans to the full extent thereof;


 


Second, to repay
outstanding Revolving Loans to the full extent thereof; and


 


Third, to prepay the
Term Loans on a pro rata basis (in accordance with the respective outstanding
principal amounts thereof).


 


Any prepayment of any Term
Loans pursuant to Section 2.25 shall be further applied on a pro rata basis to
reduce the scheduled remaining Installments of principal on such Term Loans as
set forth in Section 2.25.


 


(b)           Application of Mandatory Prepayments by Type of Loans. Any amount required to be paid pursuant to Section 2.27
shall be applied as follows:


 


First, to prepay
Term Loans on a pro rata basis (in accordance with the respective outstanding
principal amounts thereof) and shall be further applied on a pro rata basis to
the remaining scheduled Installments of principal of the Term Loans as set
forth in Section 2.25 and to further permanently reduce any Term Loan
Commitments by the amount of such prepayment (if applicable);


 


Second, to prepay the
Swing Line Loans to the full extent thereof;


 


51

















 


Third, to prepay the
Revolving Loans to the full extent thereof;


 


Fourth, to prepay the
Second Lien Term Loans to the full extent thereof; and


 


Fifth, to
permanently reduce the Revolving Commitments to the full extent thereof.


 


(c)           Application of Prepayments of Loans to Base Rate Loans and
Eurodollar Rate Loans. Considering
each Class of Loans being prepaid separately, any prepayment thereof shall be
applied first to Base Rate Loans to the full extent thereof before application
to Eurodollar Rate Loans, in each case in a manner which minimizes the amount
of any payments required to be made by Borrower pursuant to Section 2.33(c).


 


Section 2.31         General Provisions
Regarding Payments.


 


(a)           All payments by Borrower of principal, interest, fees and
other Obligations shall be made in Dollars in same day funds, without defense,
setoff or counterclaim, free of any restriction or condition, and delivered to
Administrative Agent not later than 1:00 p.m. (New York City time) on the date
due at the Administrative Agent’s Principal Office for the account of Lenders;
funds received by Administrative Agent after that time on such due date shall
be deemed to have been paid by Borrower on the next succeeding Business Day.


 


(b)           All payments in respect of the principal amount of any Loan
(other than voluntary prepayments of Revolving Loans) shall include payment of
accrued interest on the principal amount being repaid or prepaid, and all such
payments (and, in any event, any payments in respect of any Loan on a date when
interest is due and payable with respect to such Loan) shall be applied to the
payment of interest before application to principal.


 


(c)           Administrative Agent (or its agent or sub-agent appointed by
it) shall promptly distribute to each Lender at such address as such Lender
shall indicate in writing, such Lender’s applicable Pro Rata Share of all
payments and prepayments of principal and interest due hereunder, together with
all other amounts due thereto, including all fees payable with respect thereto,
to the extent received by Administrative Agent.


 


(d)           Notwithstanding the foregoing provisions hereof, if any
Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.


 


(e)           Subject to the provisos set forth in the definition of “Interest
Period”, whenever any payment to be made hereunder shall be stated to be due on
a day that is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or of the Revolving Commitment
fees hereunder.


 


(f)            Administrative Agent shall deem any payment by or on behalf
of Borrower hereunder that is not made in same day funds prior to 1:00 p.m.
(New York City time) to be a non-conforming payment. Any such payment shall not
be deemed to have been received by Administrative Agent until the later of
(i) the time such funds become available funds, and (ii) the
applicable next Business Day. Administrative Agent shall give prompt telephonic
notice to Borrower and each applicable Lender (confirmed in writing) if any
payment is non-conforming. Any non-conforming payment may


 


52

















 


constitute or become a Default or
Event of Default in accordance with the terms of Section 8.01(a). Interest
shall continue to accrue on any principal as to which a non-conforming payment
is made until such funds become available funds (but in no event less than the
period from the date of such payment to the next succeeding applicable Business
Day) at the rate determined pursuant to Section 2.22 from the date such amount
was due and payable until the date such amount is paid in full.


 


(g)           If an Event of Default shall have occurred and not otherwise
been waived, and the maturity of the Obligations shall have been accelerated
pursuant to Section 8.01, all payments or proceeds received by Agents hereunder
in respect of any of the Obligations, shall be applied in accordance with the
application arrangements described in Section 7.02 of the Pledge and Security
Agreement.


 


Section 2.32         Sharing of Payments by
Lenders.


 


Except as otherwise provided in the Collateral
Documents with respect to amounts realized from the exercise of rights with
respect to Liens on Collateral if any Lender shall, by exercising any right of
setoff or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of its Loans or other obligations hereunder resulting in
such Lender’s receiving payment of a proportion of the aggregate amount of its
Loans and accrued interest thereon or other such obligations greater than its
Pro Rata Share, then the Lender receiving such greater proportion shall
(a) notify Administrative Agent of such fact, and (b) purchase (for
cash at face value) participations in the Loans and such other obligations of
the other Lenders, or make such other adjustments as shall be equitable, so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and other amounts owing them; provided that:


 


(i)            if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest,
and


 


(ii)           the
provisions of this paragraph shall not be construed to apply to (x) any
payment made by Borrower pursuant to and in accordance with the express terms
of this Agreement or (y) any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans or
participations in Letters of Credit to any assignee or participant, other than
to Borrower or any Subsidiary thereof (as to which the provisions of this
paragraph shall apply).


 


Each Loan Party consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against Borrower rights of setoff and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of each
Loan Party in the amount of such participation.


 


Section 2.33         Making or Maintaining
Eurodollar Rate Loans.


 


(a)           Inability to Determine Applicable Interest Rate. In the event that Administrative Agent shall have
determined (which determination shall be final and conclusive and binding upon
all parties hereto), on any Interest Rate Determination Date with respect to
any Eurodollar Rate Loans, that by reason of circumstances affecting the London
interbank market adequate and fair means do not exist for ascertaining the
interest rate applicable to such Loans on the basis provided for in the
definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date
give notice (by telefacsimile or by telephone confirmed in writing) to Borrower
and each Lender of such determination,


 


53

















 


whereupon (i) no Loans may be
made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Borrower and Lenders that the circumstances
giving rise to such notice no longer exist, and (ii) any Funding Notice or
Conversion/Continuation Notice given by Borrower with respect to the Loans in
respect of which such determination was made shall be deemed to be rescinded by
Borrower unless Borrower delivers written notice to Administrative Agent that
it desires to have the Loans funded or continued, as the case may be, as Base
Rate Loans, in which case they shall be so funded or continued, as the case may
be.


 


(b)           Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any date any Lender shall have
determined (which determination shall be final and conclusive and binding upon
all parties hereto but shall be made only after consultation with Borrower and
Administrative Agent) that the making, maintaining or continuation of its
Eurodollar Rate Loans (i) has become unlawful as a result of compliance by
such Lender in good faith with any law, treaty, governmental rule, regulation, guideline
or order (or would conflict with any such treaty, governmental rule,
regulation, guideline or order not having the force of law even though the
failure to comply therewith would not be unlawful), or (ii) has become
impracticable, as a result of contingencies occurring after the date hereof
which materially and adversely affect the London interbank market, then, and in
any such event, such Lender shall be an “Affected Lender” and it shall
on that day give written notice (by telefacsimile) to Borrower and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter (1) the
obligation of the Affected Lender to make Loans as, or to convert Loans to,
Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn
by the Affected Lender, (2) to the extent such determination by the
Affected Lender relates to a Eurodollar Rate Loan then being requested by
Borrower pursuant to a Funding Notice or a Conversion/Continuation Notice, the
Affected Lender shall make such Loan as (or continue such Loan as or convert
such Loan to, as the case may be) a Base Rate Loan, (3) the Affected
Lender’s obligation to maintain its outstanding Eurodollar Rate Loans (the “Affected
Loans”) shall be terminated at the earlier to occur of the expiration of
the Interest Period then in effect with respect to the Affected Loans or when
required by law, and (4) the Affected Loans shall automatically convert
into Base Rate Loans on the date of such termination. Notwithstanding the
foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Borrower
pursuant to a Funding Notice or a Conversion/Continuation Notice, Borrower shall
have the option, subject to the provisions of Section 2.33(c), to rescind
such Funding Notice or Conversion/Continuation Notice as to all Lenders by
giving written notice (by telefacsimile) to Administrative Agent of such
rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Administrative
Agent shall promptly transmit to each other Lender). Except as provided in the
immediately preceding sentence, nothing in this Section 2.33(b) shall affect
the obligation of any Lender other than an Affected Lender to make or maintain
Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the
terms hereof.


 


(c)           Compensation for Breakage or Non-Commencement of Interest Periods. Borrower shall compensate each Lender, upon written request
by such Lender (which request shall set forth the basis for requesting such
amounts), for all reasonable losses, expenses and liabilities (including any
interest paid by such Lender to lenders of funds borrowed by it to make or
carry its Eurodollar Rate Loans and any loss, expense or liability sustained by
such Lender in connection with the liquidation or re-employment of such funds
but excluding loss of anticipated profits) which such Lender may sustain:  (i) if for any reason (other than a
default by Administrative Agent or such Lender) a borrowing of any Eurodollar
Rate Loan does not occur on a date specified therefor in a Funding Notice, or a
conversion to or continuation of any Eurodollar Rate Loan does not occur on a
date specified therefor in a Conversion/Continuation Notice; (ii) if any
prepayment or other principal payment or any conversion of any of its
Eurodollar Rate Loans occurs on a date prior to the last day of an Interest
Period applicable to that Loan; (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in


 


54

















 


a Prepayment Notice given by
Borrower; or (iv) if any prepayment of any of its Eurodollar Rate Loans is made
on less than three Business Days’ written notice pursuant to Section
2.25(b)(ii).


 


(d)           Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer Eurodollar Rate
Loans at, to, or for the account of any of its branch offices or the office of
an Affiliate of such Lender.


 


(e)           Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under this
Section 2.33 and under Sections 2.34 and 2.35 shall be made as though such Lender
had actually funded each of its relevant Eurodollar Rate Loans through the
purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant
to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal
to the amount of such Eurodollar Rate Loan and having a maturity comparable to
the relevant Interest Period and through the transfer of such Eurodollar
deposit from an offshore office of such Lender to a domestic office of such
Lender in the United States of America; provided, however, each
Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of
calculating amounts payable under this Section 2.33 and under Section 2.34 and
2.35.


 


Section 2.34         Compensation For Increased
Costs.


 


If any Change in Law shall:


 


(i)            impose,
modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for
the account of, or credit extended or participated in by, any Lender (except
any reserve requirement reflected in the definition of Adjusted Eurodollar
Rate) or the Issuing Bank;


 


(ii)           subject
any Lender or the Issuing Bank to any tax of any kind whatsoever with respect
to this Agreement, any Letter of Credit, any participation in a Letter of
Credit or any Eurodollar Rate Loan made by it, or change the basis of taxation
of payments to such Lender or the Issuing Bank in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 2.36 and changes in the
rate of any Excluded Tax payable by such Lender or the Issuing Bank); or


 


(iii)          impose
on any Lender or the Issuing Bank or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Rate Loans
made by such Lender or any Letter of Credit or participation therein;


 


and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any Eurodollar Rate Loan (or of maintaining its obligation to make any such
Loan), or to increase the cost to such Lender or the Issuing Bank of
participating in, issuing or maintaining any Letter of Credit (or of
maintaining its obligation to participate in or to issue any Letter of Credit),
or to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or any other amount),
then upon request of such Lender or the Issuing Bank, Borrower will pay to such
Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank, as the case may be,
for such additional costs incurred or reduction suffered. Such Lender will
provide Borrower with reasonable calculation of any such increased costs and a
description of the reasons therefor.


 


55

















 


Section 2.35         Capital Requirements;
Certificates for Reimbursement; Delay in Requests.


 


(a)           Capital Requirements.
If any Lender or the Issuing Bank determines that any Change in Law affecting
such Lender or the Issuing Bank or any lending office of such Lender or such
Lender’s or the Issuing Bank’s holding company, if any, regarding capital
requirements has or would have the effect of reducing the rate of return on
such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s
or the Issuing Bank’s holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such Lender’s
or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing
Bank’s holding company with respect to capital adequacy), then from time to
time Borrower will pay to such Lender or the Issuing Bank, as the case may be,
such additional amount or amounts as will compensate such Lender or the Issuing
Bank or such Lender’s or the Issuing Bank’s holding company for any such
reduction suffered.


 


(b)           Certificates for Reimbursement.
A certificate of a Lender or the Issuing Bank setting forth the amount or
amounts necessary to compensate such Lender or the Issuing Bank or its holding
company, as the case may be, as specified in Sections 2.34 and 2.35(a) and
delivered to Borrower shall be conclusive absent manifest error, and shall also
include reasonable back-up or other evidence relating to the information
contained therein. Borrower shall pay such Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days after
receipt thereof.


 


(c)           Delay in Requests. Failure
or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to Sections 2.34, 2.35 and 2.36 shall not constitute a waiver of such
Lender’s or the Issuing Bank’s right to demand such compensation, provided
that Borrower shall not be required to compensate a Lender or the Issuing Bank
pursuant to Sections 2.34, 2.35 and 2.36 for any increased costs incurred or
reductions suffered more than six months prior to the date that such Lender or
the Issuing Bank, as the case may be, notifies Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender’s or the
Issuing Bank’s intention to claim compensation therefor (except that, if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the six-month period referred to above shall be extended to include the
period of retroactive effect thereof).


 


Section 2.36         Taxes.


 


(a)           Payments Free of Taxes.
Any and all payments by or on account of any obligation of Borrower hereunder
or under any other Loan Document shall be made free and clear of and without
reduction or withholding for any Indemnified Taxes or Other Taxes, provided
that if any Person shall be required by applicable law to deduct any
Indemnified Taxes (including any Other Taxes) from such payments, then
(i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.36) each Agent, Lender or Issuing Bank, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions been made, (ii) Borrower shall make such deductions and
(iii) Borrower shall timely pay or cause to be paid the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.


 


(b)           Payment of Other Taxes by Borrower. Without limiting the provisions of paragraph (a) above,
Borrower shall timely pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.


 


 


56

















 


(c)           Indemnification by Borrower.
Borrower shall indemnify each Agent, each Lender and the Issuing Bank, within
10 days after demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section 2.36) paid by such Agent,
such Lender, or the Issuing Bank, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to Borrower by an Agent, a
Lender or the Issuing Bank (with a copy to Administrative Agent), or by
Administrative Agent on its own behalf or on behalf of an Agent, a Lender, the
Swing Line Lender or the Issuing Bank, shall be conclusive absent manifest
error.


 


(d)           Evidence of Payments.
As soon as practicable after any payment of Indemnified Taxes or Other Taxes by
Borrower to a Governmental Authority, Borrower shall deliver to Administrative
Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to Administrative
Agent. Borrower shall indemnify each Agent, each Lender and Issuing Bank,
within 10 days after written demand therefor, for the full amount of any
incremental taxes, interest and penalties that may become payable by such
Agent, such Lender, or Issuing Bank as a result of Borrower’s failure to remit
the required receipts or other required documentary evidence.


 


(e)           Foreign Lenders. Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the United States, or any treaty to which the
United States is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to Borrower (with a copy to Administrative Agent),
at the time or times prescribed by applicable law and reasonably requested in
writing by Borrower or Administrative Agent (it being understood that this
Section 2.36(e) shall constitute a written request for the applicable forms and
certificates described in Section 2.36(e)(i) through (iv)), such properly
completed and executed documentation prescribed by applicable law as will
permit such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if requested in writing by Borrower or
Administrative Agent, shall deliver such other documentation prescribed by
applicable law and reasonably requested in writing by Borrower or
Administrative Agent as will enable Borrower or Administrative Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements.


 


Without limiting the generality of the foregoing,
any Foreign Lender shall deliver to Borrower and Administrative Agent on or
prior to the date on which such Foreign Lender becomes a Lender under this
Agreement (and from time to time thereafter upon the written request of Borrower
or Administrative Agent), but only if such Foreign Lender is legally entitled
to do so, two copies of whichever of the following is applicable:


 


(i)            duly
completed original copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,


 


(ii)           duly
completed original copies of Internal Revenue Service Form W-8ECI,


 


(iii)          duly
completed original copies of Internal Revenue Service Form W-8IMY, together
with all applicable accompanying forms, certificates and statements required by
that Form W-81MY;


 


57

















 


(iv)          in
the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Internal Revenue Code,
(x) a certificate to the effect that such Foreign Lender is not (A) a
“bank” within the meaning of section 881(c)(3)(A) of the Internal Revenue Code,
(B) a “10 percent shareholder” of Borrower within the meaning of section
881(c)(3)(B) of the Internal Revenue Code, or (C) a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Internal Revenue Code and
(y) duly completed copies of Internal Revenue Service Form W-8BEN, or


 


(v)           any
other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together
with such supplementary documentation as may be prescribed by applicable law to
permit Borrower to determine the withholding or deduction required to be made.


 


Each Lender shall promptly
notify Borrower and Administrative Agent at any time it determines that it is
no longer in a position to provide any previously delivered form or certificate
to Borrower (or any other form of certification adopted by the taxing
authorities for such purpose).


 


(f)            Domestic Lenders. Each
Lender that is a “United States person” within the meaning of Section 7701(a)(30)
of the Internal Revenue Code shall deliver to the Administrative Agent two duly
signed completed originals of Internal Revenue Service Form W-9.


 


(g)           Treatment of Certain Refunds.
If an Agent, a Lender or the Issuing Bank determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by Borrower or with respect to which Borrower has paid
additional amounts pursuant to this Section, it shall pay to Borrower an amount
equal to such refund (but only to the extent of indemnity payments made, or
additional amounts paid, by Borrower under this Section 2.36 with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of such Agent, such Lender or the Issuing Bank, as the case may be,
and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided that Borrower, upon the
request of such Agent, such Lender or the Issuing Bank, agrees to repay the
amount paid over to Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to such Agent, such Lender or
the Issuing Bank in the event such Agent, such Lender or the Issuing Bank is
required to repay such refund to such Governmental Authority. This paragraph
shall not be construed to require any Agent, any Lender, the Swing Line Lender
or the Issuing Bank to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to Borrower or any other
Person.


 


Section 2.37         Mitigation Obligations;
Replacement of Lenders.


 


(a)           Designation of a Different Lending Office. If any Lender requests compensation under Section 2.34 or
2.35 or requires Borrower to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.36,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.34, 2.35 or 2.36 as
the case may be, in the future and (ii) would not subject such Lender to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender. Borrower hereby agrees to pay all reasonable and documented costs
and expenses incurred by any Lender in connection with any such designation or
assignment.


 


58

















 


(b)           Replacement of Lenders.
If (i) any Lender requests compensation under Section 2.34 or 2.35,
(ii) Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section
2.36, (iii) any Lender refuses to consent to an amendment, modification or
waiver required pursuant to Section 10.04 with respect to any Loan Document
which has otherwise been approved by Requisite Lenders or (iv) any Lender
becomes a Defaulting Lender pursuant to Section 2.38, then Borrower may, at its
sole expense and effort, upon notice to such Lender and Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions contained in, and consents required by,
Section 10.06), all of its interests, rights and obligations under this
Agreement and the related Loan Documents to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that:


 


(i)            Borrower
shall have paid to Administrative Agent the assignment fee specified in Section 10.06,


 


(ii)           such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in Letters of Credit, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder
and under the other Loan Documents (including, if applicable, any amounts under
Section 2.33(c)) from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or Borrower (in the case of all other
amounts),


 


(iii)          in
the case of any such assignment resulting from a claim for compensation under
Section 2.34 or 2.35 or payments required to be made pursuant to Section 2.36,
such assignment will result in a reduction in such compensation or payments
thereafter, and


 


(iv)          such
assignment does not conflict with applicable law.


 


A Lender shall not be required to make any such
assignment or delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling Borrower to require such
assignment and delegation cease to apply.


 


Section 2.38         Defaulting Lenders.


 


Anything contained herein to the contrary
notwithstanding, in the event that any Lender other than at the direction or
request of any regulatory agency or authority, defaults (a “Defaulting
Lender”) in its obligation to fund (a “Funding Default”) any
Revolving Loan or Delayed Draw Term Loan or its portion of any unreimbursed
payment under Section 2.06(d) (in each case, a “Defaulted Loan”), then
(a) during any Default Period with respect to such Defaulting Lender, such
Defaulting Lender shall be deemed not to be a “Lender” for purposes of voting
on any matters (including the granting of any amendments, consents or waivers)
with respect to any of the Loan Documents; (b) to the extent permitted by
applicable law, until such time as the Default Excess with respect to such
Defaulting Lender shall have been reduced to zero, (i) any voluntary
prepayment of the Revolving Loans or Delayed Draw Term Loans shall, if Borrower
so directs at the time of making such voluntary prepayment, be applied to the
Revolving Loans or Delayed Draw Term Loans of other Lenders as if such
Defaulting Lender had no Revolving Loans or Delayed Draw Term Loans outstanding
and the Revolving Exposure or Delayed Draw Term Loan Exposure, as applicable,
of such Defaulting


 


59

















 


Lender were zero, and
(ii) any mandatory prepayment of the Revolving Loans or Delayed Draw Term
Loans shall, if Borrower so directs at the time of making such mandatory
prepayment, be applied to the Revolving Loans or Delayed Draw Term Loans of
other Lenders (but not to the Revolving Loans or Delayed Draw Term Loans of
such Defaulting Lender) as if such Defaulting Lender had funded all Defaulted
Loans of such Defaulting Lender, it being understood and agreed that Borrower
shall be entitled to retain any portion of any mandatory prepayment of the
Revolving Loans or Delayed Draw Term Loans that is not paid to such Defaulting
Lender solely as a result of the operation of the provisions of this clause
(b); (c) such Defaulting Lender’s Revolving Commitment and outstanding
Revolving Loans and such Defaulting Lender’s Pro Rata Share of the Letter of
Credit Usage and such Defaulting Lender’s Delayed Draw Term Loan Commitments
and outstanding Delayed Draw Term Loans shall be excluded for purposes of
calculating the Revolving Commitment fee payable to Lenders in respect of any
day during any Default Period with respect to such Defaulting Lender, and such
Defaulting Lender shall not be entitled to receive any Revolving Commitment fee
or Delayed Draw Term Loan Commitment fee pursuant to Section 2.23 with respect
to such Defaulting Lender’s Revolving Commitment in respect of any Default
Period with respect to such Defaulting Lender; and (d) the Total
Utilization of Revolving Commitments as at any date of determination shall be
calculated as if such Defaulting Lender had funded all Defaulted Loans of such
Defaulting Lender. No Revolving Commitment or Delayed Draw Term Loan Commitment
of any Lender shall be increased or otherwise affected, and, except as
otherwise expressly provided in this Section 2.38, performance by Borrower of
its obligations hereunder and the other Loan Documents shall not be excused or
otherwise modified as a result of any Funding Default or the operation of this
Section 2.38. The rights and remedies against a Defaulting Lender under this
Section 2.38 are in addition to other rights and remedies which Borrower may
have against such Defaulting Lender with respect to any Funding Default and
which Administrative Agent or any Lender may have against such Defaulting
Lender with respect to any Funding Default.


 


Section 2.39         Incremental Revolving
Facility.


 


Borrower may by written notice to the Administrative
Agent elect to request, at any time (i) following the earlier of (A) the date
the Delayed Draw Term Loan Commitments are permanently reduced to zero pursuant
to Section 2.26 and (B) the second Delayed Draw Term Loan Credit Date (after
giving effect to such funding), and (ii) prior to the Revolving Commitment
Termination Date, an increase to the existing Revolving Commitments (any such
increase, the “New
Revolving Loan Commitments”) by an amount not in excess
of $20,000,000 in the aggregate and not less than $2,500,000 individually (or
such lesser amount which shall be approved by Administrative Agent or such
lesser amount that shall constitute the difference between $20,000,000 and all
such New Revolving Loan Commitments obtained prior to such date), and integral
multiples of $500,000 in excess of that amount, which shall be applied by
Borrower for working capital and general corporate purposes of Borrower and its
Subsidiaries. Each such notice shall specify (A) the date (each, an “Increased Amount Date”) on which Borrower proposes
that the New Revolving Loan Commitments shall be effective, which shall be a
date not less than 10 Business Days after the date on which such notice is
delivered to the Administrative Agent and (B) the identity of each Lender or
other Person that is an Eligible Assignee (each, a “New Revolving Loan Lender”) to whom Borrower proposes
any portion of such New Revolving Loan Commitments be allocated and the amounts
of such allocations; provided that the Administrative Agent may elect or
decline to arrange such New Revolving Loan Commitments in its sole discretion
and any Lender approached to provide all or a portion of the New Revolving Loan
Commitments may elect or decline, in its sole discretion, to provide a New
Revolving Loan Commitment. Such New Revolving Loan Commitments shall become
effective, as of such Increased Amount Date; provided that (1) no
Default or Event of Default shall exist on such Increased Amount Date before or
after giving effect to such New Revolving Loan Commitments; (2) Borrower and
its Subsidiaries shall be in pro forma compliance with each of the covenants
set forth in Section 6.07 as of the last day of the most recently ended Fiscal
Quarter for which financial statements have been provided pursuant to Section
5.01 after giving effect to such New Revolving Loan Commitments (assuming that
the corresponding Revolving Loans are borrowed in the amount requested on the
Increased Amount Date); (3) the New Revolving Loan Commitments shall be
effected pursuant to one or more Joinder Agreements executed and delivered by
Borrower, the New Revolving Loan Lender and Administrative Agent, and each of
which shall be recorded in the Register and each New Revolving


 


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Loan Lender shall be subject
to the requirements set forth in Section 2.36(e); (4) Borrower shall make
any payments required pursuant to Section 2.33(c) in connection with the New
Revolving Loan Commitments; and (5) Borrower shall deliver or cause to be
delivered any legal opinions or other documents reasonably requested by
Administrative Agent in connection with any such transaction.


 


On any Increased Amount Date on which New Revolving
Loan Commitments are effected, subject to the satisfaction of the foregoing
terms and conditions, (a) each of the Revolving Lenders shall assign to each of
the New Revolving Loan Lenders, and each of the New Revolving Loan Lenders
shall purchase from each of the Revolving Loan Lenders, at the principal amount
thereof (together with accrued interest), such interests in the Revolving Loans
outstanding on such Increased Amount Date as shall be necessary in order that,
after giving effect to all such assignments and purchases, such Revolving Loans
will be held by existing Revolving Loan Lenders and New Revolving Loan Lenders
ratably in accordance with their Revolving Commitments after giving effect to
the addition of such New Revolving Loan Commitments to the Revolving
Commitments, (b) each New Revolving Loan Commitment shall be deemed for all
purposes a Revolving Loan Commitment and each Loan made thereunder (a “New
Revolving Loan”) shall
be deemed, for all purposes, a Revolving Loan and (c) each New Revolving Loan
Lender shall become a Lender with respect to the New Revolving Loan Commitment
and all matters relating thereto.


 


Administrative Agent shall notify Lenders promptly
upon receipt of Borrower’s notice of each Increased Amount Date and in respect
thereof (y) the New Revolving Loan Commitments and the New Revolving Loan
Lenders and (z) in the case of each notice to any Revolving Loan Lender, the
respective interests in such Revolving Loan Lender’s Revolving Loans, in each
case subject to the assignments contemplated by this Section.


 


The terms and provisions of the New Revolving Loans
shall be identical to the Revolving Loans. Each Joinder Agreement may, without
the consent of any other Lenders, effect such amendments to this Agreement and the
other Credit Documents as may be necessary or appropriate, in the opinion of
Administrative Agent to effect the provision of this Section 2.39.


 


ARTICLE THREE

CONDITIONS PRECEDENT


 


Section 3.01         Closing Date.


 


The obligation of any Lender to make a Credit
Extension on the Closing Date is subject to the satisfaction, or waiver in
accordance with Section 10.04, of the following conditions on or before the
Closing Date:


 


(a)           Loan Documents. Administrative
Agent shall have received sufficient copies of each Loan Document originally
executed and delivered by each applicable Loan Party for each Lender.


 


(b)           Organizational Documents; Incumbency. Administrative Agent shall have received (i) copies of
each Organizational Document executed and delivered by each Loan Party, as
applicable, and, to the extent applicable, certified as of a recent date by the
appropriate governmental official, each dated the Closing Date or a recent date
prior thereto; (ii) signature and incumbency certificates of the officers
of such Person executing the Loan Documents to which it is a party;
(iii) resolutions of the Board of Directors of each Loan Party approving
and authorizing the execution, delivery and performance of this Agreement and
the other Loan Documents and the Related Agreements to which it is a party or
by which it or its assets may be bound as of the Closing Date, certified as of
the


 


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Closing Date by its secretary or an
assistant secretary as being in full force and effect without modification or
amendment; (iv) a good standing certificate from the applicable
Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization
or formation and in each jurisdiction in which it is qualified as a foreign
corporation or other entity to do business, each dated a recent date prior to
the Closing Date; and (v) such other documents as Administrative Agent may
reasonably request.


 


(c)           Organizational and Capital Structure. The organizational structure and capital structure of
Borrower and its Subsidiaries, both before and after giving effect to the  Transactions, shall be as set forth on Schedule 4.02. The
Administrative Agent shall have received reasonably satisfactory evidence that
all ownership interests in Borrower’s Subsidiaries (including Chem Rx) shall be
owned by Borrower or its Subsidiaries in each case free and clear of any lien,
charge, or encumbrance not permitted hereunder.


 


(d)           Consummation of Transactions Contemplated by Related
Agreements.


 


(i)            (1) All
conditions to the Acquisition set forth in each of the Stock Purchase
Agreement, the Merger Agreement and the Unit Redemption Agreement shall have
been satisfied or the fulfillment of any such conditions shall have been
waived, provided that no provision thereof shall have been waived in a manner
adverse to the Lenders without the consent of Administrative Agent, and
(2) the Acquisition shall have been consummated in accordance with the
terms thereof and in compliance with applicable law and regulatory approvals.


 


(ii)           The
Lenders shall be satisfied that the Equity Contribution shall have occurred.


 


(iii)          (1) The
Borrower shall have received the gross proceeds from the borrowings of the
Second Lien Term Loans in an aggregate amount in cash of not less than $37,000,000;
and (2) the Borrower shall have delivered to Administrative Agent
complete, correct and conformed copies of the Second Lien Credit Agreement.


 


(e)           Existing Indebtedness.
On the Closing Date, Borrower and its Subsidiaries shall have (i) repaid
in full all Existing Indebtedness, (ii) terminated any commitments to lend
or make other extensions of credit thereunder, (iii) delivered to
Administrative Agent all documents or instruments necessary to release all
Liens securing Existing Indebtedness or other obligations of Borrower and its
Subsidiaries thereunder being repaid on the Closing Date, (iv) made
arrangements reasonably satisfactory to Administrative Agent with respect to
the subordination of any existing liens on the Collateral made in favor of
certain vendors to the Borrower, and (v) made arrangements reasonably
satisfactory to Administrative Agent with respect to the cancellation of any
Existing Letters of Credit outstanding thereunder or the issuance of Letters of
Credit to support the obligations of Borrower and its Subsidiaries with respect
thereto.


 


(f)            Personal Property Collateral.
In order to create in favor of Collateral Agent, for the benefit of Secured
Parties, a valid, perfected First Priority security interest in the personal
property Collateral, Collateral Agent shall have received:


 


(i)            evidence
reasonably satisfactory to the Collateral Agent of the compliance by each Loan
Party of their obligations under the Pledge and Security Agreement and the
other Collateral Documents (including their obligations to authorize and
deliver UCC financing statements)


 


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(ii)           delivery
of originals of securities, promissory notes or instruments and chattel paper
to be pledged under the Pledge and Security Agreement;


 


(iii)          a
First Lien Trademark Security Agreement (the form of which is set forth as
Exhibit B to the Pledge and Security Agreement), completed, originally executed
and delivered by each applicable Loan Party; and


 


(iv)          a
completed Collateral Questionnaire dated the Closing Date and executed by an
Authorized Officer of each Loan Party, together with all attachments
contemplated thereby, including (A) the results of a recent search, by a
Person satisfactory to Collateral Agent, of all effective UCC financing
statements (or equivalent filings) made with respect to any personal or mixed
property of any Loan Party in the jurisdictions specified in the Collateral
Questionnaire, together with copies of all such filings disclosed by such
search, (B) the results of a recent search, by a Person satisfactory to
Collateral Agent, of all effective filings made with respect to any
Intellectual Property of any Loan Party in the United States Patent and
Trademark Office and Copyright Office and (B) UCC termination statements
(or similar documents) duly authorized by all applicable Persons for filing in
all applicable jurisdictions as may be necessary to terminate any effective UCC
financing statements (or equivalent filings) disclosed in such search (other
than any such financing statements in respect of Permitted Liens).


 


(g)           Financial Statements; Projections. Lenders shall have received from Borrower (i) the
Historical Financial Statements and (ii) the Projections.


 


(h)           Evidence of Insurance.
Collateral Agent shall have received evidence reasonably satisfactory to it
that all insurance required to be maintained pursuant to Section 5.05 is in
full force and effect and that Collateral Agent, for the benefit of Secured
Parties has been named as additional insured and loss payee, as applicable,
thereunder to the extent required under Section 5.05.


 


(i)            Opinions of Counsel to Loan Parties. Lenders and their respective counsel shall have received
originally executed copies of the favorable written opinions of Covington &
Burling LLP, counsel for Loan Parties and Troutman Sanders LLP, New Jersey
counsel for Loan Parties, as to such other matters as Administrative Agent may
reasonably request, dated as of the Closing Date and otherwise in form and
substance reasonably satisfactory to Administrative Agent (and each Loan Party
hereby instructs such counsel to deliver such opinions to Agents and Lenders).


 


(j)            Fees. Borrower
shall have paid to Administrative Agent, the fees payable on the Closing Date
referred to in Section 2.23.


 


(k)           Solvency Certificate.
On the Closing Date, Administrative Agent shall have received a Solvency
Certificate from Borrower affirming that immediately after giving effect to the
consummation of the Transactions, Borrower and its Subsidiaries are and will be
Solvent.


 


(l)            Closing Date Certificate.
Borrower shall have delivered to Administrative Agent an originally executed
Closing Date Certificate, together with all attachments thereto.


 


(m)          U.S.A. Patriot Act. The
Lenders shall have received all documentation and other information required by
bank regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including the U.S.A. Patriot Act.


 


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Each Lender, by delivering
its signature page to this Agreement, a Lender Addendum, an Assignment
Agreement or a Joinder Agreement and funding a Loan on the Closing Date or by
the funding of any Delayed Draw Term Loans or New Revolving Loans, as the case
may be, shall be deemed to have acknowledged receipt of, and consented to and
approved, each Loan Document and each other document required to be approved by
any Agent, Requisite Lenders or Lenders, as applicable on the Closing Date or
as of the date of funding of such Loans.


 


Section 3.02         Conditions
to Each Credit Extension.


 


(a)           Conditions Precedent.
The obligation of each Lender to make any Loan, or Issuing Bank to issue any
Letter of Credit, on any Credit Date, including the Closing Date and any
Delayed Draw Term Loan Credit Date, are subject to the satisfaction, or waiver
in accordance with Section 10.04, of the following conditions precedent:


 


(i)            Administrative
Agent shall have received a fully executed and delivered Funding Notice or
Issuance Notice, as the case may be;


 


(ii)           after
making the Credit Extensions requested on such Credit Date, the Total
Utilization of Revolving Commitments shall not exceed the Revolving Commitments
then in effect;


 


(iii)          as
of the Closing Date, (y) the representations and warranties made by Chem Rx in
the Stock Purchase Agreement and the Merger Agreement as are material to the
interests of the Lenders, but only to the extent that the Borrower has the
right to terminate its obligations under the Stock Purchase Agreement or the
Merger Agreement, respectively, as a result of breach of such representations
and warranties, and (z) the representations and warranties made in
Sections 4.01, 4.03,  4.06, 4.16 and 4.17
in each case shall be true and correct in all material respects on and as of
the Closing Date (or, if any such representation and warranty is expressly
stated to have been made as of a specific date, as of such specific date),


 


(iv)          as
of each Credit Date other than the Closing Date, the representations and
warranties contained herein and in the other Loan Documents shall be true and
correct in all material respects on and as of that Credit Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true and correct in
all material respects on and as of such earlier date;


 


(v)           as
of such Credit Date, no event shall have occurred and be continuing or would
result from the consummation of the applicable Credit Extension that would
constitute an Event of Default or a Default; and


 


(vi)          on
or before the date of issuance of any Letter of Credit, Administrative Agent
shall have received all other information required by the applicable Issuance
Notice, and such other documents or information as Issuing Bank may reasonably
require in connection with the issuance of such Letter of Credit.


 


Any Agent or Requisite
Lenders shall be entitled, but not obligated, to request and receive, prior to
the making of any Credit Extension, additional information reasonably
satisfactory to the requesting party confirming the satisfaction of any of the
foregoing if, in the good faith judgment of such Agent or Requisite Lender such
request is warranted under the circumstances.


 


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(b)           Notices. Any
Notice shall be executed by an Authorized Officer in a writing delivered to
Administrative Agent.


 


Section 3.03         Conditions
to the Credit Extension of Delayed Draw Term Loans.


 


The obligation of each Lender to make any Delayed
Draw Term Loan on any Delayed Draw Term Loan Credit Date are subject to the
satisfaction, or waiver in accordance with Section 10.04, of the following
additional conditions precedent:


 


(a)           At least 5 Business Days prior to any Delayed Draw Term Loan
Credit Date, Administrative Agent shall have received a certificate of an
Authorized Officer of the Borrower (i) setting forth the calculation of “Adjusted
EBITDA” (as defined in and pursuant to Section 1.9(c) of the Stock Purchase
Agreement on the date hereof) based on the audited financial statements for
Fiscal Year 2007, (ii) setting forth the calculation of “Final Adjusted EBITDA”
(as defined in the Stock Purchase Agreement on the date hereof), (iii) setting
forth the amount of the “2007 Earn Out Shares” (as defined in the Stock
Purchase Agreement on the date hereof) and the “2007 Cash Earn Out” (as defined
in the Stock Purchase Agreement on the date hereof), (iv) setting forth the
portion of the “2007 Earn Out Shares” (as defined in Section 1.8(a)(i) of the
Stock Purchase Agreement on the date hereof) that is to be paid in cash
pursuant to Section 1.12 of the Stock Purchase Agreement on the date hereof and
(v) setting forth the amount of Initial Earnout Payments and Milestone Payments
to be made pursuant to the Stock Purchase Agreement.


 


(b)           Borrower and its Subsidiaries shall be in pro forma compliance
with each of the covenants set forth in Section 6.07 as of the last day of the
most recently ended Fiscal Quarter for which financial statements have been
provided pursuant to Section 5.01 after giving effect to the Initial Earnout
Payments and the Milestone Payments.


 


(c)           Each Delayed Draw Term Loan Credit Date shall occur on or
before the Delayed Draw Term Loan Commitment Termination Date.


 


ARTICLE FOUR

REPRESENTATIONS AND WARRANTIES


 


In order to induce Lenders and Issuing Bank to enter
into this Agreement and to make each Credit Extension to be made thereby, each
Loan Party represents and warrants to each Lender and Issuing Bank, on the
Closing Date (only with respect to the sections referred to in Section
3.02(a)(iii)) and on each Credit Date, that the following statements are true
and correct (it being understood and agreed that the representations and
warranties made on the Closing Date are deemed to be made concurrently with the
consummation of the Transactions and the representations and warranties made on
any Delayed Draw Term Loan Credit Date are deemed to be made concurrently with
the making of the Initial Earnout Payments for which the applicable Delayed
Term Loan is being made):


 


Section 4.01         Organization;
Requisite Power and Authority; Qualification.


 


Each of Borrower and its Subsidiaries (a) is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization as identified in Schedule 4.01, (b) has
all requisite power and authority to own and operate its properties, to carry
on its business as now conducted and as proposed to be conducted, to enter into
the Loan Documents to which it is a party and to carry out the transactions
contemplated thereby, and (c) is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, except in jurisdictions where the
failure to be so qualified or in good standing could not be reasonably expected
to have, a Material Adverse Effect.


 


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Section 4.02         Capital
Stock and Ownership.


 


The Capital Stock of each of Borrower and its
Subsidiaries has been duly authorized and validly issued and is fully paid and
non-assessable. Except as set forth on Schedule 4.02 and other than the
Warrants, as of the Closing Date, there is no existing option, warrant, call,
right, commitment or other agreement to which Borrower or any of its
Subsidiaries is a party requiring, and there is no membership interest or other
Capital Stock of Borrower or any of its Subsidiaries outstanding which upon
conversion or exchange would require, the issuance by Borrower or any of its
Subsidiaries of any additional membership interests or other Capital Stock of
Borrower or any of its Subsidiaries or other Securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase, a
membership interest or other Capital Stock of Borrower or any of its
Subsidiaries. Schedule 4.02 correctly sets forth the ownership interest of
Borrower and each of its Subsidiaries in their respective Subsidiaries as of
the Closing Date both before and after giving effect to the Transaction.


 


Section 4.03         Due
Authorization.


 


The execution, delivery and performance of the Loan
Documents have been duly authorized by all necessary action on the part of each
Loan Party that is a party thereto.


 


Section 4.04         No
Conflict.


 


The execution, delivery and performance by Loan
Parties of the Loan Documents to which they are parties and the consummation of
the transactions contemplated by the Loan Documents do not and will not
(a) violate any provision of any law or any governmental rule or
regulation applicable to Borrower or any of its Subsidiaries, any of the
Organizational Documents of Borrower or any of its Subsidiaries, or any order,
judgment or decree of any court or other agency of government binding on
Borrower or any of its Subsidiaries, except to the extent any such violation
could not be reasonably expected to have a Material Adverse Effect;
(b) conflict with, result in a material breach of or constitute (with due
notice or lapse of time or both) a material default under any material
Contractual Obligation of Borrower or any of its Subsidiaries; (c) result
in or require the creation or imposition of any Lien upon any of the properties
or assets of Borrower or any of its Subsidiaries (other than any Liens created
under any of the Loan Documents in favor of Collateral Agent, on behalf of
Secured Parties and Liens securing the obligations under the Second Lien Credit
Agreement); or (d) require any approval of stockholders, members or
partners or any approval or consent of any Person under any material
Contractual Obligation of Borrower or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Closing Date and
disclosed in writing to Lenders.


 


Section 4.05         Governmental
Consents.


 


The execution, delivery and performance by Loan
Parties of the Loan Documents to which they are parties and the consummation of
the transactions contemplated by the Loan Documents do not and will not require
any registration with, consent or approval of, or notice to, or other action
to, with or by, any Governmental Authority except (a) for consents, approvals
or notices that could not be reasonably expected to have a Material Adverse
Effect and (b) for filings and recordings with respect to the Collateral to be
made, or otherwise delivered to Collateral Agent and to the agents under the
Second Lien Credit Agreement for filing and/or recordation, as of the Closing
Date.


 


Section 4.06         Binding
Obligation.


 


Each Loan Document has been duly executed and
delivered by each Loan Party that is a party thereto and is the legally valid
and binding obligation of such Loan Party, enforceable against such


 


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Loan Party in accordance
with its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability.


 


Section 4.07         Historical
Financial Statements.


 


The Historical Financial Statements were prepared in
conformity with GAAP (except as reflected in the notes thereto) and are
accurate and complete and fairly present, in all material respects, the
financial position, on a consolidated basis, of the Persons described in such
financial statements as at the respective dates thereof and the results of
operations and cash flows, on a consolidated basis, of the entities described
therein for each of the periods then ended, subject, in the case of any such
unaudited financial statements, to the absence of notes that would be required
by GAAP and to changes resulting from audit and normal year-end adjustments. As
of the Closing Date, neither Borrower nor any of its Subsidiaries has any
contingent liability or liability for taxes, long-term lease or unusual forward
or long-term commitment that (a) would be required to be included on a balance
sheet in accordance with GAAP, (b) is not reflected in the Historical
Financial Statements or the notes thereto and (c) is material in relation
to the business, operations, properties, assets, or condition (financial or
otherwise) of Borrower and its Subsidiaries taken as a whole.


 


Section 4.08         Projections.


 


On and as of the Closing Date, the projections of
Borrower and its Subsidiaries quarterly for the first year following the
Closing Date and annually through Fiscal Year 2012 (the “Projections”)
are based on good faith estimates and assumptions that were reasonable when
made by the management of Chem Rx; provided the Projections are not to
be viewed as facts and that actual results during the period or periods covered
by the Projections may differ from such Projections and that the differences
may be material.


 


Section 4.09         No
Material Adverse Effect.


 


Since December 31, 2006, no event, circumstance or
change has occurred that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect.


 


Section 4.10         Adverse
Proceedings, etc.


 


There are no Adverse Proceedings, individually or in
the aggregate, that could reasonably be expected to have a Material Adverse
Effect. Neither Borrower nor any of its Subsidiaries (a) is in violation
of any applicable laws (including Environmental Laws and Health Care Laws)
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, or (b) is subject to or in default with respect
to any final judgments, writs, injunctions, decrees, rules or regulations of
any court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.


 


Section 4.11         Payment
of Taxes.


 


Except as otherwise permitted under Section 5.03,
all material tax returns and reports of Borrower and its Subsidiaries required
to be filed by any of them have been timely filed, and all material taxes shown
on such tax returns to be due and payable and all assessments, fees and other
governmental charges upon Borrower and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when due and payable. Borrower


 


67

















 


knows of no proposed tax
assessment against Borrower or any of its Subsidiaries that is not being
actively contested by Borrower or such Subsidiary in good faith and by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of Borrower and/or its Subsidiaries, as
the case may be; and as of the Closing Date no tax Lien has been filed, and to
the knowledge of Borrower or any of its Subsidiaries, no claim is being
asserted, with respect to any such material tax, fee or other charge.


 


Section 4.12         Properties.


 


(a)           Title. Each of
Borrower and its Subsidiaries has (i) good and legal title to (in the case
of fee interests in real property), (ii) valid leasehold interests in (in
the case of leasehold interests in real or personal property), and
(iii) good title to (in the case of all other personal property,
including, but not limited to, Intellectual Property and licenses) all of their
respective properties and assets material to the business of Borrower and its
Subsidiaries, taken as a whole, and reflected in their respective most recent
balance sheet contained in the Historical Financial Statements referred to in
Section 4.07 and in the most recent balance sheet delivered pursuant to Section
5.01, in each case except for assets disposed of since the date of such
financial statements in the ordinary course of business or as otherwise permitted
under Section 6.08. Except as permitted by this Agreement, all such properties
and assets are free and clear of Liens.


 


(b)           Real Estate. As of the
Closing Date, Schedule 4.12 contains a true, accurate and complete list of
(i) all Real Estate Assets, and (ii) all real estate leases,
subleases or assignments of leases (together with all amendments,
modifications, supplements, renewals or extensions of any thereof) affecting
each Real Estate Asset of any Loan Party, regardless of whether such Loan Party
is the landlord or tenant (whether directly or as an assignee or successor in
interest) under such lease, sublease or assignment. Except as could not
reasonably be expected to have a Material Adverse Effect, each agreement listed
in clause (ii) of the immediately preceding sentence is in full force and
effect and Borrower does not have knowledge of any default that has occurred
and is continuing thereunder, and each such agreement constitutes the legally
valid and binding obligation of each applicable Loan Party, enforceable against
such Loan Party in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors’ rights generally or by equitable principles.


 


Section 4.13         Environmental
Matters.


 


Neither Borrower nor any of its Subsidiaries nor any
of their respective Facilities or operations are subject to any outstanding
written order, consent decree or settlement agreement with any Person relating
to any Environmental Law, any Environmental Claim, or any Hazardous Materials
Activity that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries
has received any letter or request for information under Section 104
of the Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. § 9604) or any comparable state law that could reasonably
be expected to result in an Environmental Claim against Borrower or any of its
Subsidiaries that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. There are and, to each of Borrower’s
and its Subsidiaries’ knowledge, have been, no conditions, occurrences, or
Hazardous Materials Activities which could reasonably be expected to form the
basis of an Environmental Claim against Borrower or any of its Subsidiaries
that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Compliance with all current or reasonably foreseeable
future requirements pursuant to or under Environmental Laws could not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect. No event or condition has occurred or is occurring with respect
to Borrower or any of its Subsidiaries relating to any Environmental Law, any
Release of Hazardous Materials, or any


 


68

















 


Hazardous Materials Activity
which individually or in the aggregate has had, or could reasonably be expected
to have, a Material Adverse Effect.


 


Section 4.14         No
Defaults.


 


Neither Borrower nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any of its Contractual
Obligations (other than this Agreement), and no condition exists which could
constitute such a default, except where the consequences, direct or indirect,
of such default or defaults, if any, could not reasonably be expected to have a
Material Adverse Effect.


 


Section 4.15         Material
Contracts.


 


Schedule 4.15 contains a true, correct and
complete list of all the Material Contracts in effect on the Closing Date, and
except as described thereon, all such Material Contracts are in full force and
effect and no defaults currently exist thereunder, except as could not
reasonably be expected to have a Material Adverse Effect.


 


Section 4.16         Governmental
Regulation.


 


Neither Borrower nor any of its Subsidiaries is a “registered
investment company” or a company “controlled” by a “registered investment
company” or a “principal underwriter” of a “registered investment company” as
such terms are defined in the Investment Company Act of 1940.


 


Section 4.17         Margin
Stock.


 


Neither Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock. No
part of the proceeds of the Loans made to such Loan Party will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or for any purpose that
violates, or is inconsistent with, the provisions of Regulation T, U or X of
said Board of Governors.


 


Section 4.18         Employee
Matters.


 


Neither Borrower nor any of its Subsidiaries is
engaged in any unfair labor practice that could reasonably be expected to have
a Material Adverse Effect. Except as set forth on Schedule 4.18, there is
(a) no unfair labor practice complaint pending against Borrower or any of
its Subsidiaries, or to the best knowledge of Borrower and its Subsidiaries,
threatened against any of them before the National Labor Relations Board and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement that is so pending against Borrower or any of its
Subsidiaries or to the best knowledge of Borrower and its Subsidiaries,
threatened against any of them, (b) no strike or work stoppage in existence,
or, to the knowledge of the Borrower, threatened, involving Borrower or any of
its Subsidiaries, and (c) to the best knowledge of Borrower and its
Subsidiaries, no union representation question existing with respect to the
employees of Borrower or any of its Subsidiaries and, to the best knowledge of
Borrower and its Subsidiaries, no union organization activity that is taking
place, except (with respect to any matter specified in clause (a), (b) or (c)
above, either individually or in the aggregate) such as could not reasonably be
expected to have a Material Adverse Effect.


 


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Section 4.19         Employee
Benefit Plans.


 


(a)           Borrower, each of its Subsidiaries and each of their
respective ERISA Affiliates are in compliance in all material respects with all
applicable provisions and requirements of ERISA and the Internal Revenue Code
and the regulations and published interpretations thereunder with respect to
each Employee Benefit Plan, and have performed all their material obligations
under each Employee Benefit Plan.


 


(b)           Each Employee Benefit Plan which is intended to qualify under
Section 401(a) of the Internal Revenue Code has received a favorable
determination or opinion letter from the Internal Revenue Service indicating
that such Employee Benefit Plan is so qualified and, nothing has occurred
subsequent to the issuance of such determination letter which would cause such
Employee Benefit Plan to lose its qualified status.


 


(c)           No material liability to the PBGC (other than required
premium payments), the Internal Revenue Service, any Employee Benefit Plan or
any trust established under Title IV of ERISA (other than contributions in the
ordinary course of business) has been or, is expected to be incurred by Borrower,
any of its Subsidiaries or any of their ERISA Affiliates.


 


(d)           No ERISA Event that could reasonably be expected to result in
a material liability to Borrower of any of its Subsidiaries has occurred or is
reasonably expected to occur.


 


(e)           Except as set forth on Schedule 4.19 or to the extent
required under Section 4980B of the Internal Revenue Code or similar state
laws, no Employee Benefit Plan provides health or welfare benefits (through the
purchase of insurance or otherwise) for any retired or former employee of
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates,
except to any Person, and in such amounts, approved by the Board of Directors
of Borrower.


 


(f)            The present value of the aggregate benefit liabilities under
each Pension Plan sponsored, maintained or contributed to by Borrower, any of
its Subsidiaries or any of their ERISA Affiliates, (determined as of the end of
the most recent plan year on the basis of the actuarial assumptions specified
for funding purposes in the most recent actuarial valuation for such Pension
Plan), did not exceed the aggregate current value of the assets of such Pension
Plan by more than $2,500,000.


 


(g)           As of the most recent valuation date for each Multiemployer
Plan, the potential liability of Borrower, its Subsidiaries and their
respective ERISA Affiliates for a complete withdrawal from each such
Multiemployer Plan (within the meaning of Section 4203 of ERISA), based on
information available pursuant to Section 4221(e) of ERISA would not be more
than $2,500,000.


 


(h)           Borrower, each of its Subsidiaries and each of their ERISA
Affiliates have complied and are in compliance in all material respects with
the requirements of Section 515 of ERISA with respect to each Multiemployer
Plan and are not in material “default” (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan.


 


Section 4.20         Solvency.


 


Each Loan Party is and, upon the incurrence of any
Obligation by such Loan Party on any date on which this representation and
warranty is made, will be, Solvent.


 


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Section 4.21         Compliance
with Statutes, etc.


 


Each of Borrower and its Subsidiaries is in
compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all Governmental Authorities, in respect of
the conduct of its business and the ownership of its property (including
compliance with all applicable Environmental Laws with respect to any Real
Estate Asset or governing its business and the requirements of any permits
issued under such Environmental Laws with respect to any such Real Estate Asset
or the operations of Borrower or any of its Subsidiaries), except such non-compliance
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.


 


Section 4.22         Disclosure.


 


The representations and warranties of the Loan
Parties contained in the Loan Documents and in any other documents,
certificates or written statements furnished to Lenders by or on behalf of
Borrower or any of its Subsidiaries for use in connection with the transactions
contemplated hereby, taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact (known to Borrower, in the case
of any document not furnished by it) necessary in order to make the statements
contained herein and therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information contained
in such materials are based upon good faith estimates and assumptions believed
by Borrower to be reasonable at the time made, it being recognized by Lenders
that such projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any such
projections may differ from the projected results.


 


Section 4.23         Health
Care Matters.


 


(a)           Compliance with Health Care Laws. Except as set
forth on Schedule 4.23, each of Borrower and its Subsidiaries is and has
been in compliance in all material respects with all Health Care Laws
applicable to it, its products and its properties or other assets or its
business or operation. Except as set forth on Schedule 4.23, each of
Borrower and its Subsidiaries has in effect all Governmental Authorizations
necessary for it to carry on its business and operations, in all material
respects, as presently conducted. All such Governmental Authorizations are in
full force and effect and there exists no default under, or violation of, any
such Governmental Authorization and neither Borrower nor any of its
Subsidiaries has received written notice or has knowledge that any Governmental
Authority is considering limiting, suspending, terminating, adversely amending
or revoking any such Governmental Authorization, except as could not reasonably
be expected to have a material effect on Borrower and its Subsidiaries, taken
as a whole.


 


(b)           Filings. Except as set forth on Schedule
4.23, all material reports, documents, claims, notices or approvals
required to be filed, obtained, maintained or furnished pursuant to any Health
Care Law to any Governmental Authority have been so filed, obtained, maintained
or furnished, and all such reports, documents, claims and notices were complete
and correct in all material respects on the date filed (or were corrected in or
supplemented by a subsequent filing).


 


(c)           Billing. Except as set forth on Schedule
4.23 or as could not reasonably be expected to have a material effect on
Borrower and its Subsidiaries, taken as a whole, each of Borrower and its
Subsidiaries has the requisite provider number or other Governmental
Authorization to bill under Medicare, the respective Medicaid program in the
state or states in which such entity operates, or Private Third Party Payor
Programs, in each case to the extent the Borrower and its Subsidiaries bill or
otherwise receive payment from such programs. Except as could not reasonably be
expected to have a material effect on Borrower and its Subsidiaries, taken as a
whole, there is no investigation, audit, claim review, or


 


71

















 


other action pending, or to
the knowledge of Borrower and its Subsidiaries, threatened, which could
reasonably be expected to result in a revocation, suspension, termination,
probation, restriction, limitation, or non-renewal of any Governmental Third
Party Payor or Private Third Party Payor (as defined below) provider number or
result in any Group Members’ exclusion from any Governmental Third Party Payor
Program or Private Third Party Payor Program. For purposes of this Agreement, a
“Governmental Third Party Payor” means Medicare, Medicaid, TRICARE, state
government insurers and any other person or entity which presently or in the
future maintains Governmental Third Party Payor Programs. In addition, for
purposes of this Agreement, “Governmental Third Party Payor Programs”
means all governmental third party payor programs in which Borrower or any of
its Subsidiaries participates (including Medicare, Medicaid, TRICARE or any
other federal or state health care programs). For purposes of this Agreement, a
“Private Third Party Payor” means private insurers and any other person
or entity which presently or in the future maintains Private Third Party Payor
Programs. In addition, for purposes of this Agreement, “Private Third Party
Payor Programs” means all non-governmental third party payor programs in
which Borrower or any of its Subsidiaries participates (including managed care
plans, or any other private insurance programs).


 


(d)           Accreditation. Except as could not
reasonably be expected to have a material effect on Borrower and its
Subsidiaries, taken as a whole, each of Borrower and its Subsidiaries has
received and maintains accreditation in good standing and without limitation or
impairment by all applicable accrediting organizations, to the extent required
by law or otherwise reasonably necessary for the operation of its business.


 


(e)           Proceedings. Except as could not
reasonably be expected to have a material effect on Borrower and its
Subsidiaries, taken as a whole, neither Borrower nor any of its Subsidiaries
(1) is a party to a corporate integrity agreement with a Governmental Authority
that imposes restrictions or costs on the Borrower, or (2) has any reporting
obligations pursuant to a settlement agreement, plan of correction, or other
remedial measure entered into with any Governmental Authority.


 


(f)            Exclusion. Neither Borrower, nor any
of its Subsidiaries is, has been, or has been threatened to be, (i) excluded
from any Governmental Third Party Payor Program pursuant to 42 U.S.C.
§ 1320a-7b and related regulations, or (ii) made a party to any other
action by any Governmental Authority that may prohibit it from selling products
to any governmental or other purchaser pursuant to any federal, state or local
laws or regulations, except, in the case of clause (ii) above, where the same
could not reasonably be expected to have a Material Adverse Effect.


 


(g)           HIPAA Compliance. To the extent applicable
to Borrower or any of its Subsidiaries, and for so long as (1) Borrower or any
of its Subsidiaries is a “covered entity” as defined in 45 C.F.R.
§ 160.103, (2) Borrower or any of its Subsidiaries is a “business associate” as defined in 45 C.F.R. § 160.103, (3)
Borrower or any of its Subsidiaries is subject to or covered by
the HIPAA Administrative Simplification Requirements pertaining to standard
transaction formats codified at 45 C.F.R. Parts 160 & 162 (the “Transactions
Rule”) and/or pertaining to the security and privacy of certain protected
health information codified at 45 C.F.R. Parts 160 & 164 (the “Privacy
and Security Rules”), and/or (4) Borrower or any of its Subsidiaries
sponsors any “group health plans” as defined in 45 C.F.R. § 160.103, Borrower
and its Subsidiaries as the case may be, has: 
(i) completed thorough and detailed surveys, audits, inventories,
reviews, analyses and/or assessments, including risk assessments, (collectively
“Assessments”) of all material areas of its business and operations
subject to HIPAA and/or that could be materially and adversely affected by the
failure of Borrower or any of its Subsidiaries, as the case may be, to the
extent these Assessments are appropriate or required for Borrower or its
Subsidiaries, as the case may be, to be HIPAA Compliant; (ii) developed a
detailed plan and time line for becoming HIPAA Compliant (a “HIPAA
Compliance Plan”); and (iii) implemented those provisions of its HIPAA
Compliance Plan necessary to ensure that such Borrower and its Subsidiaries is
HIPAA Compliant.


 


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Section 4.24         Intellectual
Property.


 


Each of Borrower and its Subsidiaries owns or
possesses, or could obtain ownership or possession of, on terms not materially
adverse to it, all patents, trademarks, service marks, trade names, copyrights,
licenses and rights with respect thereto necessary for the present conduct of
its business, without any known material conflict with the rights of others,
and free from any material burdensome restrictions.


 


Section 4.25         No
Default.


 


Each component of the Transactions was consummated,
as of the Closing Date (i) in accordance with the respective terms of the
applicable Related Agreements in the form supplied to the Administrative Agent,
without modification, waiver or amendment, except those which had the prior
written consent of the Administrative Agent or which were not adverse to the
Lenders and (ii) in compliance in all material respects with all
applicable laws, including the Delaware General Corporation Law (to the extent
relevant), the Bankruptcy Code, all regulations of the Internal Revenue Code
and the United States Department of Labor applicable to employee stock
ownership plans, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, the corporate laws of each state in which any corporation now
controlled by Borrower is or was incorporated.


 


Section 4.26         Investigations,
Audits, Etc.


 


Except as could not reasonably be expected to have a
Material Adverse Effect, to the knowledge of Borrower or its Subsidiaries,
neither Borrower nor any of its Subsidiaries is the subject of (x) any
pending review or audit by the Internal Revenue Service or any investigation by
a Governmental Authority concerning the violation or possible violation of any
law or (y) any pending litigation, judgment, action, audit, charge, claim,
demand, suit, petition, or arbitration.


 


Section 4.27         Patriot
Act.


 


To the extent applicable, each Loan Party is in
compliance, in all material respects, with the (i) Trading with the Enemy
Act, as amended, and each of the foreign assets control regulations of the
United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as
amended) and any other enabling legislation or executive order relating thereto,
and (ii) Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001) (the “Act”).
No part of the proceeds of the Loans will be used, directly or indirectly, for
any payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business
or obtain any improper advantage, in violation of the United States Foreign
Corrupt Practices Act of 1977, as amended.


 


ARTICLE FIVE

AFFIRMATIVE COVENANTS


 


Each Loan Party covenants and agrees that until the
Termination Date, each Loan Party shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Article Five.


 


Section 5.01         Financial
Statements and Other Reports.


 


Borrower will deliver to Administrative Agent and
Lenders:


 


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(a)           Monthly Reports. As soon
as available, and in any event within thirty (30) days after the end of each of
the first two months of each Fiscal Quarter ending after the Closing Date (or,
in the case of the first six months ended after the Closing Date, forty-five
(45) days), the consolidated and consolidating balance sheet of Borrower and
its Subsidiaries (excluding, for the avoidance of doubt, 750 Park Place) as at
the end of such month and the related consolidated statements of income,
stockholders’ equity and cash flows of Borrower and its Subsidiaries for such
month and for the period from the beginning of the then current Fiscal Year to
the end of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal
Year, all in reasonable detail, together with a Financial Officer Certification
and a Narrative Report with respect thereto; provided that if the Total
Leverage Ratio (determined for any such period by reference to the most recent
Compliance Certificate delivered pursuant to Section 5.01(d) calculating
the Total Leverage Ratio) shall be 3.75:1.00 or less, Borrower shall not be
required to make deliveries under this subsection (a).


 


(b)           Quarterly Financial Statements.
(1) As soon as available, and in any event within forty-five (45) days after
the end of each of the first three  Fiscal
Quarters of each Fiscal Year (or such earlier period as required by the rules
and regulations of the Exchange Act), the consolidated and consolidating
balance sheets of Borrower and its Subsidiaries (excluding, for the avoidance
of doubt, 750 Park Place) as at the end of such Fiscal Quarter and the related
consolidated (and with respect to statements of income, consolidating)
statements of income, stockholders’ equity and cash flows of Borrower and its
Subsidiaries for such Fiscal Quarter and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal Quarter, setting forth
in each case in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the corresponding figures
from the Financial Plan for the current Fiscal Year, all in reasonable detail,
together with a Financial Officer Certification and a Narrative Report with
respect thereto, and (2) in addition to the foregoing, a copy of Borrower’s
quarterly report on Form 10-Q for the applicable Fiscal Quarter as filed by
Borrower with the Securities and Exchange Commission;


 


(c)           Annual Financial Statements.
(1) As soon as available, and in any event within ninety (90) days after the
end of each Fiscal Year (or such earlier period as required by the rules and
regulations of the Exchange Act), (i) the consolidated and consolidating
balance sheets of Borrower and its Subsidiaries (excluding, for the avoidance
of doubt, 750 Park Place) as at the end of such Fiscal Year and the related
consolidated (and with respect to statements of income, consolidating)
statements of income, stockholders’ equity and cash flows of Borrower and its
Subsidiaries for such Fiscal Year, setting forth in each case in comparative
form the corresponding figures for the previous Fiscal Year and the
corresponding figures from the Financial Plan for the Fiscal Year covered by
such financial statements, in reasonable detail, together with a Financial Officer
Certification and a Narrative Report with respect thereto; and (ii) with
respect to such consolidated financial statements a report thereon of KGS LLP
in respect of the Fiscal Year ended December 31, 2007 and thereafter, an
independent certified public accountant of recognized national standing as
selected by Borrower, and reasonably satisfactory to Administrative Agent
(which report shall be unqualified as to going concern and scope of audit, and
shall state that such consolidated financial statements fairly present, in all
material respects, the consolidated financial position of Borrower and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards) together with a written
statement, during the normal course of the annual audit, by such independent
certified public accountants stating whether any condition or event that
constitutes a Default or an Event of Default in respect of Section 6.07 has
come to their attention and, if such a condition or event has come to their
attention, specifying the nature and period of existence thereof or a similar
written statement reasonably acceptable to the Administrative


 


74

















 


Agent; and (2) in addition to the
foregoing, a copy of Borrower’s annual report on Form 10-K for the applicable
Fiscal Year as filed by Borrower with the Securities and Exchange Commission;


 


(d)           Compliance Certificate.
Together with each delivery of financial statements of Borrower and its
Subsidiaries pursuant to Sections 5.01(b)(1) and 5.01(c)(1), a duly executed
and completed Compliance Certificate;


 


(e)           Notice of Default. Promptly
upon any Responsible Officer of Borrower and its Subsidiaries obtaining
knowledge (i) of any condition or event that constitutes a Default or an
Event of Default or that notice has been given to Borrower with respect
thereto; (ii) that any Person has given any notice to Borrower or any of
its Subsidiaries or taken any other action with respect to any event or
condition set forth in Section 8.01(b); or (iii) of the occurrence of any
event or change that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, a certificate of its Authorized Officers
specifying the nature and period of existence of such condition, event or
change, or specifying the notice given and action taken by any such Person and
the nature of such claimed Event of Default, Default, default, event or condition,
and what action Borrower has taken, is taking and proposes to take with respect
thereto;


 


(f)            Notice of Litigation.
Promptly upon any Responsible Officer of Borrower and its Subsidiaries
obtaining knowledge of (i) the institution of, or non-frivolous written
threat of, any Adverse Proceeding not previously disclosed in writing by
Borrower to Lenders, or (ii) any material development in any Adverse
Proceeding that, in the case of either clause (i) or (ii) if adversely
determined, could be reasonably expected to result in damages not otherwise
covered by insurance in excess of $2,500,000, or seeks to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated hereby, written notice thereof
together with such other information as may be reasonably available to Borrower
to enable Lenders and their counsel to evaluate such matters;


 


(g)           ERISA. (i) As
soon as reasonably practicable (but in any event within ten Business Days) upon
any Responsible Officer of Borrower and its Subsidiaries becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written notice
specifying the nature thereof, what action Borrower, any of its Subsidiaries or
any of their respective ERISA Affiliates has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or threatened by
the Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto; and (ii) with reasonable promptness, copies of (1) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to each Pension Plan;
(2) all notices received by Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning
an ERISA Event; and (3) copies of such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Administrative
Agent shall reasonably request;


 


(h)           Financial Plan. As soon
as practicable and in any event no later than January 31 of each Fiscal Year
(or, if earlier, ten (10) Business Days after approval by the Board of Directors
of Borrower), a consolidated plan and financial forecast for such Fiscal Year
and for the one Fiscal Year thereafter (a “Financial Plan”), including a
forecasted consolidated balance sheet and forecasted consolidated statements of
income and cash flows of Borrower and its Subsidiaries (excluding, for the
avoidance of doubt, 750 Park Place) for each Fiscal Quarter of such Fiscal Year
and annually for the one Fiscal Year thereafter, together with an explanation
of the assumptions on which such forecasts are based (including detail with
respect to long-term care beds served in each State in which the Borrower and
its Subsidiaries will operate, forecasted revenues per bed served and the
projected capital expenditure and working capital needs of the Borrower and its
Subsidiaries);


 


75

















 


(i)            Insurance Report. As soon
as practicable and in any event no later than March 31 of each Fiscal Year, a
report outlining all material insurance coverage maintained as of the date of
such report by Borrower and its Subsidiaries and all material insurance
coverage planned to be maintained by Borrower and its Subsidiaries in the
immediately succeeding Fiscal Year;


 


(j)            Environmental Reports and Audits. As soon as practicable following receipt thereof, copies of
all environmental audits and reports with respect to environmental matters at
any Facility or which relate to any environmental liabilities of Borrower or
its Subsidiaries which, in any such case, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect;


 


(k)           Information Regarding Collateral. (a) Borrower will furnish to the Collateral Agent
prompt written notice of any change (i) in any Loan Party’s corporate name
(other than the change of the Borrower’s name to “Chem Rx Corporation”),
(ii) in any Loan Party’s identity or corporate structure or (iii) in
any Loan Party’s Federal Taxpayer Identification Number. Borrower agrees not to
effect or permit any change referred to in the preceding sentence unless all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Collateral Agent to continue at all times following
such change to have a valid, legal and perfected security interest in all the
Collateral and for the Collateral at all times following such change to have a
valid, legal and perfected security interest as contemplated in the Collateral
Documents. Borrower also agrees promptly to notify the Collateral Agent if any
material portion of the Collateral is damaged or destroyed;


 


(l)            Annual Collateral Verification.
Each year, at the time of delivery of annual financial statements with respect
to the preceding Fiscal Year pursuant to Section 5.01(c), Borrower shall
deliver to the Collateral Agent an Officer’s Certificate confirming that there
has been no change in such information since the date of the Collateral
Questionnaire delivered on the Closing Date or the date of the most recent
certificate delivered pursuant to this Section and/or identifying such changes;


 


(m)          Health Care Matters.


 


(i)            copies
of any written recommendation from any Governmental Authority or other
regulatory body that Borrower or any of its Subsidiaries should have any of its
Governmental Authorizations, Governmental Third Party Payor Program provider or
supplier numbers, or accreditations suspended, revoked, or limited in any way,
or any penalties or sanctions imposed;


 


(ii)           notice
of any claim to recover any alleged material overpayments with respect to any
sales in excess of $250,000;


 


(iii)          voluntary
disclosure by Borrower or any Subsidiary to the Office of the Inspector General
of the United States Department of Health and Human Services, a Medicare fiscal
intermediary or any state’s Medicaid program of a potential overpayment matter
involving the submission of claims to such payor in any amount greater than
$250,000;


 


(iv)          notice
of termination of eligibility of Borrower or any of its Subsidiaries to
participate in any reimbursement program of any Private Third Party Payor
Program;


 


(v)           notice
of any material reduction in the level of reimbursement expected to be received
with respect to sales;


 


76

















 


(vi)          copies
of any report or communication from any Governmental Authority in connection
with any adverse inspection of any facility of Borrower or any of its
Subsidiaries other than those which are routine and non-material; and


 


(n)           Notice of Management Investors’ Ownership of Borrower. Promptly upon any Responsible Officer of Borrower obtaining
the knowledge that the Management Investors shall have ceased to own and
control at least 10% on a fully diluted basis of the economic and voting
interests in the Capital Stock of Borrower, written notice thereof.


 


(o)           Other Information. (A) Promptly
upon their becoming available, copies of (i) all financial statements,
reports, notices and proxy statements sent or made available generally by
Borrower to its security holders acting in such capacity or by any Subsidiary
of Borrower to its security holders other than Borrower or another Subsidiary
of Borrower, (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by Borrower or any of its
Subsidiaries with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority (including a
copy of each Form 8-K), (iii) all press releases and other statements made
available generally by Borrower or any of its Subsidiaries to the public concerning
material developments in the business of Borrower or any of its Subsidiaries,
and (B) such other information and data with respect to Borrower or any of
its Subsidiaries as from time to time may be reasonably requested by
Administrative Agent or any Lender.


 


Section 5.02         Existence.


 


Except as otherwise permitted under Section 6.08,
each Loan Party will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its existence and all rights
(charter and statutory) and franchises, licenses, approvals and permits
material to its business; provided, no Loan Party or any of its
Subsidiaries shall be required to preserve any such existence, right or
franchise, licenses and permits if such Person’s Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of such Person, and that the loss thereof is not
disadvantageous in any material respect to such Person or to Lenders.


 


Section 5.03         Payment
of Taxes and Claims.


 


(a)           Each Loan Party will, and will cause each of its Subsidiaries
to, pay all material Taxes imposed upon it or any of its properties or assets
or in respect of any of its income, businesses or franchises before any penalty
or fine accrues thereon, and all claims (including claims for labor, services,
materials and supplies) for sums that have become due and payable and that by
law have or may become a Lien upon any of its properties or assets, prior to
the time when any penalty or fine shall be incurred with respect thereto; provided,
no such Tax or claim need be paid if it is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, so long
as (a) adequate reserve or other appropriate provision, as shall be
required in conformity with GAAP shall have been made therefor, and (b) in
the case of a charge or claim that has or may become a Lien against any of the
Collateral, such contest proceedings conclusively operate to stay the sale of
any portion of the Collateral to satisfy such Tax or claim. No Loan Party will,
nor will it permit any of its Subsidiaries to, file or consent to the filing of
any consolidated income Tax return with any Person (other than Borrower or any
of its Subsidiaries).


 


(b)           Within 60 days following the Closing Date, the Borrower will
file a properly completed and valid Internal Revenue Service Form 8023 on which
Borrower and the Sellers will jointly make an election under Section 338(h)(10)
of the Internal Revenue Code to treat the Acquisition as an asset purchase.


 


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Section 5.04         Maintenance
of Properties.


 


Each Loan Party will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Borrower and its Subsidiaries and from time
to time will make or cause to be made all appropriate repairs, renewals and
replacements thereof.


 


Section 5.05         Insurance.


 


Borrower will maintain or cause to be maintained,
with financially sound and reputable insurers (i) business interruption
insurance and (ii) casualty insurance, public liability insurance, third
party property damage insurance with respect to liabilities, losses or damage
in respect of the assets, properties and businesses of Borrower and its
Subsidiaries as may customarily be carried or maintained under similar
circumstances by Persons of established reputation engaged in similar businesses,
in such amounts (giving effect to self-insurance), with such deductibles,
covering such risks and otherwise on such terms and conditions as shall be
customary for such Persons. Without limiting the generality of the foregoing,
Borrower will maintain or cause to be maintained (a) flood insurance with
respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, in each case in
compliance with any applicable regulations of the Board of Governors of the
Federal Reserve System, and (b) replacement value casualty insurance on
the Collateral under such policies of insurance, with such insurance companies,
in such amounts, with such deductibles, and covering such risks as are at all
times carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses. Each such policy of
insurance shall (i) name Administrative Agent, on behalf of Lenders, as an
additional insured thereunder as its interests may appear and (ii) in the
case of each casualty insurance policy, contain a loss payable clause or
endorsement, reasonably satisfactory in form and substance to Administrative
Agent, that names Administrative Agent, on behalf of Lenders as the loss payee
thereunder and provides for at least thirty (30) days’ prior written notice to
Administrative Agent of any modification or cancellation of such policy. Any
payments under each policy of insurance shall be directed to be made to
Borrower or its Subsidiaries unless an Event of Default has occurred and is
continuing and the Collateral Agent has delivered notice to Borrower that such
payment may not be made to Borrower or its Subsidiaries.


 


Section 5.06         Inspections.


 


Each Loan Party will, and will cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
(as coordinated through the Collateral Agent) to visit and inspect any of the
properties of any Loan Party and any of its respective Subsidiaries, to
inspect, copy and take extracts from its and their financial and accounting
records, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants, all upon reasonable
notice and at such reasonable times during normal business hours and as often
as may reasonably be requested; provided that the Collateral Agent shall
give Borrower the opportunity to participate in any discussions with its
independent public accountants and, so long as no Event of Default has occurred
and is continuing, no Lender may exercise its rights hereunder more than once
in any calendar year.


 


Section 5.07         Lenders’
Meetings.


 


Borrower will, upon the request of Administrative
Agent or Requisite Lenders, participate in a meeting of Administrative Agent
and Lenders once during each Fiscal Year to be held at Borrower’s corporate
offices (or at such other location as may be agreed to by Borrower and
Administrative Agent) at such time as may be agreed to by Borrower and
Administrative Agent.


 


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Section 5.08         Compliance
with Laws.


 


Each Loan Party will comply, and shall cause each of
its Subsidiaries to comply, with the requirements of all applicable laws,
rules, regulations and orders of any Governmental Authority (including ERISA
and all Environmental Laws and Health Care Laws), non-compliance with which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.


 


Section 5.09         Environmental
Disclosure.


 


Borrower will deliver to Administrative Agent and
Lenders:


 


(a)           as soon as practicable following receipt thereof, copies of
all environmental audits, investigations, analyses and reports of any kind or
character, whether prepared by personnel of Borrower or any of its Subsidiaries
or by independent consultants, governmental authorities or any other Persons,
with respect to material environmental matters at any Facility or with respect
to any material Environmental Claims;


 


(b)           promptly upon the occurrence thereof, written notice
describing in reasonable detail (1) any Release required to be reported to
any federal, state or local governmental or regulatory agency under any
applicable Environmental Laws, (2) any remedial action taken by Borrower
or any other Person in response to (A) any Hazardous Materials Activities
the existence of which could reasonably be expected to result in one or more
Environmental Claims having, individually or in the aggregate, a Material
Adverse Effect, or (B) any Environmental Claims that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect, and (3) Borrower’s discovery of any occurrence or condition on any
Facility that could reasonably be expected to cause such Facility or any part
thereof to be subject to any material restrictions on the ownership, occupancy,
transferability or use thereof under any Environmental Laws;


 


(c)           as soon as practicable following the sending or receipt
thereof by Borrower or any of its Subsidiaries, a copy of any and all written
communications with respect to (1) any Environmental Claims that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, (2) any Release required to be reported to any
federal, state or local governmental or regulatory agency, and (3) any
request for information from any governmental agency stating, or would be
reasonably expected to mean, that such agency is investigating whether Borrower
or any of its Subsidiaries may be subject to an Environmental Claim arising in
connection with any Hazardous Materials Activity;


 


(d)           prompt written notice describing in reasonable detail
(1) any proposed acquisition of stock, assets, or property by Borrower or
any of its Subsidiaries that could reasonably be expected to (A) expose
Borrower or any of its Subsidiaries to, or result in, Environmental Claims that
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or (B) affect the ability of Borrower or any of
its Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective
operations and (2) any proposed action to be taken by Borrower or any of
its Subsidiaries to modify current operations in a manner that could reasonably
be expected to subject Borrower or any of its Subsidiaries to any additional
material obligations or requirements under any Environmental Laws; and


 


(e)           with reasonable promptness, such other documents and
information as from time to time may be reasonably requested by Administrative
Agent in relation to any matters disclosed pursuant to this Section 5.09.


 


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Section 5.10         Hazardous
Materials Activities, etc.


 


Each Loan Party shall promptly take, and shall cause
each of its Subsidiaries promptly to take, any and all actions necessary to
(i) cure any violation of applicable Environmental Laws by such Loan Party
or its Subsidiaries that could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, and (ii) make an appropriate
response to any Environmental Claim against such Loan Party or any of its
Subsidiaries and discharge any obligations it may have to any Person thereunder
where failure to do so could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.


 


Section 5.11         Subsidiaries.


 


In the event that any Person becomes a Subsidiary of
Borrower (other than a Consent Subsidiary), Borrower shall (a) promptly
cause such Subsidiary to become a Guarantor hereunder and a Grantor under
the Pledge and Security Agreement by executing and delivering to Administrative
Agent and Collateral Agent a Counterpart Agreement, and (b) take all such
actions and execute and deliver, or cause to be executed and delivered, all
such documents, instruments, agreements, and certificates as are similar to
those described in Sections 3.01(b), 3.01(f) and 3.01(i). With respect to each
such Subsidiary, Borrower shall promptly send to Administrative Agent written
notice setting forth with respect to such Person (i) the date on which
such Person became a Subsidiary of Borrower, and (ii) all of the data
required to be set forth in Schedules 4.01 and 4.02 with respect to such
Subsidiaries; provided, such written notice shall be deemed to
supplement Schedule 4.01 and 4.02 for all purposes hereof. Notwithstanding
the foregoing, the creation or perfection of pledges of or security interests
in, or the obtaining of title insurance with respect to, particular assets
shall not be required if, and for so long as, in the reasonable judgment of the
Administrative Agent, the cost of creating or perfecting such pledges or
security interests in such assets or obtaining title insurance in respect of
such assets shall be excessive in view of the benefits to be obtained by the
Lenders therefrom.


 


Section 5.12         Additional
Material Real Estate Assets. In the event that any Loan Party acquires
a Material Real Estate Asset or a Real Estate Asset owned on the Closing Date
becomes a Material Real Estate Asset and such interest has not otherwise been
made subject to the Lien of the Collateral Documents in favor of Collateral
Agent, for the benefit of Secured Parties, then such Loan Party,
contemporaneously with acquiring such Material Real Estate Asset, shall (a) in
the case of each Leasehold Property that is a Material Real Estate Asset, use
commercially reasonable efforts to take all such actions and execute and
deliver, or cause to be executed and delivered, as requested by the Collateral
Agent, (i) a Landlord Consent and Estoppel and evidence that such Leasehold
Property is a Recorded Leasehold Interest or (ii) a Landlord Collateral Access
Agreement and (b) in the case of any fee interests in a Material Real Estate
Asset, take all such actions and executed and deliver or cause to be executed
and delivered, all such mortgages, documents, instruments, agreements,
opinions, title insurance, survey, flood certificates and certificates with
respect to each such Material Real Estate Asset that Collateral Agent shall
reasonably request to create in favor of Collateral Agent, for the benefit of
Secured Parties, a valid and, subject to any necessary filing and/or recording,
perfected First Priority security interest in such Material Real Estate Assets.
In addition to the foregoing, Borrower shall, at the request of Requisite
Lenders, deliver, from time to time, to Administrative Agent such appraisals as
are required by law or regulation of Real Estate Assets with respect to which
Collateral Agent has been granted a Lien.


 


Notwithstanding the foregoing, the creation or
perfection of pledges of or security interests in, or the obtaining of title
insurance with respect to, particular assets shall not be required if, and for
so long as, in the reasonable judgment of the Administrative Agent, the cost of
creating or perfecting such pledges or security interests in such assets or
obtaining title insurance in respect of such assets shall be excessive in view
of the benefits to be obtained by the Lenders therefrom.


 


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Section 5.13         Interest
Rate Protection.


 


No later than ninety (90) days following the Closing
Date, the Borrower shall maintain, or caused to be maintained, in effect one or
more Interest Rate Agreements for a term of not less than three (3) years and
pursuant to which not less than 50% of the total funded Indebtedness of the
Borrower and its Subsidiaries at the Closing Date under this Agreement and the
Second Lien Credit Agreement (excluding any Revolving Loans, the Delayed Draw
Term Loans and the face amounts of any Letters of Credit)  shall be subject to Interest Rate
Agreements in form and substance reasonably satisfactory to Administrative
Agent.


 


Section 5.14         Further
Assurances.


 


At any time or from time to time upon the request of
Administrative Agent, each Loan Party will, at its expense, promptly execute,
acknowledge and deliver such further documents and do such other acts and
things as Administrative Agent or Collateral Agent may reasonably request in
order to effect fully the purposes of the Loan Documents. In furtherance and
not in limitation of the foregoing, each Loan Party shall take such actions as
Administrative Agent or Collateral Agent may reasonably request from time to
time to ensure that the Obligations are guarantied by the Guarantors and are
secured by validly perfected, First Priority liens on all of the assets of
Borrower and its Subsidiaries and all of the outstanding Capital Stock of
Borrower and its Subsidiaries, in each case to the extent contemplated by the
Loan Documents.


 


Section 5.15         Cash
Management Systems.


 


Borrower and its Subsidiaries shall establish and
maintain cash management systems as set forth on Schedule 5.15 or as reasonably
acceptable to Administrative Agent. Borrower and its Subsidiaries shall at all
times on and after 60 days following the Closing Date ensure that all Cash and
Cash Equivalents held by it are subject to a valid and perfected First Priority
security interest in favor of the Collateral Agent for the benefit of the
Secured Parties; provided that Cash and Cash Equivalents of up to $100,000
in the aggregate at any one time for all such entities and any Deposit Accounts
into which receivables from Governmental Authorities are paid shall not be
required to be subject to such perfected security interests.


 


Section 5.16         Books
and Records.


 


The Loan Parties will, and will cause each of its
Subsidiaries to, in all material respects, keep proper books of record and
account in which full, true and correct entries in accordance with GAAP are
made of all dealings and transactions in relation to its business and
activities.


 


Section 5.17         Performance
of Leases, Related Documents and Other Material Agreements.


 


Borrower and its Subsidiaries shall take reasonable
efforts to ensure that all material leases of real and personal property and
all Material Contracts (including material debt agreements and material Capital
Leases) to which they are a party are without material default of the Loan
Party to such lease or Material Contract beyond any applicable notice and cure
period or right of the lessor or other obligee to terminate or accelerate
thereunder.


 


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Section 5.18         Compliance
Program.


 


Each of Borrower and its Subsidiaries shall
regularly (a) review and revise its policies and procedures to ensure
continuing compliance in all material respects with all applicable material
Health Care Laws, (b) maintain appropriate programs and procedures for
communicating such policies and procedures to all officers, directors and
employees of Borrower and its Subsidiaries, (c) take appropriate actions
designed to permit all officers, directors and employees of Borrower and its
Subsidiaries to report violations of any material Health Care Laws, and
(d) maintain appropriate programs and procedures designed to address and
correct reported violations as soon as practicable.


 


Section 5.19         Condition
of Participation in Third Party Payor Programs.


 


To the extent applicable to Borrower or any of its
Subsidiaries in the conduct of their business, each of Borrower and its
Subsidiaries shall maintain its qualification for participation in, and payment
under, Governmental Third Party Payor Programs and Private Third Party Payor
Programs, that provide for payment or reimbursement for services, except to the
extent such loss or relinquishment could not reasonably be expected to have a
Material Adverse Event. Borrower and each of its Subsidiaries shall promptly
furnish or cause to be furnished to Administrative Agent and Lenders copies of
all material reports and correspondence, if any, it sends or receives relating
to any material loss or revocation (or material threatened loss or revocation)
of any qualification described in this Section 5.19.


 


Section 5.20         Certain
Post-Closing Obligations.


 


(a)           Borrower and its Subsidiaries shall use commercially
reasonable efforts to provide to the Administrative Agent within 45 days
following the Closing Date (or such longer period reasonably determined by the
Administrative Agent): (a) a Landlord Collateral Access Agreement in respect of
the Leasehold Property at 750 Park Place, Long Beach, New York 11561; (b) a
Landlord Collateral Access Agreement in respect of the Leasehold Property at
4041 M. Hadley Road, South Plainfield, New Jersey 07080 and (c) a Landlord
Collateral Access Agreement in respect of the Leasehold Property at HCR 1, Box
30, Route 209, Bossardsville Road, Sciota, Pennsylvania 18354.


 


(b)           Within 60 days following the Closing Date, Borrower and its
Subsidiaries shall obtain duly executed Control Agreements with respect to its
Deposit Accounts, in substantially the form attached to the Pledge and Security
Agreement as Exhibit D (or such other form as reasonably acceptable to the
Administrative Agent), to the extent required by Section 5.15.


 


Section 5.21         Maintenance
of Ratings.


 


At all times, Borrower shall use commercially
reasonable efforts to maintain ratings issued by Moody’s and S&P with
respect to its first lien senior secured debt and second lien senior secured
debt.


 


ARTICLE SIX

NEGATIVE COVENANTS


 


Each Loan Party covenants and agrees that, until the
Termination Date, such Loan Party shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Article Six.


 


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Section 6.01         Indebtedness.


 


No Loan Party shall, nor shall it permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness, except:


 


(a)           the Obligations;


 


(b)           Indebtedness of any Guarantor to Borrower or to any
Subsidiary of Borrower, of Borrower to any Guarantor, of any Non-Guarantor
Subsidiary to any Non-Guarantor Subsidiary, or up to $1,000,000 of Indebtedness
of any Non-Guarantor Subsidiary to Borrower or any Guarantor; provided,
(i) all such Indebtedness shall be subject to a First Priority Lien
pursuant to the Pledge and Security Agreement, (ii) all such Indebtedness
shall be unsecured, and (iii) any payment by any such Guarantor under any
guaranty of the Obligations shall result in a pro tanto reduction of the amount
of any Indebtedness owed by such Subsidiary to Borrower or to any of its
Subsidiaries for whose benefit such payment is made;


 


(c)           The Second Lien Term Loans owed under the Second Lien Credit
Agreement in an aggregate principal amount not to exceed $37,000,000 plus any
accrued interest, and Indebtedness incurred to refinance, renew or replace such
Indebtedness in whole or in part in accordance with the Intercreditor
Agreement;


 


(d)           Indebtedness incurred by Borrower or any of its Subsidiaries
arising from agreements providing for indemnification, adjustment of purchase
price, earnouts or similar obligations, or from guaranties or letters of
credit, surety bonds or performance bonds securing the performance of Borrower
or any such Subsidiary pursuant to such agreements, in connection with
Permitted Acquisitions or permitted dispositions of any business, assets or
Subsidiary of Borrower or any of its Subsidiaries;


 


(e)           Indebtedness which may be deemed to exist pursuant to any
guaranties, performance, surety, statutory, appeal or similar obligations
incurred in the ordinary course of business;


 


(f)            Indebtedness in respect of netting services, overdraft
protections and otherwise in connection with deposit accounts;


 


(g)           guaranties by Borrower of Indebtedness of a Guarantor or
guaranties by a Subsidiary of Borrower of Indebtedness of Borrower or a
Guarantor with respect, in each case, to Indebtedness otherwise permitted to be
incurred pursuant to this Section 6.01;


 


(h)           Indebtedness described in Schedule 6.01, but not any
extensions, refinancings, renewals or replacements of such Indebtedness except
for any Permitted Refinancing thereof;


 


(i)            obligations to make the Initial Earnout Payments and
Milestone Payments and any Earnout Seller Notes related thereto;


 


(j)            Indebtedness in respect of the Initial Seller Notes;


 


(k)           Indebtedness with respect to Capital Leases and purchase
money Indebtedness (“Purchase Money Indebtedness”) incurred for the
purpose of financing all or any part of the purchase price of any property or
the cost of installation, construction, repair or improvement of any


 


83

















 


property in an aggregate amount not
to exceed at any time $5,000,000 and any Permitted Refinancing thereof; provided,
any such Purchase Money Indebtedness (i) shall be secured only by the
assets acquired, installed, constructed, repaired or improved (and any
accessions thereof or improvements thereto) in connection with the incurrence
of such Indebtedness, and (ii) shall constitute not less than 70% of the
aggregate consideration paid with respect to such asset;


 


(l)            Indebtedness of Borrower and its Subsidiaries in an aggregate
amount not to exceed at any time $10,000,000; provided that no more than
$2,500,000 of such Indebtedness shall be secured Indebtedness;


 


(m)          Indebtedness arising from judgments or orders in
circumstances not constituting an Event of Default under Section 8.01;


 


(n)           unsecured Indebtedness in respect of any Interest Rate
Agreement entered into to manage interest rate risk and not for speculative
purposes; and


 


(o)           Indebtedness of a Person or Indebtedness connected to assets
of a Person that, in either case, becomes a Subsidiary or Indebtedness
connected to assets that are acquired by Borrower or any of its Subsidiaries in
each case as a result of a Permitted Acquisition, in an aggregate amount not to
exceed $5,000,000 at any one time outstanding (provided that such indebtedness
existed at the time such Person became a Subsidiary or at the time such assets
were acquired and, in each case, was not created in anticipation thereof) and
any Permitted Refinancing thereof.


 


Section 6.02         Liens.


 


No Loan Party shall, nor shall it permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC of any State or under any similar recording or notice
statute, except (each of the following, collectively, the “Permitted Liens”):


 


(a)           Liens in favor of Collateral Agent for the benefit of Secured
Parties granted pursuant to any Loan Document;


 


(b)           Liens for Taxes for amounts not yet overdue, or if
obligations with respect to such Taxes are being contested in good faith by
appropriate proceedings, so long as such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made for any
such contested amounts;


 


(c)           statutory Liens of landlords, carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed by law,
in each case incurred in the ordinary course of business (i) for amounts
not yet overdue or (ii) for amounts that are overdue and that (in the case
of any such amounts overdue for a period in excess of ten (10) days) are being
contested in good faith by appropriate proceedings, so long as such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made for any such contested amounts;


 


(d)           Liens incurred in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other types
of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,


 


84

















 


trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money or other Indebtedness);


 


(e)           recorded or unrecorded easements, covenants, rights-of-way,
restrictions, encroachments, and other similar defects or irregularities in
title, in each case which do not and will not impair in any material respect
the ordinary conduct of the business of Borrower or any of its Subsidiaries;


 


(f)            any interest or title of a lessor or sublessor under any
lease of real estate permitted hereunder;


 


(g)           Liens in favor of any escrow agent solely on and in respect
of any cash earnest money deposits made by Borrower or any of its Subsidiaries
in connection with any letter of intent or purchase agreement permitted
hereunder;


 


(h)           purported Liens evidenced by the filing of precautionary UCC
financing statements relating solely to operating leases of personal property
entered into in the ordinary course of business;


 


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


 


(j)            any zoning, building or similar law or right reserved to or
vested in any governmental office or agency to control or regulate the use of
any real property or similar restrictions;


 


(k)           licenses of patents, trademarks and other Intellectual
Property rights granted by Borrower or any of its Subsidiaries in the ordinary
course of business and not interfering in any respect with the ordinary conduct
of the business of Borrower or such Subsidiary;


 


(l)            Liens described in Schedule 6.02 or on a title report
delivered pursuant to Section 5.12;


 


(m)          Liens securing Indebtedness permitted pursuant to Section
6.01(k); provided, any such Lien shall encumber only the assets
acquired, installed, constructed, repaired or improved (and any accessions
thereof or improvements thereto) with the proceeds of such Indebtedness;


 


(n)           other Liens securing obligations in an aggregate amount not
to exceed $2,500,000 at any time outstanding;


 


(o)           Liens consisting of judgment or judicial attachment liens
with respect to judgments that do not constitute an Event of Default under
Section 8.01;


 


(p)           Liens on the collateral securing obligations under the Second
Lien Credit Agreement and any refinancings thereof permitted by Section
6.01(c); provided that such Liens are subordinated to the Liens securing
the Obligations in accordance with the terms of the Intercreditor Agreement;


 


(q)           Liens in favor of a banking institution arising by operation
of law or otherwise encumbering deposits (including the right of set-off) held
by such banking institution and which are within the general parameters
customary in the banking industry; and


 


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(r)            Liens securing Indebtedness permitted pursuant to Section
6.01(o) or otherwise assumed in connection with a Permitted Acquisition or other
asset acquisition, so long as such Liens cover only the assets acquired
pursuant to such Permitted Acquisition or other asset acquisition.


 


Section 6.03         No
Further Negative Pledges.


 


Except with respect to (a) specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to a permitted Asset Sale and
(b) restrictions contained in the Second Lien Credit Agreement and the
related documents  by reason of
customary provisions restricting assignments, subletting or other transfers
contained in leases, licenses and similar agreements entered into in the
ordinary course of business (provided that such restrictions are limited to the
property or assets secured by such Liens or the property or assets subject to
such leases, licenses or similar agreements, as the case may be),
(d) restrictions set forth in any Indebtedness incurred pursuant to
Section 6.01(k), so long as they are limited to the assets that are the subject
of a Capital Lease or installed, constructed, repaired or improved with the
proceeds of such Indebtedness, (e) pursuant to Indebtedness incurred
pursuant to Section 6.01(o) and (f) pursuant to any agreements acquired or
entered into in connection with a Permitted Acquisition, no Loan Party nor any
of its Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon any of its properties or assets, whether now owned
or hereafter acquired.


 


Section 6.04         Restricted
Junior Payments.


 


No Loan Party shall, nor shall it permit any of its
Subsidiaries or Affiliates through any manner or means or through any other
Person to, directly or indirectly, declare, order, pay, make or set apart, or
agree to declare, order, pay, make or set apart, make any Restricted Junior
Payment except that:


 


(a)           Borrower may make required payments of principal, and
interest, fees and any other amount due in respect of the Indebtedness incurred
under the Second Lien Credit Agreement and any refinancing Indebtedness in
respect thereof permitted hereunder;


 


(b)           Borrower may make Initial Earnout Payments and Milestone
Payments in cash to the extent expressly required by the Stock Purchase
Agreement in respect of the Fiscal Year ended December 31, 2007; provided,
that (i) Borrower and its Subsidiaries shall be in compliance with the
financial covenants set forth in Section 6.07 on a pro forma basis after giving
effect to such payment  as of the last
day of the Fiscal Quarter most recently ended for which financial statements
have been provided pursuant to Section 5.01 (as determined in accordance with
Section 6.07(d) and evidenced by delivery of the relevant Compliance
Certificates in accordance with Section 5.01(d)) and (ii) no Default or Event
of Default shall have occurred and be continuing or would result therefrom;


 


(c)           Borrower may make payments to Sellers pursuant to Section 1.7
of the Stock Purchase Agreement;


 


(d)           Borrower may make Initial Earnout Payments and Milestone
Payments in cash as required by the Stock Purchase Agreement in respect of the
Fiscal Year ended December 31, 2008 and thereafter in an amount not to exceed
the amount of cumulative Consolidated Excess Cash Flow of the Borrower not
required to prepay the Loans pursuant to Section 2.27(e) for the period from November
1, 2007 to December 31, 2007 (that, for the avoidance of doubt, is not subject
to prepayment pursuant to Section 2.27(e)) and each Fiscal Year ending after
the Closing Date but prior to the date of determination; provided that
(i) Borrower and its Subsidiaries shall be in compliance with the financial
covenants set forth in Section 6.07 on a pro forma basis after giving effect to
such payment as of the last day of the Fiscal Quarter most recently ended for
which financial statements have been provided pursuant


 


86

















 


to Section 5.01 (as determined in
accordance with Section 6.07(d) and evidenced by delivery of the relevant
Compliance Certificates in accordance with Section 5.01(d)), (ii) no Default or
Event of Default shall have occurred and be continuing or would result
therefrom, (iii) at the time of the making of such payment and after giving
effect thereto, the amount, if any, by which (1) the Revolving Commitments
exceeds (2) the sum of the Total Utilization of Revolving Commitments shall not
be less than $5,000,000 and (iv) such payment shall not be made earlier than
five (5) Business Days after the delivery of the Compliance Certificate
required by Section 5.01(d) in respect of such Fiscal Year for which the
Initial Earnout Payments and Milestone Payments are due;


 


(e)           Borrower may make Initial Earnout Payments and Milestone
Payments in an amount equal to (i) the aggregate principal amount of any Earnout
Seller Notes plus (ii) the amount of net cash proceeds received by Borrower
from an offering of common Capital Stock of Borrower to the extent not required
to prepay the Loans pursuant to Section 2.27(c) or used in connection with a
Permitted Acquisition, a permitted Investment pursuant to Section 6.06 or
Consolidated Capital Expenditures;


 


(f)            (i) any Subsidiary may make Restricted Junior Payments to its
direct parent to the extent its parent is Borrower or any other Subsidiary,
(ii) any such Subsidiary that is not a Wholly Owned Subsidiary may make distributions
to Persons that are not Loan Parties, pro rata to such Persons’ ownership of
such Subsidiary and concurrently with the making of distributions to the Loan
Parties or otherwise for Taxes payable by such Persons (whether or not pro
rata, but if not pro rata the Loan Parties shall receive at least their pro
rata share); provided that that in the case of clause (ii), (i) Borrower
and its Subsidiaries shall be in compliance with the financial covenants set
forth in Section 6.07 on a pro forma basis after giving effect to such payment
as of the last day of the Fiscal Quarter most recently ended for which
financial statements have been provided pursuant to Section 5.01 (as determined
in accordance with Section 6.07(d) and evidenced by delivery of the relevant
Compliance Certificates in accordance with Section 5.01(d)) and (ii) no Default
or Event of Default shall have occurred and be continuing or would result
therefrom;


 


(g)           Borrower may make Restricted Junior Payments in order to
incentivize such holders to exercise the Warrants prior to the exercise date
specified therein;  provided  that (i) the making of such Restricted Junior Payment shall
be contingent upon, and shall only be made concurrently with, the minimum
receipt of cash proceeds by the Borrower prior to or simultaneous with the
exercise of such Warrants equal to or in excess of the amount of such
Restricted Junior Payment, (ii) upon the receipt of the cash proceeds of the
exercise of the Warrants, Borrower shall make a prepayment pursuant to Section
2.27 in an amount equal to the amount of such Restricted Junior Payment; (iii)
Borrower and its Subsidiaries shall be in compliance with the financial
covenants set forth in Section 6.07 on a pro forma basis after giving effect to
such payment as of the last day of the Fiscal Quarter most recently ended for
which financial statements have been provided pursuant to Section 5.01 (as
determined in accordance with Section 6.07(d) and evidenced by delivery of the
relevant Compliance Certificates in accordance with Section 5.01(d)) and (iv)
no Default or Event of Default shall have occurred and be continuing or would
result therefrom; and


 


(h)           Borrower may make Restricted Junior Payments in an aggregate
amount not to exceed $350,000 to the extent constituting payment in full to the
holders of such Warrants the minimum amount required to terminate, retire or
obtain the surrender of the Warrants expressly pursuant to their terms (without
giving effect to any amendment after the date hereof); provided that
that in each case, (i) Borrower and its Subsidiaries shall be in compliance
with the financial covenants set forth in Section 6.07 on a pro forma basis
after giving effect to such payment as of the last day of the Fiscal Quarter
most recently ended for which financial statements have been provided pursuant
to Section 5.01 (as determined in accordance with Section 6.07(d) and evidenced
by delivery of the relevant Compliance


 


87

















 


Certificates in accordance with
Section 5.01(d)) and (ii) no Default or Event of Default shall have occurred
and be continuing or would result therefrom.


 


Section 6.05         Restrictions
on Subsidiary Distributions.


 


Except (1) as provided herein, (2) in any
other Loan Document, (3) in the Second Lien Credit Agreement or any
documents related thereto, (4) pursuant to any agreements acquired or
entered into in connection with a Permitted Acquisition, (5) pursuant to the
organizational documents of any Consent Subsidiary and (6) pursuant to Indebtedness
incurred pursuant to Section 6.01(o), no Loan Party shall, nor shall it permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary of Borrower to:


 


(a)           pay dividends or make any other distributions on any of such
Subsidiary’s Capital Stock owned by Borrower or any other Subsidiary of
Borrower;


 


(b)           repay or prepay any Indebtedness owed by such Subsidiary to
Borrower or any other Subsidiary of Borrower;


 


(c)           make loans or advances to Borrower or any other Subsidiary of
Borrower; or


 


(d)           transfer any of its property or assets to Borrower or any
other Subsidiary of Borrower other than restrictions (i) in agreements
evidencing purchase money Indebtedness permitted by Section 6.01(k) that impose
restrictions on the property so acquired, (ii) by reason of customary
provisions restricting assignments, subletting or other transfers contained in
leases, licenses, joint venture agreements and similar agreements entered into
in the ordinary course of business, or (iii) that are or were created by
virtue of any transfer of, agreement to transfer or option or right with
respect to any property, assets or Capital Stock not otherwise prohibited under
this Agreement.


 


Section 6.06         Investments.


 


No Loan Party shall, nor shall it permit any of its
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture or general partnership, except (each of the
following, collectively, the “Permitted Investments”):


 


(a)           Cash Equivalents;


 


(b)           (i) equity Investments owned as of the Closing Date in
any Subsidiary, and (ii) Investments made after the Closing Date in Wholly
Owned Subsidiaries of Borrower;


 


(c)           Investments (i)  received in satisfaction or partial
satisfaction thereof from financially troubled account debtors, customers or
suppliers or in settlement of delinquent obligations of, and other disputes
with, account debtors, customers or suppliers and (ii) deposits,
prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of Borrower and its Subsidiaries;


 


(d)           intercompany loans to the extent permitted under Section
6.01(b);


 


(e)           Consolidated Capital Expenditures;


 


88

















 


(f)            loans and advances to employees of Borrower and its
Subsidiaries made in the ordinary course of business in an aggregate principal
amount not to exceed $500,000 in the aggregate (other than any loans or
advances to any director or executive officer (or equivalent thereof) that
would be in violation of Section 402 of the Sarbanes-Oxley Act to the extent
the Borrower and its Subsidiaries are subject thereto);


 


(g)           Investments made in connection with Permitted Acquisitions
permitted pursuant to Section 6.08;


 


(h)           Investments described in Schedule 6.06;


 


(i)            Investments by Borrower or any Subsidiary in any Subsidiary
that is not a Wholly Owned Subsidiary (or a Person who as a result of such Investments
becomes a Subsidiary that is not a Wholly Owned Subsidiary) in an aggregate
amount not to exceed at any time $2,500,000 plus the Available Equity Credit;


 


(j)            other Investments in an aggregate amount not to exceed at any
time $2,500,000 plus the Available Equity Credit;


 


(k)           Investments consisting of cash on deposit with banks or other
depositary institutions;


 


(l)            non-cash consideration received by the Borrower or any
Subsidiary in any permitted Asset Sale; and


 


(m)          Investments in Interest Rate Agreements permitted hereunder.


 


Notwithstanding the
foregoing, in no event shall any Loan Party make any Investment which results
in or facilitates in any manner any Restricted Junior Payment not otherwise
permitted under the terms of Section 6.04.


 


Section 6.07         Financial
Covenants.


 


(a)           Fixed Charge Coverage Ratio.
Borrower shall not permit the Fixed Charge Coverage Ratio as of the last day of
any Fiscal Quarter, beginning with the Fiscal Quarter ending  December 31, 2007 to be less than the
correlative ratio indicated:


 


	
  FISCAL QUARTER

  	
   

  	
  FIXED CHARGE

  COVERAGE RATIO

  	
   

  
	
  December 31,
  2007

  	
   

  	
  1.25:1.00

  	
   

  
	
  March 31,
  2008

  	
   

  	
  1.25:1.00

  	
   

  
	
  June 30,
  2008

  	
   

  	
  1.25:1.00

  	
   

  
	
  September
  30, 2008

  	
   

  	
  1.25:1.00

  	
   

  
	
  December 31,
  2008

  	
   

  	
  1.25:1.00

  	
   

  
	
  March 31,
  2009

  	
   

  	
  1.30:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  1.30:1.00

  	
   

  
	
  September
  30, 2009

  	
   

  	
  1.35:1.00

  	
   

  
	
  December 31,
  2009

  	
   

  	
  1.35:1.00

  	
   

  
	
  March 31,
  2010

  	
   

  	
  1.35:1.00

  	
   

  
	
  June 30,
  2010

  	
   

  	
  1.40:1.00

  	
   

  



 


 


89

















 


	
  FISCAL QUARTER

  	
   

  	
  FIXED CHARGE

  COVERAGE RATIO

  	
   

  
	
  September
  30, 2010

  	
   

  	
  1.45:1.00

  	
   

  
	
  December 31,
  2010

  	
   

  	
  1.50:1.00

  	
   

  
	
  March 31,
  2011

  	
   

  	
  1.55:1.00

  	
   

  
	
  June 30,
  2011

  	
   

  	
  1.55:1.00

  	
   

  
	
  September
  30, 2011

  	
   

  	
  1.60:1.00

  	
   

  
	
  December 31,
  2011

  	
   

  	
  1.60:1.00

  	
   

  
	
  March 31,
  2012

  	
   

  	
  1.65:1.00

  	
   

  
	
  June 30,
  2012

  	
   

  	
  1.75:1.00

  	
   

  
	
  September
  30, 2012

  	
   

  	
  1.80:1.00

  	
   

  
	
  December 31,
  2012 and thereafter

  	
   

  	
  1.85:1.00

  	
   

  



 


(b)           Total Leverage Ratio.
Borrower shall not permit the Total Leverage Ratio as of the last day of any
Fiscal Quarter, beginning with the Fiscal Quarter ending December 31, 2007 to
exceed the correlative ratio indicated:


 


	
  FISCAL

  QUARTER

  	
   

  	
  TOTAL LEVERAGE

  RATIO

  	
   

  
	
  December 31,
  2007

  	
   

  	
  5.50:1.00

  	
   

  
	
  March 31,
  2008

  	
   

  	
  5.50:1.00

  	
   

  
	
  June 30,
  2008

  	
   

  	
  5.50:1.00

  	
   

  
	
  September
  30, 2008

  	
   

  	
  5.20:1.00

  	
   

  
	
  December 31,
  2008

  	
   

  	
  5.15:1.00

  	
   

  
	
  March 31,
  2009

  	
   

  	
  4.90:1.00

  	
   

  
	
  June 30,
  2009

  	
   

  	
  4.90:1.00

  	
   

  
	
  September
  30, 2009

  	
   

  	
  4.70:1.00

  	
   

  
	
  December 31,
  2009

  	
   

  	
  4.45:1.00

  	
   

  
	
  March 31,
  2010

  	
   

  	
  4.45:1.00

  	
   

  
	
  June 30,
  2010

  	
   

  	
  4.20:1.00

  	
   

  
	
  September
  30, 2010

  	
   

  	
  4.00:1.00

  	
   

  
	
  December 31,
  2010

  	
   

  	
  3.90:1.00

  	
   

  
	
  March 31,
  2011

  	
   

  	
  3.70:1.00

  	
   

  
	
  June 30,
  2011

  	
   

  	
  3.50:1.00

  	
   

  
	
  September
  30, 2011

  	
   

  	
  3.50:1.00

  	
   

  
	
  December 31,
  2011

  	
   

  	
  3.20:1.00

  	
   

  
	
  March 31,
  2012 and thereafter

  	
   

  	
  3.00:1.00

  	
   

  



 


(c)           Maximum Consolidated Capital Expenditures. Borrower shall not, and shall not permit its Subsidiaries
to, make or incur Consolidated Capital Expenditures, in any Fiscal Year


 


90

















 


indicated below, in an aggregate
amount for Borrower and its Subsidiaries in excess of the corresponding amount
set forth below opposite such Fiscal Year: 


 


	
  PERIOD

  	
   

  	
  CONSOLIDATED

  CAPITAL

  EXPENDITURES

  	
   

  
	
  From the
  Closing Date through

  December 31, 2007

  	
   

  	
  $

  	
  1,150,000

  	
   

  
	
  Fiscal Year
  2008

  	
   

  	
  $

  	
  2,500,000

  	
   

  
	
  Fiscal Year
  2009

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  Fiscal Year
  2010

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  Fiscal Year
  2011

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  Fiscal Year
  2012

  	
   

  	
  $

  	
  4,500,000

  	
   

  
	
  Fiscal Year
  2013 and thereafter

  	
   

  	
  $

  	
  5,750,000

  	
   

  



 


provided, to the extent the permitted amount for any
Fiscal Year has been expended, such permitted amount shall be increased by an
amount equal to the excess, if any, of the permitted amount of Consolidated
Capital Expenditures for the previous Fiscal Year (without giving effect to any
adjustment in accordance with this proviso) over the actual amount of
Consolidated Capital Expenditures for the previous Fiscal Year; provided
further, Borrower shall have the right to elect in writing to the
Administrative Agent, delivered no later than concurrently with the delivery of
the Financial Plan for such Fiscal Year, to increase the permitted amount of
Consolidated Capital Expenditures for such Fiscal Year by no less than $500,000
and no more than $2,000,000, so long as such right is not exercised on more
than four occasions from the Closing Date until the date of determination and
the aggregate amount, for all increases taken together, does not exceed
$2,000,000.


 


(d)           Certain Calculations.
With respect to any period during which a Permitted Acquisition or an Asset
Sale has occurred (each, a “Subject Transaction”), for purposes of
determining compliance with the financial covenants set forth in this Section
6.07, Consolidated Adjusted EBITDA and the components of Consolidated Fixed
Charges shall be calculated with respect to such period on a pro forma basis
(including pro forma adjustments arising out of events which are directly
attributable to a specific transaction, are factually supportable and are
expected to have a continuing impact, in each case determined on a basis
consistent with Article 11 of Regulation S-X promulgated under the Securities
Act and as interpreted by the staff of the Securities and Exchange Commission,
which would include cost savings resulting from head count reduction, closure
of facilities and similar restructuring charges, which pro forma adjustments
shall be certified by the chief financial officer of Borrower) using the
historical financial statements of any business so acquired or to be acquired
or sold or to be sold and the consolidated financial statements of Borrower and
its Subsidiaries which shall be reformulated as if such Subject Transaction,
and any Indebtedness incurred or repaid in connection therewith, had been
consummated or incurred or repaid at the beginning of such period (and assuming
that such Indebtedness bears interest during any portion of the applicable
measurement period prior to the relevant acquisition at the weighted average of
the interest rates applicable to outstanding Loans incurred during such
period).


 


91

















 


Section 6.08         Fundamental
Changes; Disposition of Assets; Acquisitions.


 


No Loan Party shall, nor shall it permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, assets or property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
whether now owned or hereafter acquired, or acquire by purchase or otherwise
(other than purchases or other acquisitions of inventory, materials and
equipment and Consolidated Capital Expenditures in the ordinary course of
business) the business, substantially all of the property or fixed assets of,
or stock or other evidence of beneficial ownership of, any Person or any
division or line of business or other business unit of any Person, or become a
general partner in any partnership, except:


 


(a)           any Subsidiary of Borrower may be merged with or into Borrower
or any Guarantor, or be liquidated, wound up or dissolved, or all or any part
of its business, property or assets may be conveyed, sold, leased, transferred
or otherwise disposed of, in one transaction or a series of transactions, to
Borrower , in all cases involving Borrower, or any Guarantor; provided,
in the case of such a merger, Borrower or such Guarantor, as applicable shall
be the continuing or surviving Person, except that any Subsidiary that is not a
Wholly Owned Subsidiary may distribute its assets in liquidation to Borrower
and any Subsidiary of the Borrower, on the one hand, and to Persons that are
not Loan Parties, on the other hand, pro rata to their respective ownership of
such Subsidiary;


 


(b)           sales or other dispositions of assets that do not constitute
Asset Sales;


 


(c)           Asset Sales 
(including, without limitation, sales of assets of a Target for fair
market value within one year following the acquisition of such Target (a “Target
Sale”)), the proceeds of which (valued at the principal amount thereof in
the case of non-cash proceeds consisting of notes or other debt Securities and
valued at fair market value in the case of other non-cash proceeds), other than
those from a Target Sale, (i) are less than $5,000,000 with respect to any
single Asset Sale or series of related Asset Sales and (ii) when
aggregated with the proceeds of all other Asset Sales made within the same
Fiscal Year, are less than $10,000,000; provided (1) the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof (determined in good faith by the Board of
Directors of Borrower), (2) no less than 75% of such consideration shall
be paid in Cash or Cash Equivalents, and (3) the Net Asset Sale Proceeds
thereof shall be applied as required in Section 2.30;


 


(d)           disposals of obsolete, worn out or surplus property;


 


(e)           Permitted Acquisitions; and


 


(f)            Investments made in accordance with Section 6.06.


 


Notwithstanding anything to the contrary above, no
Loan Party shall, nor shall it permit any of its Subsidiaries to, sell or
discount overdue accounts receivable whether or not such accounts receivable
arise in the ordinary course of business, as part of any bulk sale or financing
transaction or otherwise.


 


Section 6.09         Disposal
of Subsidiary Interests.


 


Except for any sale of all of its interests in the
Capital Stock of any of its Subsidiaries in compliance with the provisions of
Section 6.08 and except as provided in the Second Lien Credit Agreement, no
Loan Party shall, nor shall it permit any of its Subsidiaries to,
(a) directly or indirectly sell,


 


92

















 


assign, pledge or otherwise
encumber or dispose of any Capital Stock of any of its Subsidiaries, except as
required by the Loan Documents and to qualify directors if required by
applicable law; or (b) permit any of its Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise encumber or dispose of any
Capital Stock of any of its Subsidiaries, except as required by the Loan Documents
and to another Loan Party (subject to the restrictions on such disposition
otherwise imposed hereunder), or to qualify directors if required by applicable
law.


 


Section 6.10         Sales
and Lease-Backs.


 


No Loan Party shall, nor shall it permit any of its
Subsidiaries to, directly or indirectly, become or remain liable as lessee or
as a guarantor or other surety with respect to any lease of any property
(whether real, personal or mixed), whether now owned or hereafter acquired,
which such Loan Party (a) has sold or transferred or is to sell or to
transfer to any other Person (other than Borrower or any of its Subsidiaries to
the extent such sale or transfer is otherwise permitted hereunder), or
(b) intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by such Loan Party to
any Person (other than Borrower or any of its Subsidiaries to the extent such
sale or transfer is otherwise permitted hereunder) in connection with such
lease.


 


Section 6.11         Transactions
with Shareholders and Affiliates.


 


No Loan Party shall, nor shall it permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of Borrower or of any such
holder, unless such transaction (i) has been disclosed to Administrative
Agent, and (ii) is on terms that are no less favorable to Borrower or that
Subsidiary, as the case may be, than those that might be obtained at the time
from a Person who is not such a holder or Affiliate; provided the
foregoing restriction shall not apply to (a) the payment by Borrower and
its Subsidiaries of reasonable and customary fees, stock options and stock
grants to members of its and its Subsidiaries’ Boards of Directors and the
payment and provisions of reasonable compensation and benefits (including
permitted incentive stock plans) to officers and employees;
(b) compensation arrangements for officers and other employees of Borrower
and its Subsidiaries entered into in the ordinary course of business;
(c) transactions described in Schedule 6.11; (d) transactions
pursuant to Section 6.06(f); (e) transactions between Borrower and any of
its Subsidiaries, or between any such Subsidiaries; and (f) the lease
between Chem Rx and 750 Park Place in accordance with the terms thereof.


 


Section 6.12         Conduct
of Business.


 


From and after the Closing Date, no Loan Party
shall, nor shall it permit any of its Subsidiaries to, engage in any business
other than (i) the businesses engaged in by such Loan Party on the Closing
Date and similar or related businesses and (ii) such other lines of
business as may be consented to by Requisite Lenders.


 


Section 6.13         Amendments
or Waivers of Certain Related Agreements.


 


Except as set forth in Section 6.14, no Loan Party
shall nor shall it permit any of its Subsidiaries to, agree to any material
amendment, restatement, supplement or other modification to, or waiver of, any
of its material rights under any Related Agreement (other than the Second Lien
Credit Agreement), Organizational Document or any agreement evidencing
Indebtedness after the Closing Date in a manner materially adverse to the
Lenders without in each case obtaining the prior written consent of Requisite
Lenders to such amendment, restatement, supplement or other modification or
waiver.


 


93

















 


Section 6.14         Amendments
or Waivers of the Second Lien Credit Agreement.


 


Each of the Borrower and its
Subsidiaries shall not, nor shall it permit any of its
Subsidiaries to, amend or otherwise change the terms of the Second Lien Credit
Agreement or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate applicable thereto, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto or otherwise make such event of default or condition less restrictive
or burdensome on the Borrower),
change the prepayment provisions thereof, or change any collateral therefor
(other than to release such collateral), or if the effect of such amendment or
change, together with all other amendments or changes made, is to increase
materially the obligations of the obligor thereunder or to confer any additional
rights on the lenders under the Second Lien Credit Agreement (or a
representative on their behalf) which would be adverse to any Loan Party or
Lenders, except as otherwise expressly permitted by the Intercreditor
Agreement.


 


Section 6.15         Fiscal
Year.


 


No Loan Party shall, nor shall it permit any of its
Subsidiaries to change its Fiscal Year-end from December 31.


 


Section 6.16         No
Foreign Subsidiaries.


 


No Loan Party shall, nor shall it permit any of its
Subsidiaries to, create, acquire or otherwise own directly or indirectly any
Subsidiary other than a Domestic Subsidiary.


 


ARTICLE SEVEN

GUARANTY


 


Section 7.01         Guaranty
of the Obligations.


 


Subject to the provisions of Section 7.02,
Guarantors jointly and severally hereby irrevocably and unconditionally guaranty
to Administrative Agent for the ratable benefit of the Beneficiaries the due
and punctual payment in full of all Obligations when the same shall become due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed
Obligations”).


 


Section 7.02         Contribution
by Guarantors.


 


All Guarantors desire to allocate among themselves
(collectively, the “Contributing Guarantors”), in a fair and equitable
manner, their obligations arising under this Guaranty. Accordingly, in the
event any payment or distribution is made on any date by a Guarantor (a “Funding
Guarantor”) under this Guaranty that exceeds its Fair Share as of such
date, such Funding Guarantor shall be entitled to a contribution from each of
the other Contributing Guarantors in the amount of such other Contributing
Guarantor’s Fair Share Shortfall as of such date, with the result that all such
contributions will cause each Contributing Guarantor’s Aggregate Payments to
equal its Fair Share as of such date. “Fair Share” means, with respect
to a Contributing Guarantor as of any date of determination, an amount equal to
(a) the ratio of (i) the Fair Share Contribution Amount with respect
to such Contributing Guarantor to (ii) the aggregate of the Fair Share
Contribution Amounts with respect to all Contributing Guarantors


 


94

















 


multiplied by (b) the
aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the obligations Guaranteed. “Fair
Share Shortfall” means, with respect to a Contributing Guarantor as of any
date of determination, the excess, if any, of the Fair Share of such
Contributing Guarantor over the Aggregate Payments of such Contributing
Guarantor. “Fair Share Contribution Amount” means, with respect to a
Contributing Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Contributing Guarantor under this Guaranty
that would not render its obligations hereunder or thereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11
of the United States Code or any comparable applicable provisions of state law;
provided, solely for purposes of calculating the “Fair Share
Contribution Amount” with respect to any Contributing Guarantor for
purposes of this Section 7.02, any assets or liabilities of such Contributing
Guarantor arising by virtue of any rights to subrogation, reimbursement or
indemnification or any rights to or obligations of contribution hereunder shall
not be considered as assets or liabilities of such Contributing Guarantor. “Aggregate
Payments” means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (1) the aggregate amount of all payments
and distributions made on or before such date by such Contributing Guarantor in
respect of this Guaranty (including in respect of this Section 7.02), minus
(2) the aggregate amount of all payments received on or before such date
by such Contributing Guarantor from the other Contributing Guarantors as contributions
under this Section 7.02. The amounts payable as contributions hereunder shall
be determined as of the date on which the related payment or distribution is
made by the applicable Funding Guarantor. The allocation among Contributing
Guarantors of their obligations as set forth in this Section 7.02 shall not be
construed in any way to limit the liability of any Contributing Guarantor
hereunder. Each Guarantor is a third party beneficiary to the contribution
agreement set forth in this Section 7.02.


 


Section 7.03         Payment
by Guarantors.


 


Subject to Section 7.02, Guarantors hereby jointly
and severally agree, in furtherance of the foregoing and not in limitation of
any other right which any Beneficiary may have at law or in equity against any
Guarantor by virtue hereof, that upon the failure of Borrower to pay any of the
Guaranteed Obligations when and as the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
§ 362(a)), Guarantors will upon demand pay, or cause to be paid, in cash,
to Administrative Agent for the ratable benefit of Beneficiaries, an amount
equal to the sum of the unpaid principal amount of all Guaranteed Obligations
then due as aforesaid, accrued and unpaid interest on such Guaranteed
Obligations (including interest which, but for Borrower’s becoming the subject
of a case under the Bankruptcy Code, would have accrued on such Guaranteed
Obligations, whether or not a claim is allowed against Borrower for such
interest in the related bankruptcy case) and all other Guaranteed Obligations
then owed to Beneficiaries as aforesaid.


 


Section 7.04         Liability
of Guarantors Absolute.


 


Subject to applicable bankruptcy and insolvency
laws, each Guarantor agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or
surety other than payment in full of the Guaranteed Obligations. In furtherance
of the foregoing and without limiting the generality thereof, each Guarantor
agrees as follows:


 


(a)           this Guaranty is a guaranty of payment when due and not of
collectability. This Guaranty is a primary obligation of each Guarantor and not
merely a contract of surety;


 


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(b)           Administrative Agent may enforce this Guaranty upon the
occurrence and during the continuance of an Event of Default notwithstanding
the existence of any dispute between Borrower and any Beneficiary with respect
to the existence of such Event of Default;


 


(c)           the obligations of each Guarantor hereunder are independent
of the obligations of Borrower and the obligations of any other guarantor
(including any other Guarantor) of the obligations of Borrower, and a separate
action or actions may be brought and prosecuted against such Guarantor whether
or not any action is brought against Borrower or any of such other guarantors
and whether or not Borrower is joined in any such action or actions;


 


(d)           payment by any Guarantor of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge any
Guarantor’s liability for any portion of the Guaranteed Obligations which has
not been paid. Without limiting the generality of the foregoing, if
Administrative Agent is awarded a judgment in any suit brought to enforce any
Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such
judgment shall not be deemed to release such Guarantor from its covenant to pay
the portion of the Guaranteed Obligations that is not the subject of such suit,
and such judgment shall not, except to the extent satisfied by such Guarantor,
limit, affect, modify or abridge any other Guarantor’s liability hereunder in
respect of the Guaranteed Obligations;


 


(e)           any Beneficiary, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or enforceability
hereof or giving rise to any reduction, limitation, impairment, discharge or
termination of any Guarantor’s liability hereunder, from time to time may, with
the written consent of the applicable Loan Party or pursuant to the terms of
the applicable Loan Document, (i) renew, extend, accelerate, increase the
rate of interest on, or otherwise change the time, place, manner or terms of
payment of the Guaranteed Obligations; (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Guaranteed Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations; (iii) request and accept other guaranties of the Guaranteed
Obligations and take and hold security for the payment hereof or the Guaranteed
Obligations; (iv) release, surrender, exchange, substitute, compromise,
settle, rescind, waive, alter, subordinate or modify, with or without
consideration, any security for payment of the Guaranteed Obligations, any
other guaranties of the Guaranteed Obligations, or any other obligation of any
Person (including any other Guarantor) with respect to the Guaranteed
Obligations; (v) enforce and apply any security now or hereafter held by
or for the benefit of such Beneficiary in respect hereof or the Guaranteed
Obligations and direct the order or manner of sale thereof, or exercise any
other right or remedy that such Beneficiary may have against any such security,
in each case as such Beneficiary in its discretion may determine consistent
herewith or the applicable Hedge Agreement and any applicable security
agreement, including foreclosure on any such security pursuant to one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy
of any Guarantor against Borrower or any security for the Guaranteed
Obligations; and (vi) exercise any other rights available to it under the
Loan Documents or the Hedge Agreements; and


 


(f)            this Guaranty and the obligations of Guarantors hereunder
shall be valid and enforceable and shall not be subject to any reduction,
limitation, impairment, discharge or termination for any reason (other than
payment in full of the Guaranteed Obligations), including the occurrence of any
of the following, whether or not any Guarantor shall have had notice or
knowledge of any of them:  (i) any
failure or omission to assert or enforce or agreement or election not to assert
or enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand or any right,
power or remedy (whether arising under the Loan Documents or the Hedge
Agreements, at law, in equity or otherwise) with respect to the Guaranteed
Obligations or any agreement


 


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relating thereto, or with respect
to any other guaranty of or security for the payment of the Guaranteed
Obligations; (ii) any rescission, waiver, amendment or modification of, or
any consent to departure from, any of the terms or provisions (including provisions
relating to events of default) hereof, any of the other Loan Documents, any of
the Hedge Agreements or any agreement or instrument executed pursuant thereto,
or of any other guaranty or security for the Guaranteed Obligations, in each
case whether or not in accordance with the terms hereof or such Loan Document,
such Hedge Agreement or any agreement relating to such other guaranty or
security; (iii) the Guaranteed Obligations, or any agreement relating
thereto, at any time being found to be illegal, invalid or unenforceable in any
respect; (iv) the application of payments received from any source (other
than payments received pursuant to the other Loan Documents or any of the Hedge
Agreements or from the proceeds of any security for the Guaranteed Obligations,
except to the extent such security also serves as collateral for indebtedness
other than the Guaranteed Obligations) to the payment of indebtedness other
than the Guaranteed Obligations, even though any Beneficiary might have elected
to apply such payment to any part or all of the Guaranteed Obligations;
(v) any Beneficiary’s consent to the change, reorganization or termination
of the corporate structure or existence of Borrower or any of its Subsidiaries
and to any corresponding restructuring of the Guaranteed Obligations;
(vi) any failure to perfect or continue perfection of a security interest
in any collateral which secures any of the Guaranteed Obligations;
(vii) any defenses, set-offs or counterclaims which Borrower may allege or
assert against any Beneficiary in respect of the Guaranteed Obligations,
including failure of consideration, breach of warranty, payment, statute of
frauds, statute of limitations, accord and satisfaction and usury; and
(viii) any other act or thing or omission, or delay to do any other act or
thing, which may or might in any manner or to any extent vary the risk of any
Guarantor as an obligor in respect of the Guaranteed Obligations.


 


Section 7.05         Waivers
by Guarantors.


 


Each Guarantor hereby waives, for the benefit of Beneficiaries:  (a) any right to require any
Beneficiary, as a condition of payment or performance by such Guarantor, to
(i) proceed against Borrower, any other guarantor (including any other
Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed
against or exhaust any security held from Borrower, any such other guarantor or
any other Person, (iii) proceed against or have resort to any balance of
any Deposit Account or credit on the books of any Beneficiary in favor of
Borrower or any other Person, or (iv) pursue any other remedy in the power
of any Beneficiary whatsoever; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of Borrower or
any other Guarantor including any defense based on or arising out of the lack
of validity or the unenforceability of the Guaranteed Obligations or any
agreement or instrument relating thereto or by reason of the cessation of the
liability of Borrower or any other Guarantor from any cause other than payment
in full of the Guaranteed Obligations; (c) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal; (d) any defense based upon any Beneficiary’s errors or
omissions in the administration of the Guaranteed Obligations, except behavior
which amounts to bad faith; (e) (i) any principles or provisions of
law, statutory or otherwise, which are or might be in conflict with the terms
hereof and any legal or equitable discharge of such Guarantor’s obligations
hereunder, (ii) the benefit of any statute of limitations affecting such
Guarantor’s liability hereunder or the enforcement hereof, (iii) any
rights to set-offs, recoupments and counterclaims, and (iv) promptness,
diligence and any requirement that any Beneficiary protect, secure, perfect or
insure any security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest, notices
of dishonor and notices of any action or inaction, including acceptance hereof,
notices of default hereunder, the Hedge Agreements or any agreement or
instrument related thereto, notices of any renewal, extension or modification
of the Guaranteed Obligations or any agreement related thereto, notices of any
extension of credit to Borrower and notices of any of the matters referred to
in Section 7.04 and any right to consent to any thereof; and (g) any
defenses or benefits that may be derived


 


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from or afforded by law
which limit the liability of or exonerate guarantors or sureties, or which may
conflict with the terms hereof.


 


Section 7.06         Guarantors’
Rights of Subrogation, Contribution, etc.


 


Until the Termination Date, each Guarantor hereby waives
any claim, right or remedy, direct or indirect, that such Guarantor now has or
may hereafter have against Borrower or any other Guarantor or any of its assets
in connection with this Guaranty or the performance by such Guarantor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute, under common law or otherwise and
including (a) any right of subrogation, reimbursement or indemnification
that such Guarantor now has or may hereafter have against Borrower with respect
to the Guaranteed Obligations, (b) any right to enforce, or to participate
in, any claim, right or remedy that any Beneficiary now has or may hereafter
have against Borrower, and (c) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by any Beneficiary. In
addition, until Termination Date, each Guarantor shall withhold exercise of any
right of contribution such Guarantor may have against any other guarantor
(including any other Guarantor) of the Guaranteed Obligations, including any
such right of contribution as contemplated by Section 7.02. Each Guarantor
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification such Guarantor may have against Borrower or against any
collateral or security, and any rights of contribution such Guarantor may have
against any such other guarantor, shall be junior and subordinate to any rights
any Beneficiary may have against Borrower, to all right, title and interest any
Beneficiary may have in any such collateral or security, and to any right any
Beneficiary may have against such other guarantor. If any amount shall be paid
to any Guarantor on account of any such subrogation, reimbursement,
indemnification or contribution rights at any time prior to the Termination
Date, such amount shall be held in trust for Administrative Agent on behalf of
Beneficiaries and shall forthwith be paid over to Administrative Agent for the
benefit of Beneficiaries to be credited and applied against the Guaranteed
Obligations, whether matured or unmatured, in accordance with the terms hereof.


 


Section 7.07         Subordination
of Other Obligations.


 


Any Indebtedness of Borrower or any Guarantor now or
hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby
subordinated in right of payment to the Guaranteed Obligations, and any such
indebtedness collected or received by the Obligee Guarantor after an Event of
Default has occurred and is continuing shall be held in trust for
Administrative Agent on behalf of Beneficiaries and shall, upon the occurrence
of an Event of Default pursuant to Section 8.01(a), (f) or (g) and otherwise
upon the demand of the Administrative Agent, forthwith be paid over to
Administrative Agent for the benefit of Beneficiaries to be credited and
applied against the Guaranteed Obligations but without affecting, impairing or
limiting in any manner the liability of the Obligee Guarantor under any other
provision hereof.


 


Section 7.08         Continuing
Guaranty.


 


This Guaranty is a continuing guaranty and shall
remain in effect until the Termination Date. Each Guarantor hereby irrevocably
waives any right to revoke this Guaranty as to future transactions giving rise
to any Guaranteed Obligations.


 


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Section 7.09         Authority
of Guarantors or Borrower.


 


It is not necessary for any Beneficiary to inquire
into the capacity or powers of any Guarantor or Borrower or the officers,
directors or any agents acting or purporting to act on behalf of any of them.


 


Section 7.10         Financial
Condition of Borrower.


 


Any Credit Extension may be made to Borrower or
continued from time to time, and any Hedge Agreements may be entered into from
time to time, in each case without notice to or authorization from any Guarantor
regardless of the financial or other condition of Borrower at the time of any
such grant or continuation or at the time such Hedge Agreement is entered into,
as the case may be. No Beneficiary shall have any obligation to disclose or
discuss with any Guarantor its assessment, or any Guarantor’s assessment, of
the financial condition of Borrower. Each Guarantor has adequate means to
obtain information from Borrower on a continuing basis concerning the financial
condition of Borrower and its ability to perform its obligations under the Loan
Documents and the Hedge Agreements, and each Guarantor assumes the
responsibility for being and keeping informed of the financial condition of
Borrower and of all circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty
on the part of any Beneficiary to disclose any matter, fact or thing relating
to the business, operations or conditions of Borrower now known or hereafter
known by any Beneficiary.


 


Section 7.11         Bankruptcy,
etc.


 


(a)           So long as any Guaranteed Obligations remain outstanding, no
Guarantor shall, without the prior written consent of Administrative Agent
acting pursuant to the instructions of Requisite Lenders, commence or join with
any other Person in commencing any bankruptcy, reorganization or insolvency
case or proceeding of or against Borrower or any other Guarantor. The
obligations of Guarantors hereunder shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any case or proceeding,
voluntary or involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation or arrangement of Borrower or any other Guarantor
or by any defense which Borrower or any other Guarantor may have by reason of
the order, decree or decision of any court or administrative body resulting
from any such proceeding.


 


(b)           Each Guarantor acknowledges and agrees that any interest on
any portion of the Guaranteed Obligations which accrues after the commencement
of any case or proceeding referred to in clause (a) above (or, if interest
on any portion of the Guaranteed Obligations ceases to accrue by operation of
law by reason of the commencement of such case or proceeding, such interest as
would have accrued on such portion of the Guaranteed Obligations if such case
or proceeding had not been commenced) shall be included in the Guaranteed
Obligations because it is the intention of Guarantors and Beneficiaries that
the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto
should be determined without regard to any rule of law or order which may
relieve Borrower of any portion of such Guaranteed Obligations. Guarantors will
permit any trustee in bankruptcy, receiver, debtor in possession, assignee for
the benefit of creditors or similar person to pay Administrative Agent, or
allow the claim of Administrative Agent in respect of, any such interest
accruing after the date on which such case or proceeding is commenced.


 


(c)           In the event that all or any portion of the Guaranteed
Obligations are paid by Borrower, the obligations of Guarantors hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) are rescinded or
recovered directly or indirectly from any Beneficiary as a preference,
fraudulent transfer or otherwise, and


 


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any such payments which are so
rescinded or recovered shall constitute Guaranteed Obligations for all purposes
hereunder.


 


Section 7.12         Discharge
of Guaranty upon Sale of Guarantor.


 


If all of the Capital Stock of any Guarantor or any
of its successors in interest hereunder shall be sold or otherwise disposed of
(including by merger or consolidation) in accordance with the terms and
conditions hereof, the Guaranty of such Guarantor or such successor in
interest, as the case may be, hereunder shall automatically be discharged and
released without any further action by any Beneficiary or any other Person
effective as of the time of such sale or disposition.


 


ARTICLE EIGHT

EVENTS OF DEFAULT


 


Section 8.01         Events
of Default.


 


If any one or more of the following conditions or
events shall occur:


 


(a)           Failure to Make Payments When Due. Failure by Borrower to pay (i) when due any
installment of principal of any Loan, whether at stated maturity, by
acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; (ii) when due any amount payable to Issuing Bank in reimbursement
of any drawing under a Letter of Credit; (iii) any interest on any Loan or
any fee due hereunder within three (3) Business Days after the date due; or
(iv) any other amount due hereunder within three (3) Business Days after
delivery of notice from the Administrative Agent; or


 


(b)           Default in Other Agreements.
(i) Failure of any Loan Party or any of their respective Subsidiaries to
pay when due any principal of one or more items of Indebtedness (other than
Indebtedness referred to in Section 8.01(a)) in a principal amount of
$5,000,000 or more, individually or in the aggregate, in each case beyond the
grace period, if any, provided therefor; or (ii) breach or default by any
Loan Party with respect to any other material term of (1) one or more items
of Indebtedness in the individual or aggregate principal amounts referred to in
clause (i) above or (2) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness, in each case beyond the
grace period, if any, provided therefor, if the effect of such breach or
default is to cause, or to permit the holder or holders of that Indebtedness
(or a trustee on behalf of such holder or holders), to cause, that Indebtedness
to become or be declared due and payable (or redeemable) prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may
be; or (iii) any Event of Default (as defined in the Second Lien Credit
Agreement); or


 


(c)           Breach of Certain Covenants.
(i) Failure of any Loan Party to perform or comply with any term or
condition contained in Section 2.16, Section 5.02 or Article Six; or
(ii) failure of any Loan Party to perform or comply with any term or
condition contained in Section 5.01(a) through (d) and such failure shall not
have been remedied or waived within ten (10) Business Days after such failure;
or


 


(d)           Breach of Representations, etc. Any representation, warranty, certification or other
statement made or deemed made by any Loan Party in any Loan Document or in any
statement or certificate at any time given by any Loan Party or any of its
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect as of the date made or deemed
made; or


 


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(e)           Other Defaults Under Loan Documents. Any Loan Party shall default in the performance of or
compliance with any term contained herein or any of the other Loan Documents,
other than any such term referred to in any other Section of this
Section 8.01, and such default shall not have been remedied or waived
within thirty (30) days after the earlier of (i) a Responsible Officer of
such Loan Party becoming aware of such default or (ii) receipt by Borrower
of notice from Administrative Agent or any Lender of such default; or


 


(f)            Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent jurisdiction shall enter a
decree or order for relief in respect of Borrower or any of its Subsidiaries in
an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be
commenced against Borrower or any of its Subsidiaries under the Bankruptcy Code
or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Borrower or any of its
Subsidiaries, or over all or a substantial part of its property, shall have
been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of Borrower or any of its
Subsidiaries for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued against any
substantial part of the property of Borrower or any of its Subsidiaries, and
any such event described in this clause (ii) shall continue for sixty (60) days
without having been dismissed, bonded or discharged; or


 


(g)           Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Borrower or any of its Subsidiaries shall have an
order for relief entered with respect to it or shall commence a voluntary case
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Borrower or any of its
Subsidiaries shall make any assignment for the benefit of creditors; or
(ii) Borrower or any of its Subsidiaries shall be unable, or shall fail
generally, or shall admit in writing its inability, to pay its debts as such
debts become due; or the Board of Directors of Borrower or any of its
Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to herein or in
Section 8.01(f); or


 


(h)           Judgments and Attachments.
Any money judgment, writ or warrant of attachment or similar process involving
in an amount in excess of $5,000,000 in any case individually or in the aggregate
at any time (to the extent not adequately covered by insurance) or any
non-monetary judgment that could reasonably be expected to have a Material
Adverse Effect shall be entered or filed against Borrower or any of its
Subsidiaries or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of sixty (60) days (or in any
event later than five (5) days prior to the date of any proposed sale
thereunder); or


 


(i)            Dissolution. Any
order, judgment or decree shall be entered against any Loan Party decreeing the
dissolution or split up of such Loan Party and such order shall remain
undischarged or unstayed for a period in excess of thirty (30) days; or


 


(j)            Employee Benefit Plans.
(i) There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of Borrower, any of its Subsidiaries or any of their respective ERISA
Affiliates in excess of $5,000,000 during the term hereof; or (ii) there
exists any fact or circumstance that reasonably could be


 


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expected to result in the
imposition of a Lien or security interest under Section 412(n) of the Internal
Revenue Code or under ERISA affecting a material portion of the assets of the
Borrower and its Subsidiaries, taken as a whole; or


 


(k)           Change of Control. A Change
of Control shall occur; or


 


(l)            Guaranties, Collateral Documents and other Loan Documents. At any time after the execution and delivery thereof,
(i) the Guaranty for any reason, other than the satisfaction in full of
all Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void or any Guarantor
shall repudiate its obligations thereunder, (ii) this Agreement or any
Collateral Document covering a material portion of the Collateral ceases to be
in full force and effect (other than by reason of a release of Collateral in
accordance with the terms hereof or thereof or the satisfaction in full of the
Obligations in accordance with the terms hereof) or shall be declared null and
void, or Collateral Agent shall not have or shall cease to have a valid and
perfected Lien in a material portion of the Collateral purported to be covered
by the Collateral Documents with the priority required by the relevant
Collateral Document, in each case for any reason other than the failure of
Collateral Agent or any Secured Party to take any action within its control, or
(iii) any Loan Party shall contest the validity or enforceability of any
Loan Document in writing or deny in writing that it has any further liability,
including with respect to future advances by Lenders, under any Loan Document
to which it is a party; or


 


(m)          Health Care Matters.
Borrower or any of its Subsidiaries fails to (i) comply with any Health
Care Law or (ii) maintain any Governmental Authorization, material
accreditation or Government Third Party Payor Program provider agreement, and,
in the case of clause (i) or (ii) above, such failure, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect
and is not cured within 30 days after the earlier of (i) a Responsible Officer
of a Loan Party becoming aware of such default or (ii) the receipt by Borrower
of written notice from Administrative Agent or any Lender of such default;


 


THEN, (1) upon the
occurrence of any Event of Default described in Section 8.01(f) or 8.01(g),
automatically, and (2) upon the occurrence and during the continuance of
any other Event of Default, at the request of (or with the consent of)
Requisite Lenders, upon notice to Borrower by Administrative Agent,
(A) the Revolving Commitments, if any, of each Lender having such
Revolving Commitments and the obligation of Issuing Bank to issue any Letter of
Credit shall immediately terminate; (B) the Delayed Draw Term Loan
Commitments, if any, of each Lender having such Delayed Draw Term Loan
Commitments shall immediately terminate; (C) each of the following shall
immediately become due and payable, in each case without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by each Loan Party:  (I) the
unpaid principal amount of and accrued interest on the Loans, (II) an
amount equal to the maximum amount that may at any time be drawn under all
Letters of Credit then outstanding (regardless of whether any beneficiary under
any such Letter of Credit shall have presented, or shall be entitled at such time
to present, the drafts or other documents or certificates required to draw
under such Letters of Credit), and (III) all other Obligations; provided,
the foregoing shall not affect in any way the obligations of Lenders under
Section 2.04(d) and Section 2.11; (D) the Administrative Agent may cause
the Collateral Agent to enforce any and all Liens and security interests
created pursuant to Collateral Documents; and (E) Administrative Agent
shall direct Borrower to pay (and Borrower hereby agrees upon receipt of such
notice, or upon the occurrence of any Event of Default specified in Section
8.01(f) and (g) to pay) to Administrative Agent such additional amounts of
cash, to be held as security for Borrower’s reimbursement Obligations in
respect of Letters of Credit then outstanding, equal to the Letter of Credit
Usage at such time.


 


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ARTICLE NINE

AGENTS


 


Section 9.01         Appointment
and Authority.


 


CIBC WM is hereby appointed Lead Arranger hereunder
and under the other Loan Documents and each Lender hereby authorizes the Lead
Arranger to act as its agent in accordance with the terms hereof and the other
Loan Documents. CIBC is hereby appointed Administrative Agent and Collateral
Agent hereunder and under the other Loan Documents by the Lenders and by the
Secured Parties’ acceptance of the benefits hereof, and each Secured Party
hereby authorizes Administrative Agent and Collateral Agent to act as its agent
in accordance with terms hereof and the other Loan Documents. The Lead Arranger
may, in its sole discretion, appoint other agents (including, without
limitation, Syndication Agent and Documentation Agent) following the date
hereof, and each Lender hereby authorizes each such agent to act as its agent
in accordance with terms hereof and the other Loan Documents. Each of the
Lenders, the Swing Line Lender and the Issuing Bank hereby irrevocably appoints
CIBC as its agent hereunder and under the other 
Loan Documents and authorizes Administrative Agent and Collateral Agent
to take such actions on its behalf and to exercise such powers as are delegated
to Administrative Agent and Collateral Agent by the terms hereof or thereof,
together with such actions and powers as are reasonably incidental thereto. The
provisions of this Article Nine (other than Section 9.06) are solely for the
benefit of the Agents, the Lenders and the Issuing Bank, and Borrower shall not
have rights as a third party beneficiary of any of such provisions. As of the
Closing Date, CIBC WM, in its capacity as Lead Arranger, shall have no
obligation, but shall be entitled to all benefits of this Article Nine.


 


Section 9.02         Rights
as a Lender.


 


Each of Administrative Agent and Collateral Agent
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent and the term “Lender”
or “Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Administrative Agent and the Collateral Agent hereunder
in their individual capacities. Administrative Agent and Collateral Agent and
their Affiliates may accept deposits from, lend money to, act as the financial
advisor or in any other advisory capacity for and generally engage in any kind
of business with Borrower or any Subsidiary or other Affiliate thereof as if
such Person were not an Agent hereunder and without any duty to account
therefor to the Lenders.


 


Section 9.03         Exculpatory
Provisions.


 


Administrative Agent and Collateral Agent shall not
have any duties or obligations except those expressly set forth herein and in
the other Loan Documents. Without limiting the generality of the foregoing,
Administrative Agent and Collateral Agent:


 


(a)           shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default or Event of Default has occurred and is
continuing,


 


(b)           shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that
Administrative Agent or Collateral Agent is required to exercise as directed in
writing by the Requisite Lenders (or such other number or percentage of the
relevant Lenders as shall be expressly provided for herein or in the other Loan
Documents); provided that neither Administrative Agent nor Collateral
Agent shall be required to take any action that, in its opinion or the opinion
of its


 


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counsel, may expose Administrative
Agent or Collateral Agent to liability or that is contrary to any Loan Document
or applicable law, and


 


(c)           shall not, except as expressly set forth herein and in the
other Loan Documents, have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to Borrower or any of its
Affiliates that is communicated to or obtained by Administrative Agent or
Collateral Agent or any of their respective Affiliates in any capacity.


 


Neither Administrative Agent
nor Collateral Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Requisite Lenders (or such other
number or percentage of the Lenders as shall be necessary, or as Administrative
Agent or Collateral Agent shall believe in good faith shall be necessary, under
the circumstances as provided in Section 10.04) or in the absence of its own
gross negligence or willful misconduct. Neither Administrative Agent nor
Collateral Agent shall be deemed to have knowledge of any Default or Event of
Default unless and until notice thereof is given to Administrative Agent or
Collateral Agent by Borrower, a Lender or the Issuing Bank.


 


Neither Administrative Agent nor Collateral Agent
shall be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection
with this Agreement or any other Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or thereunder or in
connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein
or therein or the occurrence of any Default or Event of Default, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document or
(v) the satisfaction of any condition set forth in Article Three or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to Administrative Agent or Collateral Agent.


 


Section 9.04         Reliance
by Administrative Agent and the Collateral Agent.


 


Each of Administrative Agent and Collateral Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument,
document or other writing (including any electronic message,  Internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or
otherwise authenticated by the proper Person. Each of Administrative Agent and
Collateral Agent also may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the proper Person, and shall
not incur any liability for relying thereon. In determining compliance with any
condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or
the Issuing Bank, each of Administrative Agent and Collateral Agent may presume
that such condition is satisfactory to such Lender or the Issuing Bank unless
Administrative Agent or Collateral Agent shall have received notice to the
contrary from such Lender or the Issuing Bank prior to the making of such Loan
or the issuance of such Letter of Credit. Each of Administrative Agent and
Collateral Agent may consult with legal counsel (who may be counsel for
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.


 


Section 9.05         Delegation
of Duties.


 


Each of Administrative Agent and Collateral Agent
may perform any and all of its duties and exercise its rights and powers
hereunder or under any other Loan Document by or through any one or more
sub-agents appointed by Administrative Agent or Collateral Agent. Each of
Administrative Agent and Collateral Agent and any sub-agent may perform any and
all of its duties and exercise its rights and


 


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powers under this Agreement
or under any other Loan Document by or through any one or more sub-agents
appointed by such sub-agent with the approval of Administrative Agent or
Collateral Agent, as applicable (such appointing sub-agent is referred to in
this Section 9.05 as an “Appointing Sub-Agent”). Each of Administrative
Agent, Collateral Agent and each such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective
Related Parties. The exculpatory, indemnification and other provisions of this
Article Nine and of Section 10.02 shall apply to any of the Related Parties of
Administrative Agent and Collateral Agent and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent or Collateral Agent,
as applicable. All of the rights, benefits, and privileges (including the
exculpatory and indemnification provisions) of this Article Nine and of Section
10.02 shall apply to each such sub-agent and to the Related Parties of each
sub-agent, and shall apply to their respective activities as sub-agent as if
such sub-agent and Article Nine were named herein. Notwithstanding anything
herein to the contrary, with respect to each sub-agent appointed by
Administrative Agent, Collateral Agent and/or an Appointing Sub-Agent,
(i) such sub-agent shall be a third party beneficiary under this Agreement
with respect to all such rights, benefits and privileges (including exculpatory
rights and rights to indemnification) and shall have all of the rights and
benefits of a third party beneficiary, including an independent right of action
to enforce such rights, benefits and privileges (including exculpatory rights
and rights to indemnification) directly, without the consent or joinder of any
other Person, against any or all of the Loan Parties and the Lenders,
(ii) such rights, benefits and privileges (including exculpatory rights
and rights to indemnification) shall not be modified or amended without the
consent of such sub-agent, and (iii) such sub-agent shall only have
obligations to Administrative Agent or Collateral Agent and, if applicable, an
Appointing Sub-Agent and not to any Loan Party Lender or any other Person and
no Loan Party Lender or any other Person shall have any rights, directly or
indirectly, as a third party beneficiary or otherwise, against such sub-agent.


 


Section 9.06         Resignation
of Administrative Agent.


 


Each of Administrative Agent and Collateral Agent
may at any time give notice of its resignation to the Lenders, the Issuing Bank
and Borrower. Upon receipt of any such notice of resignation, the Requisite
Lenders shall have the right, to appoint a successor, which successor shall (so
long as no Event of Default has occurred and is continuing) be subject to
approval by Borrower (such approval not to be unreasonably withheld or
delayed), and which shall be a bank with an office in the United States, or an
Affiliate of any such bank with an office in the United States. If no such
successor shall have been so appointed by the Requisite Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative
Agent or Collateral Agent gives notice of its resignation, then the retiring
Administrative Agent or Collateral Agent may appoint a successor Administrative
Agent or Collateral Agent, as applicable, meeting the qualifications set forth
above; provided that if Administrative Agent or Collateral Agent shall
notify Borrower and the Lenders that no qualifying person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent or
Collateral Agent shall be discharged from its duties and obligations hereunder
and under the other  Loan Documents
(except that in the case of any collateral security held by Administrative Agent
or Collateral Agent on behalf of the Secured Parties or the Issuing Bank under
any of the Loan Documents, the retiring Administrative Agent or Collateral
Agent shall continue to hold such collateral security until such time as a
successor Administrative Agent or Collateral Agent is appointed) and
(2) all payments, communications and determinations provided to be made
by, to or through Administrative Agent or Collateral Agent shall instead be
made by or to each Lender and the Issuing Bank directly, until such time as the
Requisite Lenders appoint a successor Administrative Agent or Collateral Agent
as provided for above in this paragraph. Upon the acceptance of a successor’s
appointment as Administrative Agent or Collateral Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent or
Collateral Agent, and the retiring Administrative Agent or Collateral Agent
shall


 


105

















 


be discharged from all of
its duties and obligations hereunder or under the other  Loan Documents (if not already discharged
therefrom as provided above in this paragraph). The fees payable by Borrower to
a successor Administrative Agent or Collateral Agent shall be the same as those
payable to its predecessor unless otherwise agreed between Borrower and such
successor. After the retiring Administrative Agent’s or Collateral Agent’s
resignation hereunder and under the other 
Loan Documents, the provisions of this Article Nine and Section 10.02
shall continue in effect for the benefit of such retiring Administrative Agent
or Collateral Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the retiring
Administrative Agent or Collateral Agent was acting as Administrative Agent or
Collateral Agent, as applicable. Any resignation of Administrative Agent or
Collateral Agent pursuant to this Section shall also constitute the resignation
of CIBC Inc. or its successor as Swing Line Lender, and any successor
Administrative Agent appointed pursuant to this Section shall, upon its
acceptance of such appointment, become the successor Swing Line Lender for all
purposes hereunder. In such event Borrower shall prepay any outstanding Swing
Line Loans made by the retiring or Administrative Agent in its capacity as
Swing Line Lender.


 


Section 9.07         Non-Reliance
on Agents and Other Lenders.


 


Each Lender, the Swing Line Lender and the Issuing
Bank acknowledges that it has, independently and without reliance upon the
Agents or any other Lender or any of their Related Parties and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender, the Swing Line
Lender and the Issuing Bank also acknowledges that it will, independently and
without reliance upon the Agents or any other Lender or any of their Related
Parties and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
any related agreement or any document furnished hereunder or thereunder.


 


Section 9.08         No
Other Duties, etc.


 


Anything herein to the contrary notwithstanding,
none of the Lead Arranger, Syndication Agent or Documentation Agent shall have
any powers, duties or responsibilities under this Agreement or any of the other
Loan Documents, except in its capacity, as applicable, as Administrative Agent,
Collateral Agent, a Lender or the Issuing Bank hereunder.


 


Section 9.09         Collateral
Documents and Guaranty.


 


(a)           Agents under Collateral Documents and Guaranty. Each Lender hereby further authorizes Administrative Agent
or Collateral Agent, as applicable, on behalf of and for the benefit of
Lenders, to be the agent for and representative of Lenders with respect to the
Guaranty, the Collateral, the Intercreditor Agreement, each Lien Subordination
Agreement and each other Collateral Document. Subject to Section 10.04, without
further written consent or authorization from Lenders, Administrative Agent or
Collateral Agent, as applicable may execute any documents or instruments
necessary to (i) release any Lien encumbering any item of Collateral that
is the subject of a sale or other disposition of assets permitted hereby or to
which Requisite Lenders (or such other Lenders as may be required to give such
consent under Section 10.04) have otherwise consented or (ii) release any
Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which
Requisite Lenders (or such other Lenders as may be required to give such
consent under Section 10.04) have otherwise consented.


 


(b)           Right to Realize on Collateral and Enforce Guaranty. Anything contained in any of the Loan Documents to the
contrary notwithstanding, (other than Section 10.03), Borrower, Administrative
Agent, Collateral Agent and each Lender hereby agree that (i) no Lender
shall


 


106

















 


have any right individually to
realize upon any of the Collateral or to enforce the Guaranty, it being
understood and agreed that all powers, rights and remedies hereunder may be
exercised solely by Administrative Agent, on behalf of Lenders in accordance
with the terms hereof and all powers, rights and remedies under the Collateral
Documents may be exercised solely by Collateral Agent, and (ii) in the
event of a foreclosure by Collateral Agent on any of the Collateral pursuant to
a public or private sale, Collateral Agent or any Lender may be the purchaser
of any or all of such Collateral at any such sale and Collateral Agent, as
agent for and representative of Secured Parties (but not any Lender or Lenders
in its or their respective individual capacities unless Requisite Lenders shall
otherwise agree in writing) shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply any of the
Obligations as a credit on account of the purchase price for any collateral
payable by Collateral Agent at such sale.


 


Section 9.10         Withholding
Taxes.


 


To the extent required by any applicable law, the
Administrative Agent may withhold from any payment to any Lender, Swing Line
Lender or Issuing Bank an amount equivalent to any applicable withholding tax. If
the Internal Revenue Service or any other Governmental Authority asserts a
claim that the Administrative Agent did not properly withhold tax from amounts
paid to or for the account of any Lender, Swing Line Lender or Issuing Bank
because the appropriate form was not delivered or was not properly executed or
because such Lender, Swing Line Lender or Issuing Bank failed to notify the
Administrative Agent of a change in circumstances that rendered the exemption
from or reduction of withholding tax ineffective or for any other reason, such
Lender, Swing Line Lender or Issuing Bank shall indemnify the Administrative
Agent fully for all amounts paid, directly or indirectly, by the Administrative
Agent as tax or otherwise, including any penalties or interest and together
with any and all expenses incurred.


 


ARTICLE TEN

MISCELLANEOUS


 


Section 10.01       Notices;
Effectiveness; Electronic Communication.


 


(a)           Notices Generally. Except in
the case of notices and other communications expressly permitted to be given by
telephone (and except as provided in paragraph (b) below), all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopier as follows:


 


(i)            if
to Borrower, to it at Chem Rx Corporation, 750 Park Place, Long Beach, New York
11561; Attention Chuck Kelly, Chief Financial Officer; Telecopier No. (516)
889-8225; Telephone No. (516) 889-8770, ext. 144;


 


(ii)           if
to Administrative Agent, the Swing Line Lender or CIBC in its capacity as
Issuing Bank, to


 


Canadian Imperial Bank of Commerce,

New York Agency

300 Madison Avenue

New York, New York 10017

Attention:  Agency Services

Facsimile No.:  (212) 856-3763


 


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and (other than notices pursuant to Article II)


 


Attention: 
Caroline Adams

Facsimile No.:  (212) 856-3991


 


with a copy of notices (other than notices pursuant
to Article II)

to:


 


Latham & Watkins LLP

885 Third Avenue, New York, NY  10022

Attention:  Marcus J. Dougherty

Facsimile No.:  (212) 751-4864; and


 


(iii)          if
to a Lender, to it at its address (or telecopier number) set forth in its
Administrative Questionnaire.


 


Notices sent by hand or
overnight courier service, or mailed by certified or registered mail, shall be
deemed to have been given when received; notices sent by telecopier shall be
deemed to have been given when sent if a confirmation has been received and, if
not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next business day for the
recipient. Notices delivered through electronic communications to the extent
provided in paragraph (b) below, shall be effective as provided in said
paragraph (b).


 


(b)           Electronic Communications.
Notices and other communications to the Lenders and the Issuing Bank hereunder
may be delivered or furnished by electronic communication (including e mail and
Internet or intranet websites) pursuant to procedures approved by
Administrative Agent; provided that the foregoing shall not apply to
notices to any Lender or the Issuing Bank pursuant to Article Two if such
Lender or the Issuing Bank, as applicable, has notified Administrative Agent
that it is incapable of receiving notices under such Section by electronic
communication. Administrative Agent or Borrower may, in its reasonable
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided
that approval of such procedures may be limited to particular notices or
communications.


 


Unless Administrative Agent otherwise prescribes,
(i) notices and other communications sent to an e mail address shall be
deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement); provided
that if such notice or other communication is not sent during the normal
business hours of the recipient, such notice or communication shall be deemed
to have been sent at the opening of business on the next business day for the
recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(i) of notification that such notice or communication is available and
identifying the website address therefor.


 


(c)           Change of Address, Etc.
Any party hereto may change its address or telecopier number for notices and
other communications hereunder by written notice to the other parties hereto.


 


Section 10.02       Expenses;
Indemnity; Damage Waiver.


 


(a)           Costs and Expenses. Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Lead Arranger and their Affiliates, including the


 


108

















 


reasonable fees, charges and
disbursements of one outside counsel for the Administrative Agent, the Lead
Arranger and their Affiliates (subject to the proviso below), in connection
with the syndication of the credit facilities provided for herein, the
preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), and (ii) all
out-of-pocket expenses incurred by the Agents, any Lender or the Issuing Bank,
including the fees, charges and disbursements of one counsel for the Agents,
any Lender or the Issuing Bank (subject to the proviso below), in connection
with the enforcement or protection of its rights in connection with this
Agreement and the other Loan Documents, including its rights under this
Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit; provided, in the case of each of clause (i) and (ii), if any
party has been advised by counsel that there is an actual or reasonable
likelihood of conflict of interest, then such party affected thereby may retain
its own counsel.


 


(b)           Indemnification by Borrower.
Borrower shall indemnify the Agents (and any sub-agent thereof), each Lender
and the Issuing Bank, and each Related Party of any of the foregoing Persons
(each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees, charges and disbursements of
any outside counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or the consummation of
the transactions contemplated hereby or thereby, (ii) any Loan or Letter
of Credit or the use or proposed use of the proceeds therefrom (including any
refusal by the Issuing Bank to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (iii) any actual
or alleged presence or Release of Hazardous Materials on or from any property
owned or operated by Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to Borrower or any of its Subsidiaries, or
(iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by Borrower or any other Loan
Party,  and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of, or breach of the Loan Documents by,
such Indemnitee; and provided further that
no Loan Party shall have any obligation to any Indemnitee hereunder with
respect to such indemnified liabilities arising out of legal proceedings
commenced against a Lender by the assignee of such Lender to the extent such
proceedings relates (A) solely to breaches of representations or
warranties of such assigning Lender regarding ownership or authority to assign
all or a portion of its Commitment or Loans owing to it or other Obligation, or
(B) principally to statements or representations made by an assigning
Lender to such assignee that were not based upon information supplied by the
Borrower.


 


(c)           Reimbursement by Lenders.
To the extent that Borrower fails to pay any amount required under paragraph
(a) or (b) of this Section to be paid by it to the Agents (or any sub-agent
thereof), the Issuing Bank or any Related Party of any of the foregoing, each
Lender severally agrees to pay to the Agents (or any such sub-agent), the
Issuing Bank or such Related Party, as the case may be, such Lender’s
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Agents (or any such sub-agent) or the Issuing Bank in its capacity as such, or
against


 


109

















 


any Related Party of any of the
foregoing acting for the Agents (or any such sub-agent) or Issuing Bank in
connection with such capacity. The obligations of the Lenders under this
paragraph (c) are subject to the provisions of Section 10.11.


 


(d)           Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, Borrower
shall not assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or
thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No
Indemnitee referred to in paragraph (b) above shall be liable for any damages
arising from the use by unintended recipients of any information or other
materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with this Agreement or the
other  Loan Documents or the transactions
contemplated hereby or thereby.


 


(e)           Payments. All
amounts due under this Section 10.02 shall be payable not later than five (5)
Business Days after written demand therefor.


 


Section 10.03       Right
of Set-Off.


 


If an Event of Default shall have occurred and be continuing
and the Obligations shall have been accelerated pursuant to Section 8.01, each
Lender, the Issuing Bank, and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted
by applicable law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by
such Lender, the Issuing Bank or any such Affiliate to or for the credit or the
account of Borrower or any other Loan Party against and on account of any and
all of the obligations of Borrower or such Loan Party now or hereafter existing
under this Agreement or any other Loan Document to such Lender or the Issuing
Bank, irrespective of whether or not such Lender or the Issuing Bank shall have
made any demand under this Agreement or any other Loan Document and although
such obligations of Borrower or such Loan Party may be contingent or unmatured
or are owed to a branch or office of such Lender or the Issuing Bank different
from the branch or office holding such deposit or obligated on such
indebtedness. The rights of each Lender, the Issuing Bank and their respective
Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender, the Issuing Bank or their
respective Affiliates may have. Each Lender and the Issuing Bank agrees
promptly to notify Borrower and Administrative Agent after any such setoff and
application; provided that the failure to give such notice shall not
affect the validity of such setoff and application.


 


Section 10.04       Amendments
and Waivers.


 


(a)           Requisite Lenders’ Consent.
Subject to Section 10.04(b) and 10.04(c), no amendment, modification,
termination or waiver of any provision of the Loan Documents, or consent to any
departure by any Loan Party therefrom, shall in any event be effective without
the written concurrence of the Requisite Lenders and Borrower.


 


(b)           Affected Lenders’ Consent.
Without the written consent of each Lender 
(other than a Defaulting Lender) that would be affected thereby, no
amendment, modification, termination, or consent shall be effective if the
effect thereof would:


 


(i)            extend
the scheduled final maturity of any Loan or Note;


 


110

















 


(ii)           waive,
reduce or postpone any scheduled repayment (but not prepayment);


 


(iii)          extend
the stated expiration date of any Letter of Credit beyond the Revolving Commitment
Termination Date;


 


(iv)          reduce
the rate of interest on any Loan (other than any waiver of any increase in the
interest rate applicable to any Loan pursuant to Section 2.22) or any fee
payable hereunder or change the cash pay nature of any such interest;


 


(v)           extend
the time for payment of any such interest or fees;


 


(vi)          reduce
the principal amount of any Loan or any reimbursement obligation in respect of
any Letter of Credit;


 


(vii)         amend,
modify, terminate or waive any provision of this Section 10.04(b) or Section
10.04(c);


 


(viii)        amend,
directly or indirectly, the definition of “Requisite Lenders” or “Pro
Rata Share” (or any other defined terms used to define terms); provided,
with the consent of Requisite Lenders, additional extensions of credit pursuant
hereto may be included in the determination of “Requisite Lenders” or “Pro
Rata Share” on substantially the same basis as the Term Loan Commitments,
the Term Loans, the Revolving Commitments and the Revolving Loans are included
on the Closing Date;


 


(ix)           release
all or substantially all of the Collateral or all or substantially all of the
Guarantors or all or substantially all of the value of the Guaranty from the
Guaranty except as expressly provided in the Loan Documents; or


 


(x)            waive
an Event of Default under Section 8.01(a).


 


(c)           Other Consents. No
amendment, modification, termination or waiver of any provision of the Loan
Documents, or consent to any departure by any Loan Party therefrom, shall:


 


(i)            increase
any Revolving Commitment or Delayed Draw Term Loan Commitment of any Lender
over the amount thereof then in effect without the consent of such Lender; provided,
no amendment, modification or waiver of any condition precedent, covenant,
Default or Event of Default shall constitute an increase in any Revolving
Commitment or Delayed Draw Term Loan Commitment of any Lender;


 


(ii)           amend,
modify, terminate or waive any provision hereof relating to the Swing Line
Sublimit or the Swing Line Loans without the consent of Swing Line Lender;


 


(iii)          amend
the definition of “Requisite Class Lenders” without the consent of
Requisite Class Lenders of each Class; provided, with the consent of the
Requisite Lenders, additional extensions of credit pursuant hereto may be
included in the determination of such “Requisite Class Lenders” on
substantially the same basis as the Term Loan Commitments, the Term Loans, the
Revolving Commitments and the Revolving Loans are included on the Closing Date;


 


111

















 


(iv)          alter
the required application of any repayments or prepayments as between Classes
pursuant to Section 2.30 without the consent of Requisite Class Lenders of each
Class which is being allocated a lesser repayment or prepayment as a result
thereof; provided, Requisite Lenders may waive, in whole or in part, any
prepayment so long as the application, as between Classes, of any portion of
such prepayment which is still required to be made is not altered;


 


(v)           amend,
modify, terminate or waive any obligation of Lenders relating to the purchase
of participations in Letters of Credit as provided in Section 2.11 without the
written consent of Administrative Agent and of Issuing Bank;  or


 


(vi)          amend,
modify, terminate or waive any provision of Article 9 as the same applies to
any Agent, or any other provision hereof as the same applies to the rights or
obligations of any Agent, in each case without the consent of such Agent.


 


Section 10.05       Execution
of Amendments, etc.


 


Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of such  Lender. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on any Loan Party in any case shall
entitle any Loan Party to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 10.05 shall be binding upon
each Lender at the time outstanding, each future Lender and, if signed by a
Loan Party, on such Loan Party.


 


Section 10.06       Successors
and Assigns; Participations.


 


(a)           Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender and no Lender may assign or otherwise transfer any of
its rights or obligations hereunder except (i) to an Eligible Assignee in
accordance with the provisions of paragraph (b) of this Section, (ii) by
way of participation in accordance with the provisions of paragraph (d) of this
Section or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of paragraph (f) of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in paragraph (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties
of each of the Agents and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.


 


(b)           Assignments by Lenders.
Any Lender may at any time assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided
that:


 


(i)            Minimum
Amounts. (A) in the case of an
assignment of the entire remaining amount of the assigning Lender’s Commitment
and the Loans at the time owing to it or in the case of an assignment to a
Lender or an Affiliate of a Lender or an Approved Fund with respect to a
Lender, no minimum amount need be assigned; and (B) in any case not
described in paragraph (b)(i)(A) of this Section, the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or,
if the applicable Commitment is not


 


112

















 


then in effect, the principal outstanding balance of the
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Assumption Agreement with respect to such
assignment is delivered to Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption Agreement, as of the Trade Date)
shall not be less than $1,000,000, in the case of any assignment in respect of
Revolving Commitments and Revolving Loans, or $1,000,000, in the case of any
assignment in respect of  Term Loans,
unless each of Administrative Agent and, so long as no Event of Default has
occurred and is continuing, Borrower otherwise consents (each such consent not
to be unreasonably withheld or delayed);


 


(ii)           Proportionate
Amounts. Each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender’s
rights and obligations under this Agreement with respect to the Loan or the
Commitment assigned, except that this clause (ii) shall not prohibit any lender
from assigning all or a portion of its rights and obligations among separate
Classes on a non-pro rata basis;


 


(iii)          Assignment
and Assumption Agreement. The
parties to an assignment shall (A) electronically execute and deliver to
the Administrative Agent and Borrower an Assignment and Assumption Agreement
via an electronic settlement acceptable to the Administrative Agent or
(B) manually execute and deliver to the Administrative Agent and Borrower
an Assignment and Assumption Agreement; and


 


(iv)          Assignment
Fee and Administrative Questionnaire. The
parties to each assignment shall deliver to Administrative Agent a processing
and recordation fee of $3,500 (except in the case of an assignment to an
Affiliate or Approved Fund of the assigning Lender, in which case the
processing and recordation fee shall be $500, or as otherwise agreed by
Administrative Agent) and the Eligible Assignee, if it shall not be a Lender,
shall deliver to Administrative Agent an Administrative Questionnaire and any
forms or other documents required pursuant to Section 2.36.


 


Subject to acceptance and
recording thereof by Administrative Agent pursuant to paragraph (c) of this
Section, from and after the effective date specified in each Assignment and
Assumption Agreement, the Eligible Assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Assumption Agreement, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption Agreement, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption Agreement covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto)
, but shall continue to be entitled to the benefits of Sections 2.34, 2.35,
2.36 and 10.02 with respect to facts and circumstances occurring  prior to the effective date of such
assignment. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with paragraph (d) of this Section.


 


(c)           Register. Administrative
Agent, acting solely for this purpose as an agent of Borrower, shall maintain
at its office a copy of each Assignment and Assumption Agreement delivered to
it and a register for the recordation of the names and addresses of the
Lenders, and the Commitments of, and principal amounts of the Loans owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”).
The entries in the Register shall be conclusive, and Borrower, Administrative
Agent and the Lenders shall treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding


 


113
















 


notice to the contrary. The
Register shall be available for inspection by Borrower, at any reasonable time
and from time to time upon reasonable prior notice.


 


(d)           Participations. Any
Lender may at any time, without the consent of, or notice to, Borrower or
Administrative Agent, sell participations to any Person (other than a natural
person or Borrower or any of Borrower’s Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans owing
to it); provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) Borrower, Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement.


 


Any agreement or instrument pursuant to which a
Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
to:  (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Revolving Commitment Termination Date) in which such
participant is participating, or reduce the rate or extend the time of payment
of interest or fees thereon (except in connection with a waiver of
applicability of any post default increase in interest rates) 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 or of a mandatory reduction in the
Commitment shall not constitute a change in the terms of such participation,
and that an increase in any Commitment or Loan shall be permitted without the
consent of any participant if the participant’s participation is not increased
as a result thereof), (ii) consent to the assignment or transfer by any
Loan Party of any of its rights and obligations under this Agreement or
(iii) release all or substantially all of the Collateral under the
Collateral Documents (except as expressly provided in the Loan Documents)
supporting the Loans hereunder in which such participant is participating. Subject
to paragraph (e) of this Section, Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.33(c), 2.34, 2.35 and 2.36 to the
same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.03 as though
it were a Lender, provided such Participant agrees to be subject to Section
2.32 as though it were a Lender.


 


(e)           Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater
payment under Sections 2.33(c), 2.34, 2.35 and 2.36 than the applicable Lender
would have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant is
made with Borrower’s prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.36 unless Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of Borrower, to comply
with Section 2.36(e) as though it were a Lender.


 


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


 


114

















 


Section 10.07       Independence
of Covenants.


 


All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or
would otherwise be within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.


 


Section 10.08       Survival
of Representations, Warranties and Agreements.


 


All representations, warranties and agreements made
herein shall survive the execution and delivery hereof and the making of any
Credit Extension. Notwithstanding anything herein or implied by law to the
contrary, the agreements of each Loan Party set forth in Sections 2.33(c),
2.34, 2.35, 2.36, 10.02 and 10.03 and the agreements of Lenders set forth in
Sections 2.33, 9.03 and 10.02 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination hereof. All other agreements and
covenants under the Loan Documents shall terminate on the Termination Date.


 


Section 10.09       No
Waiver; Remedies Cumulative.


 


No failure or delay on the part of any Agent or any
Lender in the exercise of any power, right or privilege hereunder or under any
other Loan Document shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other power, right or privilege. The rights,
powers and remedies given to each Agent and each Lender hereby are cumulative
and shall be in addition to and independent of all rights, powers and remedies
existing by virtue of any statute or rule of law or in any of the other Loan
Documents or any of the Hedge Agreements. Any forbearance or failure to
exercise, and any delay in exercising, any right, power or remedy hereunder shall
not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.


 


Section 10.10       Marshalling;
Payments Set Aside.


 


Neither any Agent nor any Lender shall be under any
obligation to marshal any assets in favor of any Loan Party or any other Person
or against or in payment of any or all of the Obligations. To the extent that
any Loan Party makes a payment or payments to Administrative Agent or Lenders
(or to Administrative Agent, on behalf of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law,
common law or any equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor or related thereto, shall be revived and continued
in full force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.


 


Section 10.11       Severability.


 


In case any provision in or obligation hereunder or
any Note shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.


 


115

















 


Section 10.12       Obligations
Several; Independent Nature of Lenders’ Rights.


 


The obligations of Lenders hereunder are several and
no Lender shall be responsible for the obligations or Commitment of any other
Lender hereunder. Nothing contained herein or in any other Loan Documents, and
no action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out hereof and it shall not be necessary
for any other Lender to be joined as an additional party in any proceeding for
such purpose.


 


Section 10.13       Headings.


 


Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.


 


Section 10.14       Governing
Law; Jurisdiction; Etc.


 


(a)           Governing Law. THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND RULE 327(b) OF THE NEW YORK CIVIL PRACTICE LAW AND
RULES.


 


(b)           Submission to Jurisdiction.
Borrower and each other Loan Party irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the courts of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State court or, to the fullest extent permitted by
applicable law, in such Federal court. Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or in any other Loan Document shall
affect any right that any Agent, any Lender or the Issuing Bank may otherwise
have to bring any action or proceeding relating to this Agreement or any other
Loan Document against Borrower or any other Loan Party or its properties in the
courts of any jurisdiction.


 


(c)           Waiver of Venue. Borrower
and each other Loan Party irrevocably and unconditionally waives, to the
fullest extent permitted by applicable law, any objection which it may now or
hereafter have to the laying of venue of any action or proceeding arising out
of or relating to this Agreement or any other Loan Document in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.


 


(d)           Service of Process. Each
party hereto irrevocably consents to service of process in the manner provided
for notices in Section 10.01. Nothing in this Agreement will affect the right
of any party hereto to serve process in any other manner permitted by
applicable law.


 


116

















 


Section 10.15       WAIVER
OF JURY TRIAL.


 


EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.


 


Section 10.16       Treatment
of Certain Information; Confidentiality.


 


Each of the Agents, the Lenders and the Issuing Bank
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to it, its Affiliates and
their respective partners, directors, officers, employees, agents, advisors,
auditors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential pursuant to
the terms hereof), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners),
(c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party hereto,
(e) in connection with the exercise of any remedies hereunder or under any
other Loan Document or any action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same
as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to Borrower and
its obligations, (g) with the consent of Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to Agents, any
Lender or the Issuing Bank on a nonconfidential basis from a source other than
Borrower not known to them to be bound by an obligation of confidentiality.


 


For purposes of this Section, “Information” means
all information received from Borrower or any of its Subsidiaries relating to
Borrower or any of their Subsidiaries or any of their respective businesses. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.


 


Section 10.17       Usury
Savings Clause.


 


Notwithstanding any other provision herein, the
aggregate interest rate charged with respect to any of the Obligations,
including all charges or fees in connection therewith deemed in the nature of
interest under applicable law shall not exceed the Highest Lawful Rate. If the
rate of interest (determined without regard to the preceding sentence) under
this Agreement at any time exceeds the Highest Lawful Rate, the outstanding
amount of the Loans made hereunder shall bear interest at the Highest Lawful
Rate until the total amount of interest due hereunder equals the amount of
interest which


 


117

















 


would have been due
hereunder if the stated rates of interest set forth in this Agreement had at
all times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, Borrower
shall pay to Administrative Agent an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid
if the Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of Lenders and Borrower to conform strictly to
any applicable usury laws. Accordingly, if any Lender contracts for, charges,
or receives any consideration which constitutes interest in excess of the
Highest Lawful Rate, then any such excess shall be cancelled automatically and,
if previously paid, shall at such Lender’s option be applied to the outstanding
amount of the Loans made hereunder or be refunded to Borrower.


 


Section 10.18       Counterparts;
Integration; Effectiveness.


 


This Agreement may be executed in counterparts (and
by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement shall become effective when it shall have been
executed by Administrative Agent and when Administrative Agent shall have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto, and thereafter shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement


 


Section 10.19       Entire
Agreement.


 


This Agreement and the other Loan Documents
represent the entire agreement of the parties with regard to the subject matter
hereof and thereof and the terms of any letters and other documentation entered
into between any of the parties hereto prior to the execution of this Agreement
which relate to Loans to be made hereunder shall be replaced by the terms of
this Agreement and the other Loan Documents.


 


Section 10.20       Electronic
Execution of Assignments.


 


The words “execution,” “signed,” “signature,” and
words of like import in any Assignment and Assumption Agreement shall be deemed
to include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as
a manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.


 


Section 10.21       Patriot
Act Notification.


 


Each Lender and Administrative Agent (for itself and
not on behalf of any Lender) hereby notifies Borrower that pursuant to the
requirements of the Act, it is required to obtain, verify and record
information that identifies Borrower, which information includes the name and
address of Borrower and other information that will allow such Lender or
Administrative Agent, as applicable, to identify Borrower in accordance with
the Act.


 


118

















 


Section 10.22       Release on
Payment in Full.


 


Administrative Agent shall, on behalf of the
Lenders, upon the written request and at the expense of Borrower upon the
Termination Date, execute any documents reasonably requested by Borrower to
evidence the release of the Liens of the Credit Documents if not theretofore
released (and upon the Termination Date, such Liens shall be automatically
released). Lenders shall, at Borrower’s request and at no cost to Lenders,
reasonably cooperate with Borrower in assigning the Notes and Mortgages
(without recourse) at payoff and will execute all documents reasonably
necessary to evidence the discharge or such assignment of the Obligations.


 


Section 10.23       Lender
Addendum.


 


Each Lender to become a party to this Agreement on
the date hereof shall do so by delivering to the Administrative Agent a Lender
Addendum duly executed by such Lender, Borrower and the Administrative Agent.


 


[Remainder of page
intentionally left blank]


 


 


119

















 


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


 


 


	 
	
   

  	
  CHEM RX CORPORATION

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
  By:

  	
  /s/ Jerry Silva

  	
   

  	 

	 
	
   

  	
   

  	
  Name: Jerry Silva 

  	 

	 
	
   

  	
   

  	
  Title: Chairman and CEO

  	 

	 
	
   

  	
   

  	
   

  	 

	 
	
   

  	
   

  	
   

  	 

	
   

  	
  B.J.K. INC.

  
	
   

  	
  CHEMRX NEW JERSEY, LLC

  
	
   

  	
  CHEMRX/SALERNO’S, LLC

  
	
   

  	
  CHEMRX-BOCA RATON, LLC

  
	
   

  	
  CHEMRX CARE, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	 
	
   

  	
  By:

  	
  /s/ Jerry Silva

  	
   

  	 

	 
	
   

  	
   

  	
  Name: Jerry Silva

  	 

	 
	
   

  	
   

  	
  Title: President

  	 

						



 


S-1

















 


	
   

  	
  CIBC WORLD MARKETS CORP.,

  
	
   

  	
  as Sole Lead Arranger and Sole Book Runner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Doug Cornett

  	
   

  
	
   

  	
   

  	
  Name: Doug Cornett

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CANADIAN IMPERIAL BANK OF COMMERCE,

  NEW YORK AGENCY,

  
	
   

  	
  as Administrative Agent, Collateral Agent
  and Issuing

  Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Doug Cornett

  	
   

  
	
   

  	
   

  	
  Name: Doug
  Cornett

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CIBC INC.,

  
	
   

  	
  as Swing Line Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Doug Cornett

  	
   

  
	
   

  	
   

  	
  Name: Doug
  Cornett

  
	
   

  	
   

  	
  Title:
  Authorized Signatory

  



 


S-2

















 


Schedule 1.01A to


First Lien Credit and Guaranty Agreement


 


Consolidated Adjusted EBITDA


 


With respect to any calculation period ending prior to the first
anniversary of the Closing Date for which the following Fiscal Quarters are
relevant, Consolidated Adjusted EBITDA for each of the following Fiscal
Quarters shall be deemed to be the following amounts and, thereafter, actual
Consolidated Adjusted EBITDA shall be used:


 


	
  Fiscal Quarter

  	
   

  	
  Consolidated Adjusted EBITDA

  	
   

  
	
  First Fiscal
  Quarter of Fiscal Year 2007

  	
   

  	
   

  	
  $

  	
  5,872,359

  	
   

  
	
  Second
  Fiscal Quarter of Fiscal Year 2007

  	
   

  	
   

  	
  $

  	
  6,874,642

  	
   

  



 


Fixed Charge Coverage Ratio


 


The components of the Fixed Charge
Coverage Ratio shall be calculated as follows:


 


1.             Consolidated Capital Expenditures Component of the Fixed
Charge Coverage Ratio


 


With respect to any calculation period ending prior to the first
anniversary of the Closing Date for which the following Fiscal Quarters are
relevant, Consolidated Capital Expenditures for each of the following Fiscal
Quarters shall be deemed to be the following amounts and, thereafter, actual
Consolidated Capital Expenditures shall be used:


 


	
  Fiscal Quarter

  	
   

  	
  Consolidated Capital Expenditures

  	
   

  
	
  First Fiscal
  Quarter of Fiscal Year 2007

  	
   

  	
   

  	
  $

  	
  1,823,227

  	
   

  
	
  Second
  Fiscal Quarter of Fiscal Year 2007

  	
   

  	
   

  	
  $

  	
  1,130,520

  	
   

  



 


2.             Consolidated Cash Interest Expense, Scheduled Payments of Principal and
Consolidated Lease Expense Components of the Fixed Charge Coverage Ratio


 


For each determination period prior to the
first anniversary of the Closing Date, the Consolidated Cash Interest Expense
(excluding for the avoidance of doubt, amortization expense with respect to
deferred financing fees), scheduled payments of principal on Consolidated Total
Debt and Consolidated Lease Expense components of the Fixed Charge Coverage
Ratio shall be calculated as Consolidated Cash Interest Expense, scheduled
payments of principal on Consolidated Total Debt and Consolidated Lease Expense
for the period from the Closing Date to such date of determination divided by the
number of days in such period and multiplied by 365.