Exhibit
10.25




 





 


CREDIT
AGREEMENT


 


DATED AS
OF DECEMBER 22, 2003


 


AMONG


 


MEDICAL
STAFFING NETWORK, INC.,


 


THE OTHER
CREDIT PARTIES SIGNATORY HERETO


 


THE
LENDERS REFERRED TO HEREIN,


 


GENERAL
ELECTRIC CAPITAL CORPORATION,


AS
ADMINISTRATIVE AGENT,


 


AND


 


LASALLE
BANK NATIONAL ASSOCIATION,


AS
SYNDICATION AGENT


 




 





 

















 


TABLE OF CONTENTS


 


	
  INTRODUCTORY
  STATEMENT

  	
  1

  
	
   

  	
   

  
	
  Article I.  Definitions

  	
  2

  
	
   

  	
  Section 1.1.  Certain Defined Terms

  	
  2

  
	
   

  	
  Section 1.2.  Accounting Terms and Determinations

  	
  38

  
	
   

  	
  Section 1.3.  Other Definitional Provisions

  	
  38

  
	
   

  	
   

  	
   

  
	
  Article II.  The Facilities

  	
  39

  
	
   

  	
  Section 2.1.  The Facilities

  	
  39

  
	
   

  	
  Section 2.2.  Notes

  	
  40

  
	
   

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

  	
  41

  
	
   

  	
  Section 2.4.  Interest on Loans

  	
  42

  
	
   

  	
  Section 2.5.  Letters of Credit

  	
  43

  
	
   

  	
  Section 2.6.  Swingline Loans

  	
  50

  
	
   

  	
  Section 2.7.  Certain Fees

  	
  53

  
	
   

  	
  Section 2.8.  Mandatory Repayments and Prepayments

  	
  54

  
	
   

  	
  Section 2.9.  Optional Prepayments

  	
  56

  
	
   

  	
  Section 2.10.  Application of Payments

  	
  56

  
	
   

  	
  Section 2.11.  Reduction of Commitments

  	
  57

  
	
   

  	
  Section 2.12.  Loan Account and Accounting

  	
  58

  
	
   

  	
  Section 2.13.  Computation of Interest and Fees

  	
  58

  
	
   

  	
  Section 2.14.  General Provisions Regarding Payments

  	
  58

  
	
   

  	
  Section 2.15.  Maximum Interest

  	
  59

  
	
   

  	
   

  	
   

  
	
  Article III.  Conditions

  	
  60

  
	
   

  	
  Section 3.1.  Conditions to Closing

  	
  60

  
	
   

  	
  Section 3.2.  Conditions to Each Extension of Credit

  	
  61

  
	
   

  	
   

  	
   

  
	
  Article IV.  Representations and Warranties

  	
  62

  
	
   

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

  	
  62

  
	
   

  	
  Section 4.2.  Governmental Approvals; Compliance with
  Laws andCompliance with Agreements with Third Parties

  	
  62

  
	
   

  	
  Section 4.3 . Organizational
  and Governmental Approvals; No Contravention

  	
  63

  
	
   

  	
  Section 4.4.  Binding Effect; Liens of Collateral
  Documents

  	
  63

  
	
   

  	
  Section 4.5.  Financial Statements

  	
  63

  
	
   

  	
  Section 4.6.  Material Adverse Effect

  	
  64

  
	
   

  	
  Section 4.7.  Litigation

  	
  64

  
	
   

  	
  Section 4.8.  Due Diligence Questionnaire; Full
  Disclosure

  	
  64

  
	
   

  	
  Section 4.9.  No Adverse Fact

  	
  65

  
	
   

  	
  Section 4.10.  Ownership of Property, Liens

  	
  65

  
	
   

  	
  Section 4.11.  Environmental Laws

  	
  65

  



 


i

















 


	
   

  	
  Section 4.12.  ERISA

  	
  65

  
	
   

  	
  Section 4.13.  Subsidiaries Capitalization

  	
  65

  
	
   

  	
  Section 4.14.  Government Regulations

  	
  66

  
	
   

  	
  Section 4.15.  Margin Regulations

  	
  66

  
	
   

  	
  Section 4.16.  Taxes

  	
  66

  
	
   

  	
  Section 4.17.  Intellectual Property

  	
  67

  
	
   

  	
  Section 4.18.  Solvency

  	
  67

  
	
   

  	
  Section 4.19.  Insurance

  	
  67

  
	
   

  	
  Section 4.20.  Brokers

  	
  67

  
	
   

  	
  Section 4.21  HIPAA Compliance

  	
  67

  
	
   

  	
  Section 
  4.22  Third Party Reimbursement

  	
  68

  
	
   

  	
  Section 4.23  Tax Shelter Representation

  	
  68

  
	
   

  	
   

  	
   

  
	
  Article V.  REPORTING Covenants

  	
  68

  
	
   

  	
  Section 5.1.  Financial Statements and Reports

  	
  68

  
	
   

  	
  Section 5.2.  Collateral Reports

  	
  71

  
	
   

  	
  Section 5.3.  Financial Statements and Information

  	
  73

  
	
   

  	
  Section 5.4.  Confidential Health Information

  	
  73

  
	
   

  	
   

  	
   

  
	
  Article VI.  Affirmative Covenants

  	
  74

  
	
   

  	
  Section 6.1.  Payment of Obligations

  	
  74

  
	
   

  	
  Section 6.2.  Preservation of Existence and Franchises

  	
  74

  
	
   

  	
  Section 6.3.
   Insurance; Damage to or Destruction
  of Collateral

  	
  74

  
	
   

  	
  Section 6.4  Compliance with Law

  	
  76

  
	
   

  	
  Section 6.5  Payment of Taxes and Other Indebtedness

  	
  76

  
	
   

  	
  Section 6.6  Maintenance of Property

  	
  76

  
	
   

  	
  Section 6.7  Performance of Obligations

  	
  76

  
	
   

  	
  Section 6.8  Use of Proceeds

  	
  76

  
	
   

  	
  Section 6.9  Audits/Inspections

  	
  76

  
	
   

  	
  Section 6.10  Financial Covenants

  	
  77

  
	
   

  	
  Section 6.11  Collateral

  	
  79

  
	
   

  	
  Section 6.12  Additional Credit Parties

  	
  80

  
	
   

  	
  Section 6.13  [Reserved]

  	
  81

  
	
   

  	
  Section 6.14.  Supplemental Disclosure

  	
  81

  
	
   

  	
  Section 6.15.  Further Assurances

  	
  81

  
	
   

  	
  Section 6.16.  Environmental Matters

  	
  81

  
	
   

  	
  Section 6.17.  Landlord and Warehouseman Waivers

  	
  82

  
	
   

  	
  Section 6.18.  Mortgages on Real Property; Title
  Insurance and Survey

  	
  82

  
	
   

  	
  Section 6.19.  Compliance Program

  	
  83

  
	
   

  	
  Section 6.20.  Cash Management
  Systems

  	
  83

  
	
   

  	
  Section 6.21.  SEC Filings

  	
  85

  
	
   

  	
   

  	
   

  
	
  Article VII.  Negative Covenants

  	
  85

  
	
   

  	
  Section 7.1  Indebtedness

  	
  85

  
	
   

  	
  Section 7.2  Liens

  	
  86

  
	
   

  	
  Section 7.3  Nature of Business

  	
  86

  
	
   

  	
  Section 7.4  Consolidation and Merger

  	
  86

  



 


ii

















 


	
   

  	
  Section 7.5  Sale or Lease of Assets

  	
  87

  
	
   

  	
  Section 7.6  Advances, Investments and Loans

  	
  87

  
	
   

  	
  Section 7.7  Restricted Payments

  	
  87

  
	
   

  	
  Section 7.8  Transactions with Affiliates

  	
  88

  
	
   

  	
  Section 7.9  Fiscal Year; Organizational Documents

  	
  88

  
	
   

  	
  Section 7.10  Limitations

  	
  88

  
	
   

  	
  Section 7.11  Sale Leasebacks

  	
  88

  
	
   

  	
  Section 7.12  Negative Pledges

  	
  89

  
	
   

  	
  Section 7.13  Capital Expenditures

  	
  89

  
	
   

  	
  Section 7.14  Prepayments of Indebtedness, etc.

  	
  89

  
	
   

  	
  Section 7.15  Ownership of Subsidiaries; Limitations on
  Borrower

  	
  89

  
	
   

  	
  Section 7.16  Earn-Out Obligations

  	
  89

  
	
   

  	
  Section 7.17.  Guaranteed Obligations

  	
  90

  
	
   

  	
  Section 7.18.  ERISA

  	
  90

  
	
   

  	
  Section 7.19.  Amendments or Waivers

  	
  90

  
	
   

  	
  Section 7.20.  Limitations on Holdings

  	
  90

  
	
   

  	
  Section 7.21.  Limitations on Parent

  	
  90

  
	
   

  	
   

  	
   

  
	
  Article VIII.  Events of Default

  	
  91

  
	
   

  	
  Section 8.1  Events of Default

  	
  91

  
	
   

  	
  Section 8.2  Acceleration; Remedies

  	
  93

  
	
   

  	
  Section 8.3
   Allocation of Payments After Event of
  Default

  	
  94

  
	
   

  	
   

  	
   

  
	
  Article IX.  Expenses and Indemnities

  	
  96

  
	
   

  	
  Section 9.1.  Expenses

  	
  96

  
	
   

  	
  Section 9.2.  Indemnity

  	
  97

  
	
   

  	
  Section 9.3.  Taxes

  	
  98

  
	
   

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

  	
  98

  
	
   

  	
   

  	
   

  
	
  Article X.  The Agent

  	
  99

  
	
   

  	
  Section 10.1.  Appointment and Authorization

  	
  99

  
	
   

  	
  Section 10.2.  Delegation of Duties.

  	
  100

  
	
   

  	
  Section 10.3.  Administration Agent and Affiliates.

  	
  100

  
	
   

  	
  Section 10.4.  Action by Administrative Agent

  	
  100

  
	
   

  	
  Section 10.5.  Consultation with Experts

  	
  100

  
	
   

  	
  Section 10.6.  Liability of Administrative Agent

  	
  100

  
	
   

  	
  Section 10.7.  Indemnification

  	
  101

  
	
   

  	
  Section 10.8.  Credit Decision

  	
  101

  
	
   

  	
  Section 10.9.  Successor Administrative Agent

  	
  102

  
	
   

  	
  Section 10.10.  Reliance by Administrative Agent

  	
  102

  
	
   

  	
  Section 10.11.  Notice of Default

  	
  102

  
	
   

  	
   

  	
   

  
	
  Article XI.  Miscellaneous

  	
  103

  
	
   

  	
  Section 11.1.  Survival

  	
   

  	
  103

  
	
   

  	
  Section 11.2.  No Waivers; Remedies Cumulative.

  	
   

  	
  103

  
	
   

  	
  Section 11.3.  Notices

  	
   

  	
  103

  



 


iii

















 


	
   

  	
  Section 11.4.  Severability

  	
   

  	
  104

  
	
   

  	
  Section 11.5.  Amendments and Waivers

  	
   

  	
  104

  
	
   

  	
  Section 11.6.  Successors and Assigns; Registration

  	
   

  	
  106

  
	
   

  	
  Section 11.7.  Setoffs and Sharing of Payments

  	
   

  	
  108

  
	
   

  	
  Section 11.8.  Collateral

  	
   

  	
  109

  
	
   

  	
  Section 11.9.  Headings

  	
   

  	
  109

  
	
   

  	
  Section 11.10.  Governing Law; Submission To Jurisdiction

  	
   

  	
  109

  
	
   

  	
  Section 11.11.  Notice of Breach by Agents or Lender

  	
   

  	
  110

  
	
   

  	
  Section 11.12.  Waiver Of Jury Trial

  	
   

  	
  110

  
	
   

  	
  Section 11.13.  Counterparts; Entire Agreement

  	
   

  	
  110

  
	
   

  	
  Section 11.14.  Confidentiality; Press Release

  	
   

  	
  110

  
	
   

  	
  Section 11.15.  Reinstatement

  	
   

  	
  111

  
	
   

  	
  Section 11.16.  Advice of Counsel

  	
   

  	
  112

  
	
   

  	
  Section 11.17.  No Strict Construction

  	
   

  	
  112

  
	
   

  	
  Section 11.18.  Conflict of Terms

  	
   

  	
  112

  



 


iv

















 


	
  EXHIBIT A

  	
  -

  	
  Revolving Note

  
	
  EXHIBIT B

  	
  -

  	
  Term Loan Note

  
	
  EXHIBIT C

  	
  -

  	
  Swingline Note

  
	
  EXHIBIT D-1

  	
  -

  	
  Notice of Borrowing

  
	
  EXHIBIT D-2

  	
  -

  	
  Notice of Swingline Borrowing

  
	
  EXHIBIT E

  	
  -

  	
  Borrower Security Agreement

  
	
  EXHIBIT F

  	
  -

  	
  Borrower Pledge Agreement

  
	
  EXHIBIT G

  	
   

  	
  Subsidiary Guaranty

  
	
  EXHIBIT H

  	
  -

  	
  Subsidiary Pledge Agreement

  
	
  EXHIBIT I

  	
  -

  	
  Subsidiary Security Agreement

  
	
  EXHIBIT J

  	
  -

  	
  Application for Standby Letter of Credit

  
	
  EXHIBIT K

  	
  -

  	
  Master Agreement for Standby Letter of Credit

  
	
  EXHIBIT L

  	
  -

  	
  Application for Documentary Letter of Credit

  
	
  EXHIBIT M

  	
  -

  	
  Master Agreement for Documentary Letter of Credit

  
	
  EXHIBIT N

  	
  -

  	
  Borrowing Base Certificate

  
	
  EXHIBIT O

  	
  -

  	
  Opinion of Counsel to the Credit Parties

  
	
  EXHIBIT P

  	
  -

  	
  Authorized Signatory Letter

  
	
  EXHIBIT Q

  	
  -

  	
  Closing Checklist

  
	
  EXHIBIT R

  	
  -

  	
  Assignment Agreement

  
	
  EXHIBIT S

  	
  -

  	
  Form of Holdings Guaranty Agreement

  
	
  EXHIBIT T

  	
  -

  	
  Form of Holdings Pledge Agreement

  
	
  EXHIBIT U

  	
  -

  	
  Form of Holdings Security Agreement

  
	
  EXHIBIT V

  	
  -

  	
  Form of Parent Guaranty Agreement

  
	
  EXHIBIT W

  	
  -

  	
  Form of Parent Pledge Agreement

  
	
  EXHIBIT X

  	
  -

  	
  Form of Parent Security Agreement

  
	
  EXHIBIT Y

  	
  -

  	
  Business Associate Agreement

  
	
   

  
	
  EXHIBIT 5.1(a)

  	
  Compliance Certificate (Monthly)

  
	
  EXHIBIT 5.1(b)

  	
  Compliance Certificate (Quarterly)

  
	
  EXHIBIT 5.1(c)

  	
  Compliance Certificate (Annual)

  
	
   

  
	
  DISCLOSURE SCHEDULE 4.5(a)

  	
   

  	
  -

  	
   

  	
  Financial Statements

  
	
  DISCLOSURE SCHEDULE 4.5(b)

  	
   

  	
  -

  	
   

  	
  Pro Forma Balance Sheet

  
	
  DISCLOSURE SCHEDULE 4.5(c)

  	
   

  	
  -

  	
   

  	
  Borrower’s Financial Projections

  
	
  DISCLOSURE SCHEDULE 4.5(d)

  	
   

  	
  -

  	
   

  	
  Fair Salable Balance Sheet

  
	
  DISCLOSURE SCHEDULE 4.7

  	
   

  	
  -

  	
   

  	
  Litigation

  
	
  DISCLOSURE SCHEDULE 4.13

  	
   

  	
  -

  	
   

  	
  Subsidiaries, Other Equity Investments

  
	
  DISCLOSURE SCHEDULE 4.16

  	
   

  	
  -

  	
   

  	
  Taxes

  
	
  DISCLOSURE SCHEDULE 4.19

  	
   

  	
  -

  	
   

  	
  Insurance Policies

  
	
  DISCLOSURE SCHEDULE 6.20

  	
   

  	
  -

  	
   

  	
  Bank Accounts

  
	
  DISCLOSURE SCHEDULE 7.1

  	
   

  	
  -

  	
   

  	
  Indebtedness

  
	
  DISCLOSURE SCHEDULE 7.6

  	
   

  	
  -

  	
   

  	
  Existing Investments

  
							



 


v

















 


CREDIT
AGREEMENT


 


CREDIT AGREEMENT, dated as of
December 22, 2003, among MEDICAL
STAFFING NETWORK, INC.,  THE OTHER
CREDIT PARTIES SIGNATORY HERETO, the LENDERS listed
on the signature pages hereof, and GENERAL
ELECTRIC CAPITAL CORPORATION, as Administrative Agent.


 


INTRODUCTORY
STATEMENT


 


A.                                             The
Borrower as herein defined desires that Lenders extend a term loan and a
revolving credit facility to the Borrower to refinance an existing credit
facility, to provide working capital financing for the Borrower and to provide
funds for other general corporate purposes of the Borrower;


 


B.                                             The
Borrower desires to secure all of its Obligations (as hereinafter defined)
under the Loan Documents (as hereinafter defined) by granting to the
Administrative Agent, for the benefit of itself and Lenders, a security
interest in and lien upon all of its personal and Real Property including a
pledge of the capital stock of all of its subsidiaries;


 


C.                                             Medical
Staffing Holdings, LLC, a Delaware limited liability company (“Holdings”)
that owns all of the capital stock of the Borrower is willing to guaranty all
of the Obligations of the Borrower to Lenders under the Loan Documents, to
grant to Administrative Agent, for the benefit of itself and Lenders, a
security interest in and lien upon all of its personal and Real Property to
secure the Obligations and to pledge to the Administrative Agent, for the
benefit of itself and Lenders, all of the capital stock of the Borrower to
secure the Obligations;


 


D.                                            Medical
Staffing Network Holdings, Inc., a Delaware corporation (“Parent”) that
owns all of the capital stock of Holdings is willing to guaranty all of the
Obligations of the Borrower to Lenders under the Loan Documents, to grant to
Administrative Agent, for the benefit of itself and Lenders, a security
interest in and lien upon all of its personal and Real Property to secure the Obligations
and to pledge to the Administrative Agent, for the benefit of itself and
Lenders, all of the capital stock of the Holdings to secure the Obligations;
and


 


E.                                              Each
of the Borrower’s Subsidiaries is willing to guaranty all of the Obligations of
the Borrower to Lenders under the Loan Documents and to grant to Administrative
Agent, for the benefit of itself and Lenders, a security interest in and lien
upon all of its personal and Real Property to secure the Obligations.


 


The
parties hereto agree as follows:


 

















 


ARTICLE I.


 


DEFINITIONS


 


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


 


“Adjusted
Current Assets” means, at any date, the consolidated current assets (excluding
cash and cash equivalents) of the Credit Parties and their Subsidiaries
determined as of such date.


 


“Administrative
Agent” means General Electric Capital Corporation, a Delaware corporation,
together with any permitted successors and assigns.


 


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


 


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


 


“Acquisition”
means the acquisition by any Person of (a) a majority of the Voting Stock of
another Person (b) all or substantially all of the assets of another Person or
(c) all or substantially all of a line of business of another Person, in each
case whether or not involving a merger or consolidation with such other Person.


 


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


 


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


 


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


 


“Aggregate
L/C Exposure” means, at any time, the sum, without duplication, of (a) the
aggregate amount that is (or may thereafter become) available for drawing under
all


 


2

















 


Letters of Credit outstanding at such time plus
(b) the aggregate unpaid principal amount of all Reimbursement Obligations
outstanding at such time.


 


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


 


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


 


“Applicable
Margin” means: (a) (i) 2.25% per annum for LIBOR Loan Advances and 1.00% per
annum for Base Rate Advances, (ii) 1.00% per annum for Swingline Loans, (iii)
2.25% per annum for the Letter of Credit Fee Applicable Margin and (iv) 0.50%
for the Unused Line Fee Applicable Margin; and (b) (i) from the Closing Date
until the Initial Adjustment Date 9.00% per annum for Term Loans constituting
LIBOR Loans and (ii) commencing on the Initial Adjustment Date and on the first
day of each calendar month thereafter that follows by at least five (5) days
the receipt of financial statements delivered pursuant to Section 5.1(a), the Applicable Margin for Term Loans shall be that
determined from the chart below based on such financial statements:


 


 


	
  If
  Leverage Ratio is:

  	
   

  	
  Level of

  Applicable Margins:

  
	
  <2.5 to 1.0

  	
   

  	
  Level I

  
	
  <3.0 to 1.0, but > 2.5 to 1.0

  	
   

  	
  Level II

  
	
  <3.5 to 1.0, but > 3.0 to 1.0

  	
   

  	
  Level III

  
	
  >3.5 to
  1.0

  	
   

  	
  Level IV

  



 


	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  
	
  Applicable Margin for Term Loans constituting LIBOR Loans

  	
   

  	
  8.50

  	
  %

  	
  9.00

  	
  %

  	
  9.50

  	
  %

  	
  10.00

  	
  %

  
	
  Applicable Margin for Term Loans constituting Base Rate Loans

  	
   

  	
  7.00

  	
  %

  	
  7.50

  	
  %

  	
  8.00

  	
  %

  	
  8.50

  	
  %

  



 


Notwithstanding
the foregoing, if the Borrower shall fail to timely deliver to the
Administrative Agent the financial statements required for the calculation of
the Leverage Ratio for any Fiscal Month, then commencing after the date such
financial statements were due and continuing through the next Business Day
following the date of delivery thereof, the Leverage Ratio for such period
shall be conclusively presumed to be, and the Applicable Margin shall be
calculated based upon, the highest Leverage Ratio level listed in the table set
forth above.


 


3

















 


Furthermore,
notwithstanding the foregoing, at the election of the Administrative Agent  so long as a Default shall have occurred
and be continuing, the Applicable Margins shall be the highest rate specified
in the table above for all Classes of Extensions of Credit.


 


“Applicable
Percentage” means one and one-quarter percent (1.25%).


 


“Asset
Disposition” means any disposition, whether by sale, lease, transfer, loss,
damage, destruction, casualty, condemnation or otherwise (including any such
transaction effected by way of merger or consolidation), of any Stock or other
property (whether real, personal or mixed) of any Credit Party, but excluding
(a) dispositions of inventory in the ordinary course of business,  (b) dispositions of Temporary Cash
Investments and cash payments otherwise permitted under this Agreement and (c)
dispositions pursuant to the exercise of remedies against the Collateral by the
Administrative Agent.


 


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


 


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


 


“Availability Block” means an amount equal to
$5,000,000, provided that such amount shall equal $0 for all times that
the Borrower demonstrates that the Borrower’s EBITDA for the twelve month
period ending on such date of determination is greater than $25,000,000.


 


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


 


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


 


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


 


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


 


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


 


“Blocked
Account” has the meaning ascribed to it in Section 6.20.


 


4

















 


“Borrower”
means Medical Staffing Network, Inc.


 


“Borrower
Account” means the deposit account specified on the signature pages hereof into
which all Advances to the Borrower shall be made available, or such other
account as the Borrower shall from time to time specify by written notice to
the Administrative Agent.


 


“Borrower
Bank of America Investment Account” means that certain securities investment
account number 223-06353-1-6 held in the name of the Borrower at Bank of
America.


 


“Borrower
Bank of America Lockbox Account” means that certain lockbox account number
3664920358 held in the name of the Borrower at Bank of America.


 


“Borrower
Pledge Agreement” means the Borrower Pledge Agreement dated as of the date
hereof between the Borrower and the Administrative Agent, substantially in the
form of Exhibit
F.


 


“Borrower
Security Agreement” means the Security Agreement dated as of the date hereof
between the Borrower and the Administrative Agent, substantially in the form of
Exhibit E.


 


“Borrowing”
means the aggregation of Advances to be made to the Borrower by the Lenders
pursuant to Article II
on the same day, all of which Advances are of the same Type (subject to Article II) and, except in the case
of Base Rate Advances, have the same initial LIBOR Period.  Borrowings are also classified for purposes
hereof by reference to the pricing of Advances comprising such Borrowing (for
example, a “LIBOR Borrowing” is a Borrowing comprised of LIBOR Loan Advances).


 


“Borrowing
Availability” means, as of any date of determination, Revolving Credit Limit minus
the sum of the aggregate Revolving Loans and Swing Line Loans then outstanding.


 


“Borrowing
Base” means, on any date, a dollar amount equal to the Account Receivable
Advance Rate multiplied by the aggregate Collection Value of Eligible Accounts.


 


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


 


“Borrowing
Base Party” means Borrower and its Subsidiaries.


 


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


 


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


 


5

















 


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


 


“Capital
Expenditures” means all expenditures of the Credit Parties and their Subsidiaries
which, in accordance with GAAP, would be classified as capital expenditures,
including, without limitation, Capital Leases and capitalized software costs.


 


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


 


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


 


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


 


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


 


“Cash
Management System” has the meaning ascribed to it in Section 6.20.


 


“Cash
Taxes” means, as of any date for the twelve month period ending on such date
with respect to the Credit Parties and their Subsidiaries on a consolidated
basis, the aggregate of all taxes, as determined in accordance with GAAP, to
the extent the same are paid in cash during such period.


 


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


 


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


 


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


 


“Change
of Control” means any event, transaction or occurrence as a result of which (a)
(i) any “person” or “group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) (other than the Sponsor, the management of the Parent or
any entity in which any


 


6

















 


member of the management of Parent owns a controlling
interest) has become, directly or indirectly, the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
shall be deemed to have “beneficial ownership” of all shares that any such
Person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), by way of merger, consolidation or
otherwise, of 35% or more of the voting power of the Voting Stock of Parent on
a fully-diluted basis, after giving effect to the conversion and exercise of
all outstanding warrants, options and other securities of Parent convertible
into or exercisable for voting stock of Parent (whether or not such securities
are then currently convertible or exercisable), and (ii) such Person or group
is or becomes, directly or indirectly, the beneficial owner of a greater
percentage of the voting power of the Voting Stock of Parent calculated on such
fully-diluted basis, than the percentage beneficially owned by the Sponsor and
the management of the Parent; or (b) during any period of two consecutive
calendar years, individuals who at the beginning of such period constituted the
board of directors of Parent together with any new members of such board of
directors whose elections by such board of directors or whose nomination for
election by the stockholders of Parent was approved by a vote of a majority of
the members of such board of directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of the directors of Parent then in office; or (c) Parent shall fail to
own and have the right to vote 100% of the outstanding Voting Stock of
Holdings, determined on a fully diluted basis after giving effect to the
conversion and exercise of all outstanding warrants, options and other
securities of Holdings, convertible into or exercisable for voting stock of
Holdings (whether or not such securities are then currently convertible or
exercisable); (d) Holdings shall fail to own and have the right to vote 100% of
the outstanding Voting Stock of the Company, determined on a fully diluted
basis after giving effect to the conversion and exercise of all outstanding
warrants, options and other securities of the Company, convertible into or exercisable
for voting stock of the Company (whether or not such securities are then
currently convertible or exercisable); or (e) 
the occurrence of a “Change of Control” under and as defined in any of
the Employment Agreements as in effect on the Closing Date.


 


“Charges”
means any and all federal, state, county, city, municipal, local, foreign or
other governmental taxes (including taxes owed to the PBGC at the time due and
payable), levies, assessments, charges, liens, claims or encumbrances upon or
relating to (a) the Collateral, (b) the Obligations, (c) the employees,
payroll, income or gross receipts of any Credit Party, (d) any Credit Party’s
ownership or use of any properties or other assets, or (e) any other aspect of
any Credit Party’s business including, without limitation, charges for
necessary business permits and governmental authorizations.


 


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


 


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


 


“Closing
Date” means December 22, 2003.


 


7

















 


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


 


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


 


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


 


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


 


“Collection
Account” means that certain account of Administrative Agent, account number
50-271-079 in the name of Administrative Agent at Deutsche Bank Trust Company
Americas in New York, New York ABA No. 021-001-033, or such other account as
may be specified in writing by Administrative Agent as the “Collection
Account.”


 


“Collection
Value” means, with respect to each Eligible Account, the amount determined by
the Agent in its reasonable credit judgment to be the amount likely to be paid
by the Account Debtor on such Account.


 


“Commitment”
means (a) as to any Lender, such Lender’s Revolving Credit Commitment
(including without duplication the Swingline Lender’s Swingline Commitment) and
Term Loan Commitment as set forth on the signature pages hereto or in the most
recent Assignment Agreement  executed by such Lender and (b) as to all
Lenders, the aggregate of all of Lenders’ Revolving Credit Commitments
(including without duplication the Swingline Lender’s Swingline Commitment) and
Term Loan Commitments, as such Commitments may be reduced, amortized or
adjusted from time to time in accordance with this Agreement.


 


“Commitment
Termination Date” means the earliest of (a) December 22, 2006, (b) the
date of termination of Lenders’ obligations to make Advances and to incur L/C
Obligations or the date of acceleration of the maturity date of all or any
portion of the Obligations pursuant to Section 8.2(b),
and (c) the date of indefeasible payment in full by the Borrower of the Loans
and the cancellation and return of (or issuance of a stand-by guarantee with
respect to) all Letters of Credit or the cash collateralization of all L/C
Obligations pursuant to Section 2.5(k),
and the permanent reduction of all Commitments to Zero Dollars ($0).


 


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


 


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


 


“Control
Letter” means a letter agreement between Administrative Agent and (a) the
issuer of uncertificated securities with respect to uncertificated securities
in the name of any Credit Party, (b) a securities intermediary with respect to
securities, whether certificated or


 


8

















 


uncertificated, securities entitlements and other
financial assets held in a securities account in the name of any Credit Party,
(c) a futures commission merchant or clearing house, as applicable, with
respect to commodity accounts and commodity contracts held by any Credit Party,
in each case whereby, among other things, the issuer, securities intermediary
or futures commission merchant disclaims any security interest in the
applicable financial assets, acknowledges the Lien of Administrative Agent, on
behalf of itself and Lenders, on such financial assets, and agrees to follow
the instructions or entitlement orders of Administrative Agent without further
consent by the affected Credit Party.


 


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


 


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


 


“Credit
Parties” means the Borrower and each Guarantor.


 


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


 


“Current
Liabilities” means, at any date, (a) the consolidated current liabilities
(excluding Indebtedness) of the Credit Parties plus (b) the current liabilities
of any Person (other than the Credit Parties) which are guaranteed by the
Credit Parties, all determined as of such date.


 


“Days
Sales Outstanding” means, with respect to the Credit Parties on any date of
determination, the amount obtained by dividing (i) the ending accounts
receivable balance of the Credit Parties on such date by (ii) the revenues of
the Credit Parties for the three month period ending on such date and then
multiplying the result of such division by 91.5 days.


 


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


 


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


 


“Disbursement
Account” has the meaning ascribed to it in Section 6.20.


 


“Discontinued
Operation Fees First Quarter 2003” means the amount of charges incurred by the
Borrower in the first Fiscal Quarter of Fiscal Year 2003 for the fees assessed
in connection with the discontinuation of operations of the physician staffing
business, not to exceed $103,200.


 


9

















 


“Discontinued
Operation Fees Second Quarter 2003” means the amount of charges incurred by the
Borrower in the second Fiscal Quarter of Fiscal Year 2003 for the fees assessed
in connection with the discontinuation of operations of the physician staffing
business, not to exceed $402,000.


 


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


 


“Domestic
Subsidiaries” means all direct and indirect Subsidiaries of a Credit Party that
are domiciled, incorporated or organized under the laws of any state of the United
States or the District of Columbia (or has any material assets located in the
United States).


 


“EBITDA”
means, for any period, with respect to the Credit Parties and their
Subsidiaries on a consolidated basis, the sum of (a) Net Income for such period
(excluding the effect of any (i) intercompany items, (ii) all earnings
attributable to equity interests in Persons that are not Subsidiaries unless
actually received by such Person, (iii) all income arising from the
forgiveness, adjustment or negotiated settlement of any Indebtedness, (iv) any
extraordinary items of income and (v) any increase or decrease in income
arising from any change in such Person’s method of accounting, subject to Section 1.2) plus (b) an amount
which, in the determination of Net Income for such period has been deducted for
(i) Interest Expense for such period, (ii) total Federal, state, foreign or
other income taxes for such period and (iii) depreciation and amortization
expense for such period, all as determined in accordance with GAAP minus
(c) the amount of all earn-out payments made during such period in connection
with Permitted Acquisitions consummated subsequent to the Closing Date; provided
that, for the calculation of EBITDA made (i) for the first Fiscal Quarter of
Fiscal Year 2003, EBITDA shall be the sum of the amounts set forth above plus
the amount of the Discontinued Operation Fees First Quarter 2003, (ii) for the
second Fiscal Quarter of Fiscal Year 2003, EBITDA shall be the sum of the
amounts set forth above plus the amount of the Discontinued Operation Fees
Second Quarter 2003 plus the amount of the Restructuring Fees and (iii) during
and for the fourth Fiscal Quarter of Fiscal Year 2003, EBITDA shall be the sum
of the amounts set forth above plus the amount of the Prior Facility Financing
Fees.


 


“EBITDAR”
means, for any period, with respect to the Credit Parties and their
Subsidiaries on a consolidated basis, the sum of (a) Net Income for such period
(excluding the effect of any (i) intercompany items, (ii) all earnings
attributable to equity interests in Persons that are not Subsidiaries unless
actually received by such Person, (iii) all income arising from the
forgiveness, adjustment or negotiated settlement of any Indebtedness, (iv) any
extraordinary items of income and (v) any increase or decrease in income
arising from any change in such Person’s method of accounting, subject to Section 1.2) plus (b) an amount
which, in the determination of Net Income for such period has been deducted for
(i) Interest Expense for such period, (ii) total Federal, state, foreign or
other income taxes for such period, (iii) depreciation and amortization expense
for such period and (iv) Rent Expense for such period, all as determined in
accordance with GAAP minus (c) the amount of all earn-out payments made
during such period in connection with Permitted Acquisitions consummated
subsequent to the Closing Date; provided that, for the calculation of
EBITDAR made (i) for the first Fiscal Quarter of Fiscal Year 2003, EBITDAR
shall be the sum of the amounts set forth above plus the amount of the
Discontinued Operation Fees First Quarter 2003, (ii) for the second Fiscal
Quarter of Fiscal Year 2003, EBITDAR shall be the sum of the amounts set forth
above plus the amount of 


 


10

















 


the Discontinued Operation Fees Second Quarter 2003
plus the amount of the Restructuring Fees and (iii) during and for the fourth
Fiscal Quarter of Fiscal Year 2003, EBITDAR shall be the sum of the amounts set
forth above plus the amount of the Prior Facility Financing Fees.


 


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


 


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


 


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


 


(c)                                        any
defense, counterclaim, setoff or dispute exists  as to such Account, provided
that this clause (c) shall not apply to adjustments in the ordinary course with
respect to Government Accounts;


 


(d)                                        in
respect of which there is no right to payment from any Third Party Payor, but
only to the extent that there is no such right of payment from a Third Party
Payor;


 


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


 


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


 


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


 


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


 


(i)                                           except
for Government Accounts, such Account is the obligation of an Account Debtor
that is the United States government or a political subdivision thereof, or any
state, county or municipality or department, agency or instrumentality thereof
unless Administrative Agent, in its sole discretion, has agreed to the contrary
in writing and such Borrowing Base Party, if necessary or desirable, has
complied with respect to such obligation


 


11

















 


with the Federal
Assignment of Claims Act of 1940, or any applicable state, county or municipal
law restricting assignment thereof;

 


(j)                                           such
Account is the obligation of an Account Debtor located in a foreign country
other than Canada (excluding the province of Newfoundland, the Northwest
Territories and the Territory of Nunavit) unless payment thereof is assured by
a letter of credit assigned and delivered to Administrative Agent, reasonably
satisfactory to Administrative Agent as to form, amount and issuer;


 


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


 


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


 


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


 


(i)                                           the
Account is not paid within one hundred twenty (120) days following its original
invoice date; provided that, for purposes of determining eligibility,
(x) not more than 70% of the aggregate amount of all Accounts that have not
been paid 91 to 120 days following the original invoice date will be eligible,
subject to the provisions set forth herein, and (y) the aggregate amount of all
such Accounts that are eligible pursuant to clause (x) above may not exceed
$2,500,000; provided further that, if the aggregate amount of such
Accounts is less than $2,500,000, Administrative Agent shall, upon the request
and at the expense of the Borrower, perform a due diligence review reasonably
satisfactory to Administrative Agent and Administrative Agent shall adjust the
eligibility percentage set forth in clause (x) above if such due diligence
review reasonably supports such adjustment;


 


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


 


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


 


(n)                                        such
Account is the obligation of an Account Debtor if fifty percent (50%) or more of
the Dollar amount of all Accounts owing by that Account Debtor are ineligible
under the other criteria set forth in this definition, except such Accounts as
deemed allowable by the Required Revolving Lenders from time to time;


 


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


 


12

















 


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


 


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


 


(r)                                          such
Account, together with all other Accounts owing by such Account Debtor and its
Affiliates as of any date of determination exceed 5% of all Eligible Accounts;


 


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


 


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


 


“Eligible
Assets” means any assets or any business (or any substantial part thereof) used
or useful in the same or a similar line of business as the Credit Parties and
their Subsidiaries were engaged in on the Closing Date.


 


“Employment
Agreements” means, collectively, the employee agreements, dated as of
August 20, 2001  as amended to
the date hereof, among the Borrower, Holdings and each of Robert J. Adamson,
Patricia Donohoe, and Kevin S. Little.


 


“Environmental
Laws” means all applicable federal, state, local and foreign laws, statutes,
ordinances, codes, rules, standards and regulations, now or hereafter in
effect, and any applicable judicial or administrative interpretation thereof,
including any applicable judicial or administrative order, consent decree,
order or judgment, imposing liability or standards of conduct for or relating
to the regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and
vegetation).  Without limiting the
generality of the foregoing, Environmental Laws include CERCLA, the Hazardous
Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et
seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
§§ 136 et seq.), the Solid Waste Disposal Act (42 U.S.C.
§§ 6901 et seq.), the Toxic Substance Control Act (15 U.S.C.
§§ 2601 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et
seq.), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et
seq.), and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.),
and any rules and regulations promulgated thereunder, and all analogous state,
local and foreign counterparts or equivalents and any transfer of ownership
notification or approval statutes.


 


“Environmental
Liabilities” means, with respect to any Person, all liabilities, obligations,
responsibilities, response, remedial and removal costs, investigation and feasibility
study costs, capital costs, operation and maintenance costs, losses, damages,
punitive damages, property damages, natural resource damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants), fines,
penalties, sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any Person, whether
based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute or common law, including any arising under or related
to any Environmental Laws or Environmental Permits or in


 


13

















 


connection with any Release or threatened Release or
the presence of a Hazardous Material whether on, at, in, under, from or about
or in the vicinity of any real or personal property.


 


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


 


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


 


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


 


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


 


“Excess
Cash Flow” means, for any fiscal year period of the Credit Parties and their
Subsidiaries on a consolidated basis, an amount equal to (a) Free Cash Flow for
such period plus (b) any interest income of the Credit Parties and their
Subsidiaries for such period minus (c) the Total Debt Service (exclusive of
amortization of debt discount or premium) for such period plus (or minus) (d)
any decrease (or increase) in the Net Working Investment at the end of such
period, when compared with the Net Working Investment at the end of the prior
fiscal year period minus (e) cash Investments of the type described in clauses
(f) and (g) of the definition of Permitted Investments and actually made
pursuant to Section 7.6 minus
(f) the Net Cash Proceeds of any Asset Disposition to the extent applied during
such period toward the acquisition of Eligible Assets pursuant to Section 7.6.


 


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


 


“Extension
of Credit” means, as the context requires, (a) an Advance, (b) the making of an
Advance, (iii) the conversion of a Base Rate Loan to a LIBOR Loan or the


 


14

















 


continuation of a LIBOR Loan as a LIBOR Loan for an
additional LIBOR Period, or (c) the issuance of any Letter of Credit or the
incurrence of any Reimbursement Obligation.


 


“Fair
Salable Balance Sheet” means a balance sheet of Borrower prepared in accordance
with Section 4.5(d), in form
and substance satisfactory to the Administrative Agent.


 


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


 


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


 


“Fiscal
Month” means any of the monthly accounting periods of Borrower.


 


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


 


“Fiscal
Year” means any of the annual accounting periods of the Borrower ending on the
Sunday closest to December 31 of each calendar year.


 


“Fixed
Charge Coverage Ratio” means, as of any date of determination, for the twelve
month period ending on such date with respect to the Credit Parties and their
Subsidiaries on a consolidated basis, the ratio of (a) the sum of (i) EBITDAR
for the applicable period minus (ii) cash Capital Expenditures for the
applicable period minus (iii) Cash Taxes for the applicable period to
(b) Fixed Charges for the applicable period.


 


“Fixed
Charges” means, as of any date for the twelve month period ending on such date
with respect to the Credit Parties and their Subsidiaries on a consolidated
basis, the sum of (i) cash Interest Expense for the applicable period plus (ii)
Scheduled Funded Debt Payments for the applicable period plus (iii) Rent
Expense for the applicable period.


 


“Foreign
Subsidiaries” means all Subsidiaries of a Credit Party that are not Domestic
Subsidiaries.


 


“Free
Cash Flow” means, for any fiscal year period, EBITDA for such period minus the
following amounts, without duplication, (a) all cash payments of income taxes
by the Credit Parties and their Subsidiaries during such period; (b) Capital
Expenditures for such period, to the extent that such Capital Expenditures are
permitted by Section 7.13 and
are not financed during such period (and are not reasonably expected by any
Credit Party to be financed in the upcoming fiscal year) with the proceeds of
Indebtedness of any Credit Party or any Subsidiary of any Credit Party under Section 7.1(d); (c) all Restricted
Payments made in such period to the extent permitted under Section 7.7(b); and (d) capitalized
costs of internal


 


15

















 


development of software for such period; plus (e) cash
extraordinary items of income or expense during such period.


 


“Funded
Indebtedness” means, without duplication, the sum of (a) all Indebtedness
(other than Hedging Agreements) of the Credit Parties and their Subsidiaries
for borrowed money (it being understood that with respect to Indebtedness
incurred with an original issue discount, the obligations shall consist of the
then accreted value), (b) all obligations of a Credit Party or any of its
Subsidiaries evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made (not including trade debt
incurred in the ordinary course of business and due within six months of the
incurrence thereof), (c) all obligations of a Credit Party or any of its
Subsidiaries under conditional sale or other title retention agreements
relating to property purchased by a Credit Party or any of its Subsidiaries
(other than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all obligations
of a Credit Party or any of its Subsidiaries issued or assumed as the deferred
purchase price of property or services purchased by a Credit Party or any of
its Subsidiaries (other than trade debt incurred in the ordinary course of
business and due within six months of the incurrence thereof) which would
appear as liabilities on a balance sheet of a Credit Party or any of its
Subsidiaries, prepared in accordance with GAAP, (e) the principal portion of
all obligations of the Credit Parties and their Subsidiaries under (i) Capital
Leases and (ii) Synthetic Leases, (f) commercial letters of credit and the
maximum amount of all performance and standby letters of credit issued or
bankers’ acceptance facilities created for the account of a Credit Party or one
of its Subsidiaries and, without duplication, all drafts drawn thereunder (to
the extent unreimbursed), (g) all preferred Stock issued by a Credit Party or
any of its Subsidiaries and which by the terms thereof could be (at the request
of the holders thereof or otherwise) subject to mandatory sinking fund
payments, redemption or other acceleration at any time on or prior to the
Commitment Termination Date, (h) all obligations of a Credit Party or any of
its Subsidiaries to repurchase any securities issued by a Credit Party or any
of its Subsidiaries at any time on or prior to the Commitment Termination Date,
which repurchase obligations are related to the issuance thereof, including,
without limitation, obligations commonly known as residual equity appreciation
potential shares, (i) the aggregate amount of uncollected accounts receivable
of a Credit Party or any of its Subsidiaries subject at such time to a sale of
receivables (or similar transaction) to the extent such transaction is effected
with recourse to a Credit Party or any of its Subsidiaries (whether or not such
transaction would be reflected on the balance sheet of a Credit Party or any of
its Subsidiaries in accordance with GAAP), (j) all Guaranteed Obligations of
the Credit Parties and their Subsidiaries with respect to Funded Indebtedness
of another Person, (k) all Funded Indebtedness of another entity secured by a
Lien on any property of a Credit Party or any of its Subsidiaries whether or
not such Funded Indebtedness has been assumed by a Credit Party or any of its
Subsidiaries and (l) all Funded Indebtedness of any partnership or
unincorporated joint venture to the extent a Credit Party or one of its Subsidiaries
is legally obligated or has a reasonable expectation of being liable with
respect thereto, net of any assets of such partnership or joint venture.


 


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


 


“GE
Capital” means General Electric Capital Corporation, a Delaware corporation.


 


16

















 


“GE
Capital Commitment Letter” means that certain letter, dated as of
December 1, 2003, between GE Capital and the Borrower setting forth
certain commitments of GE Capital to Borrower.


 


“GE
Capital Fee Letter” means that certain letter, dated as of December 1,
2003, between GE Capital and the Borrower with respect to certain fees to be
paid from time to time by the Borrower to GE Capital.


 


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


 


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


 


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


 


“Guaranteed
Obligations” means as to any Person, without duplication, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation (“primary obligation”)
of any other Person (the “primary obligor”) in any manner, including any
obligation or arrangement of such Person to (a) purchase or repurchase any such
primary obligation, (b) advance or supply funds (i) for the purchase or payment
of any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c) purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof; provided that the term Guaranteed
Obligations shall not include endorsements for collection or deposit in the
ordinary course of business.  The amount
of any Guaranteed Obligations at any time shall be deemed to be an amount equal
to the lesser at such time of (x) the stated or determinable amount of the
primary obligation in respect of which such Guaranteed Obligations are incurred
and (y) the maximum amount for which such Person may be liable pursuant to the
terms of the instrument embodying such Guaranteed Obligations, or, if not
stated or determinable, the maximum reasonably anticipated liability (assuming
full performance) in respect thereof.


 


“Guarantors” means Parent, Holdings, each Subsidiary
of the Borrower, and each other Person, if any, that executes a Guaranty
Agreement or other similar agreement in favor of Administrative Agent, for
itself and the ratable benefit of Lenders, in connection with the transactions
contemplated by this Agreement and the other Loan Documents.


 


“Guaranty
Agreements” means, collectively, the Parent Guaranty Agreement, the Holdings
Guaranty Agreement, the Subsidiary Guaranty and any other guaranty now or
hereafter 


 


17

















 


executed by any Person in favor of Administrative
Agent and Lenders to guarantee the Obligations.


 


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


 


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


 


“Hedging Agreements” means any interest rate
protection agreement, foreign exchange contract, currency swap agreement,
commodity purchase or option agreement or other interest or exchange rate or
commodity price hedging agreement or other similar agreement, designed to
protect a Credit Party or any of its Subsidiaries against fluctuations in
currency.


 


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


 


“Holdings” has the meaning ascribed to it in
Paragraph C of the Introductory Statement.


 


“Holdings Guaranty Agreement” means the Holdings
Guaranty Agreement dated as of the date hereof by Holdings in favor of
Administrative Agent, on behalf of itself and Lenders, substantially in the form of Exhibit S.


 


“Holdings Pledge Agreement” means the Holding Pledge
Agreement dated as of the date hereof between Holdings and Administrative
Agent, substantially in the form of Exhibit T.


 


“Holdings Security Agreement” means the Holding
Security Agreement dated as of the date hereof between Holdings and the
Administrative Agent, substantially in the form of Exhibit U.


 


18

















 


“Indebtedness”
of any Person means, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, or upon which interest payments are
customarily made (not including trade debt incurred in the ordinary course of
business and due within six months of the incurrence thereof), (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person to the extent of the
value of such property (other than customary reservations or retentions of
title under agreements with suppliers entered into in the ordinary course of
business), (d) all obligations of such Person issued or assumed as the deferred
purchase price of property or services purchased by such Person (other than
trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) which would appear as liabilities on a
balance sheet of such Person, (e) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the proceeds of production
from, property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (f) all Guaranty Obligations of such Person,
(g) the principal portion of all obligations of such Person under (i) Capital
Leases and (ii) Synthetic Leases, (h) all obligations of such Person in respect
of Hedging Agreements, (i) commercial letters of credit and the maximum amount
of all performance and standby letters of credit issued or bankers’ acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (j) all preferred Capital
Stock issued by such Person and which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking fund
payments, redemption or other acceleration by a fixed date, (k) all obligations
of such Person to repurchase any securities issued by such Person at any time
on or prior to the Maturity Date, which repurchase obligations are related to
the issuance thereof, including, without limitation, obligations commonly known
as residual equity appreciation potential shares, (l) the aggregate amount of
uncollected accounts receivable of such Person subject at such time to a sale
of receivables (or similar transaction) regardless of whether such transaction
is effected without recourse to such Person or in a manner that would not be
reflected on the balance sheet of such Person in accordance with GAAP and (m)
the Indebtedness of any partnership or unincorporated joint venture in which
such Person is a general partner or a joint venturer to the extent such
Indebtedness is recourse to such Person.


 


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


 


“Initial
Adjustment Date” means the date upon which Administrative Agent receives
financial statements required to be delivered pursuant to Section 5.1(a) for the first full
month commencing after the Closing Date.


 


“Information” means written data, reports,
statements (including, but not limited to, financial statements delivered
pursuant to or referred to in Sections 5.01
and 5.02), documents and other
information, whether, in the case of any such in writing, the same was prepared
by any Credit Party or any other Person on behalf of any Credit Party.


 


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


 


19

















 


“Interest Expense” means, for any period, with
respect to the Credit Parties and their Subsidiaries on a consolidated basis,
all interest expense, including the interest component under Capital Leases and
the implied interest component under Synthetic Leases, as determined in
accordance with GAAP; it being understood that Interest Expense shall include
the amortized cost of any Hedging Agreement, to the extent permitted by GAAP.


 


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


 


“Investment”
means (a) the acquisition (whether for cash, property, services, assumption of
Indebtedness, securities or otherwise) of assets, shares of Stock, bonds,
notes, debentures, partnership, joint ventures or other ownership interests or
other securities of any Person or (b) any deposit with, or advance, loan or
other extension of credit to, such Person (other than deposits made in
connection with the purchase of equipment or other assets in the ordinary
course of business) or (c) any other capital contribution to or investment in
such Person, including, without limitation, any Guaranteed Obligation
(including any support for a Letter of Credit issued on behalf of such Person)
incurred for the benefit of such Person.


 


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


 


“IRS”
means the Internal Revenue Service.


 


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


 


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


 


“L/C
Limit” means $5,000,000.


 


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


 


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


 


20

















 


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


 


“Lending
Party” means the Administrative Agent, the Lenders and any Letter of Credit
Issuer.


 


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


 


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


 


“Leverage
Ratio” means, as of the date of determination, with respect to the Credit
Parties and their Subsidiaries on a consolidated basis, the ratio of (a) the
sum of Funded Indebtedness on such date to (b) EBITDA for the most recent
twelve month period for which Administrative Agent has received financial
statements.


 


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


 


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


 


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


 


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


 


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


 


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


 


(b)                                        any
LIBOR Period that would otherwise extend beyond the Commitment Termination Date
with respect to  Revolving Loans or the
Term Loan Maturity Date with respect to Term Loans shall end two (2) LIBOR
Business Days prior to such date;


 


(c)                                        any
LIBOR Period that begins on the last LIBOR Business Day of a calendar month (or
on a day for which there is no numerically


 


21

















 


corresponding day in the calendar month at the end of
such LIBOR Period) shall end on the last LIBOR Business Day of a calendar
month;


 


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


 


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


 


(f)                                          no
Interest Period for any portion of the Term Loan shall extend beyond the date
of the final scheduled installment thereof; and


 


(g)                                        an
Interest Period may not be selected for any portion of the Term Loan if a
scheduled installment of principal for such Term Loan is payable during such
Interest Period and the portion of such Term Loan which constitutes a Base Rate
Loan does not equal or exceed the amount of such scheduled installment of
principal.


 


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


 


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


 


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


 


provided, however,
that with respect to a Term Loan constituting a LIBOR Loan, the LIBOR Rate will
never be less than 2.00%.


 


If such interest
rates shall cease to be available from Telerate News Service, the LIBOR Rate
shall be determined from such financial reporting service or other information
as shall be determined by Administrative Agent.


 


22

















 


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


 


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


 


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


 


“Loan
Documents” means this Agreement, the Notes, the GE Capital Fee Letter, the
Collateral Documents, the Master Standby Agreement, the Master Documentary
Agreement, the Business Associate Agreement, Hedging Agreements entered into
between Borrower and any Lender and all other agreements, instruments,
documents and certificates identified in the Closing Checklist executed and
delivered to, or in favor of, Administrative Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to Administrative Agent or any Lender in connection with
this Agreement or the transactions contemplated thereby.  Any reference in this Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to this Agreement or such Loan Document
as the same may be in effect at any and all times such reference becomes
operative.


 


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


 


“Lock
Box” has the meaning ascribed to it in Section 6.20.


 


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


 


“Master
Documentary Agreement” means the Master Agreement for Documentary Letters of
Credit dated as of the Closing Date among the Borrower, as Applicant, and GE
Capital.


 


“Master
Standby Agreement” means the Master Agreement for Standby Letters of Credit
dated as of the Closing Date among the Borrower, as Applicant, and GE Capital,
as issuer.


 


“Material
Adverse Effect” means, with respect to any event, act, condition or occurrence
of whatever nature (including any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts, condition or
conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business, properties or prospects of the Credit Parties
taken as a whole, (b) the rights and remedies of the Administrative Agent or
the Lenders under the Loan Documents,


 


23

















 


or the ability of any Credit Party to perform its
obligations under the Loan Documents to which it is a party, as applicable, (c)
the legality, validity or enforceability of any Loan Document, or (d) the
existence, perfection or priority of any security interest granted in the Loan
Documents or the value of the Collateral (including its value to the
Administrative Agent and the Lenders as security for the Obligations).  If (x) a fact or circumstance disclosed in
the financial statements referred to in Section 4.5
or a Disclosure Statement, or if an investigation, action, suit or proceeding
disclosed in Disclosure Schedule 4.7, that, at the time of such
disclosure did not appear reasonably likely to have a Material Adverse Effect,
should in the future have, or appear reasonably likely to have, a Material
Adverse Effect, or (y) a development or change shall occur with respect to any
fact or circumstance disclosed in any financial statement, Disclosure
Schedule or previously described investigation, action, suit or proceeding
that should in the future have or appear reasonably likely to have a Material
Adverse Effect, then in each case ((x) and (y)) such Material Adverse Effect
shall be a change or event subject to Section 4.6
notwithstanding such prior disclosure.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


24

















 


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


 


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


 


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


 


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


 


“Mortgaged
Property” has the meaning set forth to it in Section 6.18.


 


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


 


“MSN
License Agreements” means, collectively that certain License Agreement dated as
of July 30, 2003 between Medical Staffing Network Assets, LLC and Medical
Staffing Network, Inc. and that certain License Agreement dated as of
August 18, 2003 between Medical Staffing Network Assets, LLC and Medical
Staffing Network of Illinois, LLC.


 


“MSN
Management and Administrative Services Agreements” means, collectively, that
certain Management and Administrative Services Agreement dated July 30,
2003 between Medical Staffing Network Assets, LLC and Medical Staffing Network,
Inc. and that certain Management and Administrative Services Agreement dated
August 18, 2003 between Medical Staffing Network, Inc. and Medical
Staffing Network of Illinois, LLC.


 


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


 


“Nautic
Partners” means Nautic Partners V, LP, Fleet Equity Partners VI, LP, Fleet Ventures
Resources, Inc., Kennedy Plaza Partners III, LP, Chisholm Partners IV, LP and
Kennedy Plaza Partners II, LLC.


 


“Net
Cash Proceeds” means, with respect to any transaction, an amount equal to the
cash proceeds received by a Credit Party or any Subsidiary from or in respect
of such


 


25

















 


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


 


“Net
Income” means, for any period, the net income as determined in accordance with
GAAP.


 


“Net
Working Investment” means, at any date, Adjusted Current Assets minus
Current Liabilities, all determined at such date.


 


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


 


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


 


“Obligations”
means all Loans, fees, indebtedness, liabilities, obligations, covenants and
duties of any Credit Party to any Lending Party of every kind, nature and
description, direct or indirect, absolute or contingent, due or not due, in
contract or tort, liquidated or unliquidated, arising under this Agreement, or
under the other Loan Documents, by operation of law or otherwise in connection
with the transactions contemplated hereby, now existing or hereafter arising,
and whether or not for the payment of money or the performance or
non-performance of any act, including, but not limited to, all damages that any
Credit Party may owe to the Administrative Agent and/or the Lenders by reason
of any breach by any Credit Party of any representation, warranty, covenant,
agreement or other provision of this Agreement or any of the other Loan Documents
and all obligations of the Borrower  under any Hedging Agreement.  Without limiting the generality of the
foregoing, this term includes all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding by or against any Credit Party in bankruptcy, whether
or not allowed in such case or proceeding), Fees, Charges, expenses, attorneys’
fees and any other sum payable by any Credit Party to a Lending Party under
this Agreement or any of the other Loan Documents.


 


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


 


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


 


26

















 


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


 


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


 


“Parent”
has the meaning ascribed to it in Paragraph D of the Introductory Statement.


 


“Parent
Guaranty Agreement” means the Parent Guaranty Agreement dated as of the date
hereof by the Parent in favor of Administrative Agent, on behalf of itself and
Lenders, substantially in the form of Exhibit
V.


 


“Parent
Pledge Agreement” means the Parent Pledge Agreement dated as of the date hereof
between Parent and Administrative Agent, substantially in the form of Exhibit W.


 


“Parent
Security Agreement” means the Parent Security Agreement dated as of the date
hereof between Parent and the Administrative Agent, substantially in the form
of Exhibit X.


 


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


 


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


 


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


 


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


 


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


 


27

















 


that Class immediately before such termination,
adjusted to reflect any subsequent assignments pursuant to Section 11.6.


 


“Permitted
Acquisition” means an Acquisition by a Credit Party (other than the Parent) or
any Subsidiary of a Credit Party for consideration no greater than the fair
market value (as conclusively determined in good faith by the Board of
Directors of the Borrower) of the Stock or property acquired; provided that (a)
the property acquired (or the property of the Person acquired) in such
Acquisition constitutes Eligible Assets (or goodwill associated therewith), (b)
the Administrative Agent shall have received all items in respect of the Stock
or property acquired in such Acquisition required to be delivered by the terms
of Section 6.11 and/or Section 6.12, (c) in the case of an
Acquisition of the Stock of another Person, the board of directors (or other
comparable governing body) of such other Person shall have duly approved such
Acquisition, (d) the Borrower shall have delivered to the Administrative Agent,
prior to the closing of such Acquisition, a certificate of its chief financial
officer demonstrating that, upon giving effect to such Acquisition on a pro
forma basis, the Credit Parties are in compliance with all of the covenants set
forth in Section 6.10, (e)
the representations and warranties made by the Credit Parties in any Loan Document
shall be true and correct in all material respects at and as if made as of the
date of such Acquisition (after giving effect thereto) except to the extent
such representations and warranties expressly relate to an earlier date, (f) at
the time of such Acquisition and after giving effect thereto, no Default or
Event of Default shall exist or be continuing, and (g) after giving effect to
such Acquisition, the aggregate consideration (including cash and non-cash
consideration and any assumption of liabilities) for all such Acquisitions
during the term of this Credit Agreement shall not exceed the sum of
$5,000,000.


 


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


 


“Permitted
Investments” means Investments which are (a) cash or Cash Equivalents, (b)
accounts receivable created, acquired or made in the ordinary course of
business of a Credit Party and payable or dischargeable in accordance with
customary trade terms or otherwise in the prudent judgment of a Credit Party,
(c) inventory, raw materials and general intangibles (to the extent such
general intangibles are not a Capital Expenditure) acquired in the ordinary
course of business, (d) Investments by one Credit Party in another Credit Party
other than the Parent, (e) Investments by the Credit Parties (other than the
Parent) in the Parent in an


 


28

















 


aggregate amount not to exceed $250,000 during the
term of this Credit Agreement, (f) Investments in Permitted Acquisitions, (g)
loans to directors, officers, employees or agents in the ordinary course of
business for reasonable  business
expenses or in connection with relocation, not to exceed $250,000 in the
aggregate at any one time, (h) Investments made as a result of the receipt of
non-cash consideration from an Asset Disposition permitted by this Credit
Agreement in an amount not to exceed $500,000 in the aggregate during the term
of this Credit Agreement, (i) Investments in Capital Expenditures to the extent
such Capital Expenditures are permitted by Section 7.13
and (j) Investments existing as of the Closing Date and set forth on Disclosure
Schedule 7.6.


 


“Permitted
Liens” means (a) Liens securing Obligations, (b) Liens for taxes not yet due or
Liens for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the property subject to any such Lien is not yet
subject to foreclosure, sale or loss on account thereof), (c) Liens in respect
of property imposed by law arising in the ordinary course of business such as
materialmen’s, mechanics’, warehousemen’s, carrier’s, landlords’ and other
nonconsensual statutory Liens which are not yet due and payable, which have
been in existence less than 90 days or which are being contested in good faith
by appropriate proceedings for which adequate reserves determined in accordance
with GAAP have been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale or loss on account thereof),
(d) pledges or deposits made in the ordinary course of business to secure
payment of worker’s compensation insurance, unemployment insurance, pensions or
social security programs (excluding Liens under ERISA), (e) Liens arising from
good faith deposits in connection with or to secure performance of tenders,
bids, leases, government contracts, performance and return-of-money bonds and
other similar obligations incurred in the ordinary course of business (other
than obligations in respect of the payment of borrowed money), (f) Liens
arising from good faith deposits in connection with or to secure performance of
statutory obligations and surety and appeal bonds, (g) easements,
rights-of-way, restrictions (including zoning restrictions), minor defects or
irregularities in title and other similar charges or encumbrances not, in any
material respect, impairing the use of the encumbered property for its intended
purposes, (h) judgment Liens that would not constitute an Event of Default, (i)
Liens on property of any Person securing purchase money Indebtedness of such
Person permitted under Section 7.1(d) and
provided that any such Lien attaches to such property concurrently or within 90
days after the acquisition thereof and provided further that the principal
amount of the Indebtedness secured shall not be less than 70% of the value of
the asset subject to such Lien, (j) Liens arising by virtue of any statutory or
common law provision relating to banker’s liens, rights of setoff or similar
rights as to deposit accounts or other funds maintained with a creditor
depository institution, (k) Liens on property of any Person securing purchase
money Indebtedness of such Person assumed in connection with a Permitted
Acquisition and permitted under Section 7.1(f)
and (l) Liens on a time deposit account to secure the outstanding letter of
credit issued by Bank of America in an amount not to exceed $52,500.


 


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


 


29

















 


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


 


“Pledge
Agreements” means, collectively, the Borrower Pledge Agreement, the Subsidiary
Pledge Agreement, the Holdings Pledge Agreement, the Parent Pledge Agreement and any pledge agreements entered
into after the Closing Date by any Credit Party (as required by this Agreement
or any other Loan Document).


 


“Prior
Facility Financing Fees” means the amount of non-cash charges incurred by the
Borrower in the fourth Fiscal Quarter of Fiscal Year 2003 for the unamortized
financing fees assessed in connection with the credit facilities under the
Prior Lenders Credit Agreement, not to exceed $3,500,000.


 


“Prior
Lenders” means the “Lenders” signatory to the Prior Lenders Credit Agreement.


 


“Prior
Lenders Credit Agreement” means that certain credit agreement dated as of
October 26, 2001 by and among Medical Staffing Network, Inc., as borrower,
the other parties signatory thereto, and Bank of America, N.A. as
Administrative Agent, as such agreement has been amended, restated,
supplemented or otherwise modified to the date hereof.


 


“Prior
Lenders Obligations” means all obligations of the borrower, the guarantors, and
the other credit parties signatory to the Prior Lenders Credit Agreement and
the documents executed in connection therewith.


 


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


 


“Pro
Forma” means the unaudited consolidated and consolidating balance sheet of
Borrowers and their Subsidiaries as of September 30, 2003  after giving pro forma effect to the Related
Transactions, in form and substance satisfactory to the Administrative Agent.


 


“Pro
Forma Excess Availability” means for the Borrower and it Subsidiaries on a
consolidated basis, the sum of (a) Cash Equivalents on hand plus (b)
Borrowing Availability minus (c) the aggregate amount of all then
outstanding and unpaid trade payables and other obligations of the Borrower and
its Subsidiaries which are outstanding more than sixty (60) days past due as of
such time (other than trade payables or other obligations being contested or
disputed by the Borrower  in good
faith), minus (d) without duplication, the amount of checks issued by
the Borrower to pay trade payables and other obligations which are more than
sixty (60) days past due as of such time (other than trade payables or other
obligations being contested or disputed by the Borrower in good faith) but not
yet sent and the book overdraft of the Borrower, all as determined on a pro
forma basis before and after giving effect to an applicable payment.


 


30

















 


“Projections”
means Credit Parties’ forecasted consolidated and consolidating:  (a) balance sheets; (b) profit and loss
statements; (c) cash flow statements; and (d) capitalization statements, all
prepared on a Subsidiary by Subsidiary or division-by-division basis, if
applicable, and otherwise consistent with the historical financial statements
of the Credit Parties, together with appropriate supporting details and a
statement of underlying assumptions, all in form and substance satisfactory to
the Administrative Agent.


 


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


 


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


 


“Questionnaire”
means that certain due diligence request letter, dated as of November 25,
2003, drafted by Kilpatrick Stockton LLP and provided to the Borrower, and all
written responses of the Borrower to such due diligence request letter.


 


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


 


“Refinancing”
means the repayment in full by the Borrower of the Prior Lenders Obligations on
the Closing Date.


 


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


 


“Related
Person” has the meaning ascribed to it in Section 6.20.


 


“Related
Transactions” means the initial borrowing under the Revolving Loan and the Term
Loan on the Closing Date, the Refinancing, and the payment of all fees, costs
and expenses associated with all of the foregoing and the execution and
delivery of all of the Related Transactions Documents.


 


31

















 


“Related
Transaction Documents” means the Loan Documents and all other agreements or
instruments executed in connection with the Related Transactions.


 


“Relationship
Bank” has the meaning ascribed to it in Section 6.20.


 


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


 


“Rent
Expense” means, for any period, with respect to the Credit Parties and their
Subsidiaries on a consolidated basis, all rent payable under Operating Leases
(whether a lease of real property, personal property or mixed), as determined
in accordance with GAAP.


 


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


 


“Required
Lenders” means Lenders having more than 50% of the sum of (i) the Revolving
Credit Commitments of all Lenders (or if the Revolving Credit Commitments shall
have been terminated, the aggregate outstanding principal amount of the
Revolving Loan), plus (ii) the aggregate outstanding principal amount of the
Term Loans; provided
if a single Lender shall hold sufficient commitments and/or Loans to constitute
the Required Lenders, then the Required Lenders shall mean such Lender plus at
least one other Lender.


 


“Required
Revolving Lenders” means Lenders having more than 50% of the Revolving Credit
Commitments of all Lenders (or if the Revolving Credit Commitments shall have
been terminated, the aggregate outstanding principal amount of the Revolving
Loan); provided
if a single Lender shall hold sufficient commitments and/or Loans to constitute
the Required Revolving Lenders, then the Required Revolving Lenders shall mean
such Lender plus at least one other Revolving Lender.


 


“Required
Term Lenders” means Lenders having more than 50% of the aggregate outstanding
principal amount of the Term Loans; provided if a single Lender shall hold
sufficient commitments/and or Loans to constitute the Required Term Lenders,
then the Required Term Lenders shall mean such Lender plus at least one other
Term Lender.


 


“Reserves”
means reserves established by the Administrative Agent in its reasonable credit
judgment from time to time pursuant to Section 2.1(e)
against the Revolving Credit Limit, the Borrowing Base or any  component thereof of the Borrower.  Without limiting the generality of the
foregoing, Reserves established to ensure the payment of accrued Interest
Expenses or any Indebtedness shall be deemed to be a reasonable exercise of the
Administrative Agent’s reasonable  credit judgment.


 


“Restricted
Payment” means (i) any dividend or other payment or distribution, direct or
indirect, on account of any shares of any class of Stock of any Person, now or
hereafter outstanding (including without limitation any payment in connection
with any dissolution,


 


32

















 


merger, consolidation or disposition involving any
Person), or to the holders, in their capacity as such, of any shares of any
class of Stock of any Person, now or hereafter outstanding (other than
dividends or distributions payable in Stock of the applicable Person), (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 any Person, now or hereafter outstanding, (iii) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any class of Stock of any Person, now or hereafter
outstanding and (iv) any payment of any management fee to any Person.


 


“Restructuring
Fees” means the amount of charges incurred by the Borrower in the second Fiscal
Quarter of Fiscal Year 2003 for the fees assessed in connection with
restructuring, not to exceed $763,000.


 


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


 


“Revolving
Credit Commitment” means (a) with respect to any Lender listed on the signature
pages hereof, the amount (if any) set forth thereon opposite the name of such
Lender under the heading “Revolving Credit Commitment”, (b) with respect to any
assignee of a Revolving Credit Commitment, the amount of the transferor
Lender’s Revolving Credit Commitment assigned to such assignee pursuant to Section 11.6, and (c) as to all
Lenders having a Revolving Credit Commitment, the aggregate commitment of all
Lenders to make Revolving Credit Advances, which aggregate commitment shall be
sixty-five million dollars ($65,000,000) on the Closing Date, in each case, as
such amount may be reduced from time to time pursuant to Section 2.8 or changed as a result of
an assignment pursuant to Section 11.6.  The term “Revolving Credit Commitment” does
not include the Swingline Commitment.


 


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


 


“Revolving
Credit Limit” means as of any date of determination as to Borrower, the lesser
of (a) the Maximum Commitment Amount and (b) the Borrowing Base, in each case, minus
the Availability Block and minus any Reserves established by the
Administrative Agent.


 


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


 


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


 


“Revolving
Loan Collateral” means all Accounts, Cash Equivalents and General Intangibles
of each Credit Party.


 


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


 


33

















 


“Scheduled
Funded Debt Payments” means, for any period, the sum of all scheduled payments
of principal on Funded Indebtedness (including the implied principal component
of payments due on Capital Leases and Synthetic Leases, but excluding any
voluntary prepayments or mandatory prepayments required pursuant to Sections 2.8 or 2.9), as determined in accordance with GAAP; provided
that, payments of principal made pursuant to the Prior Lenders Credit Agreement
shall be excluded from calculations of Scheduled Funded Debt Payments made for
the period January 1, 2003, through September 30, 2003.


 


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


 


“Security
Agreements” means collectively, the Borrower Security Agreement, the Parent
Security Agreement, the Holdings Security Agreement, the Subsidiary Security
Agreement, and any other security agreements now or hereafter executed by any
Person in favor of Administrative Agent and Lenders to secure the Obligations.


 


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


 


“Solvent” means, with
respect to any Person on a particular date, that on such date (a) the assets of
such Person, at a fair valuation, exceed its liabilities, including contingent
liabilities, (b) the remaining capital of such Person is not unreasonably small
to conduct its business and (c) such Person will not have incurred debts, and
does not have the present intent to incur debts, beyond its ability to pay such
debts as they mature.  For purposes of
this definition, “debt” means any liability on a claim, and “claim” means any
(i) right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured, or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.  In computing the amount
of contingent liabilities of any Person on any date, such liabilities shall be
computed at the amount that, in the judgment of the Administrative Agent in
light of all facts and circumstances existing at such time, represents the
amount of such liabilities that reasonably can be expected to become actual or
matured liabilities.


 


“Sponsor” means Warburg
Pincus and Nautic Partners and their respective Subsidiaries.


 


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


 


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


 


34

















 


“Subordinated
Debt” means the Indebtedness of the Borrower or any of its Subsidiaries
incurred in connection with Permitted Acquisitions in an aggregate amount not
to exceed $1,000,000 at any one time outstanding which is subordinated to the
Obligations in a manner and form satisfactory to the Administrative Agent and
the Required Lenders in their sole discretion.


 


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


 


“Subsidiary
Guaranty” means the Subsidiary Guaranty of even date herewith executed by each
Subsidiary of the Borrower in favor of Administrative Agent, on behalf of the
Agent and Lenders, substantially in the form of Exhibit G.


 


“Subsidiary
Pledge Agreement” means the Subsidiary Pledge Agreement dated as of the date
hereof among Subsidiary Guarantors and Administrative Agent, substantially in
the form of Exhibit H.


 


“Subsidiary
Security Agreement” means the Subsidiary Security Agreement dated as of the
date hereof among Subsidiary Guarantors and Administrative Agent, substantially
in the form of Exhibit I.


 


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


 


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


 


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


 


“Swingline
Commitment” means the obligation of the Swingline Lender to make Swingline
Loans to the Borrower in an aggregate principal amount at any one time
outstanding not to exceed $3,000,000.


 


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


 


35

















 


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


 


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


 


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


 


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


 


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


 


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


 


“Term
Lenders” means, as of any date of determination, Lenders having a Term Loan
Commitment, or after the Closing Date, holding a Term Loan.


 


“Term
Loan” has the meaning ascribed to it in Section 2.1(b).


 


“Term
Loan Collateral” means all Real Property and personal property of each Credit
Party other than the Revolving Loan Collateral and Stock of the Credit Parties.


 


“Term
Loan Commitment” means (a) as to any Lender listed on the signature pages
hereof, the amount (if any) set forth opposite the name of such Lender under
the heading “Term Loan Commitment”, (b) with respect to any assignee of a Term
Loan Commitment, the amount of the transferor Lender’s Term Loan Commitment
assigned to such assignee pursuant to Section 11.6,
and (c) as to all Lenders with a Term Loan Commitment, the aggregate commitment
of all Lenders to make the Term Loan, which aggregate commitment shall be
seventeen million dollars ($17,000,000) on the Closing Date.  After advancing the Term Loan on the Closing
Date, each reference to a Lender’s Term Loan Commitment shall refer to the
outstanding principal amount of that Lender’s Term Loan.


 


36

















 


“Term
Loan Maturity Date” means December 22, 2005.


 


“Term
Note” has the meaning set forth in Section 2.2(b).


 


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


 


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


 


“Total Debt Service” means, for any period, the sum
of (a) the aggregate interest charges incurred by the Credit Parties and their
Subsidiaries for such period, whether expensed or capitalized, including the
portion of any obligation under Capital Leases allocable to interest expense in
accordance with GAAP and the portion of any debt discount or premium (but not
expenses of issuance) that shall be amortized in such period and (b) the aggregate
amount of all Scheduled Funded Debt Payments for such period.


 


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


 


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


 


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


 


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


 


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


 


37

















 


“Voting
Stock” of a corporation means all classes of the Stock of such corporation then
outstanding and normally entitled to vote in the election of directors.


 


“Warburg
Pincus” means Warburg Pincus Private Equity VIII, L.P.


 


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


 


“Wholly
Owned Subsidiary” means any Person 100% of whose Voting Stock is at the time
owned by the Borrower directly or indirectly through other Persons 100% of
whose Voting Stock is at the time owned, directly or indirectly, by the
Borrower.


 


Section 1.2.  Accounting
Terms and Determinations. 
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall be
prepared in accordance with generally accepted accounting principles as in
effect from time to time in the United States (“GAAP”), applied on a basis consistent (except for changes
concurred in by the Credit Parties’ independent public accountants) with the
most recent audited consolidated financial statements of the Credit Parties
delivered to the Lenders; provided that, if:  (a) the Borrower notifies the Lenders that the Borrower wishes to
amend any provision of any Loan Document to eliminate the effect of any change
in GAAP on the operation of such provision, or (b) the Administrative Agent
notifies the Borrower that the Required Lenders wish to amend any provision of
any Loan Document for such purpose, then compliance with such provision shall
be determined on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is withdrawn or such
provision is amended in a manner satisfactory to the Borrower and the Required
Lenders.


 


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


 


38

















 


statute and related regulation shall include any
amendments, modifications and supplements of the same and any successor
statutes and regulations.


 


ARTICLE II.


 


THE FACILITIES


 


Section 2.1.  The Facilities.


 


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


 


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


 


(ii)                                      the
aggregate Outstanding Revolving Amount of all the Revolving Lenders shall not
exceed the Revolving Credit Limit then in effect.


 


Each Revolving
Credit Advance shall be in a minimum amount of $1,000,000 or integral multiples
of $500,000 in excess thereof.  The
several Revolving Lenders shall make each Revolving Credit Advance under this
subsection ratably in proportion to their respective Revolving Credit
Commitments.  Within the limits
specified in this subsection and subject to the conditions set forth
elsewhere in this Agreement, the Borrower may borrow pursuant to this
subsection, repay such Advances and reborrow pursuant to this subsection. The
Revolving Credit Commitment of each Revolving Lender shall terminate at the
opening of business on the Commitment Termination Date, and there shall become
due and the Borrower shall pay on the Commitment Termination Date, the entire
outstanding principal amount of each Revolving Loan and of each L/C Obligation,
together with accrued and unpaid interest thereon to but excluding the
Commitment Termination Date.


 


(b)    Term
Loans.  Upon the terms and subject
to the conditions set forth herein, on the Closing Date each Term Lender,
severally and not jointly, agrees to advance funds to the Borrower (each a “Term Loan”) in a principal amount
equal to its Term Loan Commitment.  The
several Term Lenders shall make the Term Loans under this
subsection ratably in proportion to their respective Term Loan
Commitments.  Term Loans are not
revolving in nature and any portion of such Loan that is repaid or prepaid may
not be reborrowed.  The entire
outstanding principal amount of the Term Loans, together with all accrued and
unpaid interest thereon, shall become due and payable in full upon the opening
of business on the Term Loan Maturity Date; provided that, prior to
payment in full of the Term Loans on the Term Loan Maturity Date, Borrower must
demonstrate to the reasonable satisfaction of the Administrative Agent that
immediately before and after giving effect to such


 


39

















 


payment, no Default has
occurred and is continuing and the Pro Forma Excess Availability is not less
than $5,000,000.  Notwithstanding
anything to the contrary contained herein, the failure of the Borrower to pay
the Term Loans in full on the Term Loan Maturity Date shall be an Event of
Default as set forth in Section 8.1(a)(i).


 


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


 


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


 


(e)                                        Reserves;
Borrowing Base Adjustment.    The Administrative Agent
shall have the right to establish, modify or eliminate Reserves against the
Revolving Credit Limit, the Borrowing Base or any component thereof from time to
time in its reasonable credit judgment. In addition, Administrative Agent
reserves the right, at any time and from time to time after the Closing Date,
to adjust any of the criteria used to determine eligibility of any component of
the Borrowing Base, to establish new criteria, to adjust Collection Values, and
to adjust advance rates with respect to such component, in its reasonable
credit judgment, subject to the approval of the Required Revolving Lenders in
the case of adjustments or new criteria or changes in advance rates or the
elimination of Reserves which have the effect of making more credit available
to the Borrower.


 


Section 2.2. 
Notes.


 


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


 


(b)                                        Term
Loan Notes.    The Term Loan of each Term Lender shall
be evidenced by a term note substantially in the form of Exhibit B (each such note, a
“Term Note”), dated the
Closing Date in a principal amount equal to the initial principal amount of
such Term Loan or the portion of such Term Loan assigned to such Lender in
accordance with Section 11.6,
duly executed and delivered by the Borrower and payable to the Lender of such
Term Loan.


 


40

















 


(c)                                        Swingline
Notes.  The Swingline Loan shall be
evidenced by a swingline note substantially in the form of Exhibit C (such note, the “Swingline Note”), dated the
Closing Date in a principal amount equal to the Swingline Commitment or the
portion of such Swingline Loan assigned to any Lender in accordance with Section 11.6, duly executed and
delivered by the Borrower and payable to the Swingline Lender or other holder
of such Swingline Loan.


 


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


 


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


 


(b)                                        Funding
of Loans.  Promptly after receiving
a Notice of Borrowing, the Administrative Agent shall notify each Lender of the
contents of such Notice of Borrowing, of such Lender’s Percentage of the
Advances or Borrowings requested by such Notice of Borrowing and, in the case
of a LIBOR Borrowing, the applicable LIBOR Period.  In the case of an Advance, each Lender shall make available to
the Administrative Agent at the Administrative Agent’s Office its Lender’s
Percentage of such requested Advance, in lawful money of the United States of
America in immediately available funds, prior to 1:00 p.m. (New York City time) on the
specified date.  The Administrative
Agent shall, unless it shall have determined that one of the conditions set
forth in Article III
has not been satisfied, by 3:00 p.m. (or in the case of a LIBOR Borrowing, 12
p.m.) (New York City time) on such day, credit the amounts received by it in
like funds to the Borrower Account, to repay Swingline Loans, to repay
Reimbursement Obligations, to pay expenses incurred by the Administrative Agent
for the Borrower’s account or in such other manner as the Administrative Agent
shall determine.


 


41

















 


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


 


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


 


Section 2.4.  Interest on Loans.


 


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


 


(b)                                        Interest
Options.  Subject to the provisions
hereof, all or portions of the Loans, at the option of the Borrower, may be
made or Continued as, or Converted into, Base Rate Loans or one or more LIBOR
Loan, or any combination thereof; provided that Term Loans will be made
as LIBOR Loans on the Closing Date and may be Continued or Converted on the
Initial Adjustment Date; provided that LIBOR Loans may not be Converted,
but may be Continued, and such Continuation may occur on (and only on) the last
day of an applicable LIBOR Period; provided, further, that Loans
of any Class may only be part of a Borrowing consisting of Loans of the same
Class; and provided, further, that no Advances shall be made as
part of, and no Loans shall be Continued as, LIBOR Loans, and all existing
LIBOR Loans shall


 


42

















 


be Converted into Base Rate Loans on the last day of
the applicable LIBOR Period, so long as a Default shall have occurred and be
continuing.  Each LIBOR Borrowing shall
be in a minimum amount of $1,000,000 and in greater whole multiples of
$500,000.  There shall at no time be in
effect more than five (5) LIBOR Borrowings.


 


(c)                                        Post-Default
Interest.  During the period that
any Default or Event of Default shall have occurred and be continuing, at the
election of the Administrative Agent (or at the written request of Required
Lenders), all Loans and other outstanding Obligations shall bear interest at
the Default Rate.


 


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


 


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


 


Section 2.5.  Letters of Credit.


 


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


 


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


 


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


 


43

















 


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


 


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


 


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


 


(c)                                        Request
for Issuance of Letter of Credit. 
The Borrower shall give Administrative Agent at least three (3) Business
Days’ prior written notice requesting the issuance of any Letter of
Credit.  The notice shall be accompanied
by the form of the Letter of Credit (which shall be acceptable to the
Administrative Agent and the L/C Issuer) and a completed Application for
Standby Letter of Credit, Master Standby Agreement, Application for Agreement
for Documentary Letter of Credit or Master Documentary Agreement (as
applicable) in the form of Exhibit J, K, L,
or M attached hereto,
respectively.


 


(d)                                        Notice
of Proposed Extensions of Expiration Dates.  The L/C Issuer or the Borrower shall give the Administrative
Agent at least three (3) Business Days’ notice before such L/C Issuer extends
(or allows an automatic extension of) the expiration date of any Letter of
Credit issued by it (whether such extension results from a request therefor by
the Borrower or, in the case of an evergreen Letter of Credit, from the absence
of a request by the Borrower for the termination thereof).  Such notice shall (i) identify such Letter
of Credit, (ii) specify the date on which such extension is to be made (or the
last day on which such L/C Issuer can give notice to prevent such extension
from occurring) and (iii) specify the date to which such expiration date is


 


44

















 


to be so extended. 
Upon receipt of such notice, the Administrative Agent shall promptly
notify each Revolving Lender of the contents thereof.  No L/C Issuer shall extend (or allow the extension of) the
expiration date of any Letter of Credit if (x) the extended expiration date
would be after (A) the date that is one (1) year after the date on which such
Letter of Credit is to be extended or (B) the date that is the thirty (30)
Business Days before the Commitment Termination Date or (y) such L/C Issuer
shall have been notified by the Administrative Agent or the Required Revolving
Lenders expressly to the effect that any condition specified in Section 3.2  is
not satisfied at the time such Letter of Credit is to be extended, provided
that, in the case of such notice from the Administrative Agent or Required
Revolving Lenders, such L/C Issuer receives such notice prior to the date
notice of non-renewal is required to be given by such L/C Issuer and such L/C
Issuer has had a reasonable period of time to act on such notice.


 


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


 


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


 


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


 


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


 


(ii)                                      in
addition, the Borrower agrees to pay to the relevant L/C Issuer interest on any
and all amounts not paid by the Borrower when due


 


45

















 


hereunder with respect to a Letter of Credit, for each
day from and including the date when such amount becomes due to but excluding
the date such amount is paid in full, payable on demand, at a rate per annum
equal to the Default Rate.


 


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


 


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


 


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


 


(ii)                                      if
any Revolving Lender fails to pay any amount required to be paid by it pursuant
to this Section 2.5(h) on the
date on which such payment is due, interest shall accrue on such Revolving
Lender’s obligation to make such payment, for each day from and including the
date such payment became due to but excluding the date such Revolving Lender
makes such payment, at a rate per annum equal to (x) for each day from the day
such payment is due through the third succeeding Business Day, inclusive, the
Federal Funds Rate for such day as determined by the relevant L/C Issuer and
(y) for each day thereafter, the Base


 


46

















 


Rate for such day. 
Any payment made by any Revolving Lender after 3:00 p.m. (New York
City time) on any Business Day shall be deemed for purposes of the preceding
sentence to have been made on the next succeeding Business Day.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


47

















 


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


 


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


 


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


 


(j)                                           Indemnification;
Nature of Revolving Lenders’ Duties.


 


(i)                                           In
addition to amounts payable as elsewhere provided in this Agreement, the
Borrower hereby agrees to pay and to protect, indemnify and save harmless
Administrative Agent and each Revolving Lender from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys’ fees and allocated costs of internal counsel)
that Administrative Agent or any Revolving Lender may incur or be subject to as
a consequence, direct or indirect, of (A) the issuance of any Letter of Credit
or the incurrence of any L/C Obligation in respect thereof, or (B) the failure
of Administrative Agent or any Revolving Lender seeking indemnification or of
any L/C Issuer to honor a demand for payment under any Letter of Credit or of
the Administrative Agent to make any payment under any L/C Obligation as a
result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority, in each case
other than to the extent solely as a result of the gross negligence or willful
misconduct of Administrative Agent or such Revolving Lender (as finally
determined by a court of competent jurisdiction).


 


(ii)                                      As
between Administrative Agent and any Lender, on the one hand, and the Borrower,
on the other hand, the Borrower assumes all risks of the acts and omissions of,
or misuse of any Letter of Credit by, beneficiaries of any Letter of
Credit.  In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law, neither
Administrative Agent nor any Lender shall be responsible for (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
issued by any party in connection with the application for and issuance of any
Letter of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged, (B) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason, (C) the failure of the beneficiary of any Letter of
Credit to comply fully with conditions required to demand payment under such
Letter of Credit; provided that in the case of any payment by L/C Issuer
under any Letter of


 


48

















 


Credit or L/C Obligation, L/C Issuer shall be liable
only to the extent such payment was made solely as a result of its gross
negligence or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of
Credit or L/C Obligation complies on its face with any applicable requirements
for a demand for payment under such Letter of Credit or any guaranty thereof,
(D) errors, omissions, interruptions or delays in transmission or delivery of
any messages by mail, cable, telegraph, telex or otherwise, whether or not they
may be in cipher, (E) errors in interpretation of technical terms, (F) any loss
or delay in the transmission or otherwise of any document required to make a payment
under any Letter of Credit or L/C Obligation, (G) the credit of the proceeds of
any drawing under any Letter of Credit or L/C Obligation and (H) any
consequences arising from causes beyond the control of Administrative Agent or
any Lender. None of the above shall affect, impair or prevent the vesting of
any of Administrative Agent’s or any Lender’s rights or powers hereunder or
under this Agreement.


 


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


 


(k)                                        Cash
Collateral.


 


(i)                                           If
the Borrower is required to provide cash collateral for any L/C Obligations
pursuant to this Agreement prior to the Commitment Termination Date, the
Borrower will pay to Administrative Agent for the ratable benefit of itself and
the Revolving Lenders cash in an amount equal to one hundred ten percent (110%)
of the maximum amount then available to be drawn under each applicable Letter
of Credit.  Such cash shall be held by
Administrative Agent in a cash collateral account (the “Cash Collateral
Account”) maintained at a bank or financial institution acceptable to
Administrative Agent in its sole discretion. 
The Cash Collateral Account shall be in the name of the Borrower and
shall be pledged to, and subject to the control of, Administrative Agent, for
the benefit of Administrative Agent and the Revolving Lenders, in a manner
satisfactory to Administrative Agent. 
The Borrower hereby pledges and grants to Administrative Agent, on
behalf of itself and the Revolving Lenders, a security interest in all such
funds and Cash Equivalents held in the Cash Collateral Account from time to
time and all proceeds thereof, as security for the payment of all amounts due
in respect of the L/C Obligations and other Obligations, whether or not then
due.  This Agreement, including the
provisions of this Section 2.5(k), Obligations
shall constitute a security agreement under applicable law.


 


(ii)                                      If
any L/C Obligations, whether or not then due and payable, shall for any reason
be outstanding on the Commitment Termination


 


49

















 


Date, the Borrower shall either (A) provide cash
collateral therefor in the manner described above, (B) cause all such Letters
of Credit and L/C Obligations, if any, to be canceled and returned, or (C)
deliver a stand-by letter (or letters) of credit in guaranty of such L/C
Obligations, which stand-by letter (or letters) of credit shall be of like
tenor and duration (plus thirty (30) additional days) as, and in an amount
equal to one hundred ten percent (110%) of the aggregate maximum amount then
available to be drawn under, the Letters of Credit to which such outstanding
L/C Obligations relate and shall be issued by a Person, and shall be subject to
such terms and conditions, as are satisfactory to Administrative Agent in its
sole discretion.


 


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


 


(iv)                                    Neither
the Borrower nor any Person claiming on behalf of or through the Borrower shall
have any right to withdraw any of the funds or Cash Equivalents held in the
Cash Collateral Account, except that upon the termination of all L/C
Obligations and the payment of all amounts payable by the Borrower to
Administrative Agent and Revolving Lenders in respect thereof, any funds
remaining in the Cash Collateral Account shall be applied to other Obligations
then due and owing and upon payment in full of such Obligations, any remaining
amount shall be paid to the Borrower or as otherwise required by law.  Interest earned on deposits in the Cash
Collateral Account shall be for the account of Administrative Agent.


 


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


 


Section 2.6. 
Swingline Loans.


 


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


 


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


 


50

















 


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


 


(iii)                                 the
aggregate Outstanding Revolving Amount of all the Lenders shall not exceed the
Revolving Credit Limit then in effect.


 


Each Swingline
Advance shall be in a minimum amount of $500,000 or integral multiples of
$500,000 in excess thereof.  Subject to
the foregoing limits, the Borrower may borrow, repay and reborrow Swingline
Advances at any time during the Swingline Availability Period.


 


(b)                                        Notice
of Swingline Borrowing.                      The
Borrower shall give the Swingline Lender notice (a “Notice of Swingline
Borrowing”), substantially in the form of Exhibit
D-2 hereto, not later than 1:00 p.m. (New York City time) on the
date of each requested Swingline Advance, specifying:


 


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


 


(ii)                                      the
amount of such Advance.


 


(c)                                        Funding
of Swingline Loans.  As promptly as
practicable following receipt of a Notice of Swingline Borrowing, the Swingline
Lender shall, unless the Swingline Lender determines that any applicable
condition specified in Article III has not been satisfied,
make available the amount of such Swingline Advance in federal or other funds
immediately available as provided in Section 2.3(b).


 


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


 


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


 


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


 


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


 


51

















 


(h)                                        Refunding
Unpaid Swingline Loans.  The
Swingline Lender, at any time and from time to time in its sole and absolute
discretion, but not less frequently than weekly, and immediately if (x) the
Swingline Loans are not paid in full on the Swingline Maturity Date or (y) the
Swingline Loans become immediately due and payable pursuant to Article VIII, shall on behalf of
Borrower (and Borrower hereby irrevocably authorizes the Swingline Lender to so
act on its behalf) by notice to the Revolving Lenders (including the Swingline
Lender, in its capacity as a Lender), require each Revolving Lender to pay to
the Swingline Lender an amount equal to such Revolving Lender’s Percentage of
the aggregate unpaid principal amount of the Swingline Loans then
outstanding.  Such notice shall specify
the date on which such payments are to be made, which shall be the first
Business Day after such notice is given. 
Not later than 12:00 Noon (New York City time) on the date so specified,
each Revolving Lender shall pay the amount so notified to it to the Swingline
Lender at its address specified in or pursuant to Section 11.3, in federal or other funds immediately
available in New York, New York.  The
amount so paid by each Revolving Lender shall constitute a Base Rate Advance to
the Borrower and each Revolving Lender hereby irrevocably agrees (absent gross
negligence or willful misconduct of the Swingline Lender as determined by a
court of competent jurisdiction) to the making of such Base Rate Advance notwithstanding
(i) the amount of such Advance may not comply with the minimum amount for
borrowings of Revolving Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 3.2
are then satisfied, (iii) whether a Default or an Event of Default then exists,
(iv) the failure of any such request or deemed request for Revolving Loans to
be made by the time otherwise required in Section 2.1,
(v) the date of such mandatory Advance or (vi) any reduction in the Revolving
Credit Commitments or termination of the Revolving Credit Commitments
immediately prior to such mandatory Advance contemporaneously therewith; provided
that, if the Revolving Lenders are prevented from making such Base Rate
Revolving Credit Advances to the Borrower by the provisions of the United
States Bankruptcy Code or otherwise, the amount so paid by each Revolving
Lender shall constitute a purchase by it of a participation in the unpaid
principal amount of the Swingline Loan and interest accruing thereon after the
date of such payment; provided that (x) all interest payable on the
Swingline Loans shall be for the account of the Swingline Lender until the date
as of which the respective participation is purchased and (y) at the time any
purchase of participations pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay to the Swingline Lender, to the
extent not paid to the Swingline Lender by the Borrower in accordance with the
terms of subsection (d) hereof, interest on the principal amount of
participation purchased for each day from and including the day upon which such
borrowing would otherwise have occurred to, but excluding, the date of payment
for such participation.  Each Lender’s
obligation to make such payment or to purchase such participation under this
subsection shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (1) any set-off,
counterclaim, recoupment, defense or other right which such Lender or any other
Person may have against the Swingline Lender or the Borrower, (2) the
occurrence or continuance of a Default or an Event of Default or the termination
of the Commitments, (3) any adverse change in the condition (financial or
otherwise) of the Borrower or any other Person, (4) any breach of this
Agreement by any party hereto or (5) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.


 


(i)                                           Termination
of Swingline Commitment.  The
Borrower may, upon at least three (3) Business Days’ notice to the Swingline
Lender and the Administrative Agent, terminate the Swingline Commitment at any
time, if no Swingline Loans are outstanding at such time.


 


52

















 


Unless previously terminated, the Swingline Commitment
shall terminate at the close of business on the Swingline Maturity Date.


 


Section 2.7. 
Certain Fees.


 


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


 


(b)                                        Unused
Line Fee.  As additional
compensation for the Revolving Lenders, the Borrower shall pay to
Administrative Agent, for the ratable benefit of such Revolving Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a fee (the “Unused
Line Fee”) for the Borrower’s non-use of available funds in an amount equal
to (i) the Applicable Margin (calculated on the basis of a 360 day year for the
number of actual days elapsed) multiplied by (ii) the difference between
(x) the Maximum Commitment Amount (as it may be reduced from time to time) minus
(y) the average for the period of the daily closing balances of the aggregate
Revolving Loans and the Swingline Loans outstanding during the period for which
such Fee is due.


 


(c)                                        Prepayment
Fee.  If the Borrower shall
voluntarily prepay all or any portion of the Term Loan within the first twelve
months after the Closing Date, whether before or after acceleration of the
Obligations, the Borrower shall pay to Administrative Agent, for the ratable
benefit of Term Lenders as liquidated damages and compensation for the costs of
being prepared to make funds available hereunder an amount equal to (i) the
Applicable Percentage multiplied by the principal amount of the Term
Loan prepaid.  The Credit Parties agree
that the Applicable Percentages are a reasonable calculation of Term Lenders’
lost profits in view of the difficulties and impracticality of determining
actual damages resulting from an early termination of the Commitments.


 


(d)                                        Letter of
Credit Fee.  (i) The Borrower agrees
to pay to the Administrative Agent for the ratable benefit of Revolving
Lenders, with respect to the L/C Obligations incurred hereunder, (A) for the
benefit of the Administrative Agent and the L/C Issuer, all costs and expenses
incurred by the Administrative Agent and the L/C Issuer on account of such L/C
Obligations, (B) for the ratable benefit of the Revolving Lenders, for each day
during any month in which any L/C Obligation shall remain outstanding, a fee
(the “Letter of Credit Fee”) in an amount equal to (x) the Applicable
Margin (calculated on the basis of a 360 day year for actual days elapsed) multiplied
by (y) the maximum amount available for drawing (whether or not such day is a
Business Day and whether or not the conditions for drawing thereunder have been
satisfied) under all Letters of Credit at the close of business on such
day.  The Letter of Credit Fee shall be
paid to Administrative Agent for the ratable benefit of the Revolving Lenders
quarterly in arrears, on the first Business Day of each Fiscal Quarter prior to
the Commitment Termination Date and on the Commitment Termination Date.  In addition, the Borrower shall pay to any
L/C Issuer, on demand, such fees (including all per annum fees), charges and
expenses of such L/C Issuer in respect of the issuance, negotiation,
acceptance, amendment, transfer and payment of any Letter of Credit or
otherwise payable pursuant to the application and related documentation under
which any Letter of Credit is issued. 
During any period during 


 


53

















 


which the Default Rate shall have been imposed
pursuant Section 2.4(c), or,
in the absence of such imposition, during any period during which the Required
Lenders could have imposed the Default Rate pursuant to such Section and
instead elect to impose the provisions of this paragraph, the Letter of Credit
Fee otherwise in effect pursuant to the preceding paragraph shall be increased
by two percent (2%) per annum.


 


Section 2.8.  Mandatory Repayments and Prepayments.


 


(a)                                         Prepayment
of Excess Outstanding Revolving Amount; Maturity of Obligations.   (i) 
If at any time the aggregate Outstanding Revolving Amount of all Lenders
exceeds the Revolving Credit Limit then in effect, the Borrower shall immediately
prepay Loans and Swingline Loans (or if no such Loans and Swingline Loans are
outstanding, deposit cash in a collateral account in accordance with Section 2.5(k)) in an aggregate
principal amount sufficient to eliminate such excess; provided that if
any such excess results from the establishment or modification of a Reserve or
an adjustment to the Borrowing Base or Collection Values pursuant to
Section 2.1(e), such prepayments will be due within 30 days after such
establishment, modification or adjustment; provided further that, during
such 30 day period, Borrower shall be able to request Revolving Credit Advances
without giving effect to the Availability Block in an amount not to exceed the
lesser of (i) the amount of any such Reserve or the amount attributable to any
such Borrowing Base or Collection Value adjustment, as applicable, and (ii) the
Availability Block.


 


(b)                                        Asset Dispositions.   Immediately upon
any Credit Party’s receipt of Net Cash Proceeds of any Asset Disposition (other
than any Asset Dispositions permitted by Section 7.5
or any sale of Stock of any Subsidiary of any Credit Party), the
Borrower shall prepay an aggregate principal amount of Loans (and to the extent
that any Net Cash Proceeds in excess of the outstanding principal amount of
Loans, cash collateralize L/C Obligations in accordance with Section 2.5(k))  equal to (i) one hundred percent (100%) of
all such Net Cash Proceeds.  Notwithstanding the foregoing, with respect
to Net Cash Proceeds resulting from the sale of fixed assets, if Borrower
delivers to the Administrative Agent a certificate, signed by Borrower’s chief
financial officer, that it intends to reinvest all or any portion of such Net
Cash Proceeds in productive replacement assets of a kind then used or usable in
the business of a Credit Party within 180 days of receipt thereof, the Borrower
may reinvest such Net Cash Proceeds in the manner set forth in such
certificate; provided that (i) the aggregate amount of such Net Cash
Proceeds shall not exceed $1,000,000 during the term of the Credit Agreement,
and (ii) any amounts not so used within the period set forth in such
certificate shall, on the first Business Day immediately following such period,
be applied as provided in the last 
sentence of this subsection. 
Any prepayment under this Section 2.8(b)
shall be applied in accordance with Section 2.10(d).


 


(c)                                        Stock
Issuances.   Subject to the following sentence, if any
Credit Party issues Stock, immediately upon receipt of the Net Cash Proceeds
thereof (other than (i) proceeds from the issuance of Stock to members of the
management of the Borrower pursuant to
employee option or stock plans, (ii) proceeds of the issuance of Stock
to any Credit Party and (iii) issuance of common Stock of Parent pursuant to a
follow-on public offering on terms and conditions reasonably satisfactory to
the Required Lenders), the Borrower shall prepay an aggregate principal amount
of Loans (and to the extent of any Net Cash Proceeds in excess of the


 


54

















 


outstanding principal amount of Loans, cash
collateralize L/C Obligations in accordance with Section 2.5(k)) in an amount equal to (x) seventy-five
percent (75%) of such Net Cash Proceeds if the Leverage Ratio is greater than
3.0 to 1.0, (y) fifty percent (50%) of all such Net Cash Proceeds if the
Leverage Ratio is equal to or less than 3.0 to 1.0 but greater than 2.0 to 1.0
and (z) twenty-five percent (25%) of all such Net Cash Proceeds if the Leverage
Ratio is equal to or less than 2.0 to 1.0; provided that any such Net
Cash Proceeds received from the sale of common stock of Holdings in a follow-on
public offering which are not applied within 135 days from receipt thereof must
be used to prepay the Loans as set forth in this Section 2.8(c).   Prior to any prepayment pursuant to this Section 2.8(c), Borrower must
demonstrate to the reasonable satisfaction of the Administrative Agent that
immediately before and after giving effect to such prepayment, no Default has
occurred and is continuing and the Pro Forma Excess Availability is not less
than $5,000,000.  Notwithstanding
anything to the contrary contained herein, the failure of the Borrower to make
the payments set forth in this Section 2.8(c)
shall be an Event of Default as set forth in Section 8.1(a)(i).  Any prepayment under this Section 2.8(c) shall be applied in
accordance with Section 2.10(d).


 


(d)                                        Issuance
of Indebtedness.  Subject to the
following sentence, if any Credit Party incurs any Indebtedness, immediately
upon the receipt of the Net Cash Proceeds thereof, the Borrower shall prepay an
aggregate principal amount of Loans (and to the extent of any Net Cash Proceeds
in excess of the outstanding principal amount of Loans, cash collateralize L/C
Obligations in accordance with Section 2.5(k))
in an amount equal to one hundred percent (100%) of all such Net Cash
Proceeds.  Prior to any prepayment
pursuant to this Section 2.8(d),
Borrower must demonstrate to the reasonable satisfaction of the Administrative
Agent that immediately before and after giving effect to such prepayment, no
Default has occurred and is continuing and the Pro Forma Excess Availability is
not less than $5,000,000. 
Notwithstanding anything to the contrary contained herein, the failure
of the Borrower to make the payments set forth in this Section 2.8(d) shall be an Event of
Default as set forth in Section 8.1(a)(i).
Any prepayment under this Section 2.8(d)
shall be applied in accordance with Section 2.10(d).


 


(e)                                        Excess
Cash Flow.  Subject to the following
sentence, beginning with Fiscal Year 2004, on the date that is ten (10) days
after the earlier of (i) the date on which the Borrower’s annual audited
financial statements for any Fiscal Year are delivered pursuant to Section 5.1(d) or (ii) the date on
which such annual audited financial statements were required to be delivered
for such Fiscal Year pursuant to such Section, the Borrower shall prepay an
aggregate principal amount of the Loans (and to the extent of any Excess Cash
Flow in excess of the outstanding principal amount of Loans and Swingline
Loans, cash collateralize L/C Obligations in accordance with Section 2.5(k)) in an amount equal to
50% (if the Excess Cash Flow as of the end of such fiscal year is equal to or
greater than $2,500,000) or 80% (if the Excess Cash Flow as of the end of such
fiscal year is less than $2,500,000) of Excess Cash Flow for such prior fiscal
year.  Prior to any prepayment pursuant
to this Section 2.8(e),
Borrower must demonstrate to the reasonable satisfaction of the Administrative Agent
that immediately before and after giving effect to such prepayment, no Default
has occurred and is continuing and the Pro Forma Excess Availability is not
less than $5,000,000.  Notwithstanding
anything to the contrary contained herein, the failure of the Borrower to make
the payments set forth in this Section 2.8(e)
shall be an Event of Default as set forth in Section 8.1(a)(i).   Any prepayment of Loans under this Section 2.8(e) shall be applied in
accordance with Section 2.10(d)
and shall be accompanied by a certificate signed by the Borrower’s chief
financial officer certifying the


 


55

















 


manner in which Excess Cash Flow and the resulting
prepayment were calculated, which certificate shall be in form and substance
reasonably satisfactory to Administrative Agent.


 


Section 2.9. 
Optional Prepayments. 
Subject to the following sentence, the Borrower may prepay the Loans in
whole or in part (and with respect to the Term Loans, in minimum principal
amounts of $500,000 or in any larger integral multiple of $500,000, or the
total remaining amount outstanding) upon at least three (3) Business Days’ (or,
in the case of Base Rate Revolving Loans, one (1) Business Day’s) prior
irrevocable written notice to the Lenders, subject to the payment of any
prepayment fee provided in Section 2.7(c) and the payment of any
prepayment charges incurred pursuant to Section 9.4(d),
provided that in the case of repayments of Revolving Loans or Swingline
Loans pursuant to the cash sweep mechanism specified in Section 6.20, such notice shall be
waived.  Prior to any Term Loan
prepayment pursuant to this Section 2.9,
Borrower must demonstrate to the reasonable satisfaction of the Administrative
Agent that immediately before and after giving effect to such prepayment, no
Default has occurred and is continuing and the Pro Forma Excess Availability is
not less than $5,000,000.  The aggregate
principal amount of Loans designated for prepayment in any notice of optional
prepayment given pursuant to this section shall become due and payable on
the date fixed for prepayment as specified in such notice.


 


Section 2.10. 
Application of Payments. 
(a)  So long as no Event of
Default has occurred and is continuing, (i) payments consisting of proceeds of
Accounts received in the ordinary course of business, including without
limitation the cash sweeps described in Section 6.20,
shall be applied, first, to pay interest on the Loans, Fees, expenses,
Charges and costs due and payable by the Borrower, second to the
Swingline Loan and, third, to the Revolving Loan; (ii) payments matching
specific scheduled payments then due shall be applied to those scheduled
payments; (iii) voluntary prepayments shall be applied in accordance with the
provisions of Section 2.10(c);
and (iv) mandatory prepayments shall be applied as set forth in Section 2.10(d).  All payments and prepayments applied to a
particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its pro rata share. 
As to any other payment, and as to all payments made when an Event of
Default has occurred and is continuing or following the Commitment Termination
Date, Borrower hereby irrevocably waives the right to direct the application of
any and all payments received from or on behalf of Borrower, and Borrower
hereby irrevocably agrees that Administrative Agent shall apply any and all
such payments against the Obligations as set forth in Section 8.3.


 


(b)                                        Administrative
Agent is authorized to, and at its sole election may, charge to the Revolving
Loan balance on behalf of Borrower and cause to be paid all Fees, expenses,
Charges, costs (including insurance premiums in accordance with Section 6.3(a)) and interest and
principal, other than principal of the Revolving Loan, owing by Borrower under
this Agreement or any of the other Loan Documents if and to the extent Borrower
fails to pay promptly any such amounts as and when due, even if the amount of
such charges would exceed the Revolving Credit Limit at such time.  At Administrative Agent’s option and to the
extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder; provided that the consent of the Required
Revolving Lenders is required for the Administrative Agent to charge the
Revolving Loan Balance to pay past due principal and interest on Term Loans
accrued during the continuance of a Default or Event of Default.


 


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(c)                                        Prepayments
pursuant to Section 2.9
may be applied to either Revolving Loans or Term Loans, at the Borrower’s
election.


 


(d)                                        Prepayments
described in Section 2.8(e)
shall first be applied to pay the Term Loan(s) and, at any time after the Term
Loan(s) shall have been prepaid
in full, such prepayments shall be applied to reduce the outstanding principal
balance of the Revolving Loans. Prepayments described in Section 2.8(b) shall be applied first
to repay Revolving Loans to the extent of the value (if any) of any Account
Receivable related assets included in such sale (either directly or as an asset
of a subsidiary whose Stock was the subject of such sale), second, any
remaining amounts shall be applied to repay Term Loans until the Term Loans
have been repaid in full and third, any amounts remaining to be repaid after
repayment in full of the Term Loans 
shall be applied to repay Revolving Loans.  Prepayments described in Sections
2.8(c) and 2.8(d) shall
be applied, pro rata (based on
the ratio of the Outstanding Revolving Amount to the aggregate Term Loan
balance), to prepay Term Loans and Revolving Loans.  When amounts are required to be applied against Revolving Credit
Loans in the section, such amounts shall be applied first to outstanding
Revolving Credit Advances until paid in full, second to cash collateralize
all outstanding L/C Obligations until paid in full and third to repay
any outstanding Swing Line Loan. 
Subject to Section 2.10(e),
considering each Loan being prepaid separately, any such prepayment shall be
applied first to Base Rate Loans of the Class required to be prepaid before
application to LIBOR Loans of the Class required to be prepaid, in each case in
a manner which minimizes any resulting LIBOR breakage fee.


 


(e)                                        Each
payment or prepayment of less than all the outstanding aggregate principal amount
of the Loans of any Class shall be applied pro rata to the Loans of that Class
of all Lenders according to the respective outstanding principal amounts of
Loans of that Class held by each such Lender.


 


Section 2.11. 
Reduction of Commitments. 
(a) The Revolving Credit Commitment shall permanently reduce (i) to the
extent directed by the Borrower pursuant to Section 2.11(b),
and (ii) to Zero Dollars ($0) on the Commitment Termination Date.


 


(b)                                        The
Borrower shall have the right at any time after the repayment in full of the
Term Loans to terminate in whole the Revolving Credit Commitments and this
Agreement, or from time to time, irrevocably to reduce in part the amount of
the Revolving Credit Commitments upon at least thirty (30) days’ prior written
notice to the Administrative Agent; provided that Borrower must
demonstrate to the reasonable satisfaction of the Administrative Agent that
immediately before and after giving effect to a reduction of the Revolving
Credit Commitments under this Section 2.11(b),
no Default has occurred and is continuing and the Pro Forma Excess Availability
is not less than $5,000,000.   Such
notice shall be irrevocable on the part of the Borrower and shall specify the
effective date of such reduction or termination, whether a termination or
reduction is being made, and, in the case of any reduction, the amount thereof
shall be in an amount of $5,000,000 or an integral multiple $1,000,000 in
excess thereof.  Upon any such
reduction, the Borrower shall simultaneously prepay any outstanding Revolving
Loans (without premium except for the prepayment fee as required by Section 2.7(c) and except for the
payment of any charges incurred pursuant to Section 9.4(d))  to the extent necessary so that the
aggregate outstanding principal amount of the Revolving Loans does not exceed
the amount of the Revolving Credit Commitment after giving effect to any
partial reduction thereof.


 


57

















 


The aforesaid prior notice requirement shall not apply
to the Administrative Agent’s exercise of remedies under Section 8.2.  The amount of the Revolving Credit Commitment may not be
reinstated if it is reduced or if this Agreement is terminated by the Borrower.


 


(c)                                        In
the event the Borrower exercises its rights under Section 2.11(b)
to reduce the Revolving Credit Commitment or under Section 2.9 to
prepay any portion of any Term Loan, the Borrower agrees that any such
prepayment or reduction shall be accompanied by (i) in the case of a prepayment
in full and termination of this Agreement, the payment by the Borrower to the
Administrative Agent for the ratable account of the Lenders of all accrued and
unpaid interest and all fees and other remaining Obligations hereunder, (ii) if
a prepayment of the Term Loan shall occur on or prior to the first anniversary
of the Closing Date, the prepayment fee provided for in Section 2.7(c) and (iii) the payment
of any prepayment charges incurred pursuant to Section 9.4(d).


 


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


 


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


 


Section 2.14. 
General Provisions Regarding Payments.  All payments (including prepayments) to be
made by the Credit Parties under any Loan Document, including payments of
principal of and interest on the Notes, fees, expenses and indemnities, shall
be made without set-off or counterclaim and in immediately available funds to
each Lender’s Payment Account before 2:00 p.m. (New York City time) on the date
when due.  If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day and, with respect to payments
of principal, interest thereon, shall be payable at the then applicable rate
during such extension.  For purposes of
computing interest and Fees and determining Borrowing Availability as of any
date, all payments


 


58

















 


shall be deemed received on the first Business Day
following the Business Day on which immediately available funds therefor are
received in the Collection Account prior to 1:00 p.m. (New York City
time).  Payments received after 1:00
p.m. (New York City time) on any Business Day or on a day that is not a
Business Day shall be deemed to have been received on the following Business
Day.


 


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


 


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


 


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


 


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


 


(e)                                        If
any Lender has received interest hereunder in excess of the Maximum Lawful Rate
with respect to such Lender, such excess amount shall be applied to the
reduction of the outstanding principal balance of its Loans or to other amounts
(other than interest) payable hereunder, and if no such principal or other
amounts are then outstanding, such excess or part thereof remaining shall be
paid to the Borrower.


 


59


 

















 


ARTICLE III.



CONDITIONS


 


Section 3.1.  Conditions
to Closing.  The obligation
of each Lender to make any Extension of Credit on the Closing Date or for the
Administrative Agent or any Lender to take, fulfill or perform any other action
hereunder, shall be subject to satisfaction of all of the following conditions
in a manner satisfactory to Administrative Agent:


 


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


 


(b)                                        (i)  Administrative Agent shall have received a
fully executed original of a pay-off letter reasonably satisfactory to
Administrative Agent confirming that all of the Prior Lenders Obligations will be
repaid in full from the proceeds of the Term Loan, the initial Revolving Credit
Advance and an amount transferred from the Borrower’s account of not less than
$13,000,000 and all Liens upon any of the property of the Borrower or any of
its Subsidiaries in favor of Prior Lenders shall be terminated by Prior Lenders
immediately upon such payment, and (ii) all letters of credit issued or
guaranteed by Prior Lenders shall have been cash collateralized, supported by a
guaranty of Administrative Agent or supported by a Letter of Credit issued
pursuant to this Agreement, as mutually agreed upon by Administrative Agent and
the Borrower;


 


(c)                                        Administrative
Agent shall have received (i) evidence satisfactory to it in its sole
discretion that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the Related Transactions or (ii) an Officer’s
Certificate in form and substance satisfactory to Administrative Agent
affirming that no such consents or approvals are required;


 


(d)                                        Administrative
Agent and the Lenders shall have received the Fees required to be paid by the
Borrower on the Closing Date in the respective amounts specified in Section 2.7 and shall have reimbursed
the Administrative Agent for all fees, costs and expenses of closing presented
as of the Closing Date;


 


(e)                                        The
organizational and capital structure of each Credit Party and the terms and
conditions of all Indebtedness of each Credit Party shall be acceptable to
Administrative Agent in its sole discretion and Administrative Agent shall have
received all agreements, documents and Organizational Documents related thereto
which shall be reasonably satisfactory to Administrative Agent;


 


60

















 


(f)                                          Administrative
Agent shall have completed its business and legal due diligence, including a
roll forward of its previous Collateral audit, with results satisfactory to
Administrative Agent in its sole discretion;


 


(g)                                        Administrative
Agent shall have received fully executed copies of each of the other Related
Transactions Documents, each of which shall be in form and substance satisfactory
to Administrative Agent and its counsel in their sole discretion. The Related
Transactions shall have been consummated in accordance with the terms of the
Related Transactions Documents;


 


(h)                                        The
Eligible Accounts supporting the initial Revolving Credit Advances and the
initial L/C Obligations incurred and the amount of the Reserves to be
established on the Closing Date shall be sufficient in value, as determined by
Administrative Agent, to provide the Borrower with Borrowing Availability, after
giving effect to the initial Revolving Credit Advances made to the Borrower,
the incurrence of any initial L/C Obligations and the consummation of the
Related Transactions (on a pro forma basis, with trade payables being paid
currently, and expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales) of at least $7,000,000;


 


(i)                                           Administrative
Agent shall be satisfied in its sole discretion that no breach by the Credit
Parties exists under the GE Capital Fee Letter or the GE Capital Commitment
Letter; and


 


(j)                                           The
Lenders shall have received reasonably satisfactory evidence that (i) the
Credit Parties and their subsidiaries have pro-forma adjusted EBITDA
(determined in accordance with Regulation S-X including only those adjustments
acceptable to the Administrative Agent in their sole discretion) of at least
$24,000,000 (excluding the accounts receivable write-off of $3,800,000 related
to Greater Southeast Hospital; other pro forma adjustments to EBITDA to be acceptable
to Administrative Agent in its sole discretion) as of the date of the most
recent financial statements prior to the closing date and (ii) after giving
effect to the transactions and the borrowings under this Agreement to be made
on the Closing Date, that the Leverage Ratio of the Borrower and its
Subsidiaries shall be less than 3.0 to 1.0.


 


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


 


(a)                                         receipt
by the Administrative Agent of a Notice of Borrowing in accordance with Section 2.3, accompanied by a Borrowing Base Certificate as of the last day
of the month preceding the date of such proposed Borrowing;


 


(b)                                        no
event or circumstance having a Material Adverse Effect shall have occurred
since the date of this Agreement as determined by the Administrative Agent and
the Required Lenders (or after the Closing Date, the Administrative Agent and
the Required Revolving Lenders);


 


61

















 


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


 


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


 


Each Extension of
Credit hereunder shall be deemed to be a representation and warranty by the
Borrower on the date of such Extension of Credit as to the facts specified in
clauses (b), (c) and (d) of this Section.


 


ARTICLE IV.



REPRESENTATIONS AND WARRANTIES


 


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


 


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


 


Section 4.2.
 Governmental Approvals, Compliance with Laws
and Compliance with Agreements with Third Parties.  Each Credit Party possesses in full force and effect
all Governmental Approvals necessary for the conduct of its business and is in
compliance with all provisions of all Applicable Law, except where the failure
to possess such Governmental Approval or of such Governmental Approval to be in
full force and effect or the failure to comply with Applicable Law could not
reasonably be expected to have a Material Adverse Effect.  No Credit Party is in breach of or default
under or with respect to any contract, agreement, lease or other instrument to
which it is a party or by which any of its property is bound or affected, which
breach or default could reasonably be expected to have a Material Adverse
Effect.


 


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


 


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


 


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


 


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


 


(b)                                        The
Pro Forma delivered on the date hereof and attached hereto as Disclosure
Schedule 4.5(b) was prepared by the Borrower giving pro forma effect
to the Related Transactions, was based on the unaudited consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries dated
September 28, 2003, and was prepared in accordance with GAAP, with only
such adjustments thereto as would be required in accordance with GAAP.


 


(c)                                        The
Projections delivered on the date hereof and attached hereto as Disclosure
Schedule 4.5(c) have been prepared by the Borrower in light of the past
operations of its businesses, but including future payments of known contingent
liabilities reflected on the Fair


 


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Salable Balance Sheet,
and reflect projections for the two year period beginning on December 30,
2003 on a month-by-month basis for the first year and on a year-by-year basis
thereafter.  The Projections are based
upon estimates and assumptions stated therein, all of which the Borrower
believes to be reasonable and fair in light of current conditions and current
facts known to the Borrower and, as of the Closing Date, reflect the Borrower’s
good faith and reasonable estimates of the future financial performance of the
Borrower and its Subsidiaries and of the other information projected therein
for the period set forth therein.


 


(d)                                        The
Fair Salable Balance Sheet delivered on the date hereof and attached hereto as Disclosure
Schedule 4.5(d) was prepared by the Borrower on the same basis as the
Pro Forma, except that the Borrower’s consolidated assets are set forth therein
at their fair salable values on a going concern basis and the liabilities set
forth therein include all consolidated contingent liabilities of the Borrower
stated at the reasonably estimated present values thereof.


 


Section 4.6.  Material
Adverse Effect.  Since September 30, 2003, no act,
event, condition or occurrence has occurred or failed to occur, that has had or
reasonably could be expected to have, a Material Adverse Effect (an “Adverse
Change”).  In determining whether an
Adverse Change has occurred, it is understood that such an Adverse Change may
have occurred at any particular time notwithstanding the fact that at such time
no Default shall have occurred and be continuing.  If (x) a fact or circumstance disclosed in the financial
statements referred to in Section 4.5
or a Disclosure Statement, or if an investigation, action, suit or proceeding
disclosed in Disclosure Schedule 4.7, that, at the time of such
disclosure did not appear reasonably likely to have a Material Adverse Effect,
should in the future have, or appear reasonably likely to have, a Material
Adverse Effect, or (y) a development or change shall occur with respect to any
fact or circumstance disclosed in any financial statement, Disclosure
Schedule or previously described investigation, action, suit or proceeding
that should in the future have or appear reasonably likely to have a Materially
Adverse Effect, then in each case ((x) and (y)) such Materially Adverse Effect
shall be a change or event subject to Section 4.6
notwithstanding such prior disclosure.


 


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


 


Section 4.8.  Due Diligence Questionnaire; Full Disclosure.                                          The Questionnaire is complete and correct in
all respects. 
None of the Information (financial or otherwise) contained in the
Questionnaire or otherwise furnished by or on behalf of any Credit Party to the
Administrative Agent or any other Lending Party hereunder or in connection with
the Loan Documents or the Related Transaction Documents or any of the
transactions contemplated here by or thereby contains any untrue statement of a
material fact or omits to state


 


64

















 


a material fact necessary
to make the statements contained herein or therein not misleading in the light
of the circumstances under which such statements were made.


 


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


 


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


 


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


 


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


 


Section 4.13. 
Subsidiaries; Capitalization. 
The Credit Parties have no Subsidiaries on the Closing Date
other than as set forth on Disclosure Schedule 4.13.  Disclosure Schedule 4.13 sets
forth the correct legal name and jurisdiction of organization of each of the
Credit Parties.  The authorized Stock of
each of the Credit Parties are as set forth on Disclosure Schedule 4.13.  All issued and outstanding Stock of each of
the Credit Parties is duly authorized and validly issued, fully paid,
nonassessable, free and clear of all Liens other than those in favor of
Administrative Agent for the benefit of the Lending Parties, and such Stock was
issued in compliance with all Applicable Laws. 
The identity of the holders of the Stock of each of the Credit Parties
(other than Parent) and the percentage of their fully diluted ownership of the
Stock


 


65

















 


of each of the Credit
Parties is set forth on Disclosure Schedule 4.13.  No Stock of any Credit Party, other than
that described above, is issued and outstanding.  Except as provided in Disclosure Schedule 4.13, there
are no preemptive or other outstanding rights, options, warrants, conversion
rights or similar agreements or understandings for the purchase or acquisition
from any Credit Party of any Stock of any such entity.  All outstanding Indebtedness and Guaranteed
Obligations of each Credit Party as of the Closing Date (except for the
Obligations) is described in Disclosure
Schedule 4.13. Holdings
has no assets (except Stock of its Subsidiaries) and no Indebtedness or
Guaranteed Indebtedness (except the Obligations).  Holdings has no liabilities and engages in no activities except
those liabilities that are incurred in the ordinary course of business.  Parent
has no assets (except Stock of its Subsidiaries) and no Indebtedness or
Guaranteed Indebtedness (except the Obligations).  Parent has no liabilities and engages in no activities except
those liabilities that are incurred in the ordinary course of business.


 


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


 


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


 


Section 4.16. 
Taxes. 
All tax returns, reports and statements, including information returns,
required by any Governmental Authority to be filed by any Credit Party have been
filed with the appropriate Governmental Authority and all Charges have been
paid prior to the date on which any fine, penalty, interest or late charge may
be added thereto for nonpayment thereof (or any such fine, penalty, interest,
late charge or loss has been paid), excluding Charges or other amounts which
are the subject of a Permitted Contest. 
Proper and accurate amounts have been withheld by each Credit Party from
its respective employees for all periods in compliance with Applicable Laws and
such withholdings have been timely paid to the respective Governmental
Authorities.  Disclosure
Schedule 4.16 sets forth as of the Closing Date those taxable years
for which any Credit Party’s tax returns are currently being audited by the IRS
or any other applicable Governmental Authority, and any assessments or
threatened assessments in connection with such audit, or otherwise currently
outstanding.  Except as described in Disclosure
Schedule 4.16, no Credit Party has executed or filed with the IRS or
any other Governmental Authority any agreement or other document extending, or
having the effect


 


66

















 


of extending, the period
for assessment or collection of any Charges. 
None of the Credit Parties and their respective predecessors are liable
for any Charges (a) under any agreement (including any tax sharing agreements)
or (b) to each Credit Party’s knowledge, as a transferee.  As of the Closing Date, no Credit Party has
agreed or been requested to make any adjustment under IRC Section 481(a),
by reason of a change in accounting method or otherwise, that could reasonably
be expected to have a Material Adverse Effect.


 


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


 


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


 


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


 


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


 


Section 4.21  HIPAA Compliance.                                                     (a)
To the extent that and for so long as (i) a Credit Party is a “covered entity”
as defined in 45 C.F.R. § 160.103, (ii) a Credit Party and/or its business
and operations are subject to or covered by the HIPAA Administrative
Requirements codified at 45 C.F.R. Parts 160 & 162 (the “Transactions
Rule”) and/or the HIPAA Security and Privacy Requirements codified at 45
C.F.R. Parts 160 & 164 (the “Privacy and Security Rules”), and/or
(iii) a Credit Party sponsors any “group health plans” as defined in 45 C.F.R.
§ 160.103, each such Credit Party has: 
(x) completed, or will complete on or before any applicable compliance
date, thorough and detailed surveys, audits, inventories, reviews, analyses
and/or assessments, including risk assessments, (collectively “Assessments”)
of all areas of its business and operations subject to HIPAA and/or that could
be adversely affected by the failure of such Credit Party to be HIPAA Compliant
(as defined below) to the extent these Assessments are appropriate or required
for such Credit Party to be HIPAA Compliant; (y) developed, or will develop on
or before any applicable compliance date, a detailed plan and time line for
becoming HIPAA Compliant (a “HIPAA Compliance Plan”); and (z)
implemented, or will implement on or before any applicable compliance date,
those provisions of its HIPAA Compliance Plan necessary to ensure that such
Credit Party is HIPAA Compliant.  For
purposes of this Agreement, “HIPAA Compliant” shall mean that an applicable
Credit Party (1) is, or on or before any applicable compliance date will be, in
full compliance with any and all of the


 


67

















 


applicable requirements
of HIPAA, including all requirements of the Transactions Rule and the Privacy
and Security Rules and (2) is not subject to, and could not reasonably be
expected to become subject to, any civil or criminal penalty or any
investigation, claim or process that could reasonably be expected to have a
Material Adverse Effect.


 


(b)                                        Each
Credit Party represents that it, collectively with certain other affiliates of
such Credit Party has elected to be treated as a single covered entity in
accordance with the Privacy and Security Rules (45 C.F.R. § 164.504(d))
(the “Affiliated Entity”).  As
such, each Credit Party represents and warrants that it has the legal right,
power and authority to execute the Business Associate Agreement on behalf of
the Affiliated Entity, in accordance with the Privacy and Security Rules, and
that the provisions of the Business Associate Agreement shall be binding upon
each Credit Party and all of such Credit Party’s affiliates that are
participating in the Affiliated Entity, in accordance with the Privacy and
Security Rules, as if each and every such affiliate were a party to such
Business Associate Agreement directly.


 


Section  4.22  Third Party Reimbursement. 
If any Credit Party is or has been audited by Medicare,
Medicaid, TRICARE, CHAMPVA or similar governmental payors, none of such audits
provides for adjustments in reimbursable costs or asserts claims for
reimbursement or repayment by such Credit Party of costs and/or payments
theretofore made by such governmental payor that, if adversely determined,
could reasonably be expected to have or result in a Material Adverse Effect.


 


Section 4.23  Tax Shelter Representation. 
The Borrower does not intend to treat the Loans, the Letters
of Credit and/or related transactions as being a “reportable transaction”
(within the meaning of Treasury Regulation Section 1.6011-4).  In the event the Borrower determines to take
any action inconsistent with such intention, it will promptly notify the
Administrative Agent thereof.  If the
Borrower so notifies the Administrative Agent, the Borrower acknowledges that
one or more of the Lenders may treat its Loans and/or its interest in Swing
Line Loans and/or Letters of Credit as part of a transaction that is subject to
Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as
applicable, will maintain the lists and other records required by such Treasury
Regulation.


 


ARTICLE V.



REPORTING COVENANTS


 


So
long as any Lending Party has any Commitment hereunder or any Extension of
Credit or other Obligation remains outstanding, each Credit Party shall comply
with each of the provisions in this Article V:


 


Section 5.1.  Financial Statements and Reports.  The Credit Party shall deliver the following
to each Lending Party at its address specified pursuant to Section 11.3:


 


(a)                                         Monthly
Financials.    As soon as available, but in any event
within 30 days after the end of each fiscal month:


 


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


 


(ii)                                      a
Compliance Certificate in the form of Exhibit 5.1(a).


 


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


 


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


 


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


 


(iii)                                 a Compliance
Certificate in the form of Exhibit 5.1(b).


 


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


 


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


 


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


 


(iii)                                 a Compliance
Certificate in the Form of Exhibit 5.1(c);


 


(iv)                                    a
report in form and substance reasonably satisfactory to Administrative Agent
and subject only to standard qualifications required by nationally recognized
accounting firms, signed by the


 


69

















 


accounting firm auditing the financial statements, (A)
showing the calculations used to determine compliance with each of the
financial covenants set forth herein, (B) stating that, in connection with
their audit examination, nothing has come to their attention to cause them to
believe that a Default has occurred (or specifying those Defaults that they
became aware of), it being understood that such audit examination extended only
to accounting matters and that no special investigation was made with respect
to the existence of Defaults, and (C) consistent with past practices; and


 


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


 


(d)                                        Annual
Budgets.  As soon as available
following the end of each Fiscal Year, but in any event not later than 30 days
after the end of such Fiscal Year, an annual operating plan for the Credit
Parties (the “Budget”), on a consolidated and consolidating basis,
approved by the Board of Directors of the Borrower, for the following Fiscal
Year, which (i) includes a statement of all of the material assumptions on
which such plan is based, (ii) includes monthly balance sheets, income
statements and statements of cash flows for the following year and (iii)
integrates sales, gross profits, operating expenses, operating profit, cash
flow projections and Borrowing Availability projections, all prepared on the
same basis and in similar detail as that on which operating results are
reported (and in the case of cash flow projections, representing management’s
good faith estimates of future financial performance based on historical
performance), and including plans for personnel, Capital Expenditures and
facilities.


 


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


 


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


 


(g)                                        Litigation.   As
soon as practicable, and in any event within five (5) Business Days after any
executive or financial officer of any Credit Party obtains knowledge of any
Litigation commenced or threatened against any Credit Party that (i) seeks
damages in excess of $1,000,000,
(ii) seeks injunctive relief and, if such relief were granted, such injunction
could reasonably be expected to have a Material Adverse Effect, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against any Credit Party or any member of a Controlled Group in connection with
any Plan, (iv) alleges criminal misconduct by any Credit Party, (v) alleges
material violations of any Healthcare Laws, (vi) alleges the violation of any
law regarding, or seeks remedies in connection with, any Environmental
Liabilities, or (vii) if


 


70

















 


adversely determined
against any Credit Party, could reasonably be expected to have a Material
Adverse Effect.


 


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


 


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


 


(j)                                           Damage
to Collateral.  Disclosure of any
loss, damage, or destruction to the Collateral in the amount of $500,000 or
more individually or in the aggregate, whether or not covered by insurance.


 


(k)                                        Defaults
under Material Agreements.   Immediately upon receipt,
copies of any notice to any Credit Party of claimed default by any third party
to any Credit Party with respect to or by any Credit Party of any lease or
agreement to which any Credit Party is a party that involves payments in excess
of $250,000 individually or in the aggregate per annum or involves property of
any Credit Party  having a value in
excess of $250,000 individually or in the aggregate.


 


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


 


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


 


(a)                                         To
Administrative Agent, upon its request, and in any event no less frequently
than 12:00 p.m. (New York City time) on the date that is fifteen (15)
Business Days after the end of each fiscal month (together with a copy of all
or any part of the following reports requested by any Lender in writing after
the Closing Date), each of the following reports, each of which shall be
prepared by the Borrower as of the last day of the immediately preceding fiscal
month:


 


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


 


(ii)                                      a
monthly trial balance showing Accounts outstanding aged from invoice date as
follows:  one (1) to thirty (30) days;
thirty-one (31) to sixty


 


71

















 


(60) days; sixty-one (61) to ninety (90) days;
ninety-one (91) days to one hundred twenty days (120) and one hundred
twenty-one days (121) or more, accompanied by such supporting detail and
documentation as shall be requested by Administrative Agent in its reasonable
discretion;


 


(b)                                        To
Administrative Agent, on a monthly basis or at such more frequent intervals as
Administrative Agent may reasonably request from time to time (together with a
copy of all or any part of such delivery requested by any Lender in writing
after the Closing Date), Collateral reports including all additions and
reductions (cash and non-cash) with respect to Accounts in each case
accompanied by such supporting detail and documentation as shall be requested
by Administrative Agent in its reasonable discretion each of which shall be
prepared as of the last day of the immediately preceding month or the date that
is two (2) days prior to the date of any such request;


 


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


 


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


 


(ii)                                      an
aging of accounts payable and a reconciliation of such accounts payable aging
to the general ledger and monthly financial statements delivered pursuant to Section 5.1(a), in each case
accompanied by such supporting detail and documentation as shall be requested
by Administrative Agent in its reasonable discretion; and


 


(iii)                                 a
reconciliation of the outstanding Loans as set forth in the monthly Loan
Account statement provided by Administrative Agent to the general ledger and
monthly financial statements delivered pursuant to Section 5.1(a), in each case accompanied by such
supporting detail and documentation as shall be requested by Administrative
Agent in its reasonable discretion.


 


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


 


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


 


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


 


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


 


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


 


Section 5.3.  Accuracy of Financial
Statements and Information


 


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


 


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


 


5.4                                      Confidential Health Information.                                                        Notwithstanding anything in this Agreement to
the contrary, Credit Parties agree that they will not distribute or share
confidential health information with any Lender if the sharing or distribution
of such information to Lender would be a violation of HIPAA and Credit Parties
further agree to identify any such health


 


73

















 


information and protect
Lenders from the receipt thereof; provided that any Lender shall have
the right to receive confidential health information if such Lender executes a
Business Associate Agreement.


 


ARTICLE VI.



AFFIRMATIVE COVENANTS


 


So
long as any Lending Party has any Commitment hereunder or any Extension of
Credit or other Obligation remains outstanding, Borrower shall, and shall cause
each Credit Party to, comply with each of the covenants in this Article VI:


 


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


 


Section 6.2. 
Preservation of Existence and Franchises.  Each of the Credit Parties will, and will cause each of its Subsidiaries
to, do all things necessary to preserve and keep in full force and effect its
existence, rights, franchises and authority except as permitted by Section 7.4 or except (with respect to rights,
franchises and authority only) where the failure to do so would not have or be
reasonably expected to have a Material Adverse Effect.


 


Section 6.3.  Insurance; Damage to or Destruction of Collateral.    (a) 
The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described on Disclosure Schedule 4.19 as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Administrative Agent. 
Such policies of insurance (or the loss payable and additional insured
endorsements delivered to Administrative Agent) shall contain provisions
pursuant to which the insurer agrees to provide thirty (30) days prior written
notice to Administrative Agent in the event of any non-renewal, cancellation or
amendment of any such insurance policy. 
If any Credit Party at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance required above, or to pay all premiums
relating thereto, Administrative Agent may at any time or times thereafter
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect thereto that Administrative Agent deems
advisable; provided that Administrative Agent shall have no obligation
to obtain insurance for any Credit Party or pay any premiums therefor, but to
the extent it does obtain such insurance or pay such premiums, Administrative
Agent shall not be deemed to have waived any Default arising from any Credit
Party’s failure to maintain such insurance or pay any premiums therefor.  All sums so disbursed by Administrative
Agent hereunder, including reasonable attorneys’ fees, court costs and other
charges related thereto, shall be payable on demand by the Borrower to
Administrative Agent and shall constitute additional Obligations hereunder
secured by the Collateral.


 


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(b)                                        Administrative
Agent reserves the right at any time upon any change in any Credit Party’s risk
profile (including any change in the product mix maintained by any Credit Party
or any laws affecting the potential liability of such Credit Party) to require
additional forms and limits of insurance to, in Administrative Agent’s
reasonable opinion, adequately protect both Administrative Agent’s and Lender’s
interests in all or any portion of the Collateral and to ensure that each
Credit Party is protected by insurance in amounts and with coverage customary
for its industry.  If requested by
Administrative Agent, each Credit Party shall deliver to Administrative Agent
from time to time a report of a reputable insurance broker, satisfactory to
Administrative Agent, with respect to its insurance policies.


 


(c)                                        Each
Credit Party shall deliver to Administrative Agent, in form and substance
satisfactory to Administrative Agent, endorsements to (i) all “All Risk” and
business interruption insurance naming Administrative Agent, on behalf of the
Agent and Lenders, as loss payee, and (ii) all general liability and other
liability policies naming Administrative Agent, on behalf of itself and
Lenders, as additional insured.  Each
Credit Party irrevocably makes, constitutes and appoints Administrative Agent
(and all officers, employees or agents designated by Administrative Agent), as
such Credit Party’s true and lawful agent and attorney-in-fact for the purpose
of making, settling and adjusting claims under such “All Risk” policies of
insurance, endorsing the name of such Credit Party on any check or other item
of payment for the proceeds of such “All Risk” policies of insurance and for
making all determinations and decisions with respect to such “All Risk”
policies of insurance; provided that 
Administrative Agent shall have no duty to exercise any rights or powers
granted to it pursuant to the foregoing power-of-attorney.  After deducting from such proceeds the
expenses, if any, incurred by Administrative Agent in the collection or
handling thereof, Administrative Agent shall apply such proceeds in excess of
$250,000 to the reduction of the Obligations in accordance with Section 2.8(b); provided however,
that, absent a Default or Event of Default, the applicable Credit Party may use
such proceeds in an amount not to exceed $1,000,000, to replace, repair,
restore or rebuild the Collateral within 180 days of such casualty with
materials and workmanship of substantially the same quality as existed before
the loss, damage or destruction; provided that if such Credit Party
shall not have completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 180 days of such
casualty, Administrative Agent shall apply such insurance proceeds to the
Obligations in accordance with Section 2.8(b).  All insurance proceeds that are to be made
available to any Credit Party to replace, repair, restore or rebuild the
Collateral shall be applied by Administrative Agent to reduce the outstanding
principal balance of the Revolving Loan (which application shall not result in
a permanent reduction of the Revolving Credit Commitment) and upon such
application, Administrative Agent shall establish a Reserve against the
Borrowing Base in an amount equal to the amount of such proceeds so
applied.  Thereafter, such funds shall
be made available to that Credit Party to provide funds to replace, repair,
restore or rebuild the Collateral as follows: (x) the Borrower shall request a
Revolving Credit Advance be made to such Credit Party in the amount requested
to be released; (y) so long as the conditions set forth in Section 3.2 have been met, Revolving Lenders shall make such
Revolving Credit Advance and (z) in the case of insurance proceeds applied
against the Revolving Loan, the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such Revolving Credit
Advance.  To the extent not used to
replace, repair, restore or rebuild the Collateral, such insurance proceeds
shall be applied in accordance with Section 2.8(b).


 


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Section 6.4  Compliance with Law.  Each
of the Credit Parties will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its property (including,
without limitation, Environmental Laws) if noncompliance with any such law,
rule, regulation, order or restriction would have or be reasonably expected to
have a Material Adverse Effect.


 


Section 6.5  Payment of Taxes and Other Indebtedness.  Each of the Credit Parties will, and will
cause its Subsidiaries to, pay, settle or discharge (a) all taxes, assessments
and governmental charges or levies imposed upon it, or upon its income or
profits, or upon any of its properties, before they shall become delinquent,
(b) all lawful claims (including claims for labor, materials and supplies)
which, if unpaid, might give rise to a Lien upon any of its properties, and (c)
except as prohibited hereunder, all of its other Indebtedness as it shall
become due; provided, however, that a Credit Party or any of its Subsidiaries
shall not be required to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate proceedings
and as to which adequate reserves therefor have been established in accordance
with GAAP, unless the failure to make any such payment (i) could give rise to
an immediate right to foreclose on a Lien securing such amounts or (ii) would
have or be reasonably expected to have a Material Adverse Effect.


 


Section 6.6  Maintenance of Property.  Each
of the Credit Parties will, and will cause its Subsidiaries to, maintain and
preserve its properties and equipment in good repair, working order and
condition, normal wear and tear excepted, and will make, or cause to be made,
in such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as
may be needed or proper, to the extent and in the manner customary for companies
in similar businesses.


 


Section 6.7  Performance of Obligations.  Each
of the Credit Parties will, and will cause its Subsidiaries to, perform in all
respects all of its obligations under the terms of all agreements, indentures,
mortgages, security agreements or other debt instruments to which it is a party
or by which it is bound unless the failure to do so would not have or be
reasonably expected to have a Material Adverse Effect.


 


Section 6.8  Use of Proceeds.  The
Borrower will use the proceeds of the Loans solely (a) to refinance all amounts
outstanding under the Prior Lenders Credit Agreement, and (b) for working
capital and general corporate purposes including, without limitation, Capital
Expenditures as permitted in Section 7.13.


 


Section 6.9  Audits/Inspections. 
Upon reasonable notice and during normal business hours the Credit
Parties will, and will cause their Subsidiaries to, permit, subject to the
provisions of Section 11.14,
representatives appointed by the Administrative Agent, including, without
limitation, independent accountants, agents, attorneys and appraisers to visit
and inspect each Credit Party’s property, including its books and records, its
accounts receivable and inventory, its facilities and its other business
assets, and to make photocopies or photographs thereof and to write down and
record any information such representative obtains and shall permit the
Administrative Agent or its representatives to investigate and verify the
accuracy of information provided to the Lenders and to discuss all such matters
with the officers, employees


 


76

















 


and representatives of
the Credit Parties and their Subsidiaries. 
The Credit Parties agree that the Administrative Agent and its
representatives may conduct one annual field audit and, to the extent
necessary, one annual desk audit of the Collateral at the expense of the
Borrower (the Borrower being entitled to have a representative present at
discussions with its independent accountants), provided that upon a
Default or Event of Default, the Administrative Agent and its representatives
may conduct audits at the expense of the Borrower and such audits do not count
towards the limitation of one field audit and one desk audit per year at
Borrower’s expense set forth in this Section 6.9.


 


Section 6.10  Financial Covenants.  The
Borrower’s fiscal year ends on the Sunday closest to December 31 of each
calendar year.  Each reference to
March 31, June 30, September 30 and December 31 in this Section 6.10 shall be deemed to refer
to the last day of the fiscal quarter or fiscal year of the Borrower, as
applicable, ending on or about such date. 
In addition, each reference to January 1, April 1, July 1
and October 1 shall be deemed to refer to the first day of the fiscal
quarter or fiscal year of the Borrower, as applicable, beginning on or about
such date.


 


(a)                                         Leverage
Ratio.  The Leverage Ratio, at all
times during the periods set forth below, shall be less than or equal to the
ratio set forth opposite such period:


 


(i)                                           From
the Closing Date to and including December 31, 2003, 3.00 to 1.0.


 


(ii)                                      From
January 1, 2004 to and including June 30, 2004, 4.50 to 1.0;


 


(iii)                                 From July 1, 2004
to and including September 30, 2004, 4.25 to 1.0.


 


(iv)                                    From
October 1, 2004 to and including December 31, 2004,  3.50 to 1.0.


 


(v)                                         From
January 1, 2005 to and including March 31, 2005, 2.75 to 1.0.


 


(vi)                                    From
April 1, 2005 to and including December 31, 2005, 2.50 to 1.0.


 


(vii)                               From January 1,
2006 and thereafter, 2.25 to 1.0.


 


(b)                                        Fixed
Charge Coverage Ratio.  The Fixed
Charge Coverage Ratio, as of the end of each Fiscal Quarter of the Borrower set
forth below, shall be greater than or equal to the ratio set forth opposite
such Fiscal Quarter:


 


77

















 


	
  Fiscal
  Quarter

  	
   

  	
  Minimum
  Fixed

  Charge
  Coverage Ratio

  
	
  Fiscal Quarter ending December 31, 2003

  	
   

  	
  1.15 to 1.0

  
	
  Fiscal Quarter ending March 31, 2004

  	
   

  	
  1.15 to 1.0

  
	
  Fiscal Quarter ending June 30, 2004

  	
   

  	
  1.25 to 1.0

  
	
  Fiscal Quarter ending September 30, 2004

  	
   

  	
  1.25 to 1.0

  
	
  Fiscal Quarter ending December 31, 2004

  	
   

  	
  1.50 to 1.0

  
	
  Fiscal Quarter ending March 31, 2005

  	
   

  	
  1.75 to 1.0

  
	
  Fiscal Quarter ending June 30, 2005

  	
   

  	
  1.75 to 1.0

  
	
  Fiscal Quarter ending September 30, 2005

  	
   

  	
  1.75 to 1.0

  
	
  Fiscal Quarter ending December 31, 2005

  	
   

  	
  0.60 to 1.0

  
	
  Fiscal Quarter ending March 31, 2006

  	
   

  	
  0.60 to 1.0

  
	
  Fiscal Quarter ending June 30, 2006

  	
   

  	
  0.65 to 1.0

  
	
  Fiscal Quarter ending September 30, 2006

  	
   

  	
  0.65 to 1.0

  
	
  Fiscal Quarter ending December 31, 2006 and
  each Fiscal Quarter thereafter

  	
   

  	
  2.25 to 1.0

  



 


(c)                                        EBITDA.  EBITDA, for each 12 month period ending as
of the last day of each Fiscal Quarter set forth below, shall not be less than
the amount set forth opposite such period:


 


78

















 


	
  Fiscal
  Quarter

  	
   

  	
  EBITDA

  
	
  Fiscal Quarter ending December 31, 2003

  	
   

  	
  $

  	
  21,000,000

  
	
  Fiscal Quarter ending March 31, 2004

  	
   

  	
  $

  	
  13,000,000

  
	
  Fiscal Quarter ending June 30, 2004

  	
   

  	
  $

  	
  13,000,000

  
	
  Fiscal Quarter ending September 30, 2004

  	
   

  	
  $

  	
  13,500,000

  
	
  Fiscal Quarter ending December 31, 2004

  	
   

  	
  $

  	
  18,000,000

  
	
  Fiscal Quarter ending March 31, 2005

  	
   

  	
  $

  	
  18,000,000

  
	
  Fiscal Quarter ending June 30, 2005

  	
   

  	
  $

  	
  18,000,000

  
	
  Fiscal Quarter ending September 30, 2005

  	
   

  	
  $

  	
  18,000,000

  
	
  Fiscal Quarter ending December 31, 2005

  	
   

  	
  $

  	
  18,000,000

  
	
  Fiscal Quarter ending March 31, 2006

  	
   

  	
  $

  	
  18,500,000

  
	
  Fiscal Quarter ending June 30, 2004

  	
   

  	
  $

  	
  18,500,000

  
	
  Fiscal Quarter ending September 30, 2004 and
  each Fiscal Quarter thereafter.

  	
   

  	
  $

  	
  19,000,000

  



 


(d)                                        Days
Sales Outstanding.  As of the end of
each Fiscal Month  from the Closing
Date, Days Sales Outstanding shall not be greater than 70 days for any Fiscal
Month.


 


Section 6.11  Collateral. 
If, subsequent to the Closing Date, a Credit Party shall (a) acquire or
lease any real property or (b) acquire any intellectual property, securities,
instruments, chattel paper or other personal property required to be delivered
to the


 


79

















 


Administrative Agent as
Collateral hereunder or under any of the Collateral Documents, the Borrower
shall promptly (and in any event within ten (10) Business Days) after any
senior executive officer of the Borrower acquires knowledge of same notify the
Administrative Agent of same; provided that with respect to leased real
property, Credit Parties shall within five (5) Business Days after the end of
each Fiscal Quarter deliver to Administrative Agent a schedule of the
leased real property showing leased real property acquired and closed during
such Fiscal Quarter.  Each Credit Party
shall take such action as requested by the Administrative Agent and at its own
expense, to ensure that the Administrative Agent has a first priority perfected
Lien in all owned real property (and in such leased real property as reasonably
requested by the Administrative Agent or the Required Lenders) and all personal
property of the Credit Parties (whether now owned or hereafter acquired),
subject only to Permitted Liens; provided, however, that nothing in this Section 6.11 shall require any Credit
Party to take any action which would require the creation of any Lien that
would result in a breach of any agreement creating or evidencing such
Collateral so long as such agreement was not entered into with the intent of
avoiding the requirements of this Section 6.11.  Each Credit Party shall adhere to the
covenants regarding the location of personal property as set forth in the
Security Agreement.


 


Section 6.12  Additional Credit Parties.  At the time any Person becomes a Subsidiary of a Credit Party,
the Borrower shall so notify the Administrative Agent and promptly thereafter
(but in any event within 45 days after the date thereof) shall (a) cause such
Person (if it is a Domestic Subsidiary) to execute a Joinder Agreement in form
reasonably acceptable to Administrative Agent, (b)(i) cause all of the Stock of
such Person (if such Person is a Domestic Subsidiary) or 65% of the Stock of
such Person (if such Person is a Foreign Subsidiary owned by a Credit Party) to
be delivered to the Administrative Agent (together with undated stock powers
signed in blank) and pledged to the Administrative Agent pursuant to an
appropriate pledge agreement in substantially the form of the Pledge Agreement
and otherwise in a form acceptable to the Administrative Agent, (ii) if such
Person is a Domestic Subsidiary, pledge all of its assets to the Administrative
Agent pursuant to a security agreement in substantially the form of the
Security Agreement and otherwise in a form acceptable to the Administrative
Agent, (iii) if such Person is a Domestic Subsidiary and has any Subsidiaries,
(A) deliver all of the Stock of such Domestic Subsidiaries and 65% of the Stock
of such direct Foreign Subsidiaries (together with undated stock powers signed
in blank) to the Administrative Agent and (B) execute a pledge agreement in
substantially the form of the Pledge Agreement and otherwise in a form
acceptable to the Administrative Agent, (iv) if such Person is a Domestic
Subsidiary and owns or leases any real property in the United States of
America, execute any and all necessary mortgages, deeds of trust, deeds to
secure debt, collateral assignments of leaseholds or other appropriate real
estate collateral documentation in a form acceptable to the Administrative
Agent and (v) deliver such other documentation as the Administrative Agent may
reasonably request in connection with the foregoing, including, without
limitation, appropriate UCC-1 financing statements, real estate title insurance
policies, environmental reports and landlord waivers, and (c) cause such Person
to deliver certified resolutions and other organizational and authorizing
documents of such Person and favorable opinions of counsel to such Person
(which shall cover, among other things, the legality, validity, binding effect
and enforceability of the documentation referred to above); it being understood
that all of the documentation, agreements, instruments, certificates and
opinions to be delivered pursuant to (a), (b) and (c) above shall be in form,
content and scope reasonably satisfactory to the Administrative Agent.  Notwithstanding anything in this Section 6.12 to the contrary, no
Credit Party shall be required to (x) take any action which would violate


 


80

















 


any Requirement of Law or
(y) grant a Lien on any asset that is subject to a Permitted Lien if the
granting of such Lien would violate the agreement creating or evidencing such
Permitted Lien, so long as such agreement was not entered into with the intent
of avoiding the requirements of this Section 6.12.


 


Section 6.13  [Reserved]


 


Section 6.14. 
Supplemental Disclosure.  From time to time as may be reasonably requested by
Administrative Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), the Credit Parties shall supplement each Disclosure
Schedule hereto, or any representation herein or in any Loan Document,
with respect to any matter hereafter arising that, if existing or occurring as
of the date of this Agreement, would have been required to be set forth or
described in such Disclosure Schedule or as an exception to such
representation or that is necessary to correct any information in such
Disclosure Schedule or representation which has been rendered inaccurate
thereby (and, in the case of any supplements to any Disclosure Schedule, such
Disclosure Schedule shall be appropriately marked to show the changes made
therein); provided that (a) no such supplement to any such Disclosure
Schedule or representation shall amend, supplement or otherwise modify any
Disclosure Schedule or representation, or be deemed a waiver of any
Default resulting from the matters disclosed therein, except as consented to by
Administrative Agent and Required Lenders in writing, and (b) no supplement
shall be required or permitted as to representations and warranties that relate
solely to the Closing Date.


 


Section 6.15. 
Further Assurances.  Each Credit Party shall, at its own cost and expense, cause to be
promptly and duly taken, executed, acknowledged and delivered all such further
acts, documents and assurances (a) as may from time to time be necessary or as
the Administrative Agent may from time to time reasonably request to carry out
the intent and purposes of the Loan Documents and the transactions contemplated
thereby, including all such actions to establish, preserve, protect and perfect
the estate, right, title and interest of the Administrative Agent to the
Collateral (including Collateral acquired after the date hereof), including
first priority Liens thereon, subject only to Liens permitted by Section 7.2, and (b) as the
Administrative Agent may from time to time reasonably request, to establish,
preserve, protect and perfect first priority Liens in favor of the Administrative
Agent on any and all assets of the Credit Parties and the proceeds thereof, now
owned or hereafter acquired, that do not constitute Collateral on the date
hereof.  The Borrower shall promptly
give notice to the Administrative Agent of the acquisition after the Closing
Date by any Credit Party of any Real Property (including leaseholds in respect
of Real Property) or any trademark, copyright or patent.


 


Section 6.16. 
Environmental Matters.   Each Credit Party shall and shall cause each Person within its control
to (a) conduct its operations and keep and maintain its Real Property in
compliance with all Environmental Laws and Environmental Permits other than
noncompliance that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, (b) implement any and all
investigative, remedial, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Property or to
otherwise comply with Environmental Laws and Environmental Permits pertaining
to the presence, generation, treatment, storage, use, disposal, transportation
or Release of any Hazardous Material on, at, in, under, above, to, from or
about any of the Real Property of


 


81

















 


any Credit Party, and (c)
promptly forward to Administrative Agent a copy of any order, notice, request
for information or any communication or report received by such Credit Party in
connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits that could reasonably be
expected to result in Environmental Liabilities in excess of $250,000, in each
case whether or not any Governmental Authority has taken or threatened any
action in connection with any violation, Release or other matter.  If Administrative Agent at any time has a
reasonable basis to believe that there may be a violation of any Environmental
Laws or Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of the Real Property of any Credit Party, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, then each Credit Party shall, upon Administrative
Agent’s written request (i) cause the performance of such environmental audits
including subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at the Borrower’s expense, as Administrative Agent may
from time to time reasonably request, which shall be conducted by reputable
environmental consulting firms reasonably acceptable to Administrative Agent
and shall be in form and substance reasonably acceptable to Administrative Agent,
and (ii) permit Administrative Agent or its representatives to have access to
all Real Property for the purpose of conducting such environmental audits and
testing as Administrative Agent deems appropriate, including subsurface
sampling of soil and groundwater; provided that the Borrower shall reimburse
Administrative Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.


 


Section 6.17. 
Landlord and Warehouseman Waivers.  The Credit Parties shall deliver to the
Administrative Agent waivers of contractual and statutory landlord’s,
mortgagee’s or warehouseman’s Liens in form and substance reasonably
satisfactory to the Administrative Agent under each lease, mortgage, warehouse
agreement or similar agreement to which any Credit Party is a party.


 


Section 6.18.  Mortgages
on Real Property; Title
Insurance and Survey.  Within
thirty (30) days after the acquisition of any owned Real Property having a fair
market value in excess of $250,000 by any Credit Party, such Credit Party will
furnish the Administrative Agent with a Mortgage covering each parcel of Real
Property acquired by such Credit Party (the “Mortgaged Property”), together with an ALTA extended coverage
lender’s policy of title insurance in a policy amount equal to one hundred
percent (100%) of the greater of (x) the purchase price of such acquired
property (including any liabilities assumed in connection with the acquisition)
or (y) the fair market value of such property, insuring such Mortgage as a
valid, enforceable first Lien on the Credit Party’s interest in the Mortgaged
Property covered thereby, subject only to Permitted Liens and to such other
exceptions as are reasonably satisfactory to the Administrative Agent, together
with an ALTA survey with respect to each parcel of the Mortgaged Property
acquired, in form and substance reasonably satisfactory to the Administrative
Agent, and legible copies of all documents affecting title, which shall show
all recording information.  The policy,
including each of the exceptions to coverage contained therein, shall be
subject to the approval of the Administrative Agent, and shall be issued by a
title company acceptable to the Administrative Agent.  Attached to the policy shall be any and all endorsements
reasonably required by the Administrative Agent, including (a) a comprehensive
endorsement (ALTA 100 or equivalent) covering restrictions and other matters,
(b) a broad form zoning endorsement, which specifically ensures that applicable
parking requirements, if any,


 


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have been satisfied, (c)
an endorsement ensuring that the lien of each Mortgage is valid against any
applicable usury laws or other laws prohibiting the charging of interest on interest
in the state(s) where such Mortgaged Property is located, (d) an endorsement
ensuring that the Mortgaged Property has access to a dedicated public street,
(e) a revolving credit endorsement, (f) a contiguity endorsement, (g) a survey
and “same as” endorsement and (h) an endorsement deleting the so-called “doing
business” exclusion.


 


Section 6.19.  Compliance Program.  To the extent required by law, each Credit Party will maintain, and be
operated in accordance with, a compliance program which meets the compliance
guidance issued by the Department of Health and Human Services Office of
Inspector General for clinical laboratories, including without limitation (a)
the implementation of internal audits and monitoring on a regular and
systematic basis to monitor compliance with the requirements of the compliance program and applicable law, and (b) audits and monitoring of billing,
claims, and coding processes by independent third party auditors acceptable to
the Administrative Agent and the Required Lenders and on such time frames as
required by law.


 


Section 6.20. 
Cash Management Systems.  The Credit Parties will establish and maintain the cash management
systems described below (the “Cash Management Systems”):


 


(a)                                         Each Credit Party shall (i) establish lock
boxes (“Lock Boxes”) and/or at Administrative Agent’s reasonable
discretion, lockbox or blocked accounts at one or more of the banks set forth
in Disclosure Schedule 6.20 (“Blocked Accounts”), and shall
request in writing and otherwise take such reasonable steps to ensure that all
Account Debtors forward payment directly to such Lock Boxes, and (ii) deposit
or cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof at Borrower’s offices in Boca
Raton, FL or North Aurora, IL, all cash, checks, drafts or other similar items
of payment relating to or constituting payments made in respect of any and all
Collateral (whether or not otherwise delivered to a Lock Box) into one or more
Blocked Accounts in such Credit Party’s name, but under the sole dominion and
control of Administrative Agent, and at a bank identified in Disclosure
Schedule 6.20 (each, a “Relationship Bank”).   Each Credit Party and each Related Person
thereof acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral are part of the Collateral.  All proceeds of the sale or other
disposition of any Collateral, shall be deposited directly into the applicable
Blocked Accounts, subject to the provisions of Section 2.8.


 


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


 


(c)                                        On or before the Closing Date, each bank
where a Disbursement Account is maintained and all Relationship Banks, shall
have entered into tri-party blocked account agreements with Administrative
Agent, for the benefit of the Lending Parties, and the Credit Parties, as
applicable, in form and substance reasonably acceptable to Administrative
Agent, which shall become operative on or prior to the Closing Date.  Each such blocked account


 


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agreement
shall provide, among other things, that (i) the bank acknowledges that all
items of payment deposited in such account and proceeds thereof deposited in
the applicable Blocked Account are subject to a security interest of the
Administrative Agent, on behalf of the Lending Parties, (ii) that the parties
to such blocked account agreement agree that the bank shall comply with the
instruction originated by Administrative Agent directing disposition of the
funds in the deposit account without further consent of the applicable Credit
Party, (iii) the bank executing such agreement has no rights of setoff or
recoupment or any other claim against such account, as the case may be, other
than for payment of its service fees and other charges directly related to the
administration of such account and for returned checks or other items of
payment, and (iv) from and after the Closing Date (A) with respect to banks at
which a Blocked Account is maintained, such bank agrees to forward immediately
all amounts in each Blocked Account to the Collection Account and to commence
the process of daily sweeps from such Blocked Account into the Collection
Account and (B) with respect to banks at which a Disbursement Account is
maintained, from and after the receipt of a notice (an “Activation Notice”)
from Administrative Agent (which Activation Notice may be given by
Administrative Agent at any time at which (1) a Default or Event of Default has
occurred and is continuing after its applicable cure period, (2) Administrative
Agent reasonably believes based upon information available to it that a Default
or an Event of Default is likely to occur; (3) Administrative Agent reasonably
believes that an event or circumstance that is likely to have a Material
Adverse Effect has occurred, or (4) Administrative Agent reasonably has grounds
to question the integrity of the Borrower’s Cash Management Systems or any
Credit Party’s compliance with the provisions of this Section 6.20 or any other provisions
of the Loan Documents to the extent related to such Cash Management Systems),
such bank agrees to forward immediately all amounts in such Disbursement
Account to the Collection Account and to commence the process of daily sweeps
from such Disbursement Account into the Collection Account.  No Credit Party shall accumulate or maintain
cash in Disbursement Accounts or payroll accounts as of any date of
determination in excess of (x) the aggregate amount of checks outstanding
against such accounts as of that date plus (y) all amounts necessary to meet
minimum balance requirements.


 


(d)                                        So long as no Default has occurred and is
continuing, the Borrower may amend Disclosure Schedule 6.20 to add
or replace a Relationship Bank, Lock Box or Blocked Account or to replace any
Disbursement Account; provided that (i) Administrative Agent shall have
consented, such consent not to be unreasonably withheld conditioned or delayed,
in writing in advance to the opening of such account or Lock Box with the
relevant bank and (ii) prior to the time of the opening of such account or Lock
Box, the applicable Credit Party, and such bank shall have executed and
delivered to Administrative Agent a tri-party blocked account agreement, in
form and substance reasonably satisfactory to Administrative Agent.


 


(e)                                        The Lock Boxes, Blocked Accounts, and
Disbursement Accounts shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which each Credit Party thereof shall
have granted a Lien to Agent, on behalf of the Lending Parties, pursuant to the
Security Agreement.


 


(f)                                          All amounts deposited in the Collection
Account shall be deemed received by Administrative Agent in accordance with Section 2.14 and shall be applied (and
allocated) by Administrative Agent in accordance with Section 2.10.  In no event shall any amount be so


 


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applied
unless and until such amount shall have been credited in immediately available
funds to the Collection Account.  Each
Credit Party shall and shall cause its Affiliates, officers, employees, agents,
directors or other Persons acting for or in concert with such Credit Party
(each a “Related Person”) to hold in trust for Administrative Agent, for
the benefit of the Lending Parties, all checks, cash and other items of payment
received by such Credit Party or any such Related Person.


 


Section 6.21.  SEC Filings.  The Credit Parties will file all documents
and accompanying certifications required by the Securities and Exchange
Commission within the time required to file such documents (the “SEC
Documents”).  Any material
restatement of the SEC Documents shall be an Event of Default.


 


ARTICLE VII.



NEGATIVE COVENANTS


 


So
long as any Lender has any Commitment hereunder or any Extension of Credit or
other Obligation remains outstanding, Borrower shall, and shall cause each
Credit Party to, comply with each of the covenants in this Article VII:


 


Section 7.1 
Indebtedness.  No Credit Party will, nor will it permit any
of its Subsidiaries to, contract, create, incur, assume or permit to exist any
Indebtedness, except:


 


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


 


(b)                                        Indebtedness existing as of the Closing Date
as set forth on Disclosure Schedule 7.1 (including renewal, refinancing
or extension of such Indebtedness provided that any such renewal, refinancing
or extension does not increase the principal amount of such Indebtedness
outstanding as of the date of such renewal, refinancing or extension, decrease
the weighted average life of such Indebtedness, increase the interest rate
beyond reasonable market rates in effect at the time of such renewal,
refinancing or extension and is not upon terms otherwise less favorable to such
Person than the Indebtedness being renewed, refinanced or extended);


 


(c)                                        (i) Indebtedness owing from one Credit Party
(other than the Parent) to another Credit Party and (ii) Indebtedness owing
from the Parent to the other Credit Parties in an amount not to exceed $250,000
in the aggregate during the term of this Agreement;


 


(d)                                        purchase money Indebtedness (including
Capital Leases but excluding Synthetic Leases) incurred by the Borrower or any
of its Subsidiaries to finance the purchase of fixed assets; provided that (i)
the aggregate total of all such Indebtedness for all such Persons (together
with the aggregate amount of all Indebtedness outstanding under
subsection (f) below) shall not exceed an aggregate principal amount of
$3,000,000 at any one time outstanding; (ii) such Indebtedness when incurred shall
not exceed the purchase price of the


 


85

















 


asset(s) financed; and
(iii) no such Indebtedness shall be refinanced for a principal amount in excess
of the principal balance outstanding thereon at the time of such refinancing;


 


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


 


(f)                                          Indebtedness (including Subordinated Debt but
excluding Synthetic Leases) assumed in connection with a Permitted Acquisition
(including renewals, refinancing or extensions of such Indebtedness in a
principal amount not in excess of that outstanding as of the date of such
renewal, refinancing or extension) so long as (i) such Indebtedness is not
incurred in anticipation of or in connection with such Permitted Acquisition
and the aggregate total of all such Indebtedness, together with the aggregate
amount of any Indebtedness outstanding under subsection (d) above, shall
not exceed an aggregate principal amount of $3,000,000 at any one time
outstanding;


 


(g)                                        Indebtedness in respect of performance,
surety or appeal bonds in the ordinary course of business; and


 


(h)                                        other unsecured Indebtedness of the Borrower
and its Subsidiaries in an aggregate principal amount (whether fixed or
contingent or drawn) not to exceed at any time $500,000.


 


Section 7.2 
Liens.    No Credit Party will, nor will it permit
its Subsidiaries to, contract, create, incur, assume or permit to exist any
Lien with respect to any of its property or assets of any kind (whether real or
personal, tangible or intangible), whether now owned or after acquired, except
for Permitted Liens.


 


Section 7.3 
Nature of Business.  No Credit Party will, nor will
it permit its Subsidiaries to, alter the character of its business from that,
or substantially similar to that, conducted as of the Closing Date or engage in
any business other than the business conducted as of the Closing Date with
reasonable extensions and expansions of such business.  Notwithstanding the foregoing, the Parent
will not engage in any operations whatsoever other than (a) owning all of the
Stock of the Borrower and obligations related thereto and otherwise permitted
hereunder and (b) guaranteeing the Obligations pursuant to the terms of this
Agreement and the other Loan Documents and performing its obligations hereunder
and thereunder.


 


Section 7.4 
Consolidation and Merger.  No
Credit Party will, nor will it permit its Subsidiaries to, enter into any
transaction of merger or consolidation or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution); provided that notwithstanding the
foregoing provisions of this Section 7.4, if (a) the Administrative Agent is given prior written notice of such
action, and the Credit Parties execute and deliver such documents, instruments,
certificates and opinions as the Administrative Agent may reasonably request,
including, without limitation, those necessary in order to maintain the
perfection and priority of the Liens on the assets of the Credit Parties and
(b) after giving effect thereto no Default or Event of Default exists, any
Subsidiary of the Borrower may be merged or consolidated with or into the
Borrower


 


86

















 


or another Subsidiary of
the Borrower; provided that if the transaction is between the Borrower and one
of its Subsidiaries, the Borrower must be the continuing or surviving entity.


 


Section 7.5  Sale
or Lease of Assets.  No Credit Party will, nor will
it permit any of its Subsidiaries to, convey, sell, lease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or
any part of its business or assets whether now owned or hereafter acquired,
including, without limitation, inventory, receivables, leasehold interests,
equipment and securities other than (a) any inventory or other assets sold,
leased, licensed or disposed of (including through commercial accommodations
and going out of business sales) in the ordinary course of business, (b)
obsolete, idle or worn-out assets no longer used or useful in its business, (c)
subject to Section 6.11 and the location of Collateral provisions set forth in the Loan
Documents, the sale, lease or transfer or other disposal by a Credit Party of
any or all of its assets to another Credit Party so long as (i) the Credit
Parties shall cause to be executed and delivered such documents, instruments
and certificates as the Administrative Agent may request in order to maintain the
perfection and priority of the Administrative Agent’s liens on the assets of
the Credit Parties as required by Section 6.11 and 6.12 and (ii) after giving effect to such transaction, no Default or Event of
Default exists, (d) the issuance of Stock by Parent pursuant to a follow-on
public offering, (e) the transfer of assets which constitute a Permitted
Investment and (f) other sales of assets, in addition to those permitted by the
other subsections of this Section 7.5, provided that (i) the sale is for fair market value, (ii) the sale is
for cash consideration, (iii) at the time of the sale (and after giving effect
thereto) no Default or Event of Default exists, (iv) as a result of such sale,
no Material Adverse Effect would occur or be reasonably expected to occur, (v)
the proceeds from such sale are, within 180 days from the date of such sale,
applied as a mandatory prepayment in accordance with Section 2.8(b)
or reinvested by the Credit
Parties in Eligible Assets and (vi) such sales do not exceed, in the aggregate,
$1,000,000 during the term of this Agreement.


 


Section 7.6  Advances,
Investments and Loans.   No Credit Party will, nor will it permit any
of its Subsidiaries to, make any Investments except for Permitted Investments.


 


Section 7.7 
Restricted Payments.  No Credit Party will, nor will
it permit any of its Subsidiaries to, directly or indirectly, declare or pay
any Restricted Payment except (a) to make dividends or other distributions
payable to any Credit Party (other than the Parent) (directly or indirectly
through Subsidiaries), (b) to purchase shares of (or options to purchase shares
of) equity securities from employees of any Credit Party upon their death,
termination or retirement in an amount not to exceed $500,000 during the term
of this Agreement, (c) the Borrower may make distributions directly or
indirectly to Parent to permit Parent to pay operating expenses; provided that
such distributions do not exceed $500,000 in the aggregate during any Fiscal
Year, (d) to purchase shares of (or options to purchase shares of) equity
securities from certain employees pursuant to the terms of the Employment
Agreements as in effect as of the Closing Date and (e) payments made by Credit
Parties to Credit Parties pursuant to the MSN Management and Administrative
Services Agreements and the MSN License Agreements provided that Borrower
shall demonstrate to the reasonable satisfaction of the Administrative Agent
that immediately before and after giving effect to any such payment, no Default
shall have occurred and is continuing and the Pro Forma Excess Availability is
not less than $5,000,000.


 


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Section 7.8 
Transactions with Affiliates. 
Except for (a) loans
or advances to employees and officers of a Credit Party or any of its
Subsidiaries (to the extent permitted by Section 7.6), (b) fees, compensation or employee benefit
arrangements paid to and indemnity provided on behalf of directors, officers or
employees of the Borrower and its Subsidiaries in the ordinary course of
business, (c) any employment agreement (including customary benefits
thereunder) that is entered into in the ordinary course of business, (d) any
dividend or other payment that is permitted by Section 7.7 and (e) any transactions between or among a
Credit Party and any of its Subsidiaries (to the extent otherwise permitted by
this Agreement), no Credit Party will, nor will it permit its Subsidiaries to,
enter into any transaction or series of transactions, whether or not in the
ordinary course of business, with any officer, director, shareholder,
Subsidiary or Affiliate other than on terms and conditions substantially as
favorable as would be obtainable in a comparable arm’s-length transaction with
a Person other than an officer, director, shareholder, Subsidiary or Affiliate.


 


Section 7.9 
Fiscal Year; Organizational Documents.  No
Credit Party will, nor will it permit any of its Subsidiaries to, (a) change
its fiscal year or (b) change its articles or certificate of incorporation (or
other similar organizational document) or its bylaws (or other similar
document) if such change would affect the Lenders in a materially adverse
manner.


 


Section 7.10 
Limitations.  No Credit Party will, nor will
it permit any of its Subsidiaries to, directly or indirectly, create or
otherwise cause, incur, assume, suffer or permit to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any
such Person to (a) pay dividends or make any other distribution on any of such
Person’s Stock, (b) pay any Indebtedness owed to the Borrower or any other
Credit Party, (c) make loans or advances to any Credit Party or (d) transfer
any of its property to any Credit Party, except for encumbrances or
restrictions existing under or by reason of (i) customary non-assignment or net
worth provisions in any lease governing a leasehold interest or customary
provisions in documents evidencing the transactions permitted by Section 7.1(d)
and (f), provided that any such encumbrance or
restriction relates only to the property which is the subject of such lease,
(ii) any agreement or other instrument of a Person existing at the time it
becomes a Subsidiary of a Credit Party; provided that such encumbrance or
restriction is not applicable to any other Person, or any property of any other
Person, other than such Person becoming a Subsidiary of a Credit Party and was
not entered into in contemplation of such Person becoming a Subsidiary of such
Credit Party, (iii) this Agreement and the other Loan Documents, (iv)
Applicable Law and (v) any agreement of the Borrower evidencing any unsecured
Indebtedness of the Borrower permitted under Section 7.1(i); provided that any such encumbrance or
restriction is not applicable to any Person other than the Borrower and does
not prohibit or otherwise restrict the rights and remedies of the
Administrative Agent and the Lenders in any manner whatsoever.


 


Section 7.11  Sale
Leasebacks.  No Credit Party will, nor will it permit any
of its Subsidiaries to, directly or indirectly become or remain liable as
lessee or as guarantor or other surety with respect to any lease of any
property (whether real or personal or mixed), whether now owned or hereafter
acquired, (a) which such Credit Party or Subsidiary has sold or transferred or
is to sell or transfer to any other Person other than a Credit Party or (b)
which such Credit Party or Subsidiary intends to use for substantially the same
purpose as any other property which has been sold or is to be sold or
transferred by a Credit Party or Subsidiary to any Person in connection with
such lease.


 


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Section 7.12 
Negative Pledges.  None of the Credit Parties will,
nor will it permit any of its Subsidiaries to, enter into, assume or become
subject to any agreement prohibiting or otherwise restricting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, or requiring the grant of any security for such obligation
if security is given for some other obligation; provided, however, the
Indebtedness incurred or assumed, as applicable, pursuant to Sections
7.1(d) and (f) may restrict the creation of any additional
Liens on the assets securing such Indebtedness.


 


Section 7.13 
Capital Expenditures.  The Credit Parties will not
permit aggregate Capital Expenditures for each period set forth below to exceed
the amount set forth opposite such period:


 


	
  Fiscal Quarter ending on or about December 31, 2003

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fiscal Year ending on or about December 31, 2004

  	
   

  	
  $

  	
  5,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fiscal Year ending on or about December 31, 2005

  	
   

  	
  $

  	
  5,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fiscal Year ending on or about December 31, 2006

  	
   

  	
  $

  	
  5,500,000

  	
   

  



 


Section 7.14 
Payments of Indebtedness, etc. 
No Credit Party will,
nor will it permit any of its Subsidiaries to, (a) after the issuance thereof,
amend or modify (or permit the amendment or modification of) any of the terms
of any Indebtedness if such amendment or modification would add or change any
terms in a manner materially adverse to the issuer of such Indebtedness, or
shorten the final maturity or average life to maturity or require any payment
to be made sooner than originally scheduled or increase the interest rate
applicable thereto or change any subordination provision thereof, (b) make or
offer to make any principal or interest payments with respect to Subordinated
Debt, (c) redeem or offer to redeem any of Subordinated Debt or (d) deposit any
funds intended to discharge Subordinated Debt. 
Notwithstanding any terms to the contrary contained herein, Subordinated
Debt may not be amended or modified in any manner that would adversely affect
the Lenders without the prior written consent of the Required Lenders.


 


Section 7.15 
Ownership of Subsidiaries; Limitations on Borrower.  Notwithstanding any other provisions of this Agreement to the contrary,
no Credit Party will, nor will it permit any of its Subsidiaries to, (a) permit
any Person (other than the Borrower or any Wholly-Owned Subsidiary of the
Borrower) to own any Stock of any Subsidiary of the Borrower, (b) permit any
Subsidiary of the Borrower to issue Stock (except to the Borrower or to a
Wholly-Owned Subsidiary of the Borrower), (c) permit, create, incur, assume or
suffer to exist any Lien thereon, (d) notwithstanding anything to the contrary
contained in clause (b) above, permit any Subsidiary of the Borrower to issue
any shares of preferred Stock, and (e) permit the sale of any Stock of any of
its Subsidiaries.


 


Section 7.16 
Earn-Out Obligations.   The Credit Parties will not
permit projected earn-out obligations in excess of $2,000,000 in the aggregate
at any one time in connection with Permitted Acquisitions.


 


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Section 7.17. 
Guaranteed Obligations.  No Credit Party shall create, incur, assume or permit to exist
any Guaranteed Obligations except (a) by endorsement of instruments or items of
payment for deposit to the general account of any Credit Party, and (b) for
Guaranteed Obligations incurred for the benefit of any other Credit Party if
the primary obligation is expressly permitted by this Agreement.


 


Section 7.18. 
ERISA.  No
Credit Party shall, or shall cause or permit any member of a Controlled Group
to, cause or permit to occur an event that could result in the imposition of a
Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or
cause or permit to occur an ERISA Event to the extent such ERISA Event could
reasonably be expected to have a Material Adverse Effect.


 


Section 7.19. 
Amendments or Waivers.  Without the prior written consent of the Administrative Agent and
the Required Lenders, no Credit Party will agree to (a) any amendment to or
waiver of or in respect of any Loan Documents, (b) any other material amendment
to or waiver of any material contract constituting a part of the Collateral
which could reasonably be expected to have a Material Adverse Effect on the
Credit Parties, or (c) any amendment or waiver of any document governing any
Subordinated Debt.


 


Section 7.20. 
Limitations on Holdings.  Holdings shall not, directly or indirectly, (i) enter into or
permit to exist any transaction or agreement (including any agreement for the
incurrence or assumption of Indebtedness, other than the Holdings Guaranty, any
purchase, sale, lease or exchange of any property or the rendering of any
service), between itself and any other Person, (ii) engage in any business or
conduct any activity (including the making of any Investment or payment) or
transfer any of its assets, other than Investments in the Borrower and the
performance of ministerial activities and payment of taxes and administrative
fees necessary for the compliance with the next succeeding sentence or (iii)
consolidate or merge with or into any other Person.  Holdings shall further preserve, renew and keep in full force and
effect its corporate existence and any rights, privileges and franchises
necessary or desirable in the conduct of its business, and shall comply in all
material respects with all material applicable laws, ordinances, rules,
regulations and requirements of Governmental Authorities.  Holdings shall have no direct Subsidiaries
other than the Borrower.


 


Section 7.21.  Limitations on Parent.  Parent shall not, directly
or indirectly, (i) enter into or permit to exist any transaction or agreement
(including any agreement for the incurrence or assumption of Indebtedness,
other than the Parent Guaranty, any purchase, sale, lease or exchange of any
property or the rendering of any service), between itself and any other Person,
provided that Parent may enter into transactions with Persons necessary
to complete a follow-on public offering (ii) engage in any business or conduct
any activity (including the making of any Investment or payment) or transfer
any of its assets, other than Investments in Holdings and the Borrower and the
performance of ministerial activities and payment of taxes and administrative
fees necessary for the compliance with the next succeeding sentence or (iii)
consolidate or merge with or into any other Person.  Parent shall further preserve, renew and keep in full force and
effect its corporate existence and any rights, privileges and franchises
necessary or desirable in the conduct of its business, and shall comply in all
material respects with all material applicable laws, ordinances, rules,
regulations and requirements of Governmental Authorities.  Parent shall have no direct Subsidiaries
other than the Holdings.


 


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ARTICLE VIII.



EVENTS OF DEFAULT


 


Section 8.1                                       Events of
Default. An Event of Default shall exist upon the occurrence of any of the
following specified events (each an “Event of Default”):


 


(a)                                         Payment.  Any Credit Party shall:


 


(i)                                           default
in the payment when due of any principal of any of the Loans or of any
reimbursement obligation arising from drawings under Letters of Credit; or


 


(ii)                                      default,
and such default shall continue for three or more Business Days, in the payment
when due of any interest on the Loans, or of any fees or other amounts owing
hereunder, under any of the other Loan Documents or in connection herewith.


 


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


 


(c)                                        Covenants.  Any Credit Party shall:


 


(i)                                           default
in the due performance or observance of any term, covenant or agreement
contained in Sections 6.1, 6.2, 6.3, 6.4, 6.6
through 6.21, Section 7; or


 


(ii)                                      default
in the due performance or observance by it of any term, covenant or agreement
contained in Section 5 and Section 6.5, and such default shall
continue unremedied for a period of 30 days; or


 


(iii)                                 default in the due
performance or observance by it of any term, covenant or agreement (other than
those referred to in subsections (a), (b) or (c)(i) or (ii) of this Section 8.1) contained in this Credit
Agreement and such default shall continue unremedied for a period of at least
10 days after the earlier of an executive officer of a Credit Party becoming
aware of such default or notice thereof given by the Administrative Agent.


 


(d)                                        Other
Loan Documents.  (i) Any Credit
Party shall default in the due performance or observance of any term, covenant
or agreement in any of the other Loan Documents and such default shall continue
unremedied for a period of at least 10 days after the earlier of an executive
officer of a Credit Party becoming aware of such default or notice thereof
given by the Administrative Agent, (ii) except pursuant to the terms thereof,
any Loan Document shall fail to be in full force and effect or any Credit Party
shall so assert or (iii) except pursuant to the terms thereof, any Loan
Document shall fail to give the Administrative Agent and/or the Lenders the
security interests, liens, rights, powers and privileges purported to be
created thereby.


 


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(e)                                        Bankruptcy,
etc.  The occurrence of any of the
following with respect to any Credit Party or any of their Subsidiaries:  (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order for relief in
respect of any Credit Party or any of their Subsidiaries in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appoint a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of any Credit Party or any of their
Subsidiaries or for any substantial part of its property or ordering the
winding up or liquidation of its affairs; or (ii) an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect is commenced against any Credit Party or any of their Subsidiaries and
such petition remains unstayed and in effect for a period of 60 consecutive
days; or (iii) any Credit Party or any of their Subsidiaries shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consent to the entry of an order for relief in
an involuntary case under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or any substantial part of its
property or make any general assignment for the benefit of creditors; or (iv)
any Credit Party or any of their Subsidiaries shall admit in writing its
inability to pay its debts generally as they become due or any action shall be
taken by such Person in furtherance of any of the aforesaid purposes.


 


(f)                                          Defaults
under Other Agreements.  With respect
to any Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) of a Credit Party or any of their Subsidiaries in an aggregate
principal amount in excess of $1,000,000, (i) a Credit Party or one of its
Subsidiaries shall (A) default in any payment (beyond the applicable grace
period with respect thereto, if any) with respect to any such Indebtedness, or
(B) default (after giving effect to any applicable grace period) in the
observance or performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event or condition shall occur or condition exist, the effect of which default
or other event or condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause
(determined without regard to whether any notice or lapse of time is required)
any such Indebtedness to become due prior to its stated maturity; (ii) any such
Indebtedness shall be declared due and payable, or required to be prepaid other
than by a regularly scheduled required prepayment prior to the stated maturity
thereof; or (iii) any such Indebtedness shall mature and remain unpaid.


 


(g)                                        Judgments.  One or more judgments, orders, or decrees
shall be entered against any Credit Party or any of its Subsidiaries involving
a liability of $1,000,000 or more, in the aggregate, (to the extent not paid or
covered by insurance provided by a carrier who has acknowledged coverage) and
such judgments, orders or decrees (i) are the subject of any enforcement
proceeding commenced by any creditor or (ii) shall continue unsatisfied,
undischarged and unstayed for a period ending on the first to occur of (A) the
last day on which such judgment, order or decree becomes final and unappealable
or (B) 60 days.


 


(h)                                        ERISA.  The occurrence of any of the following
events or conditions if such event or condition could involve possible taxes,
penalties and other liabilities in an aggregate amount in excess of $1,000,000:  (A) any “accumulated funding deficiency,” as
such term is defined in Section 302 of ERISA and Section 412 of the
Code, whether or not waived, shall exist with respect to any Plan, or any lien
shall arise on the assets of any Credit Party or any


 


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of their Subsidiaries or
any ERISA Affiliate in favor of the PBGC or a Plan; (B) a Termination Event
shall occur with respect to a Single Employer Plan, which is, in the reasonable
opinion of the Administrative Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA; (C) a Termination Event shall
occur with respect to a Multiemployer Plan or Multiple Employer Plan, which is,
in the reasonable opinion of the Administrative Agent, likely to result in (i)
the termination of such Plan for purposes of Title IV of ERISA, or (ii) any
Credit Party or any of their Subsidiaries or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency (within the meaning of
Section 4245 of ERISA) of such Plan; or (D) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the
Code) or breach of fiduciary responsibility shall occur which may subject any
Credit Party or any of their Subsidiaries or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Code, or under any agreement or other instrument pursuant
to which any Credit Party or any of their Subsidiaries or any ERISA Affiliate
has agreed or is required to indemnify any Person against any such liability.


 


(i)                                           Guaranties.  The guaranty given by the Credit Parties
hereunder or by any Additional Credit Party hereafter or any provision thereof
shall, except pursuant to the terms thereof, cease to be in full force and
effect, or any guarantor thereunder or any Person acting by or on behalf of
such guarantor shall deny or disaffirm such Guarantor’s obligations under such
guaranty.


 


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


 


Section 8.2                                       Acceleration;
Remedies.  Upon the occurrence of an
Event of Default, and at any time thereafter unless and until such Event of
Default has been waived in writing by the Required Lenders (and/or the Lenders,
the Required Revolving Lenders or the Required Term Lenders as may be required
pursuant to Section 11.5),
the Administrative Agent shall, upon the request and direction of the Required
Lenders (and/or the Lenders, the Required Revolving Lenders or the Required
Term Lenders as may be required pursuant to Section 11.5),
by written notice to the Borrower, take any of the following actions:


 


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


 


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


 


(c)                                        Cash
Collateral.  Direct the Borrower to
pay (and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 8.1(e),
it will immediately pay) to the Administrative Agent additional cash, to be
held by the Administrative Agent, for the benefit of the Lenders, in a cash
collateral account as additional security for the L/C Obligations in respect of
subsequent drawings under all then outstanding


 


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Letters of Credit in an
amount equal to the maximum aggregate amount which may be drawn under all
Letters of Credits then outstanding.


 


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


 


Notwithstanding
the foregoing, if an Event of Default specified in Section 8.1(e) shall occur, then the Commitments shall
automatically terminate and all Loans, all reimbursement obligations under
Letters of Credit, all accrued interest in respect thereof, all accrued and
unpaid fees and other indebtedness or obligations owing to the Lenders
hereunder shall immediately become due and payable without the giving of any
notice or other action by the Administrative Agent or the Lenders, which notice
or other action is expressly waived by the Credit Parties.


 


Notwithstanding
the fact that enforcement powers reside primarily with the Administrative
Agent, each Lender has, to the extent permitted by law, a separate right of
payment and shall be considered a separate “creditor” holding a separate
“claim” within the meaning of Section 101(5) of the Bankruptcy Code or any
other insolvency statute.


 


Section 8.3  Allocation of Payments After Event of Default.  Notwithstanding any other provisions of this
Credit Agreement, after the occurrence and during the continuance of an Event
of Default, all amounts collected or received by the Administrative Agent or
any Lender on account of amounts outstanding under any of the Loan Documents or
in respect of the Collateral shall be paid over or delivered as follows:


 


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


 


SECOND,
to payment of any fees owed to the Administrative Agent or the L/C Issuer;


 


THIRD,
to the extent of any amounts received as proceeds of the Revolving Loan
Collateral:


 


A.                                             to
the payment of any and all costs, liabilities and/or expenses incurred by the
Administrative Agent in connection with the collection or administration of the
Revolving Loan or the Revolving Loan Collateral;


 


B.                                             to
the payment of all amounts due to any L/C Issuer in respect of Letters of
Credit hereunder;


 


C.                                             to
the payment of all accrued interest (including interest accrued following the
filing of a petition under any bankruptcy law or any other federal, state


 


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or foreign (including any provincial) receivership,
insolvency relief or other law or laws for the relief of debtors), fees, costs,
liabilities and/or expenses payable to the Revolving Lenders hereunder in their
capacity as such;


 


D.                                            to
the payment of the outstanding principal amount of the Revolving Credit
Advances, to the payment or cash collateralization of the outstanding L/C
Obligations and to any principal amounts outstanding under Hedging Agreements
between a Credit Party and a Lender or an Affiliate of a Lender (to the extent,
but only to the extent, that such Hedging Agreement was incurred for the
purpose of hedging exposure with respect to the Term Loans), pro rata,
as set forth below; and


 


E.                                              to
the payment of any amounts described in clause FOURTH below, in the order and
manner set forth therein;


 


FOURTH,
to the extent of any amounts received as proceeds of the Term Loan Collateral:


 


A.                                             to
the payment of any and all costs, liabilities and/or expenses incurred by the
Administrative Agent in connection with the collection or administration of the
Term Loan or the Term Loan Collateral;


 


B.                                             to
the payment of all accrued interest (including interest accrued following the
filing of a petition under any bankruptcy law or any other federal, state or
foreign (including any provincial) receivership, insolvency relief or other law
or laws for the relief of debtors), fees, costs, liabilities and/or expenses payable
to the Term Lenders hereunder in their capacity as such;


 


C.                                             to
the payment of the outstanding principal amount of the Term Loans and to any
principal amounts outstanding under Hedging Agreements between a Credit Party
and a Lender or an Affiliate of a Lender (to the extent, but only to the
extent, that such Hedging Agreement was incurred for the purpose of hedging
exposure with respect to the Term Loans), pro rata, as set forth below; and


 


D.                                            to
the payment of any amounts described in clause THIRD above, in the order and
manner set forth therein;


 


FIFTH,
to the extent of any amounts received as proceeds of a sale of Stock:


 


A.                                             proceeds
in the amount attributable to the Accounts shall be applied as set forth in
clause “THIRD” above;


 


B.                                             proceeds
in the amount attributable to tangible assets shall be applied as set forth in
clause “FOURTH” above; and


 


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C.                                             any
remaining proceeds shall be applied as set forth in clause “SIXTH” below;


 


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


 


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


 


In
carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans,
L/C Obligations and obligations under Hedging Agreements of such Class held by
such Lender bears to the aggregate then outstanding Loans, L/C Obligations and
obligations under Hedging Agreements with respect to that Class held by all
Lenders) of amounts available to be applied pursuant to clauses “THIRD,”
“FOURTH,” “FIFTH,” and “SIXTH” above; and (c) to the extent that any amounts
available for distribution pursuant to clause “THIRD,” “FOURTH,” “FIFTH,” or
“SIXTH” above are attributable to the issued but undrawn amount of outstanding
Letters of Credit, such amounts shall be held by the Administrative Agent in a
cash collateral account and applied (x) first, to reimburse the L/C Issuer from
time to time for any drawings under such Letters of Credit and (y) then,
following the expiration of all Letters of Credit, to all other obligations of
the types described in clauses “THIRD”, “FOURTH,”  “FIFTH,” or “SIXTH” above in the manner provided in this Section 8.3.  If any Lending Party shall receive any
proceeds in contradiction of this Section 8.3,
such Lending Party shall forward such proceeds to Administrative Agent for
distribution pursuant to this Section 8.3.


 


ARTICLE IX.



EXPENSES AND INDEMNITIES


 


Section 9.1. 
Expenses. 
Whether or not the transactions contemplated hereby are consummated, the
Credit Parties, jointly and severally, agree (a) to pay on demand all fees,
costs and expenses (including reasonable attorneys’ fees and expenses and the
allocated cost of internal legal staff) incurred by Administrative Agent and
any appraisers, auditors and consultants retained by the Administrative Agent
in connection with (i) the examination, review, due diligence investigation,
documentation, negotiation, closing and syndication of the transactions
contemplated herein and in the Related Transactions Documents and in connection
with the continued administration of the Loan Documents including any
amendments, modifications, consents and waivers, (ii) creating, perfecting and
maintaining Liens pursuant to the Loan Documents, including filing and
recording fees and expenses, the costs of any bonds required to be posted in
respect of future filing and recording fees and expenses, and title
investigations and (iii) any matters contemplated by or arising out of the Loan
Documents, including the Administrative Agent’s customary field and desk audit
charges and the reasonable fees, expenses and disbursements of the
Administrative Agent or any accountants or other experts retained by the
Administrative Agent (including any affiliate of Administrative Agent as shall
be engaged for such purpose) in connection with accounting and collateral
audits or reviews


 


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of the Credit Parties and
their affairs, (b) to promptly pay reasonable documentation charges assessed
the Administrative Agent for amendments, waivers, consents and any of the
documentation prepared by the Administrative Agent’s internal legal staff, and
(c) to promptly pay all fees, costs and expenses (including attorneys’ fees and
expenses and the allocated cost of internal legal staff) incurred by the
Administrative Agent and Lenders in connection with any action to enforce any
Loan Document or to collect any payments due from Borrower or any other Credit
Party.  All fees, costs and expenses for
which any Credit Party is responsible under this Section 9.1 shall be deemed part of the Obligations when
incurred, and shall payable on demand in accordance with Section 2.14.


 


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


 


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


 


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


 


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


 


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


 


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


 


98

















 


Loans owing to such
Lender, together with interest accrued thereon, unless the Borrower, within
five (5) Business Days after the delivery of such notice and demand, converts
all such Loans into Base Rate Loans.


 


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


 


ARTICLE X.



THE ADMINISTRATIVE AGENT


 


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


 


99

















 


have assumed any
obligation toward or relationship of agency or trust with or for the Borrower
or any other Credit Party.  The
Administrative Agent, as collateral agent hereunder and under the Collateral
Documents, is hereby authorized to act on behalf of the Lenders, in its own
capacity and through other agents and sub-agents appointed by it, under the
Collateral Documents, provided that, unless otherwise expressly provided in
this Agreement, the Administrative Agent shall not agree to the release of any
Collateral, or any property encumbered by any mortgage, pledge or security
interests.  In connection with its role
as secured party with respect to the Collateral hereunder, the Administrative
Agent shall act as collateral agent, for itself and for the ratable benefit of
the Lenders and such role as collateral agent shall be disclosed on all
appropriate accounts, certificates, filings, mortgages, and other collateral
documentation.


 


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


 


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


 


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


 


Section 10.5. 
Consultation with Experts.  The Administrative Agent may consult with legal counsel (who may
be counsel for the Borrower), accountants and other experts selected by it and
shall not be liable for (a) any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts, or (b) any negligence or misconduct of any of its legal counsel,
accountants or other experts, provided that Administrative Agent has
exercised due care in the selection of such Persons.


 


Section 10.6. 
Liability of Administrative Agent.  Neither the Administrative Agent nor any of
its directors, officers, agents, representatives, employees or Affiliates shall
be


 


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


 


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


 


Section 10.8. 
Credit Decision. 
L/C Issuer and each Lender acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representation or warranty to it and that no act by
the Administrative Agent hereinafter taken, including any review of the affairs
of the Borrower or any other Credit Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to L/C Issuer or any
Lender.  L/C Issuer and each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent,
L/C Issuer or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and to make the Extensions of Credit hereunder.  L/C Issuer and each Lender also acknowledges
that it will, independently and without reliance upon the Administrative Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
connection with its taking or not taking any action under the Loan
Documents.  Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide L/C Issuer or any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Borrower or any
other Credit Party which may come into the possession


 


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of the Administrative
Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or affiliates.


 


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


 


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


 


Section 10.11.  Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default


 


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hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”.  In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give prompt notice thereof to the L/C
Issuer and the Lenders.  The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Lenders, the Required
Lenders, the Required Term Lenders, or the Required Revolving Lenders, as
appropriate; provided, that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the L/C Issuer and Lenders except to the extent that this
Agreement expressly requires that such action be taken, or not taken, only with
the consent or upon the authorization of the Lenders, the Required Lenders, the
Required Term Lenders, or the Required Revolving Lenders, or all of the
Lenders, as the case may be.


 


ARTICLE XI.



MISCELLANEOUS


 


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


 


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


 


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


 


Notices
shall be addressed as follows:


 


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  If to the Borrower:

  	
   

  	
  Medical Staffing Network, Inc.

  
	
   

  	
   

  	
  901 Yamato Road, Suite 110

  
	
   

  	
   

  	
  Boca Raton, Florida 33431

  
	
   

  	
   

  	
  Attention:  Robert J. Adamson

  
	
   

  	
   

  	
  Facsimile No: (561) 322-1202

  
	
   

  	
   

  	
  Telephone No. (561) 322-1302

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Steel Hector & Davis LLP

  
	
   

  	
   

  	
  1900 Phillips Point West

  
	
   

  	
   

  	
  777 South Flagler Drive

  
	
   

  	
   

  	
  West Palm Beach, FL 33401-6198

  
	
   

  	
   

  	
  Attention: Kim Hines, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (561) 655-1509

  
	
   

  	
   

  	
  Telephone No.: (561) 650-7297

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  General Electric Capital Corporation

  
	
   

  	
   

  	
  500 West Monroe, 29th Floor

  
	
   

  	
   

  	
  Chicago, Illinois 60661

  
	
   

  	
   

  	
  Attention: 
  Medical Staffing Network, Inc.

  Account Manager

  
	
   

  	
   

  	
  Facsimile No: (312) 441-7598

  
	
   

  	
   

  	
  Telephone No.: (312) 441-7196

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  General Electric Capital Corporation

  
	
   

  	
   

  	
  2 Bethesda Metro Center

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Bethesda, Maryland 20814

  
	
   

  	
   

  	
  Attention:  Legal Department

  
	
   

  	
   

  	
  Facsimile No: (301) 664-9866

  
	
   

  	
   

  	
  Telephone No.: (301) 664-9804

  



 


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


 


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


 


Section 11.5.  Amendments and Waivers.  Any provision of this Agreement or any other
Loan Document may be amended or waived only if such amendment or waiver is in
writing and is signed by: (x) in the case of this Agreement, the Borrower and
the Required Lenders or (y) in the case of any other Loan Document, the
Borrower and the Administrative


 


104

















 


Agent (with the consent
of the Required Lenders); provided, that no such amendment or waiver
shall, unless signed by:


 


(a)                                         all
the Lenders:


 


(i)                                           increase the aggregate Revolving Credit
Commitments or the Term Loans hereunder,


 


(ii)                                      change
the percentage of the Commitments or of the aggregate unpaid principal amount
of the Loans and Reimbursement Obligations which shall be required for the
Lenders or any of them to take any action under this Section or any other
provision of this Agreement,


 


(iii)                                 release all or
substantially all of the Collateral, or release all or substantially all of the
Guarantors, or


 


(iv)                                    amend
this Section 11.5 or the
definition of “Required Lenders,” “Required Revolving Lenders” or “Required
Term Lenders,”


 


(b)                                        all the Lenders affected thereby:


 


(i)                                           increase
or decrease any Commitment of any Lender (except for a ratable decrease in the
Commitments of all Lenders) or subject any Lender to any additional obligation,


 


(ii)                                      reduce
the principal of or rate of interest on any Obligation or the amount of any
Fees payable hereunder,


 


(iii)                                 postpone the date
fixed for any (A) payment of (1) principal of any Loan or Reimbursement
Obligation pursuant to Section 2.8 or otherwise waive, excuse or reduce the
amount of any scheduled payment,
(2) interest on any Loan or Reimbursement Obligation or (3) any fees hereunder,
or (B) termination of any Commitment,


 


(iv)                                    amend,
modify or waive the order of payment provisions set forth in Section 8.3
or the payment allocation provisions of Section 2.8, or


 


(v)                                         change
any provision of any Loan Document in a manner that by its terms adversely
affects the rights of the holders of the Loans or Commitments of any one Class
disproportionately than any other Class,


 


(c)                                        the
Required Revolving Lenders:


 


105

















 


(i)                                           amend,
modify or waive the definition of Borrowing Base or any component thereof or
any reserve requirement or any other requirement imposed pursuant to
Section 2.1(e),


 


(ii)                                      amend,
modify or waive any Borrowing Base or Collateral reporting requirement or
Collateral covenant affecting the Revolving Credit Collateral,


 


(iii)                                 to amend, modify or
waive any provision of Section 3.2 or any requirement relating to the
issuance or cash collateralization of the L/Cs, or


 


(iv)                                    to
release any Revolving Credit Collateral (except to the extent contemplated by
the Loan Documents),


 


(d)                                        the
Required Term Lenders:


 


(i)                                           to
release any Term Loan Collateral (except to the extent contemplated by the Loan
Documents),


 


provided that, if
the rights or duties of the Administrative Agent, the Swingline Lender or the
L/C Issuer are affected by any amendment, modification or waiver, by the
Administrative Agent, Swingline Lender or L/C Issuer, as applicable.


 


Section 11.6.  Successors
and Assigns; Registration.  (a)  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns (including any transferee of any Note or
other Obligation), except that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement without the prior written
consent of all Lenders.  Notwithstanding
the foregoing, in the absence of an Event of Default, each Lender covenants for
the benefit of the Borrower that it will not assign Loans, Obligations or the
Commitments (or any combination thereof) except with the prior written consent
of the Borrower and the Administrative Agent (which consent shall not be
unreasonably withheld or delayed), provided, that each Lender retains
the unrestricted right to transfer, sell or assign any or all of its interest
and obligations in the Loans and the Commitments without respect to this
sentence in the following cases: (i) to any Lender or any Affiliate of any
Lender; (ii) to any Person to the extent required to comply with any order,
directive or request from any Governmental Authority; (iii) to any Person in
connection with the sale by any Lender of all or any substantial portion of such
Lender’s corporate finance or healthcare capital portfolio; or (iv) to a
Qualified Assignee.  Any assignment made
pursuant to this Section 11.6
shall be made pursuant to an Assignment Agreement substantially in the form of Exhibit R (each such agreement referred to herein as an
“Assignment Agreement”).


 


(b)                                        Any
assignment shall be for an equal percentage of such assignor Lender’s Loans and
its Commitment, and any such assignee Lender shall, upon its registration in
the Note Register referred to below, become a “Lender” for all purposes
hereunder.  If such assignment is a
partial assignment, such assignment shall be in an amount at least equal to
$5,000,000 for Revolving Loans and $1,000,000 for Term Loans and, after giving
effect to any such partial assignment, a Lender assigning Revolving Loans shall
have retained Revolving Loan


 


106

















 


Commitments in an amount
at least equal to $5,000,000 and a Lender assigning Term Loans shall have
retained Term Loan Commitments in an amount at least equal to $1,000,000.  The Administrative Agent shall receive a fee
of $5,000 in connection with any such assignment (including, without
limitation, an assignment to an existing Lender).  Upon any such assignment, the assignor Lender shall be released
from its Commitments to the extent assigned to and assumed by the assignee
Lender.


 


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


 


(d)                                        Each
Lender may sell participations in all or any part of the Loans, its Notes, its
Commitments or its L/C Exposure.  Any
participation by a Lender shall be made with the understanding that all amounts
payable by the Borrower hereunder shall be determined as if that Lender had not
sold such participation, and that the holder of any such participation shall
not be entitled to require such Lender to take or omit to take any action
hereunder.  Neither the Borrower nor any
other Credit Party shall have any obligation or duty to any participant.  Neither the Administrative Agent, L/C Issuer
nor any Lender (other than the Lender selling a participation) shall have any
duty to any participant and may continue to deal solely with the Lender selling
a participation as if no such sale had occurred.  No Lender shall, as between the Borrower and that Lender, or
Administrative Agent and/or L/C Issuer and that Lender, be relieved of any of
its obligations hereunder as a result of any participation in all or any part
of the Loans, its Note, its Commitments or other Obligations.


 


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


 


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


 


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


 


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


 


THIS
SECURITY IS NOT BEING REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”).  THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO THE BORROWER, (2) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER THAT IS AWARE
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT.


 


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


 


Section 11.7. 
Setoff and Sharing of Payments.   Upon
the occurrence and during the continuance of any Event of Default, each Lender
(and each of its Affiliates) is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness any time owing by such Lender (or any of its
Affiliates) to or for the credit or the account of any Credit Party against any
and all of the Obligations held by such Lender, irrespective of whether such
Lender shall have made any demand under this Agreement or any Note or such
Obligations and although such Obligations may be unmatured.  Each Lender agrees promptly to notify the
Borrower and Administrative Agent after any such set-off and application made
by such Lender; provided, that the failure to give such notice shall not
affect


 


108

















 


the validity of such
set-off and application.  The rights of
each Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender may have.  If any Lender (a “Benefited
Lender”) shall at any time receive any payment of all or part of the Loans
or other Obligations or other amounts owing to it hereunder, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any such
payment to or Collateral received by any other Lender, if any, in respect of
such other Lender’s Loans, Obligations or other amounts owing to it hereunder,
or interest thereon, such Benefited Lender shall purchase for cash from the
other Lender(s) a participating interest in such portion of each such other
Lender’s Loans and other Obligations owing to it, or shall provide such other
Lender(s) with the benefits of any such Collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share the excess payment
or benefits of such Collateral or proceeds ratably with each of the Lenders; provided,
that if all or any such purchase shall be rescinded, and the purchase price and
benefits are thereafter recovered from such Benefited Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. 
Each Credit Party agrees that any Lender so purchasing a participation
from any other Lender pursuant to this Section 11.7
may, to the fullest extent permitted by law, and notwithstanding the provisions
of Section 11.6(d), exercise
all of its rights of payment (including the right of set-off) with respect to
such participation as fully as if such purchasing Lender were the direct
creditor of such Credit Party in the amount of such participation.


 


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


 


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


 


Section 11.10. 
Governing Law; Submission To Jurisdiction.  THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.  EACH OF THE BORROWER AND THE OTHER CREDIT
PARTIES PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.  EACH OF THE
BORROWER AND THE OTHER CREDIT PARTIES PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. 
EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN
THE


 


109

















 


MANNER
PROVIDED FOR NOTICES IN SECTION 11.3. 
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS
AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.


 


Section 11.11. 
Notice of Breach by Agents or Lender.  The Credit Parties party hereto agree to give the
Administrative Agent and the Lenders notice of any action or inaction by the
Administrative Agent or any Lender or any agent or attorney of the
Administrative Agent or any Lender in connection with this Agreement or any
other Loan Document or the Obligations of the Credit Parties under this
Agreement or any other Loan Document that may be actionable against the
Administrative Agent or any Lender or any agent or attorney of the
Administrative Agent or any Lender or a defense to payment of any Obligations
of the Credit Parties under this Agreement or any other Loan Document for any
reason, including commission of a tort or violation of any contractual duty or
duty implied by law.  The Credit Parties
party hereto agree, to the fullest extent that they may lawfully do so, that
unless such notice is given promptly (and in any event within ten (10) Business
Days after any Credit Party has knowledge, or with the exercise of reasonable
diligence could have had knowledge, of any such action or inaction), no Credit
Party shall assert, and each Credit Party shall be deemed to have waived, any
claim or defense arising therefrom to the extent that the Administrative Agent
or any Lender could have mitigated such claim or defense after receipt of such
notice.


 


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


 


Section 11.13. 
Counterparts; Entire Agreement.  This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.  This Agreement and the other Loan Documents
(including any fee letters between Administrative and one or more of the Credit
Parties including the GE Capital Fee Letter) constitute the entire agreement
and understanding among the parties hereto and supersede any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.


 


Section 11.14. 
Confidentiality; Press Release.  (a)                                                     Any
confidential information from time to time delivered to Administrative Agent
and/or the Lenders by the Borrower or any other Credit Party which is not in
the public domain shall be held by  such
Agent or such Lender as confidential; provided, that the Administrative
Agent and each Lender may make disclosure of such information (i) to its
independent accountants and legal counsel (which Persons shall be likewise
bound by the provisions of this Section 11.14),
(ii) pursuant to statutory and regulatory requirements, (iii) pursuant to any
mandatory court order or subpoena or in connection with any


 


110

















 


legal process, (iv)
pursuant to any written agreement hereafter made between the Administrative
Agent, any Lender and the Borrower or any other Credit Party to which such
information relates, which agreement permits such disclosure, (v) as necessary
in connection with the exercise of any remedy by Administrative Agent or any
Lender under the Loan Documents, (vi) consisting of general portfolio
information that does not identify any Credit Party, (vii) which was heretofore
been publicly disclosed or is otherwise available to such Agent and/or Lender
on a non-confidential basis from a source that is not, to its knowledge,
subject to a confidentiality agreement with any Credit Party, (viii) in
connection with any litigation to which Administrative Agent or any Lender or
its Affiliates is a party, or (ix) subject to an agreement containing
provisions substantially the same as those set forth in this Section 11.14, to any assignee of or
participant in, or prospective assignee of or participant in, any of the
Obligations.  Notwithstanding anything
to the contrary set forth herein or in any other agreement to which the parties
hereto are parties or by which they are bound, the obligations of
confidentiality contained herein and therein, as they relate to the
transactions contemplated by the Credit Agreement and the other Loan Documents
(the “Transaction”), shall not apply to the federal tax structure or
federal tax treatment of the Transaction, and each party hereto (and any
employee, representative, agent of any party hereto) may disclose to any and
all persons, without limitation of any kind, the federal tax structure and
federal tax treatment of the Transaction. 
The preceding sentence is intended to cause the Transaction to be
treated as not having been offered under conditions of confidentiality for
purposes of Section 1.6011-4(b)(3) (or any successor provision) of the
Treasury Regulations promulgated under Section 6011 of the Internal
Revenue Code of 1986, as amended, and shall be construed in a manner consistent
with such purpose.  In addition, each
party hereto acknowledges that it has no proprietary or exclusive rights to the
federal tax structure of the Transaction or any federal tax matter or federal
tax idea related to the Transaction.


 


(b)                                        No
Credit Party or Affiliate thereof will in the future issue any press releases
or other public disclosure using the name of GE Capital or its Affiliates or
any other Lender or its Affiliates or referring to this Agreement or the other
Loan Documents without at least two (2) Business Days’ prior notice to GE
Capital and without the prior written consent of GE Capital unless (and only to
the extent that) such Credit Party or Affiliate is required to do so under law
and then, in any event, such Credit Party or Affiliate will consult with GE
Capital before issuing such press release or other public disclosure.  Each Credit Party consents to the
publication by Administrative Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by
this Agreement. Administrative Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.


 


Section 11.15. 
Reinstatement. 
This Agreement shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Credit Party for
liquidation or reorganization, should any Credit Party become insolvent or make
an assignment for the benefit of any creditor or creditors or should a receiver
or trustee be appointed for all or any significant part of any Credit Party’s
assets or properties, and shall continue to be effective or to be reinstated,
as the case may be, if at any time payment and performance of the Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment or


 


111

















 


performance had not been
made.  In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.


 


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


 


Section 11.17. 
No Strict Construction.  The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and the other Loan Documents.  In the event any ambiguity or question of
intent or interpretation arises, this Agreement and the other Loan Documents
shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.


 


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


 


 


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112

















 


IN WITNESS
WHEREOF, the parties
hereto have caused this Credit Agreement to be duly executed by their
respective authorized representatives on the date first above written.


 


	
   

  	
  MEDICAL STAFFING NETWORK, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT ADAMSON

  
	
   

  	
  Name:

  	
  Robert Adamson

  
	
   

  	
  Title:

  	
  Chairman and CEO

  



 


 


	
   

  	
  Borrower Account Information:

  
	
   

  	
   

  	
   

  
	
   

  	
  Borrower Account Information:

  
	
   

  	
  Bank’s Name and Address:

  
	
   

  	
  Bank of America

  
	
   

  	
  Jacksonville, FL

  
	
   

  	
  Account#3662599422

  
	
   

  	
  ABA# 026009593 (for wire transfers)

  
	
   

  	
  ABA# 063100277 (for ACH transfers)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT PARTIES:

  
	
   

  	
   

  
	
   

  	
  MEDICAL STAFFING NETWORK
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT ADAMSON

  
	
   

  	
  Name:

  	
  Robert Adamson

  
	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL STAFFING HOLDINGS, LLC

  
	
   

  	
  By:

  	
  Medical Staffing Network Holdings, Inc., as its sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT ADAMSON

  
	
   

  	
  Name:

  	
  Robert Adamson

  
	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  



 


 


 


113 

















 


	
   

  	
  MSN-ILLINOIS HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEVIN LITTLE

  
	
   

  	
  Name:

  	
  Kevin Little

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL STAFFING NETWORK OF
  ILLINOIS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEVIN LITTLE

  
	
   

  	
  Name:

  	
  Kevin Little

  
	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDICAL STAFFING NETWORK ASSETS,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEVIN LITTLE

  
	
   

  	
  Name:

  	
  Kevin Little

  
	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AGENT AND LENDERS:

  
	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC CAPITAL
  CORPORATION, as Lender and as Administrative Agent

  
	
   

  	
   

  
	
  Revolving Credit

  	
  By:

  	
  /s/ DON C. LEE

  
	
  Commitment: 
  $45,000,000

  	
   

  	
   

  
	
  Term Loan

  	
  Its Duly Authorized Signatory:

  
	
  Commitment: 
  $17,000,000

  	
  Don C. Lee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Payment Account Information:

  
	
   

  	
  Deutsche Bank/Banker’s Trust

  
	
   

  	
  New York, NY

  
	
   

  	
  ABA# 021-001-033

  
	
   

  	
  Acct. Name:  HH Cash Flow
  Collections

  
	
   

  	
  Acct# 50-271-079

  
	
   

  	
  Ref:  Medical Staffing
  Network, Inc.

  
	
   

  	
   

  



 


 


114

















 


	
   

  	
  LASALLE BANK NATIONAL

  ASSOCIATION, as Lender

  
	
   

  	
   

  
	
  Revolving Loan

  	
  By:

  	
  /s/ KERRY WARD

  	
   

  
	
  Commitment: 
  $20,000,000

  	
  Name:

  	
  Kerry Ward

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Payment Account Information:

  
	
   

  	
  Chase Bank

  
	
   

  	
  New York, New York

  
	
   

  	
  Account Name: Special Situations Investing

  
	
   

  	
  Group, Inc.

  
	
   

  	
  Account#: 066906601

  
	
   

  	
  ABA#:021000021

  
	
   

  	
  Ref: Medical Staffing Network, Inc.

  
						



 


115