Exhibit 10.1


 




 


 





DEBTOR IN POSSESSION


CREDIT AGREEMENT


 


DATED AS OF MARCH 30,
2006


 


 


AMONG


 


CURATIVE HEALTH
SERVICES, INC.,


AS BORROWER
REPRESENTATIVE,


 


THE BORROWERS SIGNATORY
HERETO,


 


THE LENDERS REFERRED TO
HEREIN,


 


GECC CAPITAL MARKETS
GROUP, INC.,


AS LEAD ARRANGER


 


AND


 


GENERAL ELECTRIC
CAPITAL CORPORATION,


AS AGENT




 


 





 

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
  ARTICLE I. DEFINITIONS

  	
  2

  
	
   

  	
  Section 1.1.
  Certain Defined Terms

  	
  2

  
	
   

  	
  Section 1.2.
  Accounting Terms and Determinations

  	
  36

  
	
   

  	
  Section 1.3. Other
  Definitional Provisions

  	
  36

  
	
   

  	
  Section 1.4.
  Disclosure Schedules

  	
  37

  
	
  ARTICLE II. THE FACILITIES

  	
  37

  
	
   

  	
  Section 2.1. The Facilities

  	
  37

  
	
   

  	
  Section 2.2. Notes

  	
  38

  
	
   

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

  	
  38

  
	
   

  	
  Section 2.4.
  Interest on Loans

  	
  40

  
	
   

  	
  Section 2.5. Letters of Credit

  	
  41

  
	
   

  	
  Section 2.6.
  Swingline Loans

  	
  48

  
	
   

  	
  Section 2.7.
  Certain Fees

  	
  51

  
	
   

  	
  Section 2.8. Mandatory Prepayments

  	
  52

  
	
   

  	
  Section 2.9. Optional Prepayments

  	
  53

  
	
   

  	
  Section 2.10. Application of Payments

  	
  53

  
	
   

  	
  Section 2.11. Reduction of Commitments

  	
  54

  
	
   

  	
  Section 2.12. Loan Account and Accounting

  	
  54

  
	
   

  	
  Section 2.13.
  Computation of Interest and Fees

  	
  54

  
	
   

  	
  Section 2.14.
  General Provisions Regarding Payments

  	
  55

  
	
   

  	
  Section 2.15.
  Maximum Interest

  	
  55

  
	
   

  	
  Section 2.16.
  Additional Borrowers

  	
  56

  
	
  ARTICLE III.
  CONDITIONS

  	
  57

  
	
   

  	
  Section 3.1.
  Conditions to Closing

  	
  57

  
	
   

  	
  Section 3.2.
  Conditions to Each Extension of Credit

  	
  60

  
	
  ARTICLE IV. REPRESENTATIONS AND WARRANTIES

  	
  60

  
	
   

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

  	
  60

  
	
   

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

  	
  61

  
	
   

  	
  Section 4.3.
  Organizational and Governmental Approvals; No Contravention

  	
  61

  
	
   

  	
  Section 4.4.
  Binding Effect; Liens of Collateral Documents

  	
  61

  
	
   

  	
  Section 4.5. Financial Statements

  	
  61

  
	
   

  	
  Section 4.6. Material Adverse Effect

  	
  62

  
	
   

  	
  Section 4.7. Litigation

  	
  62

  
	
   

  	
  Section 4.8. Full Disclosure

  	
  62

  
	
   

  	
  Section 4.9. No Adverse Fact

  	
  63

  
	
   

  	
  Section 4.10. Ownership of Property, Liens

  	
  63

  
	
   

  	
  Section 4.11. Environmental Laws

  	
  63

  
	
   

  	
  Section 4.12. ERISA

  	
  63

  
	
   

  	
  Section 4.13. Subsidiaries Capitalization

  	
  63

  
	
   

  	
  Section 4.14. Government Regulations

  	
  64

  



 


i

















 


	
   

  	
  Section 4.15. Margin Regulations

  	
  64

  
	
   

  	
  Section 4.16. Taxes

  	
  64

  
	
   

  	
  Section 4.17. Intellectual Property

  	
  64

  
	
   

  	
  Section 4.18.
  Reserved

  	
  65

  
	
   

  	
  Section 4.19. Insurance

  	
  65

  
	
   

  	
  Section 4.20. Brokers

  	
  65

  
	
   

  	
  Section 4.21.
  Compliance with HIPAA

  	
  65

  
	
  ARTICLE V. REPORTING COVENANTS

  	
  66

  
	
   

  	
  Section 5.1.
  Financial Statements and Other Reports

  	
  66

  
	
   

  	
  Section 5.2. Collateral
  Reports

  	
  68

  
	
   

  	
  Section 5.3.
  Financial Statements and Other Reports

  	
  70

  
	
  ARTICLE VI.
  AFFIRMATIVE COVENANTS

  	
  72

  
	
   

  	
  Section 6.1.
  Payment of Obligations

  	
  72

  
	
   

  	
  Section 6.2.
  Conduct of Business and Maintenance of Existence

  	
  72

  
	
   

  	
  Section 6.3.
  Maintenance of Assets and Properties

  	
  72

  
	
   

  	
  Section 6.4.
  Insurance; Damage to or Destruction of Collateral

  	
  72

  
	
   

  	
  Section 6.5.
  Compliance with Laws

  	
  74

  
	
   

  	
  Section 6.6.
  Inspection of Property, Books and Records

  	
  74

  
	
   

  	
  Section 6.7.
  Supplemental Disclosure

  	
  75

  
	
   

  	
  Section 6.8. Use
  of Proceeds

  	
  75

  
	
   

  	
  Section 6.9.
  Further Assurances

  	
  76

  
	
   

  	
  Section 6.10.
  Reserved.

  	
  76

  
	
   

  	
  Section 6.11.
  Environmental Matters

  	
  76

  
	
   

  	
  Section 6.12.
  Landlord and Warehouseman Waivers

  	
  77

  
	
   

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

  	
  77

  
	
   

  	
  Section 6.14.
  Additional Subsidiaries

  	
  78

  
	
   

  	
  Section 6.15.
  Compliance Program

  	
  79

  
	
   

  	
  Section 6.16. Cash
  Management Systems

  	
  79

  
	
   

  	
  Section 6.17.
  Accreditation and Licensing

  	
  81

  
	
   

  	
  Section 6.18. [Reserved]

  	
  81

  
	
   

  	
  Section 6.19. [Reserved]

  	
  81

  
	
  ARTICLE VII. NEGATIVE COVENANTS

  	
  81

  
	
   

  	
  Section 7.1.
  Indebtedness

  	
  82

  
	
   

  	
  Section 7.2.
  Liens; Negative Pledges

  	
  83

  
	
   

  	
  Section 7.3.
  Guaranteed Obligations

  	
  84

  
	
   

  	
  Section 7.4.
  Capital Stock; Nature of Business

  	
  84

  
	
   

  	
  Section 7.5.
  Restricted Payments

  	
  85

  
	
   

  	
  Section 7.6. No
  Restrictions on Subsidiary Distributions to the Borrowers

  	
  85

  
	
   

  	
  Section 7.7. ERISA

  	
  85

  
	
   

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

  	
  85

  
	
   

  	
  Section 7.9.
  Purchase of Assets; Investments

  	
  86

  
	
   

  	
  Section 7.10.
  Transactions with Affiliates

  	
  86

  
	
   

  	
  Section 7.11.
  Amendments or Waivers

  	
  86

  
	
   

  	
  Section 7.12.
  Fiscal Year

  	
  86

  
	
   

  	
  Section 7.13.
  Capital Expenditures

  	
  87

  
	
   

  	
  Section 7.14.
  Lease Limits

  	
  87

  



 


ii

















 


	
   

  	
  Section 7.15.
  Total Leverage Ratio

  	
  87

  
	
   

  	
  Section 7.16.
  Senior Secured Leverage Ratio

  	
  87

  
	
   

  	
  Section 7.17.
  Fixed Charge Coverage Ratio

  	
  87

  
	
   

  	
  Section 7.18. Pro Forma Adjustments.

  	
  88

  
	
   

  	
  Section 7.19.
  Accounts Receivable DSO

  	
  89

  
	
   

  	
  Section 7.20.
  Sale-Leasebacks

  	
  89

  
	
  ARTICLE VIII. EVENTS OF DEFAULT

  	
  89

  
	
   

  	
  Section 8.1.
  Events of Default

  	
  89

  
	
   

  	
  Section 8.2.
  Remedies

  	
  93

  
	
   

  	
  Section 8.3.
  Waivers by Credit Parties

  	
  94

  
	
  ARTICLE IX. EXPENSES AND INDEMNITIES

  	
  94

  
	
   

  	
  Section 9.1.
  Expenses

  	
  94

  
	
   

  	
  Section 9.2.
  Indemnity

  	
  95

  
	
   

  	
  Section 9.3. Taxes

  	
  96

  
	
   

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

  	
  96

  
	
  ARTICLE X. THE AGENT

  	
  97

  
	
   

  	
  Section 10.1.
  Appointment and Authorization

  	
  97

  
	
   

  	
  Section 10.2.
  Delegation of Duties

  	
  98

  
	
   

  	
  Section 10.3.
  Agent and Affiliates

  	
  98

  
	
   

  	
  Section 10.4.
  Action by Agent

  	
  98

  
	
   

  	
  Section 10.5.
  Consultation with Experts

  	
  98

  
	
   

  	
  Section 10.6. Liability
  of Agent

  	
  98

  
	
   

  	
  Section 10.7.
  Indemnification

  	
  99

  
	
   

  	
  Section 10.8.
  Credit Decision

  	
  99

  
	
   

  	
  Section 10.9.
  Successor Agent

  	
  99

  
	
   

  	
  Section 10.10.
  Reliance by Agent

  	
  100

  
	
   

  	
  Section 10.11.
  Notice of Default

  	
  100

  
	
  ARTICLE XI. MISCELLANEOUS

  	
  101

  
	
   

  	
  Section 11.1.
  Survival

  	
  101

  
	
   

  	
  Section 11.2. No
  Waivers; Remedies Cumulative

  	
  101

  
	
   

  	
  Section 11.3.
  Notices

  	
  101

  
	
   

  	
  Section 11.4.
  Severability

  	
  102

  
	
   

  	
  Section 11.5.
  Amendments and Waivers

  	
  103

  
	
   

  	
  Section 11.6.
  Successors and Assigns; Registration

  	
  103

  
	
   

  	
  Section 11.7.
  Setoffs and Sharing of Payments

  	
  105

  
	
   

  	
  Section 11.8.
  Collateral

  	
  106

  
	
   

  	
  Section 11.9.
  Headings

  	
  106

  
	
   

  	
  Section 11.10.
  Governing Law; Submission To Jurisdiction

  	
  106

  
	
   

  	
  Section 11.11.
  Notice of Breach by Agent or Lender

  	
  106

  
	
   

  	
  Section 11.12.
  Waiver Of Jury Trial

  	
  107

  
	
   

  	
  Section 11.13. Counterparts;
  Entire Agreement

  	
  107

  
	
   

  	
  Section 11.14.
  Confidentiality; Press Release

  	
  107

  
	
   

  	
  Section 11.15.
  Reinstatement

  	
  108

  
	
   

  	
  Section 11.16.
  Advice of Counsel

  	
  108

  
	
   

  	
  Section 11.17. No
  Strict Construction

  	
  108

  
	
   

  	
  Section 11.18.
  Conflict of Terms

  	
  109

  



 


iii

















 


	
   

  	
  Section 11.19.
  Reserved

  	
  109

  
	
   

  	
  Section 11.20. New
  Lenders

  	
  109

  
	
  ARTICLE XII. CROSS-GUARANTY

  	
  109

  
	
   

  	
  Section 12.1.
  Cross-Guaranty

  	
  109

  
	
   

  	
  Section 12.2.
  Waivers by Borrowers

  	
  110

  
	
   

  	
  Section 12.3.
  Benefit of Guaranty

  	
  110

  
	
   

  	
  Section 12.4.
  Subordination of Subrogation, Etc.

  	
  110

  
	
   

  	
  Section 12.5.
  Election of Remedies

  	
  110

  
	
   

  	
  Section 12.6.
  Limitation

  	
  111

  
	
   

  	
  Section 12.7.
  Contribution with Respect to Guaranty Obligations

  	
  111

  
	
   

  	
  Section 12.8.
  Liability Cumulative

  	
  112

  
	
  ARTICLE XIII. SPECIAL BANKRUPTCY PROVISIONS

  	
  112

  
	
   

  	
  Section 13.1.
  Post-Petition Security

  	
  112

  
	
   

  	
  Section 13.2.
  Liens Perfected without Filing Or Recording

  	
  112

  
	
   

  	
  Section 13.3.
  Relief from Stay.

  	
  113

  
	
   

  	
  Section 13.14.
  Extension of Post-Petition Credit and Other Remedies of Lenders

  	
  113

  
	
   

  	
  Section 13.5. Plan
  of Reorganization

  	
  113

  
	
   

  	
  Section 13.6.
  Disavowal and Waiver of Any Subsequent Relief Based on Changed Circumstances

  	
  114

  
	
   

  	
  Section 13.7.
  Exclusive Remedy For Any Alleged Post-Petition Claim

  	
  115

  
	
   

  	
  Section 13.8.
  Prohibition on Priming of the Liens of Lender
  on the Collateral

  	
  115

  
	
   

  	
  Section 13.9.
  Marshalling Obligations

  	
  115

  



 


iv

















 


	
  EXHIBIT A

  	
  -

  	
  Revolving Note

  
	
  EXHIBIT B

  	
  -

  	
  [Reserved]

  
	
  EXHIBIT C

  	
  -

  	
  Swingline Note

  
	
  EXHIBIT D-1

  	
  -

  	
  Notice of Borrowing

  
	
  EXHIBIT D-2

  	
  -

  	
  Notice of Swingline Borrowing

  
	
  EXHIBIT E

  	
  -

  	
  Borrower Security Agreement

  
	
  EXHIBIT F

  	
  -

  	
  Borrower Pledge Agreement

  
	
  EXHIBIT G

  	
  -

  	
  Subsidiary Guaranty Agreement

  
	
  EXHIBIT H

  	
  -

  	
  Guarantor Security Agreement

  
	
  EXHIBIT I

  	
  -

  	
  Opinion of Counsel to the Credit Parties

  
	
  EXHIBIT J

  	
  -

  	
  [Reserved]

  
	
  EXHIBIT K

  	
  -

  	
  Closing Checklist

  
	
  EXHIBIT L

  	
  -

  	
  Assignment Agreement

  
	
  EXHIBIT M

  	
  -

  	
  HIPAA Business Associate Agreement

  
	
  EXHIBIT N

  	
  -

  	
  [Reserved]

  
	
  EXHIBIT O

  	
  -

  	
  Form of Borrowing Base Certificate

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 5.1(b)

  	
   

  	
  Compliance Certificate (Annual)

  
	
  EXHIBIT 5.1(n)

  	
   

  	
  Compliance Certificate (Monthly)

  



 


	
  DISCLOSURE SCHEDULE 1.1

  	
  -

  	
  [Reserved]

  
	
  DISCLOSURE SCHEDULE 2.5(l).

  	
  -

  	
  Existing L/Cs

  
	
  DISCLOSURE SCHEDULE 4.5(a)

  	
  -

  	
  Financial Statements

  
	
  DISCLOSURE SCHEDULE 4.5(b)

  	
  -

  	
  Borrowers’ Financial Budget

  
	
  DISCLOSURE SCHEDULE 4.7

  	
  -

  	
  Litigation

  
	
  DISCLOSURE SCHEDULE 4.13

  	
  -

  	
  Subsidiaries, Other Equity Investments

  
	
  DISCLOSURE SCHEDULE 4.19

  	
  -

  	
  Insurance Policies

  
	
  DISCLOSURE SCHEDULE 6.15

  	
  -

  	
  Compliance Program

  
	
  DISCLOSURE SCHEDULE 6.16(a)

  	
  -

  	
  Government Receivables Deposit Accounts and Concentration Account

  
	
  DISCLOSURE SCHEDULE 6.16(c)

  	
  -

  	
  Blocked Accounts

  
	
  DISCLOSURE SCHEDULE 7.1

  	
  -

  	
  Indebtedness

  
	
  DISCLOSURE SCHEDULE 7.2

  	
  -

  	
  Effective Date Liens

  
	
  DISCLOSURE SCHEDULE 7.4

  	
  -

  	
  Capital Structure

  
	
  DISCLOSURE SCHEDULE 7.9

  	
  -

  	
  Existing Investments

  
	
  DISCLOSURE SCHEDULE 7.10(b)

  	
  -

  	
  Existing Loans to Employees

  



 


v

















 


DEBTOR IN POSSESSION


CREDIT AGREEMENT


 


This DEBTOR IN POSSESSION CREDIT AGREEMENT, dated
as of March 30, 2006 (the “Agreement”),
among CURATIVE HEALTH SERVICES, INC.,
a Minnesota corporation formerly known as Curative Holding Co. (“Holdings”), EBIOCARE.COM, INC., a Delaware corporation (“Ebiocare”), HEMOPHILIA ACCESS, INC., a Tennessee corporation (“Hemophilia Access”), APEX THERAPEUTIC CARE, INC., a
California corporation (“Apex”), CHS SERVICES, INC., a Delaware
corporation (“CHS”), CURATIVE HEALTH SERVICES CO., a Minnesota
corporation formerly known as Curative Health Services, Inc. (“CHSC”),
CURATIVE HEALTH SERVICES OF NEW YORK, INC., New York
corporation (“CHSNY”), OPTIMAL CARE PLUS, INC., a Delaware
corporation (“Optimal Care”), INFINITY INFUSION, LLC, a Delaware limited
liability company (“Infinity”), INFINITY INFUSION II, LLC, a Delaware
limited liability company (“Infinity II”),
INFINITY INFUSION CARE, LTD., a
Texas limited partnership (“Infinity Infusion”),
MEDCARE, INC., a Delaware
corporation (“Medcare”), CURATIVE PHARMACY SERVICES, INC., a
Delaware corporation (“CPS”), CRITICAL CARE SYSTEMS, INC., a
Delaware corporation (“CCS”), any
Additional Borrowers that hereafter may from time to time become a party
hereto pursuant to Section 2.16
hereof (Holdings, Ebiocare, Hemophilia Access, Apex, CHS, CHSNY, CHSC, Optimal
Care, Infinity, Infinity II, Infinity Infusion, Medcare, CPS, CCS and such
Additional Borrowers are sometimes collectively referred to herein as the “Borrowers” and individually as a “Borrower”), the Lenders listed on the signature pages hereof, and GENERAL ELECTRIC CAPITAL CORPORATION, as
Agent.


 


INTRODUCTORY STATEMENT


 


A.                                   The
Borrowers are party to that certain Existing
Credit Facility (as defined below), among the Borrowers, the lenders
party thereto, General Electric Capital Corporation, individually as a lender
and in its capacity as agent, pursuant to which such lenders have agreed to
extend, and have extended, credit and other financial accommodations to the
Borrowers.


 


B.                                     The
Borrowers have filed voluntary petitions commencing jointly administered
Chapter 11 cases (the “Bankruptcy Cases”) in the United States Bankruptcy Court
for the Southern District of New York (the “Bankruptcy Court”).


 


C.                                     The
Borrowers desire to establish certain post-petition, debtor-in-possession (“DIP”)
financing arrangements with and borrow funds from the Lenders, and the Agent
and the Lenders are willing to establish such arrangements for and to extend
DIP financing to the Borrowers, on the terms and conditions set forth below
(subject to the approval of the Bankruptcy Court).


 

















 


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


 


NOW, THEREFORE, in
consideration of the premises and the agreements hereinafter set forth, the
parties hereto hereby agree that, on the Effective Date (as defined below), the
Existing Credit Facility shall be terminated, subject to the continued
effectiveness of certain provisions thereof pursuant to this Agreement and the Loan
Documents, and this agreement shall be effective in its entirety as follows:


 


ARTICLE I.


 


DEFINITIONS


 


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


 


“2005 Unaudited
Financials” has the meaning ascribed to it in Section 3.1(x).


 


“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 85%, subject to adjustment pursuant to Section 2.1(d).


 


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


 


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


 


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


 


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


 


“Affiliate” means, with
respect to any Person, (a) each Person that, directly or indirectly, owns
or controls, whether beneficially or as a trustee, guardian or other fiduciary,
five percent (5%) or more of the Stock of such Person, (b) each Person
that controls, is controlled by 


 


2

















 


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


 


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


 


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


 


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


 


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


 


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


 


“Apex Adjustment” shall
mean a one time add back, in the aggregate, of up to $2,500,000 of Accounts
Receivable earned by Apex in Fiscal Years 2003 and 2004 which were reserved for
in the Fiscal Quarter ended December 31, 2005.


 


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


 


“Applicable Margin”
means: (a) from the Effective Date to and including the fifth day
following the receipt of financial statements for the Fiscal Year ended [December 31,
2005] delivered pursuant to Section 5.1(b) (the
“Initial Adjustment Date”), (i) 3.50% per annum for LIBOR Loan
Advances and 2.25% per annum for Base Rate Advances, (ii) 2.25% per annum
for Swingline Loans, and (iii) 3.50% per annum for the Letter of Credit
Fee Applicable Margin; and (b) commencing on the Initial Adjustment Date
and on the first day of each Fiscal Quarter thereafter that follows by at least
five (5) days the receipt of financial statements delivered pursuant to Section 5.1(n), the Applicable Margin for
each Class of Extension of Credit shall be that determined from the chart
below based on such financial statements:


 


3

















 


	
  If Total Leverage Ratio is:

  	
   

  	
  Level of
Applicable Margins:

  
	
  <3.50x

  	
   

  	
  Level I

  
	
  >3.50x
  but <4.25x

  	
   

  	
  Level II

  
	
  >4.25x

  	
   

  	
  Level III

  



 


	
   

  	
   

  	
  Applicable Margins

  	
   

  
	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  
	
  Applicable Margin for Base Rate Advances

  	
   

  	
  1.75

  	
  %

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  
	
  Applicable Margin for LIBOR Loan Advances

  	
   

  	
  3.00

  	
  %

  	
  3.25

  	
  %

  	
  3.50

  	
  %

  
	
  Applicable Margin for Letter of Credit Fee

  	
   

  	
  3.00

  	
  %

  	
  3.25

  	
  %

  	
  3.50

  	
  %

  
	
  Applicable Margin for Overadvance Facility Advances

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4.00

  	
  %

  



 


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


 


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


 


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


 


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


 


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


 


“Bankruptcy Cases” shall
have the meaning established in the recitals hereto.


 


“Bankruptcy Code” means
11 U.S.C. §§ 101 et seq.


 


“Bankruptcy Court Order”
means the following orders entered by the Bankruptcy Court:  (i) an Order approving this Agreement on
an interim basis in form and substance acceptable to the Agent and the
Borrowers (the “Interim Order”), a proposed form of which is attached to
this Agreement as Exhibit A;  (ii) an
Order approving this Agreement on final basis 


 


4

















 


in a form and
substance acceptable to the Agent and the Borrowers (the “Final Order”); and (iii) and
any other orders in form and substance acceptable to the Agent and the
Borrowers and entered by the Bankruptcy Court in connection with the Loan.


 


“Bankruptcy Rules” means
the Federal Rules of Bankruptcy Procedure.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Borrower Representative”
means Holdings.


 


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


 


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


 


5

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Carve
Out” means a carve out from liens and superiority claims granted to the Agent
and the Lenders pursuant to this Agreement and the Bankruptcy Court Orders for
expenses arising from Claims in the Bankruptcy Cases of the following
parties for the following amounts: (i) all fees required to be paid
to the Clerk of the Bankruptcy Court and to the Office of the United States
Trustee under Section 1930(a) of Title 28 of the United States Code, (ii) all
fees and expenses incurred by any trustee under Section 726(b) of the
Bankruptcy Code and (iii) the fees and expenses payable under Sections 330
and 331 of the Bankruptcy Code to professional persons retained (each such
person, a “Professional”) and committee members appointed pursuant to an
order of the Bankruptcy Court by any Credit Party or any statutory committees
appointed in the Bankruptcy Cases (each such committee, a “Committee”),
which in the case of clause (iii), above collectively may not exceed the
sum of $500,000 in the aggregate, 


 


6

















 


inclusive of any
holdbacks, provided, however, that any fees or disbursements paid to any
Professional or any Committee during the Bankruptcy Cases pursuant to an
appropriate Bankruptcy Court Order shall not reduce the Carve Out.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


7

















 


“Changed Circumstances”
has the meaning ascribed to it in Section 13.6.


 


“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 K
attached hereto.


 


“Closing Date” means March 30,
2006. All documents held in escrow and shall be of no force or effect until the
Effective Date.


 


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


 


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


 


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


 


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


 


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


 


Deutsche Bank/Banker’s
Trust


New York, NY


ABA No.:  021-001-033


Account No.:  50-271-079


Account Name:  GE-HFS Cash Flow Collections


Re:  Curative Health Services, Inc.


 


8

















 


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


 


“Commitment Extension Fee”
means 0.50% (calculated on the basis of a 360-day year for actual days elapsed)
of the Maximum Commitment Amount.


 


“Commitment Letter” means
that certain Commitment Letter, dated January 30, 2006, by and between GE
Capital and certain of the Credit Parties party thereto.


 


“Commitment
Termination Date” means the earliest of:  
(i) 12 months from the filing of the Bankruptcy Cases, (ii) the
effective date of the Plan of Reorganization in the Bankruptcy Cases, (iii) 15
days after the filing of the Bankruptcy Case if entry of an Interim Order
approving this Agreement has not been entered by such date in all of the
Bankruptcy Cases or (iv) 45 days after the filing of any Bankruptcy Case
if entry of a Final Order approving this Agreement has not been entered by such
date in all Bankruptcy Cases; provided, that prior to the Commitment Termination Date and
provided no Default has occurred, upon Borrowers’ request and payment of the Commitment
Extension Fee, the Commitment Termination Date (for the conditions set forth in
(i) and (ii) of this paragraph only) may be extended by six (6) months,
to a period of up to eighteen (18) months in the aggregate, but in no event
shall the Commitment Termination Date be later than the effective date of the Plan
of Reorganization in any Bankruptcy Case.


 


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


 


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


 


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


 


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


 


 “Conditionally Waived
Pre-petition Fees” means the PIK Spread and the pre-payment fee due under the
Existing Credit Facility, which were conditionally waived under the sections 1(c) and
3(c) of the Forbearance Agreement.


 


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


 


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


 


9

















 


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


 


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


 


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


 


 “Credit Parties” means the Borrowers 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
Equivalents and debts due from Affiliates.


 


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


 


 “Damage Lawsuit” has the meaning ascribed to
it in Section 13.7.


 


“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 6.16.


 


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


 


“EBITDA” means, with
respect to any Person for any fiscal period, without duplication, an amount
equal to (a) consolidated net income (or loss) of such Person for such
period (excluding extraordinary gains and non-cash items), minus (b) the
sum of, without duplication, (i) income tax credits, (ii) interest
income, (iii) any aggregate net gain (but not any aggregate net loss)
during such period arising from the sale, exchange or other disposition of
capital assets by such Person (including any fixed assets, whether tangible or
intangible, all 


 


10

















 


inventory sold in
conjunction with the disposition of fixed assets and all securities), plus,
(c) to the extent deducted in determining such consolidated net income (or
loss) for such period, the sum of, without duplication, (i) income tax
expense, (ii) Interest Expense and Fees, (iii) loss from
extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized
debt discount for such period, (vi) the amount of any deduction to
consolidated net income as the result of any grant to any employees, officers
or directors of such Person of any Stock, (vii) the Apex Adjustment and (viii) the
Pharmacy Adjustment. For purposes of this definition, the following items shall
be excluded in determining consolidated net income of a Person: (1) the
income (or deficit) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of such
Person’s Subsidiaries; (2) the income (or deficit) of any other Person
(other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person
in the form of cash dividends or distributions; (3) the undistributed
earnings of any Subsidiary of such Person to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not at the
time permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of income accrued during such period; (5) any write-up of any
asset; (6) any net gain from the collection of the proceeds of life
insurance policies; (7) any net gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness, of such
Person; (8) in the case of a successor to such Person by consolidation or
merger or as a transferee of its assets, any earnings of such successor prior
to such consolidation, merger or transfer of assets; and (9) any deferred
credit representing the excess of equity in any Subsidiary of such Person at
the date of acquisition of such Subsidiary over the cost to such Person of the
investment in such Subsidiary.


 


“Effective Date” means the
date upon which the Bankruptcy Court signs or enters the Interim Order
authorizing the Borrowers to enter into this Agreement.


 


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


 


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


 


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


 


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


 


11

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


12

















 


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


 


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


 


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


 


(p)                                 such Account is evidenced by a judgment,
Instrument or Chattel Paper (other than Instruments or Chattel Paper that have
been delivered to the Agent);


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


13

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


14

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


15

















 


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


 


“Existing Credit Facility” means the secured
Amended and Restated Credit Agreement dated as of April 23, 2004, by and
among the Credit Parties, and GECC Capital Markets Group, Inc., as Lead
Arranger, General Electric Capital Corporation, as Agent, and the Existing
Lenders, as amended or modified by the Amendments dated May 3, 2004, June 30,
2004, October 20, 2004 and December 31, 2004, the Waiver Agreements
dated August 8, 2005, October 14, 2005, November 7, 2005, and
the Forbearance Agreement, and as may be further amended or modified from
time to time.


 


“Existing
L/C” means any Letter of Credit issued under the Existing Credit Facility which
remains outstanding on the Effective Date, each as scheduled on Schedule 2.5(l).


 


“Existing Lenders” means the “Lenders”
signatory to the Existing Credit Facility.


 


“Exit Facility” has the meaning ascribed to it in Section 2.7(e).


 


“Exit Fee” has the meaning ascribed to it in Section 2.7(e).


 


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


 


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


 


“Fees” means any and all
fees payable (after giving effect to any fee waivers) to Agent or any Lender
pursuant to this Agreement, the Existing Credit Facility, the Forbearance
Agreement, the Commitment Letter or any of the other Loan Documents.


 


“Filing Date” has the
meaning ascribed to it in Section 13.


 


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


 


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


 


16

















 


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


 


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


 


“Forbearance Agreement”
means the Forbearance Agreement dated December 1, 2005, as amended by the
First Amendment to Forbearance Agreement (the “First Amendment”) dated as of December 23,
2005, the Second Amendment to Forbearance Agreement (the “Second Amendment”)
dated as of January 30, 2006 and the Third Amendment to Forbearance
Agreement (the “Third Amendment”) dated as of March 14, 2006.


 


“Forbearance Period’
means the period commencing December 1, 2005 and ending on the Commitment
Termination Date, as extended pursuant to the terms hereof.


 


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


 


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


 


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


 


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


 


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


 


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


 


17

















 


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


 


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


 


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


 


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


 


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


 


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


 


“Guarantor Security Agreement” means a Guarantor
Security Agreement substantially in the form of Exhibit H to this
Agreement.


 


“Guaranty Agreements”
means, collectively, that certain Subsidiary Guaranty dated as of March 30,
2006 by and among Curative Health Services III Co., and any other guaranty
agreements now or hereafter executed by any Person in favor of 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 


 


18

















 


material or
substance that is (a) defined as a “solid waste,” “hazardous waste,” “hazardous
material,” “hazardous substance,” “extremely hazardous waste,” “restricted
hazardous waste,” “pollutant,” “contaminant,” “hazardous constituent,” “special
waste,” “toxic substance” or other similar term or phrase under any Environmental
Laws, or (b) petroleum or any fraction or by-product thereof, asbestos,
polychlorinated biphenyls (PCB’s), or any radioactive substance.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


 “Indebtedness” of a Person means at any date,
without duplication, (a) all obligations of such Person for borrowed money
(but excluding obligations to trade creditors incurred in the ordinary course
of business that are unsecured and not overdue by more than 6 months unless
being contested in good faith and for which adequate reserves have been
established in accordance with GAAP), (b) all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, or upon
which interest payments are customarily made, (c) all obligations of such
Person to pay the deferred purchase price of property or service 


 


19

















 


incurred in the
ordinary course of business if the purchase price is due more than six (6) months
from the date the obligation is incurred, (d) all Capital Lease Obligations of such
Person, (e) any obligation under
any lease (a “synthetic lease”) treated as an operating lease under GAAP and as
a loan or financing for United States income tax purposes or creditors rights
purposes, (f) all obligations of such Person to purchase securities
(or other property) which arise out of or in connection with the issuance or
sale of the same or substantially similar securities (or property), (g) all
contingent or non-contingent obligations of such Person to reimburse any bank
or other Person in respect of amounts paid under a letter of credit or similar
instrument, (h) all equity securities of such Person subject to repurchase
or redemption otherwise than at the sole option of such Person, (i) all “earnouts”
and similar payment obligations of such Person, (j) all indebtedness secured by
a Lien on any asset of such Person, whether or not such indebtedness is otherwise
an obligation of such Person, (k) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter
the risks of that Person arising from fluctuations in currency values or
interest rates, in each case whether contingent or matured, net of liabilities
owed to such Person by the counterparty thereon, (l) all Guaranteed Obligations
of such Person.


 


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


 


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


 


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


 


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


 


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


 


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


 


20

















 


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


 


“Interim
Order” has the meaning set forth in the definition of the Bankruptcy Court
Order.


 


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


 


“Investment” means, with
respect to any Person, any investment by such Person in any other Person,
whether by means of acquiring or holding Stock, capital contribution, loan,
advance, extension of credit, purchase of Indebtedness, guarantee, deposit or
otherwise, but excluding any trade account receivable arising in the ordinary
course of business.


 


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


 


“IRS” means the Internal
Revenue Service.


 


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


 


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


 


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


 


“L/C Limit” means $7,500,000.


 


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


 


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


 


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


 


21

















 


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


 


“Lending Party” means the
Agent, Lead Arranger, the Lenders and any L/C 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).


 


“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), three (3) or six (6) months thereafter,
in each case as selected by the Borrower Representative’s irrevocable notice to
Agent as set forth in Section 2.3;
provided that the foregoing provision relating to LIBOR Periods is
subject to the following:


 


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


 


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


 


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


 


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


 


22

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Loan Documents” means
this Agreement, the Notes, the Commitment Letter, the Collateral Documents, the
master documentary agreement relating to the issuance of documentary Letters of
Credit, the HIPAA Business Associate Agreement, and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of 


 


23

















 


any Credit Party,
and delivered to Agent or any Lender in connection with this Agreement or the
transactions contemplated thereby. Any reference in this Agreement or any other
Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to this Agreement or such Loan Document
as the same may be in effect at any and all times such reference becomes
operative.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


24

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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“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.


 


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


 


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


 


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


 


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


 


“Obligations”
means (a) all Loans, fees, indebtedness, liabilities, obligations,
covenants and duties of any Credit Party to any Lending Party of every kind,
nature and description, direct or indirect, absolute or contingent, due or not
due, in contract or tort, liquidated or unliquidated, arising under this
Agreement, or under the other Loan Documents, by operation of law or otherwise
in connection with the transactions contemplated hereby, now existing or hereafter
arising, and whether or not for the payment of money or the performance or
non-performance of any act, including, but not limited to, all damages that any
Credit Party may owe to the Agent and/or the Lenders by reason of any
breach by any Credit Party of any representation, warranty, covenant, agreement
or other provision of this Agreement or any of the other Loan Documents. 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.


 


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 limitation, the partnership agreement, and the operating
agreement (or comparable agreement) of any partnership or limited liability
company, respectively.


 


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


 


“Overadvance” has the meaning ascribed to it in Section 2.17(a).


 


“Overadvance Commitment” has the meaning ascribed to it in Section 2.17(b).


 


“Overadvance Loan” has the meaning ascribed to it in Section 2.17(a).


 


“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 Borrowers to such Lender under
the Loan Documents shall be made, or such other account as such Lender shall
from time to time specify by notice to the Borrower Representative and Agent.


 


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


 


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


 


“Percentage” means, with
respect to any Lender at any time, the percentage which the amount of its
Commitment for a particular Class at such time represents of the aggregate
amount of all the Commitments for such Class at such time. At any time
after the Commitments for a Class shall have terminated, the term “Percentage”
shall refer to a Lender’s Percentage for that Class immediately before
such termination, adjusted to reflect any subsequent assignments pursuant to Section 11.6.


 


“Permitted 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


 


27

















 


superior to any of
the Liens securing the Obligations, (c) none of the Collateral becomes
subject to forfeiture or loss as a result of such contest, (d) such Credit
Party shall promptly pay or discharge such contested Charges, claims,
obligations, liabilities and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence reasonably acceptable to
Agent of such compliance, payment or discharge, if such contest is terminated
or discontinued adversely to such Credit Party or the conditions set forth
above in clauses (a), (b) and (c) of this definition are no longer
met, and (e) Agent has not advised Borrower Representative in writing that
Agent reasonably believes that nonpayment or nondischarge thereof could have,
or result in, a Material Adverse Effect.


 


“Permitted Encumbrances”
means the following encumbrances: (a) Liens for taxes or assessments or
other governmental Charges not yet due and payable or which are the subject of
a Permitted Contest; (b) pledges or deposits of money securing statutory
obligations under workmen’s compensation, unemployment insurance, social security
or public liability laws or similar legislation (excluding Liens under ERISA); (c) pledges
or deposits of money made in the ordinary course of business and securing bids,
tenders, contracts (other than contracts for the payment of money), securing leases
to which any Credit Party is a party as lessee made in the ordinary course of
business, or securing indemnity, performance or other similar bonds incurred in
the ordinary course of business and to the extent required by applicable law
for the performance of bids, tenders or contracts (other than for the repayment
of Debt and excluding Liens under ERISA); (d) inchoate and unperfected
workers’, mechanics’ or similar liens arising in the ordinary course of
business, so long as such Liens attach only to Equipment, Fixtures and/or Real
Property; (e) carriers’, warehousemen’s, suppliers’ or other similar
possessory liens arising in the ordinary course of business and securing
liabilities in an outstanding aggregate amount not in excess of $25,000 at any
time, so long as such Liens attach only to Inventory; (f) deposits
securing, or in lieu of, surety, appeal or customs bonds in proceedings to
which any Credit Party is a party; (g) any attachment or judgment lien not
constituting an Event of Default under Section 8.1(k);
(h) zoning restrictions, easements, licenses, or other restrictions on the
use of any Real Property or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use,
value, or marketability of such Real Property; (i) presently existing or
hereafter created Liens in favor of Agent, on behalf of the Lenders and the
other Secured Creditors; (j) Liens in respect of the Carve Out, as required by
the Bankruptcy Court Order and (k) Liens expressly permitted under clauses (b),
(c), (e) and (f) of Section 7.2
of this Agreement.


 


 “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).


 


“Pharmacy
Adjustment” shall mean a one time add back, in the aggregate, of up to
$1,700,000 of Accounts Receivable due from Park Compounding Pharmacy, Inc. American
Surgical Pharmacy, Inc. and Siskin’s San Carlos Pharmacy, Inc. which
were reserved for in the Fiscal Quarter ended December 31, 2005.


 


28

















 


 “PIK Spread” means the difference
between the interest accrued and the interest previously paid under the
Existing Credit Facility.


 


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


 


“Plan of Reorganization”
means any plan of reorganization filed in pursuant to Chapter 11 of the
Bankruptcy Code by any Credit Party, by any Affiliate of any Credit Party, or
by any other party in interest in a Bankruptcy Case.


 


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


 


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


 


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


 


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


 


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


 


29

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


 “Restricted Payment” means, with respect to
any Credit Party (a) the declaration or payment of any dividend or the
incurrence of any liability to make any other payment or distribution of cash
or other property or assets in respect of Stock, (b) any payment on
account of the purchase, redemption, defeasance, sinking fund or other
retirement of such Credit Party’s Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt, (d) any


 


30

















 


payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Credit
Party now or hereafter outstanding, (e) any payment of a claim for the
rescission of the purchase or sale of, or for material damages arising from the
purchase or sale of, any shares of such Credit Party’s Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission, (f) any payment, loan, contribution,
or other transfer of funds or other property to any holder of stock or equity
interests of such Credit Party other than payment of compensation in the
ordinary course of business to any holders of stock or equity interests who are
employees, officers or directors of such Person, (g) any payment of
management fees (or other fees of a similar nature) by such Credit Party to any
holder of Stock of such Credit Party or its Affiliates, (h) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Senior Unsecured Debt.


 


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


 


“Revolving Credit
Commitment” means: (a) as to any Lender, the amount (if any) set forth
thereon opposite the name of such Lender on the signature pages hereof
under the heading “Revolving Credit Commitment”; (b) with respect to any
assignee of a Revolving Credit Commitment, the amount of the transferor Lender’s
Revolving Credit Commitment assigned to such assignee pursuant to Section 11.6; and (c) as to all
Lenders having a Revolving Credit Commitment, the aggregate commitment of all
Lenders to make Revolving Credit Advances, which aggregate commitment shall be
$45,000,000 on the Effective Date, as such amount may be reduced from time
to time pursuant to Section 2.8
or changed as a result of an assignment pursuant to Section 11.6. The term “Revolving Credit Commitment” does
not include the Swingline Commitment.


 


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


 


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


 


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


 


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


 


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


 


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


 


31

















 


“Security Agreements”
means collectively, (i) the Borrower Security Agreement and (ii) any
other security agreements now or hereafter executed by any Person in favor of
Agent and Lenders to secure the Obligations.


 


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


 


“Senior
Management” shall mean with respect to each Credit Party, the chief executive
officer, the chief operating officer, and the chief financial officer.


 


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


 


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


 


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


 


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


 


“Senior
Unsecured High Yield Notes” means, collectively, the unsecured senior notes of
Holdings issued pursuant to the Senior Unsecured High Yield Note Indenture.


 


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


 


“Solvent”
means, with respect to any Person on a particular date, that on such date (a) the
assets of such Person, at a fair valuation (with such assets being measured on
a going concern basis if and only to the extent that such Person’s business
could reasonably be viewed at the time of any such determination as in fact
being conducted as a going concern in light of the business historically
conducted by such Person and such other facts and circumstances existing at
such time that are relevant under Applicable Law to such determination, and
otherwise, if such Person is not conducting its business as a going concern,
such assets shall be measured on a liquidation basis and in any event without
attributing any value to any asset of such Person constituting goodwill),
exceed its liabilities, including contingent liabilities, (b) the
remaining


 


32

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“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


 


33

















 


respect to which
any such Person has the right to vote or designate the vote of fifty percent
(50%) or more of such Stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which
such Person or one or more Subsidiaries of such Person shall have an interest
(whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%) or of which any such Person is a
general partner or may exercise the powers of a general partner. Unless
the context otherwise requires, each reference to a Subsidiary shall be a
reference to a Subsidiary of the Borrowers.


 


“Subsidiary Guaranty
Agreement” means a Subsidiary Guaranty Agreement substantially in the form of
Exhibit G to this Agreement


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Temporary Cash
Investment” means any Investment in (a) direct obligations of the United
States or any agency thereof, or obligations fully guaranteed by the United
States or any agency thereof, (b) commercial paper rated at least A-1 by
Standard & Poor’s Rating Group and P-1 by Moody’s Investors Service, Inc.,
(c) time deposits with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized under the laws of the United States or any State thereof and has
capital, surplus and


 


34

















 


undivided profits
aggregating at least $500,000,000 and which issues (or the parent of which
issues) certificates of deposit or commercial paper with a rating described in
clause (b) above, (d) repurchase agreements with respect to
securities described in clause (a) above entered into with an office of a
bank or trust company meeting the criteria specified in clause (c) above, provided
in each case that such Investment matures within one (1) year from the
date of acquisition thereof by any Credit Party or (e) any money market or
mutual fund that invests only in the foregoing and the manager of which and the
liquidity of which is reasonably satisfactory to the Agent.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


35

















 


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


 


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


 


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


 


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


 


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


 


Section 1.3.
Other Definitional Provisions. The terms “Accounts”, “Chattel
Paper”, “Code”, “Contracts”, “Deposit Accounts”, “Documents”, “Fixtures”, “Equipment”,
“General Intangibles”, “Goods”, “Intellectual Property”, “Instruments”, “Inventory”,
“Investment Property”, “Letter-of-Credit Rights”, “License” and “Software” have
the meanings assigned to such terms in Section 1
of the Borrower Security Agreement. References in this Agreement to “Articles”,
“Sections”, “Schedules” or “Exhibits” shall be to
Articles, Sections, Schedules or Exhibits of or to this Agreement unless
otherwise specifically provided. Any of the terms defined in Section 1.1 may, unless the context
otherwise requires, be used in the singular or plural depending on the
reference. “Include”, “includes” and “including” shall be deemed to be followed
by “without limitation” whether or not they are in fact followed by such words
or words of like import. “Writing”, “written” and comparable terms refer to
printing, typing and other means of reproducing words on paper. Except as
otherwise expressly provided herein, references to any agreement or contract
are to such agreement or contract as amended, modified or supplemented from
time to time in accordance with the terms hereof and thereof. References


 


36

















 


to any Person
include the successors and permitted assigns of such Person; provided
that no Credit Party may assign its rights or obligations under any Loan
Document without the prior written consent of the Agent and the Lenders. References
“from”, “through” or “to” any date mean, unless otherwise specified, mean “from
and including”, “through and including”, and “to but excluding”, respectively. References
to any statute and related regulation shall include any amendments,
modifications and supplements of the same and any successor statutes and
regulations.


 


Section 1.4.
Disclosure Schedules. Disclosures included in the disclosure
schedules to this Agreement (collectively, the “Disclosure Schedules”)
shall be considered to be made for purposes of all sections thereof if it is
reasonably apparent from the face of such disclosure that the disclosure would
also be applicable to some other section. Inclusion of any matter or item in
any section of any Disclosure Schedule does not imply that such
matter or item would, under the provisions of this Agreement, have to be
included in any section thereof or that such matter or term is otherwise
material. In addition, matters disclosed in the Disclosure Schedules are not
necessarily limited to matters required by this Agreement to be disclosed in
the Disclosure Schedules, and any such additional matters are set forth for
informational purposes only and do not necessarily include other matters of a
similar nature.


 


ARTICLE II.


 


THE FACILITIES


 


Section 2.1. The Facilities.


 


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


 


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


 


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


 


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


 


37

















 


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


 


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


 


Section 2.2. Notes.


 


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


 


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


 


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


 


(a)           Method of Borrowing.
Whenever the Borrowers desire to receive an Advance, including the initial
Advance, or to convert any portion of the outstanding Base Rate


 


38

















 


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


 


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


 


(c)           Agent May Assume
Funding. Unless the Agent shall have received notice from a Lender prior to
the date of any particular Advance that such Lender will not make available to
the Agent such Lender’s Percentage of such Advance, the Agent may assume
that such Lender has made such amount available to it on the date of such
Advance in accordance with subsection (b) of this Section 2.3,
and may (but shall not be obligated to), in reliance upon such assumption,
make available a corresponding amount for the account of the Borrowers on such
date. If and to the extent that such Lender shall not have so made such amount
available to the Agent, such Lender and the Borrowers severally agree to repay
to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the day such amount is made available to
the Borrowers until the day such amount is repaid to the Agent, at (i) in
the case of the Borrowers, a rate per annum equal to the greater of (x) the
Federal Funds


 


39

















 


Rate and (y) the
interest rate applicable thereto pursuant to Section 2.4,
and (ii) in the case of such Lender, a rate per annum equal to (x) for
each day from the day such amount is made available to the Borrowers through
the third succeeding Business Day, the Federal Funds Rate for such day as
determined by the Agent and (y) for each day thereafter until the day such
amount is repaid to the Agent, the Base Rate for such day. If such Lender shall
repay such corresponding amount to the Agent, the amount so repaid shall
constitute such Lender’s Loan included in such Borrowing for purposes of this
Agreement.


 


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


 


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


 


Section 2.4. Interest
on Loans.


 


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


 


(b)           Interest Options.
Subject to the provisions hereof, all or portions of the Loans, at the option
of the Borrower Representative, may be made or Continued as, or Converted


 


40

















 


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


 


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


 


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


 


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


 


Section 2.5. Letters of Credit.


 


(a)           Letters of Credit.
Upon the terms and subject to the conditions set forth herein, from time to
time during the period commencing on the Effective Date and ending on the date
that is thirty (30) days prior to the latest possible Commitment Termination
Date, the Revolving Credit Commitment may, in addition to Advances under the
Revolving Loan, be utilized, upon the request of Borrower Representative on
behalf of the applicable Borrower, for (i) the issuance of standby letters
of credit for the account of such Borrower by GE Capital or any other L/C
Issuer approved by the Agent, (ii) the issuance of commercial letters of
credit for the account of such Borrower by any L/C Issuer other than GE Capital
approved by Agent or (iii) the issuance of standby letters of credit or
commercial letters of credit for the account of such Borrower under risk
participation agreements entered into by GE Capital, as L/C Issuer, with other
banks or financial institutions (the letters of credit described in clauses
(i), (ii) and (iii), together with the Existing L/Cs, will be referred to
hereinafter collectively as “Letters of
Credit”). Immediately upon the issuance by a L/C Issuer of a Letter
of Credit, and without further action on the part of Agent or any of the
Lenders, each Lender with a Revolving Credit Commitment shall be deemed to have
purchased from such L/C Issuer a participation in such


 


41

















 


Letter of Credit
(or in its obligation under a risk participation agreement with respect
thereto) equal to such Lender’s Percentage of the aggregate amount available to
be drawn under such Letter of Credit. Immediately after each such Letter of
Credit is issued and participations therein are sold to the Lenders as provided
in this subsection:


 


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


 


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


 


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


 


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


 


(b)           Permitted Terms.
Each Letter of Credit (other than the Existing L/Cs) must (i) support a
transaction entered into in the ordinary course of business of the applicable
Borrower on or after the filing of the Bankruptcy Cases and (ii) be in a
form, for an amount and contain such terms and conditions as are reasonably
satisfactory to each of the L/C Issuer and the Agent in its sole discretion. No
Letter of Credit shall have an expiration date later than the close of business
on the 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). 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 the latest possible
Commitment Termination Date (exclusive of any extentions).


 


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


 


42

















 


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


 


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


 


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


 


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


 


(i)            the
Borrowers irrevocably and unconditionally agree to reimburse the relevant L/C Issuer
for all amounts paid by such L/C Issuer immediately upon such drawing, together
with interest on the amount drawn at the rate applicable to Base Rate Loans for
each day from and including the date such amount is drawn to but excluding the
date such reimbursement payment is due and payable. Such reimbursement payment
shall be due and payable on the relevant L/C Payment Date and Borrowers hereby
authorize and direct Agent, at


 


43

















 


Agent’s option, to debit the Loan Account (by increasing the
outstanding principal balance of the Revolving Loan) in the amount of any
payment made by an L/C Issuer with respect to any Letter of Credit; and


 


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


 


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


 


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


 


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


 


(ii)           if
any Revolving Lender fails to pay any amount required to be paid by it pursuant
to this Section 2.5(h) on
the date on which such payment is due, interest shall accrue on such Revolving
Lender’s obligation to make such payment, for each day from and including the
date such payment became due to


 


44

















 


but excluding the date such Lender makes such payment, at a rate per
annum equal to (x) for each day from the day such payment is due through the
third succeeding Business Day, inclusive, the Federal Funds Rate for such day
as determined by the relevant L/C Issuer and (y) for each day thereafter, the
Base Rate for such day. Any payment made by any Revolving Lender after 3:00 p.m.
(New York City time) on any Business Day shall be deemed for purposes of the
preceding sentence to have been made on the next succeeding Business Day.


 


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


 


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


 


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


 


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


 


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


 


(iv)          payment
by Agent (except as otherwise expressly provided in paragraph (j)(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;


 


45

















 


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


 


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


 


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


 


(j)            Indemnification;
Nature of Lenders’ Duties.


 


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


 


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


 


46

















 


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


 


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


 


(k)           Cash
Collateral.


 


(i)            If
the Borrowers are required to provide cash collateral for any L/C Obligations
pursuant to this Agreement prior to the Commitment Termination Date, the
Borrowers will pay to Agent for the ratable benefit of itself and the Revolving
Lenders cash in an amount equal to one hundred three percent (103%) of the
maximum amount then available to be drawn under each applicable Letter of
Credit. Such cash shall be held by Agent in a cash collateral account (the “Cash Collateral Account”) maintained at a
bank or financial institution acceptable to Agent in its sole discretion. The
Cash Collateral Account shall be in the name of the Borrowers and shall be
pledged to, and subject to the control of, Agent, for the benefit of Agent and
the Revolving Lenders, in a manner satisfactory to Agent. Each Borrower hereby
pledges and grants to Agent, on behalf of itself and the Revolving Lenders, a
security interest in all such funds and Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of the L/C Obligations and other
Obligations, whether or not then due. This Agreement, including the provisions
of this Section 2.5(k), shall
constitute a security agreement under applicable law.


 


(ii)           If
any L/C Obligations, whether or not then due and payable, shall for any reason
be outstanding on the Commitment Termination Date, the Borrowers shall either (A) provide
cash collateral therefor in the manner described above, (B) cause all such
Letters of Credit and L/C Obligations, if any, to be canceled and returned, or (C) deliver
a stand-by letter (or letters) of credit in guaranty of such L/C Obligations,
which stand-by letter (or letters) of credit shall be of like tenor and
duration (plus thirty (30) additional days) as, and in an


 


47

















 


amount equal to one hundred three percent (103%) of the aggregate
maximum amount then available to be drawn under, the Letters of Credit to which
such outstanding L/C Obligations relate and shall be issued by a Person, and
shall be subject to such terms and conditions, as are satisfactory to Agent in
its sole discretion.


 


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


 


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


 


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


 


(l) Existing L/Cs


 


The Borrowers, the Agent and the Lenders agree that, as between themselves,
the Existing L/Cs shall be deemed issued under this Agreement and the Borrowers
shall bear all responsibility for the Existing L/Cs as if issued hereunder. The
L/C Issuer hereby assumes and reaffirms each Existing L/C, as if such Letter of
Credit were issued under this Agreement.


 


Section 2.6. Swingline
Loans.


 


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


 


48

















 


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


 


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


 


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


 


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


 


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


 


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


 


(ii)           the
amount of such Advance.


 


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


 


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


 


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


 


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


 


49

















 


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


 


(h)           Refunding Unpaid Swingline
Loans. If (x) the Swingline Loans are not paid in full on the Swingline
Maturity Date or (y) the Swingline Loans become immediately due and payable
pursuant to Article VIII, the
Swingline Lender (or the Agent on its behalf) may, by notice to the Lenders
(including the Swingline Lender, in its capacity as a Lender), require each
Lender to pay to the Swingline Lender an amount equal to such Lender’s
Percentage of the aggregate unpaid principal amount of the Swingline Loans then
outstanding. Such notice shall specify the date on which such payments are to
be made, which shall be the first Business Day after such notice is given. Not
later than 12:00 Noon (New York City time) on the date so specified, each
Lender shall pay the amount so notified to it to the Swingline Lender at its
address specified in or pursuant to Section 11.3, in federal or other funds immediately available in New
York, New York. The amount so paid by each Lender shall constitute a Base Rate
Advance to the Borrowers and each Lender hereby irrevocably agrees (absent
gross negligence of the Swingline Lender as determined by a court of competent
jurisdiction) to the making of such Base Rate Advance notwithstanding (i) the
amount of such Advance may not comply with the minimum amount for borrowings
of Revolving Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 3.1
or 3.2 as applicable, are then
satisfied, (iii) whether a Default or an Event of Default then exists, (iv) the
failure of any such request or deemed request for Revolving Loans to be made by
the time otherwise required in Section 2.1,
(v) the date of such mandatory Advance or (vi) any reduction in the
Revolving Credit Commitments or termination of the Revolving Credit Commitments
immediately prior to such mandatory Advance contemporaneously therewith; provided
that, if the Lenders are prevented from making such Base Rate Revolving Credit
Advances to the Borrowers by the provisions of the United States Bankruptcy
Code or otherwise, the amount so paid by each Lender shall constitute a
purchase by it of a participation in the unpaid principal amount of the
Swingline Loan and interest accruing thereon after the date of such payment; provided
that (x) all interest payable on the Swingline Loans shall be for the account
of the Swingline Lender until the date as of which the respective participation
is purchased and (y) at the time any purchase of participations pursuant to
this sentence is actually made, the purchasing Lender shall be required to pay
to the Swingline Lender, to the extent not paid to the Swingline Lender by the
Borrowers in accordance with the terms of subsection (d) hereof,
interest on the principal amount of participation purchased for each day from
and including the day upon which such borrowing would otherwise have occurred
to, but excluding, the date of payment for such participation. Each Lender’s
obligation to make such payment or to purchase such participation under this
subsection shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (1) any set-off,
counterclaim, recoupment, defense or other right which such Lender or any other
Person may have against the Swingline Lender or the Borrowers, (2) the
occurrence or continuance of a Default or an Event of Default or the
termination of the Commitments, (3) any adverse change in the condition
(financial or otherwise) of the Borrowers or any other Person, (4) any
breach of this Agreement by any party hereto or (5) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.


 


(i)            Termination of
Swingline Commitment. The Borrowers may, upon at least three (3) Business
Days’ notice to the Swingline Lender and the Agent, terminate the


 


50

















 


Swingline
Commitment at any time, if no Swingline Loans are outstanding at such time. Unless
previously terminated, the Swingline Commitment shall terminate at the close of
business on the Swingline Maturity Date.


 


Section 2.7. Certain
Fees.


 


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


 


(b)           Unused Line Fee.
As additional compensation for the Revolving Lenders, the Borrowers shall pay
to Agent, for the ratable benefit of such Revolving Lenders, in arrears, on the
first Business Day of each month prior to the Commitment Termination Date and
on the Commitment Termination Date, a fee (the “Unused Line Fee”) for the Borrowers’ non-use of available
funds in an amount equal to the product of (i) 0.50% per annum multiplied
by (ii) the difference between (x) the Maximum Commitment Amount (as
it may be reduced from time to time) minus (y) the average for the
period of the daily closing balances of the aggregate Revolving Loans and the
Swingline Loans outstanding during the period for which such Unused Line Fee is
due, calculated for such period on the basis of a 360-day year for the actual
number of days elapsed during such period.


 


(c)           [Reserved.]


 


(d)           Letter
of Credit Fee. (i) The Borrowers agree to pay to the Agent for the
ratable benefit of Revolving Lenders, with respect to the L/C Obligations
incurred hereunder, (A) for the benefit of the Agent and the L/C Issuer,
all customary costs and expenses incurred by the Agent and the L/C Issuer on
account of such L/C Obligations, (B) for the ratable benefit of the
Revolving Lenders, for each day during any month in which any L/C Obligation
shall remain outstanding, a fee (the “Letter
of Credit Fee”) in an amount equal to (x) the Applicable Margin
(calculated on the basis of a 360 -day year for actual days elapsed) multiplied
by (y) the maximum amount available for drawing (whether or not such day is a Business
Day and whether or not the conditions for drawing thereunder have been
satisfied) under all Letters of Credit at the close of business on such day,
and (C) for the sole benefit of the L/C Issuer, a fronting fee (the “Fronting Fee”) in an amount equal to 0.125%
of the face amount of each Letter of Credit. The Letter of Credit Fee shall be
paid to Agent for the ratable benefit of the Revolving Lenders monthly in
arrears, on the first day of each month and on the Commitment Termination Date.
The Fronting Fee shall be paid to the Agent, for the benefit of the L/C Issuer,
on the date of issuance of the applicable Letter of Credit. In addition, the
Borrowers shall pay to any L/C Issuer, on demand, such fees (including all per
annum fees), customary charges and expenses of such L/C Issuer in respect of
the issuance, negotiation, acceptance, amendment, transfer and payment of any
Letter of Credit or otherwise payable pursuant to the application and related
documentation under which any Letter of Credit is issued. During any period
during which the Default Rate shall have been imposed pursuant Section 2.4(c), or, in the absence of
such imposition, during any period during which the Required Lenders could have
imposed the Default Rate pursuant to such Section and instead elect to
impose the provisions of this paragraph, the Letter of Credit Fee otherwise in
effect pursuant to the preceding paragraph shall be increased by two percent
(2%) per annum.


 


51

















 


(e)           Exit Fee. The
Borrowers shall be required to satisfy all obligations under this Agreement on
or before the Commitment Termination Date. Upon termination of this Agreement,
whether by the satisfaction of the Loan or upon the occurrence of a Default
hereunder, the Borrowers shall pay to the Lenders an exit fee equal to 1.00% of
the Revolving Credit Commitment (the “Exit Fee”), provided, however, that:  (A) if the Lenders provide to the Borrowers
a credit facility, in an amount not less than the Revolving Credit Commitment
hereunder, to enable their emergence and exit from the Bankruptcy Cases (the “Exit
Facility”), then the Exit Fee, to the extent paid, will be credited to any
upfront fees due to the Lenders upon closing of the Exit Facility, or (B) if
the Lenders do not provide the Exit Facility then, upon payment in full of all
obligations under this Agreement and the Existing Credit Facility, the Exit Fee
will be waived as provided in the Forbearance Agreement.


 


Section 2.8. Mandatory Repayments and Prepayments.


 


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


 


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


 


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


 


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


 


(c)           [Reserved].


 


(d)           [Reserved].


 


(e)           [Reserved].


 


52

















 


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


 


Section 2.10. Application of Payments.


 


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


 


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


 


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


 


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


 


(iii)          third,
to the extent proceeds remain after the application pursuant to the preceding
clauses (i) and (ii), to the payment to the Lenders, pro rata, of any
accrued but unpaid interest under the Loan Documents;


 


(iv)          fourth, to
the extent proceeds remain after the application pursuant to the preceding
clauses (i), (ii) and (iii), to the payment to the Lenders, pro rata, of
any principal balance under the Loan Documents;


 


53






 













 


(v)                                 fifth,
to the extent proceeds remain after the application pursuant to the preceding
clauses (i) through (iv), inclusive, to the payment of an amount equal to
all other outstanding Obligations in such order as Agent may in its sole
discretion elect; and


 


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


 


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


 


(b)                                 The
Borrowers shall have the right to terminate in whole the Revolving Credit
Commitments 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 from Borrower Representative to the Agent.


 


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


 


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


 


Section 2.13.
Computation of Interest and Fees. Unused Line Fees pursuant
to Section 2.7(b),
Letter of Credit Fees pursuant to Section 2.7(d) and all interest on LIBOR Loans


 


54

















 


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. All interest on Base Rate
Loans hereunder shall be calculated for any period on the basis of a 365-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 3:00 p.m.
(New York City time) on the date when due. If any payment hereunder becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day and, with respect to payments of principal,
interest thereon, shall be payable at the then applicable rate during such
extension. For purposes of computing interest and Fees and determining
Borrowing Availability as of any date, all payments shall be deemed received on
the first Business Day following the Business Day on which immediately
available funds therefor are received in the Collection Account prior to 1:00 p.m.
(New York City time). Payments received after 1:00 p.m. (New York City
time) on any Business Day or on a day that is not a Business Day shall be
deemed to have been received on the following Business Day.


 


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


 


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


 


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


 


55

















 


(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 Borrowers.


 


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


 


Section 2.17
Overadvance Facility


 


(a)                            Upon the terms and subject to the conditions
set forth herein, from time to time during the period commencing on the
Effective Date and ending on the date that is ten (10) days prior to the
Commitment Termination Date, Borrower Representative may request that the
Lenders make advances of Revolving Credit Loans to a Borrower, which advances
will cause the principal balance of all Revolving Credit Loans of the Borrowers
then outstanding to exceed the Borrowing Base (each such advance of Revolving
Credit Loans, an “Overadvance Loan” and, collectively, the “Overadvance”),
but which Overadvance Loans shall not in the aggregate exceed the Overadvance
Commitment (as defined below). The Lenders have agreed to make the Overadvance
available to the Borrowers, effective as of the Effective Date, subject to the
terms and conditions set forth herein.


 


(b)                                 The maximum aggregate principal amount of the
Overadvance shall be Two Million, Five Hundred Thousand and 00/100 Dollars ($2,500,000.00)
(the “Overadvance Commitment”). Subject to the Borrowers’ compliance
with the conditions to funding set forth in Section 3.2
of this Agreement, one or more of the Borrowers may, at any time and from time
to time on and after the Effective Date and until the Commitment Termination
Date, borrow, repay and re-borrow all or any portion of the Overadvance up to
the Overadvance Commitment;


 


56

















 


provided, however, that, notwithstanding anything to the contrary set forth in this Agreement,
until the Overadvance has been repaid in full and all obligations of the
Lenders to make advances of Overadvance Loans has terminated, the Borrowers
shall not request, and Lender shall not be obligated to make, any advances of
Revolving Credit Loans (including, without limitation, Overadvance Loans) that
exceed the Revolving Credit Commitment at any time less any applicable Reserves.
Overadvances shall be made as Base Rate Advances only and shall not be eligible
for the LIBOR Rate.


 


(c)                                  Notwithstanding anything else contained in
this Section 2.17, Borrower
acknowledges that the Overadvance Facility is not a commitment to lend and any
individual Overadvance may be made or refused in the sole and absolute
discretion of the Lenders.


 


ARTICLE III.


 


CONDITIONS


 


Section 3.1. Conditions
to Effectiveness of this Agreement and to the initial Extensions of Credit on
the Effective Date.   The effectiveness of this Agreement and the
obligation of each Lender to make any Extension of Credit on the Effective Date
or for the Agent or any Lender to take, fulfill or perform any other action
hereunder, shall be subject to satisfaction of all of the following conditions
in a manner satisfactory to Agent:


 


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


 


(b)                                 The
Interim Order shall have been entered or approved by the Bankruptcy Court in form and
substance acceptable to the Borrowers, the Agent and the Lenders;


 


(c)                                  Agent
shall have received (i) evidence satisfactory to it in its sole discretion
that the Credit Parties have obtained all required consents and approvals,
including regulatory and other third party 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 continuing
operations of the Credit Parties, and the same shall be in full force and
effect or (ii) an Officer’s Certificate in form and substance
satisfactory to Agent affirming that no such consents or approvals are
required;


 


(d)                                 Agent
shall have received the Fees required to be paid by the Borrowers on the Effective
Date in the respective amounts specified in Section 2.7 or in the Commitment


 


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Letter and shall
have reimbursed the Agent for all fees, costs and expenses of closing presented
as of the Effective Date;


 


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


 


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


 


(g)                                 As
of the Effective Date, there shall have been (i) other than the
commencement of the Bankruptcy Cases and the events contemplated by the
Forbearance Agreement, since January 30, 2006, no
material adverse change in the business, financial or other condition of the
Credit Parties taken as a whole, the Collateral which would be subject to the
security interest granted to the Agent, or in the projections of the Credit
Parties and (ii) no litigation commenced that has not been stayed by the
Bankruptcy Court, that has a reasonable likelihood of being determined
adversely to any Credit Party and that, if so determined, could reasonably be
expected to have a Material Adverse Effect;


 


(h)                                 [Reserved.]


 


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


 


(j)                                     After
giving effect to any Extensions of Credit to be made on the Effective Date,
Borrowers shall have Borrowing Availability (calculated on a pro forma basis
with trade payables being paid currently, expenses and liabilities being paid
in the ordinary course of business and without acceleration of sales and
without deterioration of working capital) of at least $2,000,000, in the
aggregate;


 


(k) [Reserved]


 


(l)  [Reserved]


 


(m)                               There
shall not exist (i) any Default or Event of Default under the Loan
Documents or (ii) any default or event of default under any other
Indebtedness or agreement of any Credit Party not disclosed on the Disclosure
Schedules, which could reasonably be expected to have a Material Adverse
Effect;


 


(n)                                 There
shall have been no direct or indirect change in Senior Management of any Credit
Party, except as set forth in Section 7.22;


 


(o)                                 [Reserved.]


 


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(p)                                 The
Fixed Charge Coverage Ratio shall not exceed 0.50 to 1.00, determined on a pro
forma basis after giving effect to the Loans to be made on the Effective Date;


 


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


 


(r)                                    The
Credit Parties shall be in pro forma compliance (based on the 2005 Unaudited
Financials) with all financial covenants set forth in Sections 7.15, 7.16, 7.17 and 7.19 as of the Effective Date after giving
effect to the Loans to be made on the Effective Date and Agent shall have
received evidence in form and substance satisfactory to it in its sole
discretion of such pro form compliance;


 


 (s)                               Holdings and its
consolidated Subsidiaries shall have pro forma trailing twelve month EBITDA of
at least $16,500,000 (based on the 2005 Unaudited Financials), with any
adjustments to such pro forma EBITDA to be satisfactory to Agent in its sole
discretion;


 


(t)                                    The
Senior Secured Leverage Ratio shall not exceed 2.00 to 1.00, (based on the 2005
Unaudited Financials) determined on a pro forma basis after giving effect to
the Loans to be made on the Effective Date;


 


(u)                                 The
Total Leverage Ratio shall not exceed 13.75 to 1.00, (based on the 2005
Unaudited Financials) determined on a pro forma basis after giving effect to
the Loans to be made on the Effective Date;


 


(v)                                 The
Agent shall not have become aware of any information or other matter affecting
any Credit Party or the transactions contemplated hereby that is inconsistent
in a material and adverse manner with any such information or other matter
disclosed to the Agent prior to January 30, 2006;


 


(w)                               The
Agent shall have received a duly executed Borrowing Base Certificate, dated not
more than 15 days prior to the Effective Date, in form and substance
satisfactory to Agent;


 


(x)                                   Agent
shall have received and reviewed (i) the audited consolidated balance
sheets and related statements of income, stockholders’ equity and cash flows of
each of Holdings and its consolidated Subsidiaries and CCS prepared in
accordance with GAAP for the Fiscal Year ended December 31, 2004, (ii) the
unaudited consolidated balance sheets and related statements of income,
stockholders’ equity and cash flows of each of Holdings and its consolidated
Subsidiaries and CCS prepared in accordance with GAAP for the Fiscal Year ended
December 31, 2005 (the “2005 Unaudited Financials”) and (iii) any
changes to the forecasts of the financial performance of Holdings and its
Subsidiaries through 2008. Agent shall be satisfied with the items specified in
clause (i) (it being understood that Agent is satisfied with the draft
consolidated balance sheets and related statements of income, stockholders’
equity and cash flows of Holdings for the Fiscal Year ended December 31, 2005
delivered to Agent prior to March 31, 2006, provided, that if the Credit
Parties obtain an extension from the Securities and Exchange Commission
regarding the filing of audited financial statements, the preceding date


 


59

















 


may be
extended to April 30, 2006. Any changes specified in clause (ii) shall
not be materially worse than the forecasts previously provided to Agent.


 


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


 


(a)                                  receipt
by the Agent of a Notice of Borrowing in accordance with Section 2.3(a), 2.5(c) or 2.6(b);


 


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


 


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


 


(d)                                 [Reserved].


 


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


 


ARTICLE IV.


 


REPRESENTATIONS AND
WARRANTIES


 


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


 


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


 


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


 


Section 4.3.  Organizational and Governmental Approvals; No
Contravention. The execution, delivery and performance by each
Credit Party of the Loan Documents 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 Interim Order, the Final Order, the filing of UCC-1 financing statements,
and such other filings as have been made and are in full force and effect), (c) do
not contravene, or constitute a default under (i) any provision of
Applicable Law the violation of which
could reasonably be expected to have a Material Adverse Effect, (ii) the
Organizational Documents of such Credit Party or (iii) any agreement,
judgment, injunction, order, decree or other instrument binding upon any Credit
Party and (d) do not result in the creation or imposition of any Lien
(other than the Liens created by the Collateral Documents) on any asset of any
such Credit Party.


 


Section 4.4. Binding Effect; Liens of Collateral
Documents. (a)  Each Loan 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


 


61

















 


such statements is
true, correct and complete in all material respects. Except as disclosed or
reflected in such financial statements or in Disclosure Schedule 4.5(a),
no Credit Party has any liabilities, contingent or otherwise, nor any
unrealized or anticipated losses, that, singly or in the aggregate, have had or
might have a Material Adverse Effect.


 


(b)                                 The
Budget delivered on the date hereof and attached hereto as Disclosure Schedule 4.5(b) was
prepared by the Borrowers in light of the past operations of their businesses,
but including future payments of known contingent liabilities, and reflect
projections for the three year period beginning on January 1, 2006 on a
month-by-month basis for the first year and on a year-by-year basis thereafter.
The Budget is based upon estimates and assumptions stated therein, all of which
the Borrowers believe to be reasonable and fair in light of current conditions
and current facts known to the Borrowers and, as of the Effective Date, reflect
the Borrowers’ good faith and reasonable estimates of the future financial
performance of the Borrowers and their Subsidiaries and of the other
information projected therein for the period set forth therein. The monthly
Budget for the month beginning on January 1,
2006 and the projections for the years beginning on January 1, 2007 and
2008 shall include an income statement, balance sheet and cash flow statement.


 


Section 4.6. Material Adverse Effect. Between
December 31, 2005 and the Effective Date, other than the filing of the
Bankruptcy Cases and the events detailed in the Forbearance Agreement: (a) no
Credit Party has incurred any obligations, contingent or noncontingent
liabilities, liabilities for Charges, long-term leases or unusual forward or
long-term commitments that, alone or in the aggregate, could reasonably be
expected to have a Material Adverse Effect; (b) no contract, lease or
other agreement or instrument has been entered into by any Credit Party or has
become binding upon any Credit Party’s assets and no law or regulation
applicable to any Credit Party has been adopted that has had or could
reasonably be expected to have a Material Adverse Effect; (c) no Credit
Party is in default and, to the best of each Credit Party’s knowledge, no third
party is in default under any material contract, lease or other agreement or
instrument which default could reasonably be expected to have a Material
Adverse Effect; and (d) no event has occurred, that alone or together with
other events, could reasonably be expected to have a Material Adverse Effect. December 31,


 


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


 


Section 4.8.
Full Disclosure. None of the Information (financial or
otherwise) furnished by or on behalf of any Credit Party to the Agent or any
other Lending Party hereunder or in connection with the Loan Documents or any
of the transactions contemplated here by or thereby contains any untrue
statement of a material fact or omits to state a material fact necessary


 


62

















 


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


 


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


 


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


 


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


 


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


 


Section 4.13. Subsidiaries; Capitalization.  Borrowers have no
Subsidiaries on the Effective Date other than as set forth on Disclosure Schedule 4.13.
Disclosure Schedule 4.13 sets forth the correct legal name and
jurisdiction of organization of each of the Borrowers and their Subsidiaries. The
authorized Stock of each of the Credit Parties are as set forth on Disclosure
Schedule 4.13. All issued and outstanding Stock of each of the Credit
Parties are duly authorized and validly issued, fully paid, nonassessable, free
and clear of all Liens other than those in favor of Agent for the benefit of
the Lending Parties, and such Stock was issued in compliance with all Applicable
Laws, provided that with respect to the Borrower Representative no
representation is made as to Liens on its publicly held shares. The identity of
the holders of


 


63

















 


the Stock of each
of the Credit Parties and the percentage of their fully diluted ownership of
the Stock of each of the Credit Parties is set forth on Disclosure Schedule 4.13,
provided that with respect to the Borrower Representative, no
representation is made as to the identity and respective percentage ownership
of the holders of its publicly held shares. 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 Effective Date (except for the Obligations) is described in Disclosure Schedule 4.13.


 


Section 4.14. Government Regulations. No
Credit Party is an “investment company” or an “affiliated person” of, or “promoter”
or “principal underwriter” for, an “investment company”, as such terms are
defined in the Investment Company Act of 1940. No Credit Party is subject to
regulation under the 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 or charges related to certain state and/or local
taxes (other than income, gross receipts, sales, franchise or use taxes) in an
aggregate amount not to exceed $50,000 at any time. Proper and accurate amounts
have been withheld by each Credit Party from its respective employees for all
periods in compliance with Applicable Laws and such withholdings have been
timely paid to the respective Governmental Authorities.


 


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


 


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Section 4.18.   [Reserved.]


 


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


 


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


 


Section 4.21. Compliance with HIPAA. To
the extent that and for so long as (i) any Credit Party is a “covered
entity” as defined in 45 C.F.R. § 160.103, (ii) any Credit Party
and/or its business and operations are subject to or covered by the HIPAA
Administrative Requirements codified at 45 C.F.R. Parts 160 & 162 (the
“Transactions Rule”) and/or the
HIPAA Security and Privacy Requirements codified at 45 C.F.R. Parts 160 &
164 (the “Privacy and Security Rules”),
or (iii) any Credit Party sponsors any “group health plans” as defined in
45 C.F.R. § 160.103, such Credit Party has:  (x) completed, or will complete on or before
any applicable compliance date, surveys, audits, inventories, reviews, analyses
and/or assessments, including risk assessments, (collectively “Assessments”) of all areas of its business
and operations subject to HIPAA and/or that could reasonably be expected to be
adversely affected by the failure of such Credit Party to be HIPAA Compliant
(as defined below) to the extent that such Credit Party reasonably believes
that these Assessments are appropriate or required for such Credit Party to be
HIPAA Compliant; (y) developed, or will develop on or before any applicable
compliance date, a detailed plan and time line for becoming HIPAA Compliant (a “HIPAA Compliance Plan”); and (z)
implemented, or will implement on or before any applicable compliance date,
those provisions of its HIPAA Compliance Plan necessary to ensure that such
Credit Party is HIPAA Compliant; provided, however, that
subsections (x), (y) and (z) of this Section 4.21 as they relate to
the Transactions Rule shall not apply to Medcare for the period beginning
on the date of this Agreement and continuing until the later to occur (and
including such date) of (1) October 15, 2003 and (2) such other
date as may be adopt by the U.S. Department of Health and Human Services (“HHS”) as the compliance deadline for the
Transactions Rule (including any extensions of such deadline adopted by
HHS). For purposes of this Agreement, “HIPAA Compliant” shall mean that such
Credit Party (1) is, or on or before any applicable compliance date,
including any extensions of such date adopted by HHS, will be, in full
compliance with any and all of the applicable requirements of HIPAA, including
all requirements of the Transactions Rule and the Privacy and Security Rules and
(2) is not subject to, and could not reasonably be expected to become subject
to, any civil or criminal penalty or any investigation, claim or process that
could reasonably be expected to have a Material Adverse Effect.


 


Section 4.22. [Reserved.]


 


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ARTICLE V.


 


REPORTING COVENANTS


 


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


 


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


 


(a)                                  [Reserved]


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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or involves property of any Credit Party having a
value in excess of $500,000 individually or in the aggregate.


 


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


 


(l)  [Reserved]


 


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


 


(n)                                 Monthly Financials. As soon as available, but in any event (i) for
the month of January 2006, not later than April 15, 2006 (ii) within
45 days after the end of each of February, March, and April 2006 as well
as the last month of each Fiscal Quarter and (iii) otherwise within 30
days after the end of each month, the Credit Parties will deliver to the Agent
an unaudited, internally prepared balance sheet and the related statements of
income, retained earnings and cash flows for the Credit Parties as at the end
of and for such month and for the year -to -date period then ended, prepared,
on a consolidating and consolidated basis to include any affiliates, in
reasonable detail and stating in comparative form the figures for the
corresponding date and periods in the previous year, all prepared in accordance
with GAAP, subject to year-end audit adjustments; and accompanied by a Compliance
Certificate substantially in the form of Exhibit 5.1(n).


 


(o)                                 Bankruptcy
Reporting. As soon as available but no later than 3 days after the delivery
to any Committee constituted in the Bankruptcy Cases, the Credit Parties will provide
to the Agent and the Lenders all financial reports, proposals, analyses,
projections, not otherwise identified in Section 5.1
hereof, created for or delivered to any Committee, trustee, examiner, or the
like in the Bankruptcy Cases.


 


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


 


(a)                                  To
the Agent, on a bi-weekly basis or at such more frequent intervals as Agent may reasonably
request from time to time (together with a copy of all or any part of the
following reports requested by Agent or any Lender in writing after the Effective
Date), each of the following reports, each of which shall be prepared by the
Borrowers as of the last day of the immediately preceding two week period:


 


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


 


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


 


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


 


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


 


(c)                                  To
the Agent, at the time of delivery of each of the monthly financial statements
delivered pursuant to Section 5.1(n) for the last month in each Fiscal Quarter :


 


(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(n) for the last month in the previous Fiscal
Quarter, in each case accompanied by such supporting detail and
documentation as shall be requested by the Agent in its sole discretion; and


 


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


 


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


 


(e)                                  To
Agent, at the time of delivery of each of the monthly financial statements
delivered pursuant to Section 5.1(n) for the last month in the previous Fiscal
Quarter,


 


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a reconciliation
of the outstanding Loans as set forth in the quarterly Loan Account statement
provided by Agent to the general ledger and monthly financial statements
delivered pursuant to Section 5.1(n) for the last month in the previous Fiscal
Quarter, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable credit judgment;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 5.3.                                Accuracy of Financial
Statements and Information


 


(a)                                  Future Financial Statements. All financial statements delivered pursuant
to Section 5.1(b) or (n),
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


 


70

















 


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(n), to the absence of
footnotes and normally recurring year-end adjustments) and (ii) in the
case of any other information presented, be true, correct and complete in all
material respects, and the furnishing of the same to the Lending Parties shall
constitute a representation and warranty by the Credit Parties made on the date
the same are furnished to the Lending Parties to that effect.


 


(b)                                 Future Information. All Information furnished to any Lending
Party by or on behalf of any Credit Party on and after the Agreement Date in
connection with or pursuant to this Agreement or any other Loan Document or in
connection with or pursuant to any amendment or modification of, or waiver
under, this Agreement or any other Loan Document, shall, at the time the same
is so furnished, but in the case of Information dated as of a prior date, as of
such date, (i) in the case of any such Information prepared in the
ordinary course of business, be complete and correct in all material respects
in the light of the purpose prepared, and, in the case of any such Information
required by the terms of this Agreement or the preparation of which was
requested by any Lending Party pursuant to the terms of this Agreement, 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).


 


Section 5.4  Bankruptcy
Pleadings


 


Copies of all pleadings, motions, applications,
judicial information, financial information and other documents filed or
submitted by or on behalf of Credit Parties with the Bankruptcy Court or the
U.S. Trustee in the Bankruptcy Cases, or distributed by or on behalf of Credit
Parties to any official committee, examiner, or trustee in Bankruptcy Cases,
shall be distributed by the Credit Parties to the Agent and the Lenders at the
same time such information is distributed to such other parties.


 


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ARTICLE VI.


 


AFFIRMATIVE
COVENANTS


 


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


 


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


 


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


 


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


 


Section 6.4. Insurance; Damage to or Destruction of
Collateral.   (a) 
The Credit Parties shall, at their sole cost and expense, maintain the policies
of insurance described on Disclosure Schedule 4.19 as in effect on
the date hereof or otherwise in form with such deductibles as is customary
for similarly situated businesses, and amounts and with insurers reasonably
acceptable to Agent. Such policies of insurance (or the loss payable and
additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide thirty (30) days prior written
notice to Agent in the event of any non-renewal,


 


72

















 


cancellation or
amendment of any such insurance policy. If any Credit Party at any time or
times hereafter shall fail to obtain or maintain any of the policies of insurance
required above, or to pay all premiums relating thereto, Agent may at any
time or times thereafter obtain and maintain such policies of insurance and pay
such premiums and take any other action with respect thereto that Agent deems
advisable; provided that Agent shall have no obligation to obtain
insurance for any Credit Party or pay any premiums therefor, but to the extent
it does obtain such insurance or pay such premiums, Agent shall not be deemed
to have waived any Default arising from any Credit Party’s failure to maintain
such insurance or pay any premiums therefor. All sums so disbursed by Agent
hereunder, including reasonable attorneys’ fees, court costs and other charges
related thereto, shall be payable by Borrowers on demand by the Agent and shall
constitute additional Obligations hereunder secured by the Collateral.


 


(b)                                 Agent
reserves the right at any time upon any change in any Credit Party’s risk
profile (including any change in the product mix maintained by any Credit Party
or any laws affecting the potential liability of such Credit Party) to require
additional forms and limits of insurance to, in Agent’s opinion, adequately
protect both Agent’s and the Lenders’ 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 Agent,
each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, satisfactory to Agent, with respect to its
insurance policies.


 


(c)                                  Each
Credit Party shall deliver to Agent, in form and substance satisfactory to
Agent, endorsements to (i) all “All Risk” and business interruption
insurance naming Agent, on behalf of itself and Lenders, as loss payee, and (ii) all
general liability and other liability policies naming Agent, on behalf of
itself and Lenders, as additional insured. Each Credit Party irrevocably makes,
constitutes and appoints Agent (and all officers, employees or agents
designated by Agent), so long as any Event of Default has occurred and is
continuing or the anticipated insurance proceeds exceed $250,000, as such Credit Party’s true and lawful
agent and attorney-in-fact for the purpose of making, settling and adjusting
claims under such “All Risk” policies of insurance, endorsing the name of such
Credit Party on any check or other item of payment for the proceeds of such “All
Risk” policies of insurance and for making all determinations and decisions
with respect to such “All Risk” policies of insurance; provided that Agent
shall have no duty to exercise any rights or powers granted to it pursuant to
the foregoing power-of-attorney. After deducting from such proceeds the
expenses, if any, incurred by Agent in the collection or handling thereof,
Agent may, at its option, (i) apply such proceeds to the reduction of the
Obligations or (ii) permit or require the applicable Credit Party to use
such money, or any part thereof, to replace, repair, restore or rebuild
the Collateral within 180 days of such casualty with materials and workmanship
of substantially the same quality as existed before the loss, damage or
destruction; provided that if such Credit Party shall not have completed
or entered into binding agreements to complete such replacement, restoration,
repair or rebuilding within 180 days of such casualty, Agent may apply
such insurance proceeds to the Obligations. Notwithstanding the foregoing, if
the casualty giving rise to such insurance proceeds could not reasonably be
expected to have a Material Adverse Effect and such insurance proceeds do not
exceed $250,000 in the aggregate, Agent shall permit the applicable Credit
Party to replace, restore, repair or rebuild the property; provided that
if such Credit Party shall not have completed or entered into binding
agreements to complete such replacement, restoration, repair or rebuilding
within 180 days of such casualty, Agent may apply such insurance proceeds
to the


 


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Obligations. All
insurance proceeds that are to be made available to any Credit Party to
replace, repair, restore or rebuild the Collateral shall be applied by Agent to
reduce the outstanding principal balance of the Revolving Loan (which
application shall not result in a permanent reduction of the Revolving Credit
Commitment) and upon such application, Agent shall establish a Reserve against
the Borrowing 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 Representative shall request a Revolving Credit Advance be made to
such Credit Party in the amount requested to be released; (y) so long as the
conditions set forth in Section 3.4, as applicable, have been met, Revolving Lenders
shall make such Revolving Credit Advance and (z) in the case of insurance
proceeds applied against the Revolving Loan, the Reserve established with
respect to such insurance proceeds shall be reduced by the amount of such
Revolving Credit Advance. To the extent not used to replace, repair, restore or
rebuild the Collateral, such insurance proceeds shall be applied to the
Obligations.


 


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


 


Section 6.6. Inspection
of Property, Books and Records. Each Credit Party will keep
proper books of record and account in which full, true and correct entries
shall be made of all dealings and transactions in relation to its business and
activities and will permit the Agent, who may be accompanied by the
representatives of any Lender upon such Lender’s written request, to visit and
inspect any of its properties, to examine and make abstracts or copies from any
of its books and records subject to applicable confidentiality laws relating to
patient medical care records (to the extent not waived by the patient), to
conduct a collateral audit and analysis of its inventories and accounts
receivable and to discuss its affairs, finances and accounts with its


 


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officers,
employees and independent public accountants, all at such reasonable times
during regular business hours and as often as may reasonably be desired; provided
that, so long as no Default or Event of Default shall have occurred and be continuing,
the Agent shall have provided the appropriate Credit Party with reasonable
prior notice and shall conduct such visit in a manner that does not
unreasonably interfere with the conduct of such Credit Party’s business; and provided
further that Agent agrees that except (a) during the occurrence and
continuance of a Default or Event of Default, and (b) for audits of
Additional Subsidiaries pursuant to Section 6.14,
no Credit Party shall be responsible for any audit fees with respect to more
than two (2) audits during any Fiscal Year. Representatives of each Lender
will be permitted to accompany representatives of Agent during each visit,
inspection and discussion referred to in the immediately preceding sentence. Agent
and Lenders agree that to the extent that (x) any documents or records
requested for inspection pursuant to this Section 6.6
are, at the time of such request, subject to a legitimate attorney-client
privilege in favor of a Credit Party as a result of threatened or potential
litigation or adverse action involving such Credit Party and another Person
(other than a Lender or Agent) and (y) such disclosure would destroy such
attorney-client privilege, such Agent or Lender, as applicable, shall afford
Borrower Representative an opportunity to consult with such Agent or Lender, as
applicable, prior to disclosure of such documents or records. Without in any
way limiting the foregoing, Borrowers will participate and will cause the chief
executive officer and the chief financial officer of the Borrowers and such
other officers of the Credit Parties as the Agent shall designate to
participate in a meeting with Agent and Lenders to discuss the financial
results and condition of the Credit Parties at least once during each year,
which meeting shall be held at such time during regular business hours and such
place as may be reasonably requested by Agent.


 


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


 


Section 6.8. Use
of Proceeds. The proceeds of Revolving Loans made on the Effective
Date shall be used by the Borrowers solely to (a) repay on the Effective
Date the principal amount of all of the outstanding “Obligations” under and as
defined in the Existing Credit Facility owing to GE Capital and any other
lenders under the Existing Credit Facility on the Effective Date and (b) to
pay on the Effective Date all accrued and unpaid interest and fees, other than
the Conditionally Waived Pre-petition Fees, owing to GE Capital and the other Existing
Lenders under the Existing Credit Facility, in each case as specified in the
Statement of


 


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Sources and Uses
delivered by Holdings to Agent on or prior to the Effective Date. The proceeds
of Revolving Loans and Swingline Loans made on and after the Effective Date
shall be used by the Borrowers solely for the purpose of funding working
capital and other general corporate purposes of the Borrowers and any of their
Subsidiaries that are Credit Parties. Letters of Credit shall be used solely
for general corporate purposes of the Borrowers and any of their Subsidiaries
that are Credit Parties. No Extension of Credit and none of the proceeds of any
Extension of Credit will be used (i) in violation of any Applicable Law or
(ii) to repay all or any portion of the principal amount of any Senior
Unsecured Debt or Subordinated Debt. GE Capital hereby acknowledges and agrees
that the pre-payment fee and the PIK Spread that are due and payable pursuant
to the Existing Credit Facility have been conditionally waived pursuant to
sections 1(c) and 3(c) of the Forbearance Agreement, and the
conditions of such waiver are incorporated herein by reference.


 


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


 


Section 6.10. [Reserved].


 


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


 


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


 


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


 


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


 


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


 


Section 6.14. Additional
Subsidiaries.  Within
30 days (or, with respect to clause (iii) below, 60 days) after the
creation or acquisition of any Subsidiary by any Credit Party, such Credit
Party (other than new Subsidiaries that become Additional Borrowers pursuant to
Section 2.16) shall cause to
be executed and delivered, (i) by such new Subsidiary, a Subsidiary
Guaranty Agreement pursuant to which such Subsidiary shall guarantee the payment
and performance of all of the Obligations, (ii) by such new Subsidiary, a
Guarantor Security Agreement pursuant to which the Agent (for the benefit of
itself and the Lenders) shall be granted a first priority (subject to Permitted
Encumbrances) and perfected security interest in all Collateral (as defined in
the Security Agreement) of such Subsidiary that is either (x) property in which
a security interest can be granted and perfected under the Code or (y)
Intellectual Property registered with the United States Patent and Trademark
Office or the United States Copyright Office, (iii) by such new Subsidiary
if it owns any real property, a Mortgage in form and substance reasonably
satisfactory to Agent) pursuant to which the Agent (for the benefit of itself
and the Lenders) shall be granted a first priority (subject to Permitted
Encumbrances) and perfected Lien in such Mortgaged Properties together with the
other documents relating to such Mortgaged Properties described in Section 6.13, (iv) by such Subsidiary
if it owns any Intellectual Property that is registered with the United States
Patent and Trademark Office or the United States Copyright Office, an
Intellectual Property Security Agreement in substantially the form of the
Intellectual Property Security Agreement delivered by the other Credit Parties
on the Closing Date (or otherwise in form and substance reasonably
satisfactory to Agent) and pursuant to which the Agent (for the benefit of
itself and the Lenders) shall be granted a first priority (subject to Permitted
Encumbrances) and perfected security in all of such Intellectual Property, (v) by
the Credit Party that is such Subsidiary’s direct parent company or companies,
a Pledge Agreement substantially in the form of the Pledge Agreement
delivered by the other Credit Parties on the Closing Date (or otherwise in form and
substance reasonably satisfactory to the Agent) and pursuant to which all of
the Stock of such new Subsidiary owned by each such parent company shall be
pledged to the Collateral Agent (for the benefit of itself and the Lenders) on
a first priority and perfected basis to secure the Obligations, and (vi) by
the applicable Credit Parties, such other related documents (including closing
certificates, legal opinions and other documents of the types described in Exhibit I) as the Agent may reasonably
request, all in form


 


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and substance
reasonably satisfactory to the Agent; provided, however, that clause (i) and
(ii) above shall not apply to any newly-formed Subsidiary that becomes an
Additional Borrower in accordance with Section 2.16.


 


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


 


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


 


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


 


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


 


(c)                                  On or before the Effective Date (or such
later date as Agent shall consent to in writing), each Credit Party shall
deliver to Agent (i) for each Government Receivables Deposit Account, a
tri-party deposit account agreement between Agent, the bank at which each
Government Receivables Deposit Account is maintained and each Credit Party, in form and
substance satisfactory to Agent (each a “Government
Receivables Deposit Account Agreement”), which Government Receivables Deposit Account Agreement shall become
operative on or prior to the Effective Date, and (ii) for the accounts of
Credit Parties designated as a Blocked Account on Disclosure Schedule 6.16(c) and
for the Concentration Account and any Disbursement Accounts, a tri-party
blocked account agreement or lockbox account


 


79

















 


agreement between Agent, the bank at which each such
Blocked Account or Disbursement Account is maintained and Credit Parties, in form and
substance satisfactory to Agent (each a “Blocked
Account Agreement”), which
Blocked Account Agreement shall become operative on or prior to the Effective
Date. Each such Blocked Account Agreement shall provide, among other things,
that from and after the Effective Date (A) with respect to banks at which
any Blocked Accounts or Disbursement Account is maintained, such bank agrees to
forward immediately all amounts in each Blocked Account to the Concentration
Account and to commence the process of daily sweeps from each of the
Concentration Accounts and Disbursement Accounts into the Collection Account. Notwithstanding
the foregoing, the Agent hereby acknowledges that the Private Pay Account (Bank One account number: 1571836806) of CCS (the “Bank One Account”) is not currently subject to a
Blocked Account Agreement. Subject to (x) the delivery of a Blocked Account
Agreement for the Bank One Account
or (y) the closing of the Bank One
Account, confirmed in writing, on or before the thirtieth day following
the Closing Date, the failure to deliver a Blocked Account Agreement for this
account shall not constitute a default hereunder.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 6.18                            [Reserved].


 


Section 6.19                            [Reserved.]


 


ARTICLE VII.


 


NEGATIVE COVENANTS


 


So long as any Lender has
any Commitment hereunder or any Extension of Credit or other Obligation (other
than contingent indemnity obligations not then due) remains


 


81

















 


outstanding, each
Borrower shall, and shall cause each Credit Party to, comply with each of the
covenants in this Article VII
unless compliance with such covenants has previously been waived in writing by
Agent or Lenders, as applicable, in their sole and absolute discretion, in
accordance with Section 11.5:


 


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


 


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


 


(b)                                 Indebtedness under the
Loan Documents;


 


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


 


(d)                                 Indebtedness of a
Credit Party to another Credit Party, provided that: (i) upon
request of Agent, each Credit Party shall have executed and delivered to each
other Credit Party, on the Effective Date, a demand note (collectively, the “Intercompany Notes”) to evidence any such
intercompany Indebtedness owing at any time by such Credit Party to such other
Credit Parties which Intercompany Notes shall be in form and substance
reasonably satisfactory to Agent and shall be pledged and delivered to Agent
pursuant to the applicable Pledge Agreement or Security Agreement as additional
collateral security for the Obligations; (ii) each Credit Party shall
record all intercompany transactions on its books and records in a manner
reasonably satisfactory to Agent; (iii) the obligations of each Credit
Party under any such Intercompany Notes shall be subordinated to the
Obligations of such Credit Party hereunder in a manner reasonably satisfactory
to Agent; and (iv) no Default would occur and be continuing after giving
effect to any such proposed intercompany loan;


 


(e)                                  Indebtedness
consisting of Guaranteed Obligations to the extent that such Guaranteed
Obligations are permitted pursuant to Section 7.3
or


 


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to the extent that the underlying Indebtedness being guaranteed is
expressly permitted pursuant to this Section 7.1;


 


(f)                                    Reserved;


 


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


 


(h)                                 [Reserved];


 


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


 


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


 


(k) Indebtedness
of the Credit Parties in respect of the Carve Out, if any.


 


Section 7.2. Liens;
Negative Pledges. No Credit Party shall create, incur, assume
or permit to exist any Lien on or with respect to its Accounts or any of its other
properties or assets (whether now owned or hereafter acquired), including but
not limited to the


 


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Collateral, except
for (a) Permitted Encumbrances, (b) Liens in existence on the date
hereof and summarized on Disclosure Schedule 7.2 securing the
Indebtedness described on Disclosure Schedule 7.1 and permitted
refinancings, extensions and renewals thereof, including extensions or renewals
of any such Liens; provided that the principal amount of the Indebtedness
so secured is not increased and the Lien does not attach to any other property
or assets of any Credit Party, (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with Indebtedness permitted by Section 7.1(c); provided that such
Liens attach only to the assets subject to such purchase money debt, (d) encumbrances
in the nature of non-exclusive licenses granted by Credit Parties to customers
in the ordinary course of business, provided that such licenses do not
impair in any respect the presently existing or hereafter created Liens in
favor of Agent on any of the Collateral; (e) banker’s liens on Deposit
Accounts of Credit Parties to the extent and only to the extent that (i) such
Deposit Accounts are not required pursuant to the express terms of this
Agreement or any of the other Loan Documents to be subject to a Control
Agreement in favor of Agent, or (ii) Agent shall have entered into a
Control Agreement which subordinates, waives or otherwise imposes limits upon
such Liens on terms satisfactory to Agent in its sole discretion, and (f) other
Liens securing Indebtedness not exceeding $500,000 in the aggregate at any time
outstanding, so long as such Liens do not attach to any Accounts or Inventory. In
addition, no Credit Party shall become a party to any agreement, note,
indenture or instrument, or take any other action, that would prohibit the
creation of a Lien on any of its properties or other assets in favor of Agent,
on behalf of itself and Lenders, in each case entered into in the ordinary
course of business, except operating leases, Capital Leases or Licenses which
prohibit Liens upon the assets or properties that are subject to such operating
lease, Capital Lease or License.


 


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


 


Section 7.4. Capital
Stock; Nature of Business. No Credit Party shall (a) make
any change in its capital structure as described in Disclosure Schedule 7.4,
including the issuance or sale of any shares of Stock, warrants or other
securities convertible into Stock or any revision of the terms of its
outstanding Stock; provided that, so long as no Change of Control occurs as a
result of such action, Holdings may issue shares of its Stock in
connection with the award of Stock or options to its employees, consultants,
officers or directors under any employee stock option plan existing on the Closing
Date or in connection with the exercise of any options not granted pursuant to
a stock option plan but in connection with any Acquisition or granted to new
hires; provided that (x) such options and plans shall not provide in the
aggregate for the issuance of options to acquire more than 40% of the common
Stock of Holdings, on a fully-diluted basis, and (y) Holdings will not in
connection with either the exercise of any such options or the reservation of
shares of Stock for issuance in connection with the exercise of any such
options repurchase any of its Stock unless such repurchase is expressly
permitted under Section 7.5 of this Agreement, and (z) Holdings may issue
shares of its Stock upon the exercise of any warrants, or (b) amend its
Organizational Documents in a manner that would adversely affect Agent or
Lenders or such Credit Party’s duty or ability to repay the Obligations. No
Credit Party


 


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shall engage in any
business materially different than the businesses currently engaged in by it on
the Closing Date.


 


Section 7.5. Restricted
Payments. No Credit Party shall make any Restricted Payment,
except (a) intercompany loans between Credit Parties to the extent
permitted by Section 7.1, (b) dividends and distributions by Subsidiaries of
any Credit Party paid to such Credit Party, (c) employee loans permitted
under Section 7.10(b), (d) payments
of principal and interest of Intercompany Notes issued in accordance with Section 7.1, (e) Holdings or any Subsidiary
thereof may redeem or repurchase for cash, at fair value, the equity
interests of Holdings or a Subsidiary (or options to purchase equity interests)
from any director, officer or employee of Holdings or a Subsidiary upon the
death, disability, retirement or other termination of such director, officer or
employee; provided that all such repurchases under this clause (e) shall
not exceed $750,000 in any Fiscal Year, and (f) Holdings may engage
in cashless exercises of stock options with its officers, employees and
directors provided that no cash or property is paid to or given by any Credit
Party to such officer, employee, director or any other Person in connection
with such exercise and no Credit Party incurs any Indebtedness in connection
with such transaction; provided that, in each case with respect to
clauses (d), (e), and (f) above (and both before and after giving effect
to any such Restricted Payment) (i) no Default or Event of Default has
occurred and is continuing at the time of such proposed Restricted Payment, (ii) the
chief financial officer of Holdings shall have delivered to Agent a
certificate, in form and substance reasonably satisfactory to Agent,
demonstrating on a pro forma basis after giving effect to any such Restricted
Payment compliance with the minimum liquidity covenant in Section 6.18 and
actual and pro forma compliance with the financial covenants in Sections 7.15, 7.16 and 7.17,
and (iii) the Restricted Payments shall be made at such times as will
permit the delivery of financial statements necessary to determine current
compliance with the financial covenants set forth herein prior to each such
Restricted Payment.


 


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


 


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


 


Section 7.8. Consolidations;
Mergers; Sales of Assets; Creation of Subsidiaries. No Credit
Party will, without the appropriate approval of the Bankruptcy Court in the
Bankruptcy Cases: (a) consolidate or merge with or into any other Person
other than the merger of a wholly owned Subsidiary of a Borrower with and into
a Borrower (provided that


 


85

















 


such Borrower is
the surviving corporation) or another wholly owned Subsidiary of a Borrower, (b) sell,
lease or otherwise transfer, or grant any Person an option to acquire, directly
or indirectly, any of its properties or assets or consummate any Asset
Disposition, other than (i) sales of Inventory and data collection and
management services for fair value in the ordinary course of businesses, (ii) dispositions
of Temporary Cash Investments, (iii) dispositions of obsolete or worn-out
property in the ordinary course of business provided that the aggregate fair
market value of all such assets disposed of pursuant to this clause (b)(iii) after
the date hereof does not exceed $250,000 in any Fiscal Year.


 


Section 7.9. Purchase
of Assets; Investments. No Credit Party will acquire all or
substantially all of the assets of, engage in any joint venture or Partnership
with any Person, or make, acquire or own any Investment other than (a) Cash
Equivalents or Temporary Cash Investments; (b) Investments in another
Credit Party; (c) Investments existing on the Effective Date and described
on Disclosure Schedule 7.9; and (d) other Investments not
exceeding $100,000 in the
aggregate at any time outstanding. Without limiting the generality of the
foregoing, no Credit Party will (i) acquire or create any Subsidiary
without the consent of the Required Lenders or (ii) engage in any joint
venture or partnership with any other Person.


 


Section 7.10. Transactions
with Affiliates  (a) No
Credit Party will, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of any Credit Party on terms
that are less favorable to such Credit Party than those which might be obtained
at the time from a Person who is not an Affiliate of such Credit Party, except (i) awards
of Stock to the extent expressly permitted under Section 7.4(a)(ii), (ii) Restricted Payments to the
extent expressly permitted under Sections 7.5(a) and
(c), and (iii) mergers and
consolidations to the extent expressly permitted under Section 7.8(a) and (iv) other de minimis transactions
among the Credit Parties to the extent not otherwise prohibited hereunder.


 


(b)                                 No
Credit Party shall enter into any lending or borrowing transaction with any
employees of any Credit Party, except with respect to loans existing on the Effective
Date and disclosed on Disclosure Schedule 7.10(b).


 


Section 7.11. Amendments
or Waivers. Without the prior written consent of the Agent
and the Required Lenders, except in connection with the Plan of Reorganization,
no Credit Party will agree to (a) any amendment to or waiver of or in
respect of any Loan Documents, or (b) any other material amendment to or
waiver of any material contract constituting a part of the Collateral which
could reasonably be expected to have a Material Adverse Effect on the Credit
Parties, or (c) any amendment or waiver of any document governing any
Subordinated Debt or any Senior Unsecured Debt.


 


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


 


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Section 7.13.
Capital Expenditures. The Credit Parties will not make or
commit to make any Capital Expenditures in excess of (a) $3,500,000 in the
aggregate during the Fiscal Year 2006 and (b) thereafter in an amount to
be established in the Agent’s discretion.


 


Section 7.14. Lease Limits. No Credit
Party will become or remain liable in any way, whether by assignment, as a
guarantor or other surety or otherwise, for the obligations of any lessee
(other than any other Credit Party) under any equipment lease, synthetic lease
or similar off-balance sheet financing, if the aggregate amount of all rents
(or substantially equivalent payments) paid by the Credit Parties under all
such leases would exceed $1,000,000 in
any Fiscal Year.


 


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


 


	
  Quarterly Period

  	
   

  	
  Maximum Total Leverage

  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Fiscal Quarter Ended March 31, 2006

  	
   

  	
  15.75:1.00

  	
   

  
	
  Fiscal Quarter Ended June 30, 2006

  	
   

  	
  15.50:1.00

  	
   

  
	
  Fiscal Quarter Ended September 30,
  2006

  	
   

  	
  14.75:1.00

  	
   

  
	
  Fiscal Quarter Ended December 31, 2006

  	
   

  	
  13.50:1.00

  	
   

  



 


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


 


	
  Quarterly Period

  	
   

  	
  Maximum Senior Secured

  Leverage Ratio

  	
   

  
	
  Fiscal Quarter Ended March 31, 2006

  	
   

  	
  2.25:1.00

  	
   

  
	
  Fiscal Quarter Ended June 30, 2006

  	
   

  	
  2.75:1.00

  	
   

  
	
  Fiscal Quarter Ended September 30,
  2006

  	
   

  	
  2.50:1.00

  	
   

  
	
  Fiscal Quarter Ended December 31, 2006

  	
   

  	
  2.50:1.00

  	
   

  



 


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


 


	
  Quarterly Period

  	
   

  	
  Minimum Fixed Charge

  Coverage Ratio

  	
   

  
	
  Fiscal Quarter Ended March 31, 2006

  	
   

  	
  0.50:1.00

  	
   

  
	
  Fiscal Quarter Ended June 30, 2006

  	
   

  	
  1.50:1.00

  	
   

  
	
  Fiscal Quarter Ended September 30,
  2006

  	
   

  	
  1.50:1.00

  	
   

  
	
  Fiscal Quarter Ended December 31, 2006

  	
   

  	
  2.50:1.00

  	
   

  



 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(g)                                 For the purposes
of Sections 7.15, the total
Indebtedness shall exclude the insurance premium financing arrangement
described on Schedules 7.1 and 7.2.


 


Section 7.19. Accounts Receivable Days Sales Outstanding.
Accounts Receivable Days Sales Outstanding shall not at any time
exceed 105 days during any three month period commencing with the Fiscal
Quarter ended December 31, 2005.


 


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


 


Section 7.21. Pre-petition Obligations; Adequate
Protection Payments. No Credit Party shall make
payments in respect of obligations incurred prior to the filing of the
Bankruptcy Cases except in accordance with the Forbearance Agreement, a
Bankruptcy Court Order or this Agreement. No Credit Party shall make an
adequate protection payment, as provided for in the Bankruptcy Code, without
the prior written consent of the Lenders and the Agent, other than payments in
connection with Permitted Encumbrances.


 


Section 7.22 Changes in Management.
No Credit Party shall make any direct or indirect change in its Senior
Management without giving at least ten days notice to the Agent (or such shorter
notices as may be given to the Credit Party by the relevant Member of its
Senior Management); provided, that the Agent hereby consents to the departure
and replacement of the Borrowers’ chief financial officer as of April 30,
2006. Any notice regarding change in Senior Management shall specify the
Borrower’s plan to fill any vacancy in Senior Management.


 


ARTICLE VIII.


 


EVENTS OF DEFAULT


 


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


 


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


 


89

















 


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


 


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


 


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


 


(e)                                  any Credit Party
shall fail to make any payment when due in respect of any post-petition
Indebtedness (other than the Obligations) the aggregate outstanding principal
amount of which Indebtedness, either individually or in the aggregate with all
other post-petition Indebtedness with respect to which the Credit Parties have
failed to make a payment, equals or exceeds $1,000,000;


 


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


 


(g)                                 any Credit Party shall
from and after the Effective Date (i) have its Bankruptcy Case converted
to one under Chapter 7 of the Bankruptcy Code; (ii) in its Bankruptcy
Case, seek to liquidate the Credit Parties’ assets; (iii) have a trustee,
receiver, liquidator, custodian or other similar official be appointed
(consensually or non-consensually) over any substantial part of its
properties or assets, (iv) consent to any such relief or to the
appointment of or taking possession by any such official in its Bankruptcy Case
or other proceeding commenced against it, or (v) fail generally, not be
able or admit in writing its 


 


90

















 


inability to pay its post petition debts as they become due, or take
any action in furtherance of, or indicating its consent to, or approval of or
acquiescence in any of the foregoing;


 


(h)                                 [Reserved];


 


(i)                                     (i) institution
of any steps by any Borrower or any member of the Controlled Group or any other
Person to terminate a Pension Plan if, as a result of such termination, such
Borrower or any member of the Controlled Group could reasonably be expected to
be required to make a contribution to such Pension Plan, or could incur a
liability or obligation to such Pension Plan, in excess of $1,000,000, (ii) a
contribution failure occurs with respect to any Pension Plan sufficient to give
rise to a Lien under Section 302 of ERISA, (iii) there shall occur
any withdrawal or partial withdrawal from a Multiemployer Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Plans as a
result of such withdrawal (including any outstanding withdrawal liability that
any Borrower and the members of the Controlled Group have incurred on the date
of such withdrawal) exceeds $1,000,000, (iv) with respect to any Plan, any
Borrower or any member of the Controlled Group shall incur an accumulated
funding deficiency or request a funding waiver from the IRS, or (v) there
shall occur an ERISA Event or a non-exempt prohibited transaction within the
meaning of Section 406 of ERISA or IRC Section 4975; provided,
that the events listed in clauses (iv) and (v) hereof shall constitute
Events of Default only if the liability, deficiency or waiver request, whether
or not assessed, could reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect;


 


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


 


91

















 


(k)                                  a
judgment or order for the payment of money (other than any Bankruptcy Court
Order) which, individually or when aggregated with other such judgments or
orders, equals or exceeds $1,000,000 and is not subject to insurance coverage,
shall be rendered against any Credit Party and such judgment or order shall
continue unsatisfied and unstayed for a period of ten (10) days or any
judgment shall be rendered against any Credit Party that exceeds by more than
$1,000,000 any insurance coverage applicable thereto as to which the insurance
company has acknowledged coverage and such judgment or order shall continue
unsatisfied and unstayed for a period of ten (10) days;


 


(l)                                     [Reserved.]


 


(m)                               [Reserved.]


 


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


 


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


 


(p)                                 [Reserved.]


 


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


 


(r)                                    any
material damage to, or loss, theft or destruction of, any Collateral, whether
or not insured, or any strike, lockout, labor dispute, embargo, condemnation,
act of God or public enemy, or other casualty which causes, for more than
fifteen (15) consecutive days, the cessation or substantial curtailment of 


 


92

















 


revenue producing activities at any facility of any Credit Party, if
any such event or circumstance, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect;


 


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


 


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


 


(u)                                 [Reserved.];
or


 


(v)                                 [Reserved.]


 


(w)                               the
occurrence of the Commitment Termination Date, other than under clause (ii) of
the definition thereof.


 


Section 8.2.
Remedies.


 


(a)                                  If
any Default or Event of Default has occurred and is continuing, subject to
compliance with any requirements of the applicable Bankruptcy Court Order,
Agent may, and at the written request of the Required Lenders shall, without
notice or demand, suspend the Revolving Credit Commitment with respect to
additional Advances or the incurrence of additional L/C Obligations, whereupon
any additional Advances and additional L/C Obligations shall be made or
incurred in Agent’s sole discretion (or in the sole discretion of the Required
Lenders, if such suspension occurred at their direction) so long as such
Default or Event of Default is continuing. If any Default or Event of Default
has occurred and is continuing, Agent may (and at the written request of
Required Lenders shall), without notice except as otherwise expressly provided
herein, increase the rate of interest applicable to the Loans in accordance
with Section 2.4(c) and
other outstanding Obligations.


 


(b)                                       If any Event of
Default has occurred and is continuing, subject to compliance with any
requirements of the applicable Bankruptcy Court Order, Agent may, and at the
written request of the Required Lenders shall, without notice or demand (i) terminate
the Revolving Credit Commitment with respect to further Advances or the
incurrence of further L/C Obligations (ii) declare all or any portion of
the Obligations, including all or any portion of any Loan and the Conditionally
Waived Pre-petition Fees, to be forthwith due and payable, and require that the
L/C Obligations be either cash collateralized as provided in Section 2.5(k) or fully supported by a back-up
letter of credit (other than a Letter of Credit issued under this Agreement)
issued for the benefit of


 


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Agent, in form and substance
satisfactory to Agent, from an issuer satisfactory to Agent, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by the Borrowers and each other Credit Party, or (iii) exercise
any rights and remedies provided to Agent under the Loan Documents or at law or
equity, including all remedies provided under the Code; provided that
upon the occurrence of an Event of Default specified in Section 8.1(g), the Revolving Credit
Commitment shall be immediately terminated and all of the Obligations,
including the outstanding Loans, shall become immediately due and payable
without declaration, notice or demand by any Person.


 


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


 


ARTICLE IX.


 


EXPENSES AND INDEMNITIES


 


Section 9.1. Expenses. Whether or not
the transactions contemplated hereby are consummated, the Credit Parties,
jointly and severally, agree (a) to pay on demand all fees, costs and
expenses (including reasonable attorneys’ fees and expenses and the allocated
cost of internal legal staff) incurred by Agent, Lead Arranger and any
appraisers, auditors and consultants retained by the Agent or Lead Arranger in
connection with (i) the examination, review, due diligence investigation,
documentation, negotiation, closing and syndication of the transactions
contemplated herein and in 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 Agent’s customary field audit charges and the
reasonable fees, expenses and disbursements of the Agent, Lead Arranger or any
accountants or other experts retained by the Agent or Lead Arranger (including
any affiliate of Agent or Lead Arranger as shall be engaged for such purpose)
in connection with accounting and collateral audits or reviews of the Credit
Parties and their affairs, (b) to promptly pay reasonable documentation
charges assessed by Agent for amendments, waivers, consents and any of the
documentation prepared by Agent’s internal legal staff, and (c) to
promptly pay all fees, costs and expenses (including attorneys’ fees and
expenses and the allocated cost of internal legal staff) 


 


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incurred by Agent
and Lenders (I) in connection with protecting, preserving or enforcing Agent’s
and Lenders’ rights and remedies in the Bankruptcy Cases, (II) in connection
with any action to enforce any Loan Document or to collect any payments due
from the Borrowers or any other Credit Party or (III) to defend any action
brought against Lenders or Agent by the Borrowers, any creditors or creditor’s
committee, trustee or the like in connection with the Bankruptcy Cases. All
fees, costs and expenses for which any Credit Party is responsible under this Section 9.1 shall be deemed part of
the Obligations when incurred, and shall be payable on demand in accordance
with Section 2.14.


 


Section 9.2. Indemnity. Whether or
not the transactions contemplated hereby are consummated, the Credit Parties,
jointly and severally, agree to indemnify, pay and hold harmless each Lending
Party and any subsequent holder of any of the Notes or any other Obligation,
and each of such Person’s officers, directors, employees, attorneys, agents and
Affiliates (collectively, the “Indemnitees”)
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including the fees and disbursements of
counsel for such Indemnitee and the allocated cost of internal legal staff) in
connection with any claim, investigative, administrative or judicial
proceeding, whether or not such Indemnitee shall be designated a party thereto and
including any such proceeding initiated by or on behalf of any Credit Party,
and the expenses of investigation by experts, engineers, environmental
consultants and similar technical personnel and any commission, fee or
compensation claimed by any broker (other than any broker retained by any
Lending Party) asserting any right to payment for the transactions contemplated
hereby, which may be imposed on, incurred by or asserted against such
Indemnitee as a result of or in connection with the transactions contemplated
hereby or by the Loan Documents (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. An Indemnitee under this Section 9.2 shall endeavor to notify
the Borrower Representative of any event requiring indemnification 


 


95

















 


within ten (10) Business
Days following such Indemnitee’s receipt of notice of commencement of any
action or proceeding, or such Indemnitee’s obtaining knowledge of the
occurrence of any event, giving rise to a claim for indemnification hereunder,
provided that the failure to give such notice shall not invalidate or otherwise
impair the rights of the Indemnitee to indemnification under this Section 9.2 or result in any liability
of such Indemnitee, the Agent or any Lender to any Credit Party or any other
Person.


 


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


 


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


 


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


 


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


 


(c)                                  Notwithstanding
anything to the contrary contained herein, if the introduction of or any change
in any law or regulation (or any change in the interpretation 


 


96

















 


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


 


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


 


ARTICLE X.


 


THE AGENT


 


Section 10.1. Appointment and Authorization. L/C
Issuer and each Lender hereby irrevocably designates and appoints GE Capital as
the Agent of L/C Issuer and Lenders under this Agreement, and L/C Issuer and
each such Lender irrevocably authorizes GE Capital as the Agent for L/C Issuer
and Lenders, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this Agreement
and the other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Agent shall not 


 


97

















 


have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with L/C Issuer or any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement, the other Loan Documents or
otherwise exist against the Agent. In performing its functions and duties under
this Agreement, Agent shall act solely as agent of Lenders and the L/C Issuer
and does not assume and shall not be deemed to have assumed any obligation toward
or relationship of agency or trust with or for any Borrower or any other Credit
Party.


 


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


 


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


 


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


 


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


 


Section 10.6. Liability of Agent. Neither
the Agent nor any of its directors, officers, agents, representatives,
employees or Affiliates shall be liable for any action taken or not taken by it
in connection with the Loan Documents (a) with the consent or at the
request or direction of the Required Lenders, or (b) in the absence of its
own gross negligence or willful misconduct. Neither the Agent nor any of its
directors, officers, agents, representatives, employees or Affiliates shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made under or in connection with any Loan
Document or any Extension of Credit hereunder, (ii) the performance or
observance of any of the 


 


98

















 


covenants or
agreements of any Credit Party, (iii) the satisfaction of any condition
specified in Article III, except to confirm receipt of items required to be
delivered to the Agent, (iv) the validity, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or writing furnished
in connection therewith, or (v) the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any of the Loan Documents or for
any failure of any Borrower or any other Credit Party to perform its
obligations under this Agreement or any other Loan Document. The Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, other writing (which may be a bank wire, telex,
facsimile transmission or similar writing) or conversation believed by it to be
genuine or to be signed by the proper party or parties.


 


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


 


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


 


Section 10.9. Successor Agent. The
Agent may resign at any time by giving thirty (30) days’ prior written
notice thereof to the Lenders and the Borrower Representative. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent which, absent the occurrence and continuance of a Default or Event of
Default, must be acceptable to the Borrower Representative (such acceptance not
to be unreasonably withheld or delayed). If no successor Agent shall have been
so appointed by the Required Lenders, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent gives notice of 


 


99

















 


resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent,
which shall be an institution organized or licensed under the laws of the
United States of America or of any State thereof and which, absent the
occurrence and continuance of a Default or Event of Default, must be acceptable
to the Borrower Representative (such acceptance not to be unreasonably withheld
or delayed). Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent’s resignation hereunder as Agent, the provisions of this Article shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent.


 


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


 


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


 


100

















 


ARTICLE XI.


 


MISCELLANEOUS


 


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


 


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


 


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


 


Notices shall be
addressed as follows:


 


If to any
Borrower or


	
  Borrower Representative:

  	
   

  	
  c/o Curative Health Services, Inc.

  
	
   

  	
   

  	
  61 Spit Brook Road, Suite 505

  
	
   

  	
   

  	
  Executive Tower

  
	
   

  	
   

  	
  Nashua, New Hampshire 03060

  
	
   

  	
   

  	
  Attention: Chief Financial
  Officer

  
	
   

  	
   

  	
  Facsimile No: (603) 966-3345

  
	
   

  	
   

  	
  Telephone No.: (603) 232-7015

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Curative Health Services, Inc.

  
	
   

  	
   

  	
  61 Spit Brook Road, Suite 505

  
	
   

  	
   

  	
  Executive Tower

  
	
   

  	
   

  	
  Nashua, New Hampshire 03060

  
	
   

  	
   

  	
  Attention: General Counsel

  



 


101

















 


	
   

  	
   

  	
  Facsimile No: (603) 966-3345

  
	
   

  	
   

  	
  Telephone No.: (603) 232-7015

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  -and-

  
	
  With a copy to:

  	
   

  	
  Linklaters

  
	
   

  	
   

  	
  1345 Avenue of the Americas

  
	
   

  	
   

  	
  New York, New York 10105

  
	
   

  	
   

  	
  Attention: Martin
  N. Flics

  
	
   

  	
   

  	
  Facsimile No.: (212)
  903-9100

  
	
   

  	
   

  	
  Telephone No.:(212) 903-9000

  
	
   

  	
   

  	
   

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

  	
   

  	
  General Electric Capital
  Corporation

  
	
   

  	
   

  	
  2 Bethesda Metro Center

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Bethesda, MD 20814

  
	
   

  	
   

  	
  Attention:

  	
  Curative Health Services, Inc.

  
	
   

  	
   

  	
   

  	
  Account Manager

  
	
   

  	
   

  	
  Facsimile No: (301) 347-3175

  
	
   

  	
   

  	
  Telephone No.: (301) 664-9816

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  General Electric Capital
  Corporation

  
	
   

  	
   

  	
  2 Bethesda Metro Center

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Bethesda, MD 20814

  
	
   

  	
   

  	
  Attention: Legal Department

  
	
   

  	
   

  	
  Facsimile No: (301) 664-9849

  
	
   

  	
   

  	
  Telephone No.: (301) 664-9866

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  -and-

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Moritt Hock Hamroff & Horowitz LLP

  
	
   

  	
   

  	
  400 Garden City Plaza

  
	
   

  	
   

  	
  Garden City, NY 11530

  
	
   

  	
   

  	
  Attention: Marc L. Hamroff

  
	
   

  	
   

  	
  Facsimile No: (516) 873-2010

  
	
   

  	
   

  	
  Telephone No.: (516) 873-2000

  



 


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


 


Section 11.4.
Severability. In case any provision of or obligation under
this Agreement or any other Loan Document shall be invalid, illegal or
unenforceable in any applicable jurisdiction, the validity, legality and
enforceability of the remaining provisions or 


 


102

















 


obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.


 


Section 11.5.                         Amendments and Waivers. Any provision of this Agreement or
any other Loan Document may be amended or waived only if such amendment or
waiver is in writing and is signed by the Borrowers and the Agent (if
authorized by the Required Lenders) or the Required Lenders (and, if the rights
or duties of the Agent, the Swingline Lender or the L/C Issuer are affected
thereby, by the Agent, Swingline Lender or L/C Issuer as applicable); provided,
that no such amendment or waiver shall, unless signed by all the Lenders (i) increase
or decrease any Commitment of any Lender (except for a ratable decrease in the
Commitments of all Lenders) or subject any Lender to any additional obligation,
(ii) reduce the principal of or rate of interest on any Obligation or the
amount of any Fees payable hereunder, (iii) postpone the date fixed for
any (A) payment of (1) principal of any Loan or Reimbursement
Obligation pursuant to Section 2.8,
(2) of interest on any Loan or Reimbursement Obligation or (3) any
fees hereunder, or (B) termination of any Commitment, (iv) change the
percentage of the Commitments or of the aggregate unpaid principal amount of
the Loans and Reimbursement Obligations which shall be required for the Lenders
or any of them to take any action under this Section or any other
provision of this Agreement, (e) release all or substantially all of the
Collateral, (f) release all or substantially all of the Guarantors or (g) amend
this Section 11.5 or the
definition of “Required Lenders”.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 11.7.
Setoff and Sharing of Payments. Upon the occurrence and
during the continuance of any Event of Default, each Lender (and each of its
Affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness any time owing by such Lender (or any of its affiliates) to
or for the credit or the account of any Credit Party against any and all of the
Obligations held by such Lender, irrespective of whether such Lender shall have
made any demand under this Agreement or any Note or such Obligations and
although such Obligations my be unmatured. Each Lender agrees promptly to notify
the Borrower Representative and Agent after any such set-off and application
made by such Lender; provided, that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender may have. If any Lender (a “Benefited
Lender”) shall at any time receive any payment of all or part of
the Loans or other Obligations or other amounts owing to it hereunder, or
interest thereon, or receive any Collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, or otherwise), in a greater
proportion than any such payment to or Collateral received by any other Lender,
if any, in respect of such other Lender’s Loans, Obligations or other amounts
owing to it hereunder, or interest thereon, such Benefited Lender shall
purchase for cash from the other Lender(s) a participating interest in such
portion of each 


 


105

















 


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


 


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


 


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


 


Section 11.11.
Notice of Breach by Agent or Lender. The Credit Parties party
hereto agree to give the Agent and the Lenders notice of any action or inaction
by the Agent or any Lender or any agent or attorney of the Agent or any Lender
in connection with this Agreement or any other Loan Document or the Obligations
of the Credit Parties under this


 


106

















 


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


 


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


 


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


 


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


 


107

















 


any litigation
against any Credit Party or otherwise arising out of or relating to the
transactions contemplated under the Loan Documents to which Agent or any Lender
or its Affiliates is a party, or (ix) subject to a written agreement
containing provisions substantially the same as those set forth in this Section 11.14, to any assignee of or
participant in, or prospective assignee of or participant in, any of the
Obligations; provided, however, that in the event any assignee of
a Lender has an Affiliate which is a Competitor, such assignee may not
disclose to such Affiliate any information concerning any Credit Party or its
Subsidiaries or business operations or assets which is identified as
confidential and which is not in the public domain.


 


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


 


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


 


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


 


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


 


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


 


Section 11.19.
[Reserved].


 


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


 


ARTICLE XII


 


CROSS-GUARANTY


 


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


 


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


 


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


 


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


 


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


 


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


 


109

















 


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


 


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


 


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


 


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


 


Section 12.5.
Election of Remedies. If Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving Agent or such Lender a Lien upon any Collateral, whether owned by any
Borrower or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, Agent or any Lender may, at its sole option,
determine which of its remedies or rights it may pursue without affecting
any of its rights and remedies under this Section 12.
If, in the exercise of any of its rights and remedies, Agent or any Lender
shall forfeit any of its rights or remedies, including its right to enter a
deficiency judgment against any Borrower or any other Person, whether because
of any applicable laws pertaining to “election of remedies” or the like, each
Borrower hereby consents to such action by Agent or such Lender and waives any
claim based upon such action, even if such action by Agent or such Lender shall
result in a full or partial loss of any rights of subrogation that each
Borrower might otherwise have had but for such action by Agent or such Lender.
Any election of remedies that results in the denial or impairment of the right
of Agent or any Lender to seek a deficiency judgment against any Borrower shall
not impair any other Borrower’s obligation to pay the full amount of the
Obligations. In the event Agent or any Lender shall bid at any foreclosure or
trustee’s sale or at any private sale permitted by law or the 


 


110

















 


Loan Documents,
Agent or such Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Agent or such Lender
but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether Agent, Lender or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 12,
notwithstanding that any present or future law or court decision or ruling may have
the effect of reducing the amount of any deficiency claim to which Agent or any
Lender might otherwise be entitled but for such bidding at any such sale.


 


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


 


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


 


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


 


Section 12.7.
Contribution with Respect to Guaranty Obligations.


 


(a)                                  To
the extent that any Borrower shall make a payment under this Section 12 of all or any of the
Obligations (other than Loans made to that Borrower for which it is primarily
liable) (a “Guarantor Payment”) that, taking into account all other Guarantor
Payments then previously or concurrently made by any other Borrower, exceeds
the amount that such Borrower would otherwise have paid if each Borrower had
paid the aggregate Obligations satisfied by such Guarantor Payment in the same
proportion that such Borrower’s “Allocable Amount” (as defined below) (as
determined immediately prior to such Guarantor Payment) bore to the aggregate
Allocable Amounts of each of the Borrowers as determined immediately prior to
the making of such Guarantor Payment, then, following indefeasible payment in
full in cash of the Obligations and termination of the Commitments, such
Borrower shall be entitled to receive contribution and indemnification payments
from, and be reimbursed by, each other Borrower for the amount of such excess,
pro rata based upon their respective Allocable Amounts in effect immediately
prior to such Guarantor Payment.


 


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


 


111

















 


(c)                                  This
Section 12.7 is intended only
to define the relative rights of Borrowers and nothing set forth in this Section 12.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 12.1.
Nothing contained in this Section 12.7
shall limit the liability of any Borrower to pay the Loans made directly or
indirectly to that Borrower and accrued interest, Fees and expenses with
respect thereto for which such Borrower shall be primarily liable.


 


(d)                                 The
parties hereto acknowledge that the rights of contribution and indemnification
hereunder shall constitute assets of the Borrower to which such contribution
and indemnification is owing.


 


(e)                                  The
rights of the indemnifying Borrowers against other Credit Parties under this Section 12.7 shall be exercisable upon
the full and indefeasible payment of the Obligations and the termination of the
Commitments.


 


Section 12.8.
Liability Cumulative. The liability of Borrowers under this Section 12 is in addition to and shall
be cumulative with all liabilities of each Borrower to Agent and Lenders under
this Agreement and the other Loan Documents to which such Borrower is a party
or in respect of any Obligations or obligation of the other Borrower, without
any limitation as to amount, unless the instrument or agreement evidencing or
creating such other liability specifically provides to the contrary.


 


ARTICLE XIII 


 


SPECIAL BANKRUPTCY PROVISIONS


 


Section 13.1 Post-Petition Security. From and after the filing date of
the Bankruptcy Cases (the “Filing Date”), the Liens granted to the Lenders and
the Agent and held by the Agent, for the benefit of itself and the Lenders,
with respect to the Collateral shall be and are post-petition liens, entitled
to priority as set forth in the Bankruptcy Court Order. The Agent, for itself
and the Lenders will be entitled to all of the rights, remedies, protections
and priorities as provided in the Bankruptcy Court Order.


 


Section 13.2 Liens Perfected without Filing Or Recording. Upon and after
entry of the Bankruptcy Court Order, the post-petition liens and encumbrances
granted to the Agent, for itself and the Lenders, with respect to the
Collateral by virtue of the Bankruptcy Court Order and this Agreement shall
have the priority stated in the Bankruptcy Court Order and shall be valid and
perfected as against all third parties, without regard to applicable federal,
state or local filing or recording statutes, nunc pro
tunc as of the Filing Date, and without further action of any party,
including the Lenders; provided, that the Agent, for itself and the Lenders
may, but need not, take such steps as it deems desirable and applicable to
comply with such statutes, and all financing statements which are filed listing
one or more of the Borrowers as debtor and the Agent as secured party, all
mortgages or similar instruments which are filed granting to Agent liens upon
and security interests in Collateral will be deemed to have been 


 


112

















 


filed and the security interests and liens evidenced thereby will be
deemed perfected nunc pro tunc as of the Filing
Date.


 


Section 13.3 Relief from Stay. Upon the entry of the Bankruptcy Court
Order, the Agent and the Lenders will have stay relief to the extent provided
in, and under the terms of, the Bankruptcy Court Order.


 


Section 13.4 Extension of Post-Petition Credit and Other Remedies of Lenders. The
agreement of the Lenders and the Agent to provide post-petition financing to
the Borrowers is conditioned on the proceeds of such financing being used first
to satisfy all obligations under the Existing Credit Facility, except for
payment of the Conditionally Waived Pre-petition Fees, and will be subject to
the following exceptions:


 


(a)                                  The
agreement to provide post-petition financing will not prohibit the Agent or the
Lenders from moving in the Bankruptcy Court for any other and further relief
which: (i) the Lender and/or Agent believes in good faith to be reasonably
and immediately necessary to protect their rights with respect to the
Collateral (including, without limitation, a request for Borrower to abandon
any part of the Collateral); and as to which (ii) the Lender and/or
Agent also reasonably believe in good faith the Bankruptcy Court Order is not
sufficient to protect the rights of the Lenders and the Agent with respect to
the Collateral under the circumstances existing when the Lenders and the Agent
request such other and further relief; provided that the Borrowers reserve
their right to assert any defenses they may have with respect to the Agent
and/or the Lenders’ motion except as otherwise waived herein or in the
Bankruptcy Court Order; and


 


(b)                                 From
and after the termination of this Agreement (whether upon the occurrence of the
Commitment Termination Date or an Event of Default), the Lenders will have no
obligation to provide financing to or on behalf of any Borrower or its
bankruptcy estate; and, except as provided in any Bankruptcy Court Order and
the Loan Documents, there will be no restriction of any kind against the
exercise by the Agent or any Lender of its rights and remedies under the Loan
Documents, including but not limited to, the right of the Agent or the Lenders
to exercise all of its remedies with respect to the Collateral.


 


Section 13.5 Plan of Reorganization. Except with the prior written
consent of Agent and the Lenders (which shall not be unreasonably withheld),
the Credit Parties will not file or propose any Plan of Reorganization
(including, but not limited to, any amendment or modification of a Plan of
Reorganization, whether before or after confirmation):  (i) which does not incorporate all of
the terms of any Bankruptcy Court Order and this Agreement that pertain to the
treatment of the secured claim of Agent and the Lenders and the preservation of
Agent’s and the Lenders’ rights in the Collateral, (ii) which does not
provide for the payment and performance in full of all of the Obligations upon
confirmation of the Plan of Reorganization as provided in the Bankruptcy Court
Order, or (iii) which would allow any person to improve its lien priority vis à vis the Lenders and/or the Agent with respect to the
Collateral. If there is any inconsistency between any Bankruptcy Court Order
and this Agreement, on the one hand, and 


 


113

















 


any Plan of Reorganization filed or proposed by the Credit Parties, on
the other hand, the terms of the Agreement and such Bankruptcy Court Order will
control, and any such inconsistent provisions of any Plan of Reorganization or
any confirmation order thereon will be null and void. Nothing in this Agreement
will be construed as a consent by the Agent or the Lenders, or an approval by
Agent or the Lenders of, the terms of any Plan of Reorganization or any
amendment or modification thereto.


 


Section 13.6 Disavowal and Waiver of Any Subsequent Relief Based on Changed
Circumstances. The Credit Parties and the Agent know and understand
that there are rights and remedies provided under the Bankruptcy Code, the
Federal Rules of Civil Procedure, and the Bankruptcy Rules, pursuant to
which parties otherwise bound by a previously entered order can attempt to
obtain relief from such an order by alleging circumstances that may warrant
a change or modification in the order, or circumstances such as fraud, mistake,
inadvertence, excusable neglect, newly discovered evidence, or similar matters
that may justify vacating the order entirely, or otherwise changing or
modifying it (collectively, “Changed Circumstances”). Rights and remedies based
on Changed Circumstances include, but are not limited to, modification of a
plan of reorganization after confirmation of the plan and before its
substantial consummation pursuant to section 1127(b) of the Bankruptcy
Code, relief from a final order or judgment pursuant to Rule 60(b) of
the Federal Rules of Civil procedure and Bankruptcy Rule 9024, and
the commencement and prosecution of a serial Chapter 11 case by a debtor which
is in default of obligations under a stipulation or plan or reorganization
confirmed in an earlier case. With full knowledge and understanding of what
are, or may be, its present or future rights and remedies based on
allegations of Changed Circumstances, the Credit Parties:  (i) expressly disavow that there are any
matters which constitute any kind of Changed Circumstances as of the date of
entry of the Bankruptcy Court Order;  (ii) expressly
disavow that they are aware of any matters whatsoever that they are assuming,
contemplating, or expecting in proceeding with the Bankruptcy Court Order and
the transactions contemplated by this Agreement and having the Bankruptcy Court
Order entered that would serve as a basis to allege such Changed Circumstances;
and (iii) in all events, the Credit Parties expressly waive any and all
rights and remedies that they have, or may have, now or in the future,
based on any Changed Circumstances. The Credit Parties voluntarily assume the
risk of any Changed Circumstances. Without limiting any of the foregoing, the
Credit Parties are engaged in the specialty infusion and wound care management
business. The Credit Parties enterprises are, and will be, affected by highly
volatile and unpredictable local, national, and world trends, including, but
not limited to, the local economy, the national economy, that availability or
unavailability of financing, interest rate, oil prices and supplies, acts of
war, acts of nature, acts of god, act of Congress, work stoppages and
other workforce disruptions, political and social issues, and numerous other
factors. Any and all such matters may seriously affect the business
enterprises of the Credit Parties and the ability of the Credit Parties to pay
the Agent and the Lenders as required by the Bankruptcy Court Order and the Loan
Documents. The Credit Parties understand and agree that the Agent and the
Lenders are not willing to bear any of the risks involved in business
enterprises and the Agent and the Lenders are not willing to modify any of
their rights if such risks cause actual or alleged Changed Circumstances; the
Credit Parties expressly assume all risks of any and all such matters, and the
consequences that the Agent and the Lenders will enforce their legal,
equitable, and contractual rights if they are not paid and dealt with strictly
in 


 


114

















 


accordance with the terms and conditions of the Loan Documents and the
Bankruptcy Court Order. Without limiting the foregoing in any way, the Credit
Parties’ use of any cash Collateral will be governed exclusively by the terms
and conditions of this Agreement and the Bankruptcy Court Order, and, either
before or after a termination of this Agreement, the Credit Parties will not
seek authority from the Bankruptcy Court to otherwise use any cash collateral
that is included in the Collateral for any cash collateral that is included in
the Collateral for any purpose whatsoever.


 


Section 13.7 Exclusive Remedy For Any Alleged Post-Petition Claim. Each
Credit Party disavows, waives and releases any and all adverse claims against
the Lenders through and including the date on which the Bankruptcy Court enters
the Bankruptcy Court Order. If a credit party asserts that it has any adverse
claims against any Lender arising after the entry of the Bankruptcy Court
Order, such Credit Party agrees that its sole and exclusive remedy for any and
all such adverse claims will be an action for monetary damages (the “Damage
Lawsuit”). Any such Damage Lawsuit, regardless of the procedural form in
which it is alleged (e.g., by complaint, counterclaim, cross-claim, third-party
claim or otherwise), will be severed from any enforcement by such Lender of its
legal, equitable, and contractual rights (including, but not limited to,
collection of the Obligations and foreclosure or other enforcement against the
Collateral) pursuant to the Loan Documents, and the Damage Lawsuit (including
any and all adverse claims against such Lender therein) cannot be asserted by
any Credit Party as a defense, setoff, recoupment, or grounds for delay, stay
or injunction against any enforcement by such Lender of its legal, equitable,
and contractual rights under the Bankruptcy Court Order, the Loan Documents,
and otherwise. Venue for any Damage Lawsuit brought by any Borrower will be in
the state or federal courts in the Southern District of New York.
Notwithstanding the foregoing, nothing herein shall limit the Borrowers’ right
to dispute any claim by the Agent and/or the Lenders that an Event of Default
has occurred and/or any enforcement action taken by the Agent and/or the
Lenders’ in connection therewith (a “Default Claim”), as provided in the
Bankruptcy Court Order.


 


Section 13.8 Prohibition on Priming of the Liens of Lender on the Collateral. Except
as expressly provided in the Bankruptcy Court Order, no person will be
permitted to surcharge the Collateral under Bankruptcy Code §506(c) or to
obtain a lien, set off right, or other charge or adverse claim of any kind with
respect to the Collateral which is equal or senior to the Liens of the Agent on
the Collateral.


 


Section 13.9 Marshalling Obligations. The right of the Lenders and/or
Agent to seek the equitable remedy of marshalling is expressly preserved, and
the Credit Parties will cooperate fully with any effort by the Lenders and/or Agent
to exercise its equitable remedy of marshalling.


 


[Remainder
of page intentionally left blank]


 


115

















 


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


 


 


	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES, INC.,

  
	
   

  	
  a
  Minnesota corporation formerly known as

  
	
   

  	
  Curative
  Holding Co.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA
  ACCESS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
												



 


 


[Signature
Page to Debtor In Possession Credit Agreement]


 

















 


	
   

  	
  APEX
  THERAPEUTIC CARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES OF NEW 

  
	
   

  	
  YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL
  CARE PLUS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY
  INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative
  Health Services Co., its Sole 

  
	
   

  	
  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
														



 

















 


	
   

  	
  INFINITY
  INFUSION II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  Curative Health Services Co., its Sole

  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY
  INFUSION CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Infinity
  Infusion II, LLC, its Sole General

  Partner

  
	
   

  	
  By:
  Curative Health Services Co., the Sole

  Member of Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  PHARMACY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
										



 

















 


	
   

  	
  CRITICAL
  CARE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES CO.,

  
	
   

  	
  a Minnesota corporation
  formerly known as 

  Curative Health Services, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
									



 

















 


AGENT AND LENDERS:


 


	
   

  	
  GENERAL
  ELECTRIC CAPITAL 

  
	
   

  	
  CORPORATION,
  as Lender and as Agent

  
	
   

  	
   

  
	
  Revolving
  Credit  Commitment: $45,000,000

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its Duly Authorized Signatory

  
	
   

  	
   

  
	
  Payment
  Account:

  	
  Deutsche Bank/Banker’s Trust

  
	
   

  	
  New York, NY

  
	
   

  	
  ABA No.: 021-001-033

  
	
   

  	
  Account No.: 50-271-079

  
	
   

  	
  Account Name: GE-HFS Cash
  Flow Collections

  
	
   

  	
  Re: Curative Health Services, Inc.

  
					



 

















 


EXHIBIT A 


to


DEBTOR IN POSSESION CREDIT AGREEMENT


 


REVOLVING NOTE


 


	
  March 30,2006

  	
   

  	
  New York,
  New York

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $45,000,000.00

  



 


FOR VALUE RECEIVED, the undersigned, CURATIVE
HEALTH SERVICES, INC., a Minnesota corporation formerly known
as Curative Holding Co., EBIOCARE.COM, INC.,
a Delaware corporation, HEMOPHILIA ACCESS, INC.,
a Tennessee corporation, APEX THERAPEUTIC
CARE, INC., a California corporation, CHS SERVICES, INC., a Delaware
corporation, CURATIVE HEALTH SERVICES CO.,
a Minnesota corporation formerly known as Curative Health Services, Inc., CURATIVE HEALTH SERVICES OF NEW YORK, INC.,
New York corporation, OPTIMAL CARE PLUS, INC.,
a Delaware corporation, INFINITY INFUSION,
LLC, a Delaware limited liability company, INFINITY INFUSION II, LLC, a Delaware
limited liability company, INFINITY INFUSION
CARE, LTD., a Texas limited partnership, MEDCARE, INC., a Delaware corporation, CURATIVE PHARMACY SERVICES, INC., a
Delaware corporation, and CRITICAL CARE
SYSTEMS, INC., a Delaware corporation hereby JOINTLY AND
SEVERALLY PROMISE TO PAY to the order of GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (“Lender”), at the offices of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, as Agent for Lenders (“Agent”), at its address at 2 Bethesda Metro
Center, Suite 600, Bethesda, MD 20814, or at such other place as Agent may designate
from time to time in writing, in lawful money of the United States of America
and in immediately available funds, the amount of FORTY FIVE
MILLION DOLLARS ($45,000,000.00) or, if less, the aggregate unpaid
amount of all Revolving Loans made to the undersigned under the Credit
Agreement (as hereinafter defined). Borrowers further promise to pay interest
on the outstanding unpaid principal amount hereof from the date hereof until
payment in full at the rate or rates from time to time applicable to the
Revolving Credit Advances as determined in accordance with the Credit
Agreement. All capitalized terms used but not otherwise defined herein have the
meanings given to them in Section 1.1
of the Credit Agreement.


 


This Revolving Note is one of the Revolving Notes issued pursuant to
that certain Debtor in Possession Credit Agreement dated as of March 30,
2006 by and among Borrowers, the other Persons named therein as Credit Parties,
Agent, Lender and the other Persons signatory thereto from time to time as
Lenders (including all annexes, exhibits and schedules thereto, and as from
time to time amended, restated, supplemented or otherwise modified, the “Credit
Agreement”), and is entitled to the benefit and security of the Credit
Agreement, the Borrower Security Agreement and all of the other Loan Documents
referred to therein. Reference is hereby made to the Credit Agreement for a
statement of all of the terms and conditions under which the Loans evidenced
hereby are made and are to be repaid.


 

















 


The principal amount of the indebtedness
evidenced hereby shall be payable in the amounts and on the dates specified in
the Credit Agreement, the terms of which are hereby incorporated herein by
reference. interest thereon shall be paid until such principal amount is paid
in full at such interest rates and at such times, and pursuant to such
calculations, as are specified in the Credit Agreement. If any payment on this
Revolving Note becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension.


 


Upon and after the occurrence of any Event of
Default, the entire principal amount of this Revolving Note, together with all
accrued interest thereon, may, as provided in the Credit Agreement, and without
demand, notice or legal process of any kind, be declared, and immediately shall
become, due and payable.


 


Time is of the essence of this Revolving
Note. Except as expressly required in the Credit Agreement, demand,
presentment, protest and notice of nonpayment and protest are hereby waived by
Borrowers. Borrowers further agree, subject only to any limitation imposed by
applicable law, to pay all expenses, including attorneys’ fees and legal
expenses, incurred by Agent and Lender in endeavoring to collect any amounts
payable hereunder which are not paid when due, whether by acceleration or
otherwise.


 


THIS REVOLVING NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. Whenever
possible each provision of this Revolving Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provisions
of this Revolving Note shall be prohibited by or invalid under applicable law,
such provisions shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Revolving Note. Whenever in this Revolving Note
reference is made to Agent, Lender or Borrowers, such reference shall be deemed
to include, as applicable, a reference to their respective permitted successors
and assigns and in the case of Lender, any financial institution to which it
has sold or assigned all or any part of its interest in the Revolving Loan
or in its commitment to make the Revolving Credit Advances as permitted by the
Credit Agreement. The provisions of this Revolving Note shall be binding upon
and inure to the benefit of such successors and assigns, except that no
Borrower may assign its rights or obligations. Borrowers’ successors and
assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for any of the Borrowers.


 


[Remainder of page intentionally left blank; signature pages follow]


 

















 


	
   

  	
  CURATIVE
  HEALTH SERVICES, INC.,

  
	
   

  	
  a
  Minnesota corporation formerly known as

  
	
   

  	
  Curative
  Holding Co.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA
  ACCESS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APEX
  THERAPEUTIC CARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							



 


[Revolving Note Signature Page]


 

















 


	
   

  	
  CURATIVE
  HEALTH SERVICES OF 

  NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL
  CARE PLUS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY
  INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  Curative Health Services Co., its Sole 

  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY
  INFUSION II, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  Curative Health Services Co., its Sole 

  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						



 

















 


	
   

  	
  INFINITY
  INFUSION CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By:
  Infinity Infusion II, LLC, its Sole 

  General Partner

  
	
   

  	
   

  
	
   

  	
  By:
  Curative Health Services Co., the Sole 

  Member of Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  PHARMACY SERVICES,

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES CO.,

  
	
   

  	
  a
  Minnesota corporation formerly known as Curative Health Services, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							



 

















 


	
   

  	
  CRITICAL
  CARE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							



 






 













 


EXHIBIT C 


to 


DEBTOR IN POSSESION CREDIT AGREEMENT


 


SWINGLINE NOTE


 


	
  March 30,
  2006

  	
   

  	
  New York,
  New York

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $5,000,000.00

  



 


FOR VALUE RECEIVED, the undersigned, CURATIVE
HEALTH SERVICES, INC., a Minnesota corporation formerly known
as Curative Holding Co., EBIOCARE.COM, INC.,
a Delaware corporation, HEMOPHILIA ACCESS, INC.,
a Tennessee corporation, APEX THERAPEUTIC
CARE, INC., a California corporation, CHS SERVICES, INC., a Delaware
corporation, CURATIVE HEALTH SERVICES CO.,
a Minnesota corporation formerly known as Curative Health Services, Inc., CURATIVE HEALTH SERVICES OF NEW YORK, INC.,
New York corporation, OPTIMAL CARE PLUS, INC.,
a Delaware corporation, INFINITY INFUSION,
LLC, a Delaware limited liability company, INFINITY INFUSION II, LLC, a Delaware
limited liability company, INFINITY INFUSION
CARE, LTD., a Texas limited partnership, MEDCARE, INC., a Delaware corporation, CURATIVE PHARMACY SERVICES, INC., a
Delaware corporation, and CRITICAL CARE
SYSTEMS, INC., a Delaware corporation (collectively, the “Borrowers”)
HEREBY JOINTLY AND SEVERALLY PROMISE TO PAY to the order of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
(“Swingline Lender”) at the offices of Swingline Lender at 201 Long Ridge Road,
Stamford, Connecticut 06927, or at such other place as Swingline Lender may designate
from time to time in writing, in lawful money of the United States of America
and in immediately available funds, the amount of FIVE MILLION Dollars ($5,000,000)
or, if less, the aggregate unpaid amount of all Swingline Advances made to the
undersigned under the Credit Agreement (as hereinafter defined). Borrowers
further promise to pay interest on the outstanding unpaid principal amount
hereof from the date hereof until payment in full at the rate or rates from
time to time applicable to the Swingline Advances as determined in accordance
with the Credit Agreement. All capitalized terms used but not otherwise defined
herein have the meanings given to them in Section 1.1 of the Credit
Agreement.


 


This Swingline Note is issued pursuant to
that certain Debtor in Possession Credit Agreement dated as of March 30,
2006 by and among Borrowers, the other Persons named therein as Credit Parties,
Agent, Swingline Lender and the other Persons signatory thereto from time to
time as Lenders (including all annexes, exhibits and schedules thereto, and as
from time to time amended, restated, supplemented or otherwise modified, the “Credit
Agreement”), and is entitled to the benefit and security of the Credit
Agreement, the Borrower Security Agreement and all of the other Loan Documents.
Reference is hereby made to the Credit Agreement for a statement of all of the
terms and conditions under which the Loans evidenced hereby are made and are to
be repaid.


 

















 


The principal amount of the indebtedness
evidenced hereby shall be payable in the amounts and on the dates specified in
the Credit Agreement, the terms of which are hereby incorporated herein by
reference. Interest thereon shall be paid until such principal amount is paid in
full at such interest rates and at such times, and pursuant to such
calculations, as are specified in the Credit Agreement.


 


If any payment on this Swingline Note becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension.


 


Upon and after the occurrence of any Event of
Default, the entire principal amount of this Swingline Note, together with an
accrued interest thereon, may, as provided in the Credit Agreement, and without
demand, notice or legal process of any kind, be declared, and immediately shall
become, due and payable.


 


Time is of the essence of this Swingline
Note. Except as expressly required in the Credit Agreement, demand,
presentment, protest and notice of nonpayment and protest are hereby waived by
Borrowers. Borrowers further agree, subject only to any limitation imposed by
applicable law, to pay all expenses, including attorneys’ fees and legal
expenses, incurred by Swingline Lender and Agent in endeavoring to collect any
amounts payable hereunder which are not paid when due, whether by acceleration
or otherwise.


 


THIS SWINGLINE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. Whenever possible each
provision of this Swingline Note shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provisions of this
Swingline Note shall be prohibited by or invalid under applicable law, such
provisions shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Swingline Note. Whenever in this Swingline Note
reference is made to Agent, Swing1ine Lender or Borrowers, such reference shall
be deemed to include, as applicable, a reference to their respective permitted
successors and assigns and in the case of Swingline Lender, any financial
institution to which it has sold or assigned all or any part of its
interest in the Swingline Loan or in its commitment to make the Swingline
Advances as permitted by the Credit Agreement. The provisions of this Swingline
Note shall be binding upon and inure to the benefit of such successors and
assigns, except that no Borrower may assign its rights or obligations.
Borrowers’ successors and assigns shall include, without limitation, a
receiver, trustee or debtor in possession of or for any Borrower.


 


[Remainder of page intentionally left blank; signature pages follow]


 

















 


	
   

  	
  CURATIVE
  HEALTH SERVICES, INC.,

  
	
   

  	
  a
  Minnesota corporation formerly known as 

  Curative Holding Co.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA
  ACCESS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APEX
  THERAPEUTIC CARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							



 


[Swingline Note Signature Page]


 

















 


	
   

  	
  CURATIVE
  HEALTH SERVICES OF

  NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL
  CARE PLUS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY
  INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  Curative Health Services Co., its Sole

  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY
  INFUSION II, LLC

  
	
   

  	
   

  
	
   

  	
  By:
  Curative Health Services Co., its Sole

  Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							



 

















 


	
   

  	
  INFINITY
  INFUSION CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By:
  Infinity Infusion II, LLC, its Sole 

  General Partner

  
	
   

  	
   

  
	
   

  	
  By:
  Curative Health Services Co., the Sole 

  Member of Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  PHARMACY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES CO.,

  
	
   

  	
  a
  Minnesota corporation formerly known as 

  Curative Health Services, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							



 

















 


	
   

  	
  CRITICAL
  CARE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
							



 






 













 


EXHIBIT D-1


to


DEBTOR IN POSSESSION


CREDIT AGREEMENT


 


NOTICE OF BORROWING


 


Reference is made to that certain Debtor in Possession
Credit Agreement, dated as of March       ,
2006, by and among the undersigned (“Borrower Representative”),
the other Persons signatory thereto from time to time as Borrowers, General
Electric Capital Corporation, a Delaware corporation, as agent (“Agent”), the other Persons signatory thereto from time to
time as Lenders (including all annexes, exhibits and schedules thereto, and as
from time to time amended, restated, supplemented or otherwise modified, the “Credit Agreement”). All capitalized terms used but not
otherwise defined herein have the meanings given to them in Section 1.1 of the Credit Agreement.


 


Borrower Representative hereby gives irrevocable
notice, pursuant to Section 2.3(a) of
the Credit Agreement, of its request for an Advance to be made on                                    
(the “Borrowing Date”) in the
aggregate principal amount of $                     ,
to be made as [a Base Rate Loan] [a LIBOR Loan having LIBOR Period of [          ]
month(s)].


 


In order to induce the Lenders to make the Advance(s)
requested hereby, Borrowers hereby represent and warrant as of the date of this
Notice of Borrowing that:


 


(i) all of the conditions precedent contained in Section 3.2 of the Credit Agreement
have been satisfied on and as of the date hereof, and will continue to be
satisfied on and as of the date of the Advance(s) requested hereby, before and
after giving effect thereto and to the application of the proceeds therefrom;


 


(ii) all of the representations and warranties
contained in Article IV of
the Credit Agreement are true on and as of the date of this Notice of Borrowing
and will be true in all material respects on and as of the applicable Borrowing
Date with the same effect as if such representations and warranties had been
made on and as of the date of this Notice of Borrowing or on and as of the
applicable Borrowing Date, as the case may be, except to the extent that
such representations and warranties are expressly stated to by made as of an
earlier date, in which case they shall be true as of such earlier date;


 


(iii) no Default or Event of Default has occurred
and is continuing on the date of this Notice of Borrowing or will have occurred
and be continuing on the applicable Borrowing Date, or will result from the
Advance(s) requested in this Notice of Borrowing; and


 

















 


IN WITNESS WHEREOF, Borrower
Representative has caused this Notice of Borrowing to be executed and delivered
by its duly authorized representative as of the date set forth below.


 


Dated:                                   


 


	
   

  	
  CURATIVE
  HEALTH SERVICES, INC.,

  
	
   

  	
  a
  Minnesota corporation formerly known

  
	
   

  	
  as
  Curative Health Services Co.,

  
	
   

  	
  individually
  and as Borrower

  
	
   

  	
  Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


2






 













 


EXHIBIT D-2


to


 


DEBTOR IN POSSESSION


CREDIT AGREEMENT


 


NOTICE OF SWINGLINE BORROWING


 


Reference
is made to that certain Debtor in Possession Credit
Agreement, dated as of March    , 2006, by and among the
undersigned (“Borrower Representative”), the other Persons signatory thereto
from time to time as Borrowers, General Electric Capital Corporation, a
Delaware corporation, as agent (“Agent”), the other Persons signatory thereto
from time to time as Lenders (including all annexes, exhibits and schedules thereto,
and as from time to time amended, restated, supplemented or otherwise modified,
the “Credit Agreement”). All capitalized terms used but not otherwise defined
herein have the meanings given to them in Section 1.1 of the Credit
Agreement.


 


Borrower Representative hereby gives irrevocable notice, pursuant to Section 2.6(b) of
the Credit Agreement, of its request for a Swingline Advance to be made on                                 
(the “Borrowing Date”) in the aggregate principal amount of $                ,
to be made as a Base Rate Loan.


 


In order to induce the Swingline Lenders to make the Swingline Advance(s)
requested hereby, Borrower Representative hereby represents and warrants as of
the date of this Notice of Borrowing that:


 


(i) all of the conditions precedent contained in Section 3.4 of the Credit Agreement have been satisfied
on and as of the date hereof, and will continue to be satisfied on and as of
the date of the Swingline Advance(s) requested hereby, before and after giving
effect thereto and to the application of the proceeds therefrom;


 


(ii) all
of the representations and warranties contained in Article IV
of the Credit Agreement are true on and as of the date of this Notice of Swingline
Borrowing and will be true in all material respects on and as of the applicable
Borrowing Date with the same effect as if such representations and warranties
had been made on and as of the date of this Notice of Swingline Borrowing or on
and as of the applicable Borrowing Date, as the case may be, except to the
extent that such representations and warranties are expressly stated to be made
as of an earlier date, in which case they shall be true as of such earlier
date; and


 


(iii) no
Default or Event of Default has occurred and is continuing on the date of this
Notice of Borrowing or will have occurred and be continuing on the applicable
Borrowing Date, or will result from the Advance(s) requested in this Notice of
Swingline Borrowing.


 

















 


IN WITNESS WHEREOF, Borrower Representative has caused this
Notice of Swingline Borrowing to be executed and delivered by its duly
authorized representative as of the date set forth below.


 


Dated:                                


 


	
   

  	
  CURATIVE HEALTH SERVICES, INC.,

  
	
   

  	
  a Minnesota corporation formerly known

  
	
   

  	
  as Curative Health Services Co.,

  
	
   

  	
  individually and as Borrower

  
	
   

  	
  Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 






 













 


EXHIBIT E


to


CREDIT AGREEMENT


 


BORROWER SECURITY AGREEMENT


 


BORROWER
SECURITY AGREEMENT (together with all amendments, supplements
and modifications, if any, from time to time hereto, this “Security
Agreement”), dated as of March 30, 2006, by and among CURATIVE HEALTH SERVICES, INC. a Minnesota corporation, CURATIVE
HEALTH SERVICES CO. a Minnesota corporation, EBIOCARE.COM,
INC., a Delaware corporation, HEMOPHILIA
ACCESS, INC., a Tennessee corporation, APEX THERAPEUTIC CARE, INC., a California corporation, CHS SERVICES, INC., a Delaware corporation,
CURATIVE HEALTH SERVICES OF NEW YORK, INC.,
a New York corporation, OPTIMAL CARE PLUS,
INC., a Delaware corporation, INFINITY
INFUSION, LLC, a Delaware limited liability company, INFINITY INFUSION II, LLC, a Delaware
limited liability company, INFINITY INFUSION
CARE, LTD., a Texas limited partnership, MEDCARE, INC., a Delaware corporation, CURATIVE PHARMACY SERVICES, INC., a
Delaware corporation, CRITICAL CARE SYSTEMS,
INC., a Delaware corporation (collectively, the “Grantors”),
and GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation, individually and in its capacity as Agent for Lenders
(“Agent”).


 


W I T N E S S T H:


 


WHEREAS, pursuant to that
certain Debtor in Possession Credit Agreement, dated as of the date hereof, by
and among Grantors, the other Credit Parties signatory thereto, Agent and
Lenders (including all annexes, exhibits and schedules thereto, as from time to
time amended, restated, supplemented or otherwise modified, the “Credit
Agreement”), Lenders have, subject to certain terms and conditions, agreed
to make the Loans and to incur L/C Obligations on behalf of Grantors;


 


WHEREAS, in order to
induce Agent and Lenders to enter into the Credit Agreement and other Loan
Documents and to induce Lenders to make the Loans and to incur L/C Obligations
as provided for in the Credit Agreement, Grantors have agreed to grant a
continuing Lien on the Collateral (as hereinafter defined) to secure the
Obligations;


 


NOW, THEREFORE, in
consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:


 


1.                                       DEFINED TERMS.


 


Capitalized terms used in this Security Agreement
shall have the meanings ascribed to them in this Section 1 unless the context indicates otherwise.  All capitalized terms used but not otherwise
defined herein have the meanings given to them in

Section 1.1


 

















 


of the
Credit Agreement.  Any other terms
contained in this Security Agreement not defined in this Security Agreement or
the Credit Agreement have the meanings provided for by the Code to the extent
the same are used or defined therein.


 


(a)                                  “Accounts” means all “accounts,”
as such term is defined in the Code, now owned or hereafter acquired by any
Grantor, including (a) all accounts receivable, other receivables, book
debts and other forms of obligations (other than forms of obligations evidenced
by Chattel Paper, or Instruments), (including any such obligations that may be
characterized as an account or contract right under the Code), (b) all of
each Grantor’s rights in, to and under all purchase orders or receipts for
goods or services, (c) all of each Grantor’s rights to any goods
represented by any of the foregoing (including unpaid sellers’ rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (d) all rights to payment due
to any Grantor for property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services rendered or to be
rendered by such Grantor or in connection with any other transaction (whether
or not yet earned by performance on the part of such Grantor), (e) all
health care insurance receivables and (f) all collateral security of any
kind, given by any Account Debtor or any other Person with respect to any of
the foregoing.


 


(b)                                 “Chattel Paper” means any “chattel
paper,” as such term is defined in the Code, including electronic chattel paper,
now owned or hereafter acquired by any Grantor.


 


(c)                                  “Code” means the Uniform
Commercial Code as the same may, from time to time, be enacted and in effect in
the State of New York; provided, that to the extent that the Code is
used to define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Code, the definition of
such term contained in Article or Division 9 shall govern; provided
further, that in the event that, by reason of mandatory provisions of law, any
or all of the attachment, perfection or priority of, or remedies with respect
to, Agent’s or any Lender’s Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State
of New York, the term “Code” shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.


 


(d)                                 “Contracts” means all “contracts,”
as such term is defined in the Code, now owned or hereafter acquired by any
Grantor, in any event, including all contracts, undertakings, or agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which any Grantor may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.


 


2

















 


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


 


(f)                                    “Copyright License” means any and
all rights now owned or hereafter acquired by any Grantor under any written
agreement granting any right to use any Copyright or Copyright registration.


 


(g)                                 “Copyrights” means all of the
following now owned or hereafter adopted or acquired by any Grantor: (a) all
copyrights and General Intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications
in connection therewith, including all registrations, recordings and
applications in the United States Copyright Office or in any similar office or
agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all reissues,
extensions or renewals thereof.


 


(h)                                 “Deposit Accounts” means all
“deposit accounts” as such term is defined in the Code, now or hereafter held
in the name of any Grantor.


 


(i)                                     “Documents” means all “documents,”
as such term is defined in the Code, now owned or hereafter acquired by any Grantor,
wherever located.


 


(j)                                     “Equipment” means all “equipment,”
as such term is defined in the Code, now owned or hereafter acquired by any
Grantor, wherever located and, in any event, including all such Grantor’s
machinery and equipment, including processing equipment, conveyors, machine
tools, data processing and computer equipment, including embedded software and
peripheral equipment and all engineering, processing and manufacturing
equipment, office machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks, forklifts,
molds, dies, stamps, motor vehicles, rolling stock and other equipment of every
kind and nature, trade fixtures and fixtures not forming a part of real
property, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.


 


(k)                                  “Fixtures” means all “fixtures” as
such term is defined in the Code, now owned or hereafter acquired by any
Grantor.


 


3

















 


(l)                                     “General Intangibles” means all
“general intangibles,” as such term is defined in the Code, now owned or
hereafter acquired by any Grantor, including all right, title and interest that
such Grantor may now or hereafter have in or under any Contract, all payment
intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all
applications therefor and reissues, extensions or renewals thereof, rights in
Intellectual Property, interests in partnerships, joint ventures and other
business associations, licenses, permits, copyrights, trade secrets,
proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how,
software, data bases, data, skill, expertise, experience, processes, models,
drawings, materials and records, goodwill (including the goodwill associated
with any Trademark or Trademark License), all rights and claims in or under
insurance policies (including insurance for fire, damage, loss and casualty,
whether covering personal property, real property, tangible rights or
intangible rights, all liability, life, key man and business interruption
insurance, and all unearned premiums), uncertificated securities, choses in
action, deposit, checking and other bank accounts, rights to receive tax
refunds and other payments, rights to receive dividends, distributions, cash,
Instruments and other property in respect of or in exchange for pledged Stock
and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in
the possession or under the control of such Grantor or any computer bureau or
service company from time to time acting for such Grantor.


 


(m)                               “Goods” means all “goods” as
defined in the Code, now owned or hereafter acquired by any Grantor, wherever
located, including embedded software to the extent included  in “goods” as defined in the Code,
manufactured homes, standing timber that is cut and removed for sale and unborn
young of animals.


 


(n)                                 “Indemnified Person” means each of
Agent, Lenders and their respective Affiliates, and each such Person’s
respective officers, directors, employees, attorneys, agents and
representatives.


 


(o)                                 “Instruments” means all
“instruments,” as such term is defined in the Code, now owned or hereafter
acquired by any Grantor, wherever located, and, in any event, including all
certificated securities, all certificates of deposit, and all promissory notes
and other evidences of indebtedness, other than instruments that constitute, or
are a part of a group of writings that constitute, Chattel Paper.


 


(p)                                 “Intellectual Property” means any
and all Licenses, Patents, Copyrights, Trademarks, and the goodwill associated
with such Trademarks.


 


(q)                                 “Inventory” means all “inventory,”
as such term is defined in the Code, now owned or hereafter acquired by any
Grantor, wherever located, and in any event including inventory, merchandise,
goods and other personal property that are held by or on behalf of any Grantor
for sale or lease or are furnished or are to be furnished under a contract of
service, or that constitute raw materials, work in process, finished goods,
returned goods, or materials or supplies of any kind, nature or description
used or


 


4

















 


consumed
or to be used or consumed in such Grantor’s business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
all supplies and embedded software.


 


(r)                                    “Investment Property” means all
“investment property” as such term is defined in the Code now owned or
hereafter acquired by any Grantor, wherever located, including (i) all
securities, whether certificated or uncertificated, including stocks, bonds,
interests in limited liability companies, partnership interests, treasuries,
certificates of deposit, and mutual fund shares; (ii) all securities
entitlements of any Grantor, including the rights of any Grantor to any
securities account and the financial assets held by a securities intermediary
in such securities account and any free credit balance or other money owing by
any securities intermediary with respect to that account; (iii) all securities
accounts of any Grantor; (iv) all commodity contracts of any Grantor; and (v) all
commodity accounts held by any Grantor.


 


(s)                                  “Letter-of-Credit Rights” means
“letter-of-credit rights” as such term is defined in the Code, now owned or
hereafter acquired by any Grantor, including rights to payment or performance
under a letter of credit, whether or not such Grantor, as beneficiary, has
demanded or is entitled to demand payment or performance.


 


(t)                                    “License” means any Copyright
License, Patent License, Trademark License or other license of rights or
interests now held or hereafter acquired by any Grantor.


 


(u)                                 “Patent License” means rights
under any written agreement now owned or hereafter acquired by any Grantor
granting any right with respect to any invention on which a Patent is in
existence.


 


(v)                                 “Patents” means all of the
following in which any Grantor now holds or hereafter acquires any interest: (a) all
letters patent of the United States or of any other country, all registrations
and recordings thereof, and all applications for letters patent of the United
States or of any other country, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State, or any other country, and (b) all
reissues, continuations, continuations-in-part or extensions thereof.


 


(w)                               “Proceeds” means “proceeds,” as
such term is defined in the Code, including (a) any and all proceeds of
any insurance, indemnity, warranty or guaranty payable to any Grantor from time
to time with respect to any of the Collateral, (b) any and all payments
(in any form whatsoever) made or due and payable to any Grantor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any
claim of any Grantor against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Grantor


 


5

















 


against
third parties with respect to any litigation or dispute concerning any of the
Collateral including claims arising out of the loss or nonconformity of,
interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral, (e) all amounts collected on, or distributed on
account of, other Collateral, including dividends, interest, distributions and
Instruments with respect to Investment Property and pledged Stock, and (f) any
and all other amounts, rights to payment or other property acquired upon the
sale, lease, license, exchange or other disposition of Collateral and all
rights arising out of Collateral.


 


(x)                                   “Software” means all “software” as
such term is defined in the Code, now owned or hereafter acquired by any
Grantor, other than software embedded in any category of Goods, including all
computer programs and all supporting information provided in connection with a
transaction related to any program.


 


(y)                                 “Supporting Obligations” means all
“supporting obligations” as such term is defined in the Code, including letters
of credit and guaranties issued in support of Accounts, Chattel Paper,
Documents, General Intangibles, Instruments, or Investment Property.


 


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


 


(aa)                            “Trademark License” means rights
under any written agreement now owned or hereafter acquired by any Grantor
granting any right to use any Trademark.


 


(bb)                          “Trademarks” means all of the
following now owned or hereafter existing or adopted or acquired by any
Grantor: (a) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear,
designs and general intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications
in connection therewith, including registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by
any of the foregoing.


 


(cc)                            “Uniform Commercial Code jurisdiction”
means any jurisdiction that has adopted all or substantially all of Article 9
as contained in the 2000 Official Text of the Uniform Commercial Code, as
recommended by the National Conference of Commissioners on Uniform State Laws
and the American Law Institute, together with any subsequent amendments or
modifications to the Official Text.


 


6

















 


2.                                       GRANT OF LIEN.


 


(a)                                  To secure the prompt and complete
payment, performance and observance of all of the Obligations, each Grantor
hereby grants, assigns, conveys, mortgages, pledges, hypothecates and
transfers, to Agent, for itself and the benefit of Lenders, a Lien upon all of
their right, title and interest in, to and under all personal property and
other assets, whether now owned by or owing to, or hereafter acquired by or
arising in favor of Grantors (including under any trade names, styles or
derivations thereof), and whether owned or consigned by or to, or leased from
or to, Grantors, and regardless of where located (all of which being
hereinafter collectively referred to as the “Collateral”), including:


 


i.                                          all Accounts;


 


ii.                                       all Chattel Paper;


 


iii.                                    all Documents;


 


iv.                                   all General Intangibles (including
payment intangibles and Software);


 


v.                                      all Goods (including Inventory, Equipment
and Fixtures);


 


vi.                                   all Instruments;


 


vii.                                all Investment Property;


 


viii.                             all Deposit Accounts of such Grantor,
including all Blocked Accounts, Government Receivables Deposit Accounts,
Concentration Accounts, Disbursement Accounts, and all other bank accounts and
all deposits therein;


 


ix.                                     all money, cash or cash equivalents of
such Grantor;


 


x.                                        all Supporting Obligations and
Letter-of-Credit Rights of such Grantor;


 


xi.                                     all commercial tort claims of such Grantor;


 


xii.                                  all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of
the Collateral described in clauses (i) through (xi) above or are
otherwise necessary or helpful in the collection thereof or realization
thereon; and


 


xiii.                               to the extent not otherwise included, all
Proceeds, tort claims, insurance claims and other rights to payments not
otherwise included in the foregoing and products of the foregoing and all
accessions to, substitutions and replacements for, and rents and profits of,
each of the foregoing.


 


7

















 


Notwithstanding
the foregoing, “Collateral” shall not include any Equipment that is (i) leased
by any Grantor or any rights of such Grantor under such lease (other than such
Grantor’s rights to payment under such lease constituting Accounts or General
Intangibles for money due or to become due), or (ii) is subject to a
purchase money lien to the extent and only to the extent that such lien is
expressly permitted under the Credit Agreement, in each case if and only for so
long as the grant of a security interest by such Grantor in such Equipment or
lease violates the terms of such lease or, in the case of any purchase money
lien on Equipment violates the terms of the financing documents evidencing or
securing such purchase money indebtedness; provided that such Grantor
shall be deemed to have granted a security interest in such Equipment, and such
Equipment shall be included in the Collateral, at such time that such grant no
longer violates such lease or, in the case of any purchase money lien on
Equipment, the terms of the financing documents evidencing or securing such
purchase money indebtedness.


 


(b)                                 In addition, to secure the prompt and
complete payment, performance and observance of the Obligations and in order to
induce Agent and Lenders as aforesaid, Grantors hereby grant to Agent, for
itself and the benefit of Lenders, a right of setoff against the property of
Grantors held by Agent or any Lender, consisting of property described above in
Section 2(a) now or
hereafter in the possession or custody of or in transit to Agent or any Lender,
for any purpose, including safekeeping, collection or pledge, for the account
of Grantors, or as to which Grantors may have any right or power.


 


3.                                       AGENT’S AND LENDERS’
RIGHTS: LIMITATIONS ON AGENT’S AND LENDERS’ OBLIGATIONS.


 


(a)                                  It is expressly agreed by each Grantor
that, anything herein to the contrary notwithstanding, such Grantor shall
remain liable under each of its Contracts and each of its Licenses to observe
and perform all the conditions and obligations to be observed and performed by
it thereunder except where such failure could not reasonably be expected to
have a Material Adverse Effect.  Neither
Agent nor any Lender shall have any obligation or liability under any Contract
or License by reason of or arising out of this Security Agreement or the
granting herein of a Lien thereon or the receipt by Agent or any Lender of any
payment relating to any Contract or License pursuant hereto.  Neither Agent nor any Lender shall be
required or obligated in any manner to perform or fulfill any of the
obligations of any Grantor under or pursuant to any Contract or License, or to
make any payment, or to make any inquiry as to the nature or the sufficiency of
any payment received by it or the sufficiency of any performance by any party
under any Contract or License, or to present or file any claims, or to take any
action to collect or enforce any performance or the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.


 


(b)                                 Agent may at any time after an Event of
Default has occurred and be continuing (or if any rights of set-off (other than
set-offs against an Account arising under the Contract giving rise to the same
Account) or contra accounts may be asserted with respect to the following),
without prior notice to the Grantors, notify Account Debtors and other Persons
obligated on the Collateral that Agent has a security interest therein, and
that payments shall be made directly to Agent. 
Upon the request of Agent, the


 


8

















 


Grantors
shall so notify Account Debtors and other Persons obligated on Collateral.  Once any such notice has been given to any
Account Debtor or other Person obligated on the Collateral, the Grantors shall
not give any contrary instructions to such Account Debtor or other Person
without Agent’s prior written consent.


 


(c)                                  Agent may at any time in Agent’s own
name, in the name of a nominee of Agent or in the name of any Grantor
communicate (by mail, telephone, facsimile or otherwise) with Account Debtors,
parties to Contracts and obligors in respect of Instruments to verify with such
Persons, to Agent’s satisfaction, the existence, amount terms of, and any other
matter relating to, Accounts, payment intangibles, Instruments or Chattel
Paper.  If a Default or Event of Default
shall have occurred and be continuing, the Grantors, at their own expense,
shall cause the independent certified public accountants then engaged by them
to prepare and deliver to Agent and each Lender at any time and from time to
time promptly upon Agent’s request the following reports with respect to the
Grantors: (i) a reconciliation of all Accounts; (ii) an aging of all
Accounts; (iii) trial balances; and (iv) a test verification of such
Accounts as Agent may request.  The
Grantors, at their own expense, shall deliver to Agent the results of each
physical verification, if any, which the Grantors may in their discretion have
made, or caused any other Person to have made on its behalf, of all or any
portion of their Inventory.


 


4.                                       REPRESENTATIONS AND
WARRANTIES.  Each Grantor
represents and warrants that:


 


(a)                                  Such Grantor has rights in and the power
to transfer each item of the Collateral upon which it purports to grant a Lien
hereunder free and clear of any and all Liens other than Permitted Encumbrances;


 


(b)                                 No effective security agreement,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is on file or of record in
any public office, except such as may have been filed (i) by such Grantor
in favor of Agent pursuant to this Security Agreement or the other Loan
Documents, and (ii) in connection with any other Permitted Encumbrances;


 


(c)                                  This Security Agreement is effective to
create a valid and continuing Lien on and, upon the filing of the appropriate
financing statements listed on Schedule I hereto, a perfected Lien
in favor of Agent, for itself and the benefit of Lenders, on the Collateral
with respect to which a Lien may be perfected by filing pursuant to the
Code.  Such Lien is prior to all other
Liens, except Permitted Encumbrances that would be prior to Liens in favor of
Agent for the benefit of Agent and Lenders as a matter of law, and is
enforceable as such as against any and all creditors of and purchasers from such
Grantor (other than purchasers and lessees of Inventory in the ordinary course
of business and non-exclusive licensees of General Intangibles in the ordinary
course of business).  All action by
Grantor necessary or desirable to protect and perfect such Lien on each item of
the Collateral has been duly taken;


 


(d)                                 Schedule II hereto lists all Instruments, Letter of
Credit Rights and Chattel Paper of such Grantor.  All action by such Grantor necessary or
desirable to protect and


 


9

















 


perfect
the Lien of Agent on each item set forth on Schedule II (including
the delivery of all originals thereof to Agent and the legending of all Chattel
Paper as required by Section 5(b) hereof)
has been duly taken.  The Lien of Agent,
for the benefit of Agent and Lenders, on the Collateral listed on Schedule II
hereto is prior to all other Liens, except Permitted Encumbrances that would be
prior to the Liens in favor of Agent as a matter of law, and is enforceable as
such against any and all creditors of and purchasers from such Grantor;


 


(e)                                  Such Grantor’s name as it appears in
official filings in such Grantor’s state of incorporation or other
organization, the type of entity of such Grantor (including corporation,
partnership, limited partnership or limited liability company), organizational
identification number issued by such Grantor’s state of incorporation or
organization or a statement that no such number has been issued, such Grantor’s
state of organization or incorporation, the location of such Grantor’s chief
executive office, principal place of business, offices, all warehouses and
premises where Collateral is stored or located, and the locations of its books
and records concerning the Collateral are set forth on Schedule III-A,
Schedule III-B, Schedule III-C, Schedule III-D,
Schedule III-E, Schedule III-F, Schedule III-G,
Schedule III-H, Schedule III-I, Schedule III-J,
Schedule III-K and Schedule III-L, Schedule III-M, Schedule III-N
or Schedule III-O hereto, as applicable.  Such Grantor has only one state of
incorporation or organization;


 


(f)                                    With respect to the Accounts, except as
specifically disclosed in the most recent Collateral Report delivered to Agent (i) they
represent bona fide sales of Inventory or rendering of services to Account
Debtors in the ordinary course of Grantor’s business and are not evidenced by a
judgment, Instrument or Chattel Paper; (ii) there are no setoffs, claims
or disputes existing or asserted with respect thereto and Grantor has not made
any agreement with any Account Debtor for any extension of time for the payment
thereof, any compromise or settlement for less than the full amount thereof,
any release of any Account Debtor from liability therefor, or any deduction
therefrom except a discount or allowance allowed by Grantor in the ordinary
course of its business for prompt payment and disclosed to Agent; (iii) to
Grantor’s knowledge, there are no facts, events or occurrences which in any way
impair the validity or enforceability thereof or could reasonably be expected
to reduce the amount payable thereunder as shown on Grantor’s books and records
and any invoices, statements and Collateral Reports delivered to Agent and
Lenders with respect thereto; (iv) Grantor has not received any notice of
proceedings or actions which are threatened or pending against any Account
Debtor which might result in any adverse change in such Account Debtor’s
financial condition; and (v) Grantor has no knowledge that any Account
Debtor is unable generally to pay its debts as they become due.  Further with respect to the Accounts (x) the
amounts shown on all invoices, statements and Collateral Reports which may be
delivered to the Agent with respect thereto are actually and absolutely owing
to Grantor as indicated thereon and are not in any way contingent; (y) no
payments have been or shall be made thereon except payments immediately
delivered to the applicable Blocked Accounts or the Agent as required pursuant
to the terms of Section 6.16
of the Credit Agreement; and (z) to Grantor’s knowledge, all Account Debtors
have the capacity to contract;


 


10

















 


(g)                                 With respect to any Inventory scheduled
or listed on the most recent Collateral Report delivered to Agent pursuant to the
terms of this Security Agreement or the Credit Agreement, (i) such
Inventory is located at one of Grantor’s locations set forth on Schedule III
hereto, (ii) no Inventory is now, or shall at any time or times hereafter
be stored at any other location without Agent’s prior consent, and if Agent
gives such consent, Grantor will concurrently therewith obtain, to the extent
required by the Credit Agreement, bailee, landlord and mortgagee agreements, (iii) Grantor
has good, indefeasible and merchantable title to such Inventory and such
Inventory is not subject to any Lien or security interest or document
whatsoever except for the Lien granted to Agent, for the benefit of Agent and
Lenders, and except for Permitted Encumbrances, (iv) except as
specifically disclosed in the most recent Collateral Report delivered to Agent,
such Inventory is Eligible Inventory of good and merchantable quality, free
from any defects, (v) such Inventory is not subject to any licensing,
patent, royalty, trademark, trade name or copyright agreements with any third
parties which would require any consent of any third party upon sale or
disposition of that Inventory or the payment of any monies to any third party
upon such sale or other disposition, and (vi) the completion of
manufacture, sale or other disposition of such Inventory by Agent following an
Event of Default shall not require the consent of any Person and shall not
constitute a breach or default under any contract or agreement to which Grantor
is a party or to which such property is subject; and


 


(h)                                 Such Grantor does not have any interest
in, or title to, any Patent, Trademark or Copyright except as set forth in Schedule IV
hereto.  This Security Agreement is
effective to create a valid and continuing Lien on and, upon filing of the
Copyright Security Agreements with the United States Copyright Office, filing
of the Patent Security Agreements and the Trademark Security Agreements with
the United States Patent and Trademark Office and the filing of appropriate
financing statements listed on Schedule I hereto, such Liens in favor of
Agent on such Grantor’s Patents, Trademarks and Copyrights will be enforceable
and perfected.  Upon filing of the
Copyright Security Agreements with the United States Copyright Office, filing
of the Patent Security Agreements and the Trademark Security Agreements with
the United States Patent and Trademark Office and the filing of appropriate
financing statements listed on Schedule I hereto, all action
necessary or desirable to protect and perfect Agent’s Lien on such Grantor’s
Patents, Trademarks or Copyrights shall have been duly taken; and


 


(i)                                     All motor vehicles owned by such Grantor
are listed on Schedule V hereto, by model, model year and vehicle
identification number (“VIN”).  At Agent’s
request, such Grantor shall deliver to Agent motor vehicle title certificates
for all motor vehicles from time to time owned by it and shall cause those
title certificates to be filed (with Agent’s lien noted thereon) in the
appropriate state motor vehicle filing office.


 


5.                                       COVENANTS.  Each Grantor covenants and agrees with Agent,
for the benefit of Agent and Lenders, that from and after the date of this
Security Agreement and until the Termination Date:


 


(a)                                  Further Assurances: Pledge of
Instruments; Chattel Paper.


 


11

















 


i.                                          At any time and from time to time, upon
the written request of Agent and at the sole expense of the Grantors, each
Grantor shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further actions as may be necessary or
as Agent may reasonably request to obtain the full benefits of this Security
Agreement and of the rights and powers herein granted, including (A) using
its best efforts to secure all consents and approvals necessary or appropriate
for the assignment to or for the benefit of Agent of any License or Contract
held by any Grantor and to enforce the security interests granted hereunder and
(B) filing any financing or continuation statements under the Code with
respect to the Liens granted hereunder or under any other Loan Document as to
those jurisdictions that are not Uniform Commercial Code jurisdictions.


 


ii.                                       Unless Agent shall otherwise consent in
writing (which consent may be revoked), each Grantor shall deliver to Agent all
Collateral consisting of negotiable Documents, certificated securities, Chattel
Paper and Instruments (in each case, accompanied by stock powers, allonges or
other instruments of transfer executed in blank) promptly after such Grantor
receives the same.


 


iii.                                    Each Grantor shall, to the extent
required by the Credit Agreement, obtain or use its best efforts to obtain
waivers or subordinations of Liens from landlords and mortgagees, and each
Grantor shall in all instances obtain signed acknowledgements of Agent’s Liens
from bailees having possession of Grantor’s Goods that they hold for the
benefit of Agent.


 


iv.                                   If required by the terms of the Credit
Agreement and not waived by Agent in writing (which waiver may be revoked),
Grantor shall obtain authenticated Control Letters from each issuer of
uncertificated securities, securities intermediary, or commodities intermediary
issuing or holding any financial assets or commodities to or for Grantor.


 


v.                                      In accordance with Section 6.16 of
the Credit Agreement, Grantor shall obtain a blocked account, lockbox or
similar agreement with each bank or financial institution holding a Deposit
Account for Grantor.


 


vi.                                   Grantor that is or becomes the
beneficiary of a letter of credit shall promptly after becoming a beneficiary,
notify Agent thereof and enter into a tri-party agreements with Agent and the
issuer and/or confirmation bank with respect to Letter-of-Credit Rights
assigning such Letter-of-Credit Rights to Agent and directing all payments
thereunder to the Collection Account, all in form and substance reasonably
satisfactory to Agent.


 


vii.                                Each Grantor shall take all steps
necessary to grant the Agent control of all electronic chattel paper in
accordance with the Code and all “transferable records” as defined in each of
the Uniform Electronic Transactions Act and the Electronic Signatures in Global
and National Commerce Act.


 


12

















 


viii.                             Each Grantor hereby irrevocably
authorizes the Agent at any time and from time to time to file in any filing
office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as
all assets of such Grantor or words of similar effect, regardless of whether
any particular asset comprised in the Collateral falls within the scope of Article 9
of the Code or such jurisdiction, or (ii) as being of an equal or lesser
scope or with greater detail, and (b) contain any other information required
by part 5 of Article 9 of the Code for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether
such Grantor is an organization, the type of organization and any organization
identification number issued to such Grantor, and (ii) in the case of a
financing statement filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. 
Each Grantor agrees to furnish any such information to the Agent
promptly upon request.  Grantor also
ratifies its authorization for the Agent to have filed in any Uniform
Commercial Code jurisdiction any initial financing statements or amendments
thereto if filed prior to the date hereof.


 


ix.                                     Each Grantor shall, promptly, and in any
event within two (2) Business Days after the same is acquired by it,
notify Agent of any commercial tort claim (as defined in the Code) acquired by
it and unless otherwise consented by Agent, such Grantor shall enter into a
supplement to this Security Agreement, granting to Agent a Lien in such
commercial tort claim.


 


(b)                                 Maintenance of Records. 
Each Grantor shall keep and maintain, at its own cost and expense,
satisfactory and complete records of the Collateral, including a record of any
and all payments received and any and all credits granted with respect to the
Collateral and all other dealings with the Collateral.  Each Grantor shall mark its books and records
pertaining to the Collateral to evidence this Security Agreement and the Liens
granted hereby.  If any Grantor retains
possession of any Chattel Paper or Instruments with Agent’s consent, such
Chattel Paper and Instruments shall be marked with the following legend: “This
writing and the obligations evidenced or secured hereby are subject to the
security interest of General Electric Capital Corporation, as Agent, for the
benefit of Agent and certain Lenders.”


 


(c)                                  Covenants Regarding Patent, Trademark and
Copyright Collateral.


 


i.                                          Each Grantor shall notify Agent as soon
as possible, but in any event within two (2) Business Days if it knows or
has reason to know that any application or registration relating to any Patent,
Trademark or Copyright (now or hereafter existing) may become abandoned or
dedicated, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding Grantor’s ownership of any Patent, Trademark or
Copyright, its right to register the same, or to keep and maintain the same
unless such Grantor shall determine


 


13

















 


that such Patent,
Trademark or Copyright is not material to the conduct of its business.


 


ii.                                       In no event shall any Grantor, either
itself or through any agent, employee, licensee or designee, file an
application for the registration of any Patent, Trademark or Copyright with the
United States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency without giving Agent prior written notice
thereof, and, upon request of Agent, such Grantor shall execute and deliver any
and all Patent Security Agreements, Copyright Security Agreements or Trademark
Security Agreements as Agent may request to evidence Agent’s Lien on such
Patent, Trademark or Copyright, and the General Intangibles of Grantor relating
thereto or represented thereby.


 


iii.                                    Each Grantor shall take all actions
necessary or reasonably requested by Agent to maintain and pursue each
application, to obtain the relevant registration and to maintain the
registration of each of the Patents, Trademarks and Copyrights (now or
hereafter existing), including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings, unless such Grantor shall reasonably
determine that such Patent, Trademark or Copyright is not material to the
conduct of its business.


 


iv.                                   In the event that any of the Patent,
Trademark or Copyright Collateral is infringed upon, or misappropriated or
diluted by a third party, each Grantor shall, unless such Grantor shall
reasonably determine that such Patent, Trademark or Copyright Collateral is not
material to the conduct of its business or operations, promptly take action to
protect such Patent, Trademark or Copyright Collateral (including, but not
limited to, suing for infringement, misappropriation or dilution and to recover
any and all damages for such infringement, misappropriation or dilution), and
shall take such other actions as Agent shall reasonably deem appropriate under
the circumstances to protect such Patent, Trademark or Copyright Collateral.


 


(d)                                 Indemnification. 
In any suit, proceeding or action brought by Agent or any Lender
relating to any Collateral for any sum owing with respect thereto or to enforce
any rights or claims with respect thereto, the Grantors will save, indemnify
and keep Agent and Lenders harmless from and against all expense (including
reasonable attorneys’ fees and expenses), loss or damage suffered by reason of
any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the Account Debtor or other Person obligated on the Collateral,
arising out of a breach by any Grantor of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to, or
in favor of, such obligor or its successors from any Grantor, except in the
case of Agent or any Lender, to the extent such expense, loss, or damage is
attributable solely to the gross negligence or willful misconduct of Agent or
such Lender as finally determined by a court of competent jurisdiction.  An indemnitee under this

Section 5(d) shall endeavor to
notify the Borrower Representative of any event requiring


 


14

















 


indemnification
within ten (10) Business Days following such indemnitee’s receipt of notice
of commencement of any action or proceeding, or such indemnitee’s obtaining
knowledge of the occurrence of any event, giving rise to a claim for
indemnification hereunder, provided that the failure to give such notice shall
not invalidate or otherwise impair the rights of the indemnitee to
indemnification under this Section 5(d) or
result in any liability of such indemnitee, the Agent or any Lender to any
Credit Party or any other Person.  All
such obligations of the Grantors shall be and remain enforceable against and
only against Grantor and shall not be enforceable against Agent or any Lender.


 


(e)                                  Compliance with Terms of Accounts, etc. 
In all material respects, Grantor will perform and comply with all
obligations in respect of the Collateral and all other agreements to which it
is a party or by which it is bound relating to the Collateral.


 


(f)                                    Limitation on Liens on Collateral. 
Grantor will not create, permit or suffer to exist, and each Grantor
will defend the Collateral against, and take such other action as is necessary
to remove, any Lien on the Collateral except Permitted Encumbrances, and will
defend the right, title and interest of Agent and Lenders in and to any of such
Grantor’s rights under the Collateral against the claims and demands of all
Persons whomsoever, other than holders of Permitted Encumbrances.


 


(g)                                 Limitations on Disposition. 
No Grantor will sell, license, lease, transfer or otherwise dispose of
any of the Collateral, or attempt or contract to do so, except as permitted by
the Credit Agreement.


 


(h)                                 Further Identification of Collateral. 
Each Grantor will, if so requested by Agent, furnish to Agent, as often
as Agent reasonably requests, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Agent may reasonably request, all in such detail as Agent may
reasonably specify.


 


(i)                                     Notices.  Each Grantor
will advise Agent promptly, in reasonable detail, (i) of any Lien (other
than Permitted Encumbrances) or claim made or asserted against any of the
Collateral, and (ii) of the occurrence of any other event which would have
a Material Adverse Effect on the aggregate value of the Collateral or on the
Liens created hereunder or under any other Loan Document.


 


(j)                                     Good Standing Certificates. 
Not more frequently than once during each calendar quarter, Grantor
shall, unless Agent shall otherwise consent, provide to Agent a certificate of
good standing from its state of incorporation or organization.


 


(k)                                  No Reincorporation. 
Except for the reorganization expressly described in and permitted under
the Credit Agreement in connection with the Permitted Restructuring, Grantor
shall not reincorporate or reorganize itself under the laws of any jurisdiction
other than the jurisdiction in which it is incorporated or organized as of the
date hereof without the prior written consent of Agent.


 


(l)                                     Terminations; Amendments Not Authorized. 
Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement


 


15

















 


with
respect to any financing statement without the prior written consent of Agent
and agrees that it will not do so without the prior written consent of Agent,
subject to such Grantor’s rights under Section 9-509(d)(2) of
the Code.


 


(m)                               Authorized Terminations. 
Upon payment in full in cash and performance of all of the Obligations
(other than indemnification Obligations), termination of the Commitments and a
release of all claims against Agent and Lenders, and so long as no suits,
actions, proceedings or claims are pending or threatened against any
Indemnified Person asserting any damages, losses or liabilities that are
indemnified liabilities under Section 9.2
of the Credit Agreement, Agent shall, at the Grantors’ expense,
promptly deliver to the Grantors or authorize the Grantors to prepare and file
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.


 


(n)                                 Federal Claims. 
Each Grantor shall notify Agent of any Collateral (other than Government
Accounts) which constitutes a claim against the United States government or any
instrumentality or agency thereof, the assignment of which claim is restricted
by federal law.  Upon the request of
Agent, such Grantor shall take such steps as may be necessary to comply with
any applicable federal assignment of claims laws and other comparable laws.


 


(o)                                 Hot Goods.  None of the
Inventory of any Grantor has been or will be produced in violation of any
provision of the Fair Labor Standards Act of 1938, as amended, or in violation
of any other law.


 


6.                                       AGENT’S APPOINTMENT
AS ATTORNEY-IN-FACT.


 


On the Closing Date, each
Grantor shall execute and deliver to Agent a power of attorney (the “Power
of Attorney”) substantially in the form attached hereto as Exhibit A.  The power of attorney granted pursuant to the
Power of Attorney is a power coupled with an interest and shall be irrevocable
until the Termination Date.  The powers
conferred on Agent, for the benefit of Agent and Lenders, under the Power of
Attorney are solely to protect Agent’s interests (for the benefit of Agent and
Lenders) in the Collateral and shall not impose any duty upon Agent or any
Lender to exercise any such powers. 
Agent agrees that (a) except for the powers granted in clause (h) of
the Power of Attorney, it shall not exercise any power or authority granted
under the Power of Attorney unless an Event of Default has occurred and is
continuing, and (b) Agent shall account for any moneys received by Agent
in respect of any foreclosure on or disposition of Collateral pursuant to the
Power of Attorney provided that none of Agent or any Lender shall have any duty
as to any Collateral, and Agent and Lenders shall be accountable only for
amounts that they actually receive as a result of the exercise of such
powers.  NONE OF AGENT, LENDERS OR THEIR
RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES
SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY
POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE
SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY
DETERMINED BY A


 


16

















 


COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.


 


7.                                       REMEDIES:  RIGHTS UPON DEFAULT.


 


(a)                                  In addition to all other rights and
remedies granted to it under this Security Agreement, the Credit Agreement, the
other Loan Documents and under any other instrument or agreement securing,
evidencing or relating to any of the Obligations, if any Event of Default shall
have occurred and be continuing, Agent may exercise all rights and remedies of
a secured party under the Code.  Without
limiting the generality of the foregoing, each Grantor expressly agrees that in
any such event Agent, without demand of performance or other demand, advertisement
or notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon such Grantor or any other Person (all and
each of which demands, advertisements and notices are hereby expressly waived
to the maximum extent permitted by the Code and other applicable law), may
forthwith enter upon the premises of such Grantor where any Collateral is
located through self-help, without judicial process, without first obtaining a
final judgment or giving such Grantor or any other Person notice and opportunity
for a hearing on Agent’s claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, license, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem
acceptable, for cash or on credit or for future delivery without assumption of
any credit risk.  Agent or any Lender
shall have the right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase for the
benefit of Agent and Lenders, the whole or any part of said Collateral so sold,
free of any right or equity of redemption, which equity of redemption such
Grantor hereby releases.  Such sales may
be adjourned and continued from time to time with or without notice.  Agent shall have the right to conduct such
sales on such Grantor’s premises or elsewhere and shall have the right to use
such Grantor’s premises without charge for such time or times as Agent deems
necessary or advisable.


 


If any Event of Default shall have occurred and be
continuing, each Grantor further agrees, at Agent’s request, to assemble the
Collateral and make it available to Agent at a place or places designated by
Agent which are reasonably convenient to Agent and such Grantor, whether at
such Grantor’s premises or elsewhere. 
Until Agent is able to effect a sale, lease, or other disposition of
Collateral, Agent shall have the right to hold or use Collateral, or any part
thereof, to the extent that it deems appropriate for the purpose of preserving
Collateral or its value or for any other purpose deemed appropriate by
Agent.  Agent shall have no obligation to
any Grantor to maintain or preserve the rights of such Grantor as against third
parties with respect to Collateral while Collateral is in the possession of
Agent.  Agent may, if it so elects, seek
the appointment of a receiver or keeper to take possession of Collateral and to
enforce any of Agent’s remedies (for the benefit of Agent and Lenders), with
respect to such appointment without prior notice or hearing as to such
appointment.  Agent shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or


 


17

















 


sale
to the Obligations as provided in the Credit Agreement, and only after so
paying over such net proceeds, and after the payment by Agent of any other
amount required by any provision of law, need Agent account for the surplus, if
any, to the relevant Grantor.  To the
maximum extent permitted by applicable law, each Grantor waives all claims, damages,
and demands against Agent or any Lender arising out of the repossession,
retention or sale of the Collateral except such as arise solely out of the
gross negligence or willful misconduct of Agent or such Lender as finally
determined by a court of competent jurisdiction.  Each Grantor agrees that ten (10) days
prior notice by Agent of the time and place of any public sale or of the time
after which a private sale may take place is reasonable notification of such
matters.  Each Grantor shall remain liable
for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay all Obligations, including any attorneys’ fees and
other expenses incurred by Agent or any Lender to collect such deficiency.


 


(b)                                 Except as otherwise specifically provided
herein or in the Credit Agreement, each Grantor hereby waives presentment,
demand, protest or any notice (to the maximum extent permitted by applicable
law) of any kind in connection with this Security Agreement or any Collateral.


 


(c)                                  To the extent that applicable law imposes
duties on the Agent to exercise remedies in a commercially reasonable manner,
each Grantor acknowledges and agrees that it is not commercially unreasonable
for the Agent (i) to fail to incur expenses reasonably deemed significant
by the Agent to prepare Collateral for disposition or otherwise to complete raw
material or work in process into finished goods or other finished products for
disposition, (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other law, to
fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to
exercise collection remedies against Account Debtors and other Persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (v) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other Persons,
whether or not in the same business as such Grantor, for expressions of
interest in acquiring all or any portion of such Collateral, (vii) to hire
one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, such as title, possession or quiet enjoyment, (xi) to
purchase insurance or credit enhancements to insure the Agent against risks of
loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by the Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist the
Agent in the collection or disposition of any of the Collateral.  Each Grantor acknowledges that the purpose of
this Section 7(c) is to
provide


 


18

















 


non-exhaustive
indications of what actions or omissions by the Agent would not be commercially
unreasonable in the Agent’s exercise of remedies against the Collateral and
that other actions or omissions by the Agent shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section 7(c).  Without limitation upon the foregoing,
nothing contained in this Section 7(c) shall
be construed to grant any rights to any Grantor or to impose any duties on
Agent that would not have been granted or imposed by this Security Agreement or
by applicable law in the absence of this Section 7(c).


 


(d)                                 Neither the Agent nor the Lenders shall
be required to make any demand upon, or pursue or exhaust any of their rights
or remedies against, any Grantor, any other obligor, guarantor, pledgor or any
other Person with respect to the payment of the Obligations or to pursue or
exhaust any of their rights or remedies with respect to any Collateral therefor
or any direct or indirect guarantee thereof. 
Neither the Agent nor the Lenders shall be required to marshal the
Collateral or any guarantee of the Obligations or to resort to the Collateral
or any such guarantee in any particular order, and all of its and their rights
hereunder or under any other Loan Document shall be cumulative.  To the extent it may lawfully do so, each
Grantor absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Agent or any Lender, any
valuation, stay, appraisement, extension, redemption or similar laws and any
and all rights or defenses it may have as a surety now or hereafter existing
which, but for this provision, might be applicable to the sale of any
Collateral made under the judgment, order or decree of any court, or privately
under the power of sale conferred by this Security Agreement, or otherwise.


 


8.                                       GRANT OF LICENSE TO
USE INTELLECTUAL PROPERTY COLLATERAL.  For the purpose of enabling Agent to exercise
rights and remedies under Section 7
hereof (including, without limiting the terms of Section 7 hereof, in order to take possession of, hold,
preserve, process, assemble, prepare for sale, market for sale, sell or
otherwise dispose of Collateral) at such time as Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to
Agent, for the benefit of Agent and Lenders, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to such
Grantor) to use, license or sublicense any Intellectual Property now owned or
hereafter acquired by such Grantor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed
items may be recorded or stored and to all computer software and programs used
for the compilation or printout thereof.


 


9.                                       LIMITATION ON AGENT’S
AND LENDERS’ DUTY IN RESPECT OF COLLATERAL. 
Agent and each Lender shall use reasonable care with respect to the
Collateral in its possession or under its control.  Neither Agent nor any Lender shall have any
other duty as to any Collateral in its possession or control or in the
possession or control of any agent or nominee of Agent or such Lender, or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto.


 


10.                                 REINSTATEMENT.  This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by
or against Grantor


 


19

















 


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


 


11.                                 NOTICES.  Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give and serve upon any other party any communication with respect to this
Security Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given in
the manner, and deemed received, as provided for in the Credit Agreement.


 


12.                                 SEVERABILITY.  Whenever possible, each provision of this
Security Agreement shall be interpreted in a manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.  This Security
Agreement is to be read, construed and applied together with the Credit Agreement
and the other Loan Documents which, taken together, set forth the complete
understanding and agreement of Agent, Lenders and each Grantor with respect to
the matters referred to herein and therein.


 


13.                                 NO WAIVER;
CUMULATIVE REMEDIES.  Neither Agent
nor any Lender shall by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies hereunder, and no waiver shall be valid
unless in writing, signed by Agent and then only to the extent therein set
forth.  A waiver by Agent of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Agent would otherwise have had on any future
occasion.  No failure to exercise nor any
delay in exercising on the part of Agent or any Lender, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or future exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law.  None of the terms or provisions of this
Security Agreement may be waived, altered, modified or amended except by an instrument
in writing, duly executed by Agent and the Grantors.


 


14.                                 LIMITATION BY LAW.  All rights, remedies and powers provided in


 


20

















 


this Security Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Security Agreement
are intended to be subject to all applicable mandatory provisions of law that
may be controlling and to be limited to the extent necessary so that they shall
not render this Security Agreement invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.


 


15.                                 TERMINATION OF THIS
SECURITY AGREEMENT.  Subject to Section 10 hereof, this Security
Agreement shall terminate upon the Termination Date.


 


16.                                 SUCCESSORS AND
ASSIGNS.  This Security Agreement and all
obligations of each Grantor hereunder shall be binding upon the successors and
assigns of such Grantor and shall, together with the rights and remedies of
Agent, for the benefit of Agent and Lenders, hereunder, inure to the benefit of
Agent and Lenders, all future holders of any instrument evidencing any of the
Obligations and their respective successors and assigns.  No sales of participations, other sales,
assignments, transfers or other dispositions of any agreement governing or
instrument evidencing the Obligations or any portion thereof or interest
therein shall in any manner impair the Lien granted to Agent, for the benefit
of Agent and Lenders, hereunder.  No
Grantor may assign, sell, hypothecate or otherwise transfer any interest in or
obligation under this Security Agreement except for such transfers and
assignments to other Credit Parties to the extent expressly permitted in the
Credit Agreement in connection with the Permitted Restructuring.


 


17.                                 COUNTERPARTS.  This Security Agreement may be authenticated
in any number of separate counterparts, each of which shall collectively and
separately constitute one agreement. 
This Security Agreement may be authenticated by manual signature,
facsimile or, if approved in writing by Agent, electronic means, all of which
shall be equally valid.


 


18.                                 GOVERNING
LAW. 
THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.  GRANTORS AND AGENT HEREBY SUBMIT TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES BANKRUPTCY COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.  EACH GRANTOR AND AGENT
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE PARTIES HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.3
OF THE CREDIT AGREEMENT.  NOTHING IN THIS
SECURITY AGREEMENT WILL AFFECT THE RIGHT OF


 


21

















 


ANY PARTY TO
THIS SECURITY AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.


 


19.                                 WAIVER
OF JURY TRIAL. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT
PERMITTED BY LAW WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE
CONSEQUENTIAL OR SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY.


 


20.                                 SECTION TITLES.  The Section titles contained in this
Security Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the parties
hereto.


 


21.                                 NO STRICT
CONSTRUCTION.  The parties
hereto have participated jointly in the negotiation and drafting of this
Security Agreement.  In the event an
ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.


 


22.                                 ADVICE OF COUNSEL.  Each of the parties represents to each other
party hereto that it has discussed this Security Agreement and, specifically,
the provisions of Section 18
and Section 19, with its
counsel.


 


23.                                 BENEFIT OF LENDERS.  All Liens granted or contemplated hereby
shall be for the benefit of Agent, individually, and Lenders, and all proceeds
or payments realized from Collateral in accordance herewith shall be applied to
the Obligations in accordance with the terms of the Credit Agreement.


 


[Remainder of page intentionally left blank; signature pages follow]


 


22

















 


IN WITNESS WHEREOF, each
of the parties hereto has caused this Borrower Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.


 


	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA ACCESS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APEX THERAPEUTIC CARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


[Signature Page to Borrower Security Agreement]


 

















 


	
   

  	
  CURATIVE HEALTH SERVICES OF NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL CARE PLUS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services Co., its Sole

  Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION II, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services Co., its Sole

  Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


24

















 


	
   

  	
  INFINITY INFUSION CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Infinity Infusion  II, LLC, its Sole General

  Partner

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services Co., the Sole

  Member of Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE PHARMACY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRITICAL
  CARE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


25

















 


	
   

  	
  GENERAL
  ELECTRIC CAPITAL

  CORPORATION, as
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


26

















 


SCHEDULE I


to


SECURITY AGREEMENT


 


FILING JURISDICTIONS


 




	
  i.

  	
   

  	
  Curative
  Health Services, Inc.

  	
   

  	
  Minnesota

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ii.

  	
   

  	
  eBioCare.com, Inc.:

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  iii.

  	
   

  	
  Hemophilia
  Access, Inc.

  	
   

  	
  Tennessee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  iv.

  	
   

  	
  Apex
  Therapeutic Care, Inc.

  	
   

  	
  California

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  v.

  	
   

  	
  CHS
  Services, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  vi.

  	
   

  	
  Curative
  Health Services of New York, Inc.

  	
   

  	
  New
  York

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  vii.

  	
   

  	
  Infinity
  Infusion, LLC

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  viii.

  	
   

  	
  Infinity
  Infusion II, LLC

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ix.

  	
   

  	
  Optimal
  Care Plus, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  x.

  	
   

  	
  Infinity
  Infusion Care, Ltd.

  	
   

  	
  Texas

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  xi.

  	
   

  	
  MedCare, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  xii.

  	
   

  	
  Curative
  Pharmacy Services, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  xiii.

  	
   

  	
  Critical Care Systems, Inc

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  xiv.

  	
   

  	
  Curative
  Health Services Co.

  	
   

  	
  Minnesota

  






 





















 


SCHEDULE II


to


SECURITY AGREEMENT


 


INSTRUMENTS


CHATTEL PAPER


AND


LETTER OF CREDIT RIGHTS


 


[None.]


 

















 


SCHEDULE III-A


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING BORROWER’S COLLATERAL


 


	
  I.

  	
   

  	
  Grantor’s
  official name:                     Curative
  Health Services, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  Type of entity:                 Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  Organizational
  identification number issued by Grantor’s state of incorporation:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MN 12S-385

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
   

  	
  State or
  Incorporation of Borrower:            Minnesota

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  Chief Executive
  Office/Corporate Office and principal place of business of Borrower:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  61 Spit Brook
  Road

  	
   

  	
   

  
	
   

  	
   

  	
  Nashua, NH 03060

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
   

  	
  Warehouses and
  Other Premises at which Collateral is Stored or Located:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  61 Spit Brook
  Road

  	
   

  	
   

  
	
   

  	
   

  	
  Nashua, NH 03060

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  VII.                             Locations
  of Records Concerning Collateral:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (see V. and VI.
  above and Schedule III-O below)

  	
   

  	
   

  



 

















 


SCHEDULE III-B


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING EBIOCARE.COM, INC.’S COLLATERAL


 


I.                                         Grantor’s
official name:                     eBioCare.com, Inc.


 


II.                                     Type
of entity:                                                                 Corporation


 


III.                                 Organizational
identification number issued by Grantor’s state of incorporation:


 


DE
2838307


 


IV.                                 State
of Incorporation of eBioCare.com, Inc.:          Delaware


 


V.                                     Chief
Executive Office/Corporate Office and principal place of business of
eBioCare.com, Inc.:


 


61
Spit Brook Road, Suite 505


Nashua,
NH 03060


 


VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:


 


31332
Via Colinas, Suite 106


Westlake
Village, CA 91362


 


61
Spit Brook Road, Suite 505


Nashua,
NH 03060


 


VII.                             Locations
of Records Concerning Collateral:


 


(see
V. and VI. above and Schedule III-O below)


 

















 


SCHEDULE III-C


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING HEMOPHILIA ACCESS, INC.’S
COLLATERAL


 


I.                                         Grantor’s
official name:                     Hemophilia
Access, Inc.


 


II.                                     Type
of entity:                                                                 Corporation


 


III.                                 Organizational
identification number issued by Grantor’s state of incorporation:


 


TN
0275344


 


IV.                                 State
of Incorporation of Hemophilia Access, Inc.:                      Tennessee


 


V.                                     Chief
Executive Office/Corporate Office and principal place of business of  Hemophilia Access Inc.:


 


61
Spit Brook Road, Suite 505


Nashua,
NH 03060


 


VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:


 


61
Spit Brook Road, Suite 505


Nashua,
NH 03060


 


VII.                             Locations
of Records Concerning Collateral:


 


(see
V. and VI. above and Schedule III-O below)


 

















 


SCHEDULE III-D


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING APEX THERAPEUTIC CARE, INC.’S
COLLATERAL


 


I.                                         Grantor’s
official name:         Apex
Therapeutic Care, Inc.


 


II.                                     Type
of entity:    Corporation


 


III.                                 Organizational
identification number issued by Grantor’s state of incorporation:


 


CA
2026547


 


IV.                                 State
of Incorporation of Apex Therapeutic Care, Inc.:               California


 


V.                                     Chief
Executive Office/Corporate Office and principal place of business of Apex
Therapeutic Care, Inc.:


 


31332
Via Colinas


Suite 106


Westlake
Village, CA  91362


 


VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:


 


31332
Via Colinas


Suite 106


Westlake
Village, CA  91362


 


623 N.
Main Street


Unit
D6-8


Corona,
CA  92880


 


61
Spit Brook Road, Suite 505


Nashua,
NH 03060


 


Access
Family Pharmacy


4062
Hixsow Pike


Chattanooga,
TN 37415


 


VII.                             Locations
of Records Concerning Collateral:


 


(see
V. and VI. above and Schedule III-O below)


 

















 


SCHEDULE III-E


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING CHS SERVICES, INC.’S COLLATERAL


 


	
  I.

  	
  Grantor’s
  official name: CHS Services, Inc.

  
	
   

  	
   

  
	
  II.

  	
  Type of entity:
  Corporation

  
	
   

  	
   

  
	
  III.

  	
  Organizational
  identification number issued by Grantor’s state of incorporation:

  
	
   

  	
   

  
	
   

  	
  DE 2578204

  
	
   

  	
   

  
	
  IV.

  	
  State of
  Incorporation of CHS Services, Inc.:         Delaware

  
	
   

  	
   

  
	
  V.

  	
  Chief Executive
  Office/Corporate Office and principal place of business of CHS
  Services, Inc.:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VI.

  	
  Warehouses and
  Other Premises at which Collateral is Stored or Located:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
   

  	
  103 Foulk Road

  
	
   

  	
  Suite 200

  
	
   

  	
  Wilmington, DE
  19803

  
	
   

  	
   

  
	
  VII.

  	
  Locations of
  Records Concerning Collateral:

  
	
   

  	
   

  
	
   

  	
  (see V. and VI.
  above and Schedule III-O below)

  



 


 

















 


SCHEDULE III-F


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING CURATIVE HEALTH SERVICES OF NEW
YORK, INC.’S COLLATERAL


 


	
  I.

  	
  Grantor’s
  official name: Curative Health Services of New York, Inc.

  
	
   

  	
   

  
	
  II.

  	
  Type of entity:
  Corporation

  
	
   

  	
   

  
	
  III.

  	
  Organizational
  identification number issued by Grantor’s state of incorporation:

  
	
   

  	
   

  
	
   

  	
  Not issued by
  state of incorporation

  
	
   

  	
   

  
	
  IV.

  	
  State of
  Incorporation of Curative Health Services of New York, Inc.: New York

  
	
   

  	
   

  
	
  V.

  	
  Chief Executive
  Office/Corporate Office and principal place of business of Curative Health
  Services of New York, Inc.:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road, Suite 505

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VI.

  	
  Warehouses and
  Other Premises at which Collateral is Stored or Located:

  
	
   

  	
   

  
	
   

  	
  15 Technology
  Place, Suite 2

  
	
   

  	
  East Syracuse,
  NY 13057

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VII.

  	
  Locations of
  Records Concerning Collateral:

  
	
   

  	
   

  
	
   

  	
  (see V. and VI.
  above and Schedule III-O below)

  



 


 

















 


SCHEDULE III-G


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING INFINITY INFUSION, LLC’S
COLLATERAL


 


	
  I.

  	
  Grantor’s
  official name: Infinity Infusion, LLC

  
	
   

  	
   

  
	
  II.

  	
  Type of entity:
  Limited Liability Company

  
	
   

  	
   

  
	
  III.

  	
  Organizational
  identification number issued by Grantor’s state of organization:

  
	
   

  	
   

  
	
   

  	
  DE 3529163

  
	
   

  	
   

  
	
  IV.

  	
  State of
  organization of Infinity Infusion, LLC: Delaware

  
	
   

  	
   

  
	
  V.

  	
  Chief Executive
  Office/Corporate Office and principal place of business of Infinity Infusion,
  LLC:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VI.

  	
  Warehouses and
  Other Premises at which Collateral is Stored or Located:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VII.

  	
  Locations of
  Records Concerning Collateral:

  
	
   

  	
   

  
	
   

  	
  (see V. and VI.
  above and Schedule III-O below)

  



 


 

















 


SCHEDULE III-H


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING INFINITY INFUSION II, LLC’S
COLLATERAL


 


	
  I.

  	
  Grantor’s
  official name: Infinity Infusion II, LLC

  
	
   

  	
   

  
	
  II.

  	
  Type of entity:
  Limited Liability Company

  
	
   

  	
   

  
	
  III.

  	
  Organizational
  identification number issued by Grantor’s state of organization:

  
	
   

  	
   

  
	
   

  	
  DE 3529166

  
	
   

  	
   

  
	
  IV.

  	
  State of
  organization of Infinity Infusion II, LLC: Delaware

  
	
   

  	
   

  
	
  V.

  	
  Chief Executive
  Office/Corporate Office and principal place of business of Infinity Infusion
  II, LLC

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VI.

  	
  Warehouses and
  Other Premises at which Collateral is Stored or Located:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VII.

  	
  Locations of
  Records Concerning Collateral:

  
	
   

  	
   

  
	
   

  	
  (see V. and VI.
  above and Schedule III-O below)

  



 


 

















 


SCHEDULE III-I


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING OPTIMAL CARE PLUS, INC.
COLLATERAL


 


	
  I.

  	
  Grantor’s
  official name: Optimal Care Plus, Inc.

  
	
   

  	
   

  
	
  II.

  	
  Type of entity:
  Corporation

  
	
   

  	
   

  
	
  III.

  	
  Organizational
  identification number issued by Grantor’s state of incorporation:

  
	
   

  	
   

  
	
   

  	
  DE 3579727

  
	
   

  	
   

  
	
  IV.

  	
  State of
  Incorporation of Optimal Care Plus, Inc.: Delaware

  
	
   

  	
   

  
	
  V.

  	
  Chief Executive
  Office/Corporate Office and principal place of business of Optimal Care
  Plus, Inc.:

  
	
   

  	
   

  
	
   

  	
  12761 Darby
  Brooke Court

  
	
   

  	
  Woodbridge, VA
  22192

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road, Suite 505

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VI.

  	
  Warehouses and
  Other Premises at which Collateral is Stored or Located:

  
	
   

  	
   

  
	
   

  	
  12761 Darby
  Brooke Court

  
	
   

  	
  Woodbridge, VA
  22192

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road, Suite 505

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VII.

  	
  Locations of
  Records Concerning Collateral:

  
	
   

  	
   

  
	
   

  	
  (see V. and VI.
  above and Schedule III-O below)

  



 


 

















 


SCHEDULE III-J


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING INFINITY INFUSION CARE, LTD.
COLLATERAL


 


	
  I.

  	
  Grantor’s
  official name: Infinity Infusion Care, Ltd.

  
	
   

  	
   

  
	
  II.

  	
  Type of entity:
  Limited Partnership

  
	
   

  	
   

  
	
  III.

  	
  Organizational
  identification number issued by Grantor’s state of organization:

  
	
   

  	
   

  
	
   

  	
  TX 800037312

  
	
   

  	
   

  
	
  IV.

  	
  State of
  organization of Infinity Infusion Care, Ltd.: Texas

  
	
   

  	
   

  
	
  V.

  	
  Chief Executive
  Office/Corporate Office and principal place of business of Infinity Infusion
  Care, Ltd.:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road, Suite 505

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VI.

  	
  Warehouses and
  Other Premises at which Collateral is Stored or Located:

  
	
   

  	
   

  
	
   

  	
  3600 South
  Gessner, Suite 1000

  
	
   

  	
  Houston, TX
  77063

  
	
   

  	
   

  
	
   

  	
  25010 Oakhurst
  Drive

  
	
   

  	
  Spring, Texas

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road, Suite 505

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VII.

  	
  Locations of
  Records Concerning Collateral:

  
	
   

  	
   

  
	
   

  	
  (see V. and VI.
  above and Schedule III-O below)

  



 

















 


SCHEDULE III-K


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING CURATIVE PHARMACY SERVICES,
INC. COLLATERAL


 


	
  I.

  	
  Grantor’s
  official name: Curative Pharmacy Services, Inc.

  
	
   

  	
   

  
	
  II.

  	
  Type of entity:
  Corporation

  
	
   

  	
   

  
	
  III.

  	
  Organizational
  identification number issued by Grantor’s state of incorporation:

  
	
   

  	
   

  
	
   

  	
  DE 3646680

  
	
   

  	
   

  
	
  IV.

  	
  State or
  Incorporation of Curative Pharmacy Services, Inc.: Delaware

  
	
   

  	
   

  
	
  V.

  	
  Chief Executive
  Office/Corporate Office and principal place of business of Curative Pharmacy
  Services, Inc.:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VI.

  	
  Warehouses and
  Other Premises at which Collateral is Stored or Located:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VII.

  	
  Locations of
  Records Concerning Collateral:

  
	
   

  	
   

  
	
   

  	
  (see V. and VI.
  above and Schedule III-O below)

  



 

















 


SCHEDULE III-L


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING MEDCARE, INC. COLLATERAL


 


	
  I.

  	
  Grantor’s
  official name: MedCare, Inc.

  
	
   

  	
   

  
	
  II.

  	
  Type of entity: Corporation

  
	
   

  	
   

  
	
  III.

  	
  Organizational
  identification number issued by Grantor’s state of incorporation:

  
	
   

  	
   

  
	
   

  	
  DE 3613625

  
	
   

  	
   

  
	
  IV.

  	
  State or
  Incorporation of MedCare, Inc.: Delaware

  
	
   

  	
   

  
	
  V.

  	
  Chief Executive
  Office/Corporate Office and principal place of business of
  MedCare, Inc.:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road, Suite 505

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VI.

  	
  Warehouses and
  Other Premises at which Collateral is Stored or Located:

  
	
   

  	
   

  
	
   

  	
  4854 Woodbine
  Road

  
	
   

  	
  Pace, FL 32571

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook
  Road, Suite 505

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VII.

  	
  Locations of
  Records Concerning Collateral:

  
	
   

  	
   

  
	
   

  	
  (see V. and VI.
  above and Schedule III-O below)

  



 

















 


SCHEDULE III-M


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


 


AND RECORDS CONCERNING CRITICAL CARE SYSTEM, INC.’S
COLLATERAL


 


	
  I.

  	
  Grantor’s
  official name: Critical Care System, Inc.

  
	
   

  	
   

  
	
  II.

  	
  Type of entity:
  Corporation

  
	
   

  	
   

  
	
  III.

  	
  Organizational
  identification number issued by Grantor’s state of organization:

  
	
   

  	
  DE 2256955

  
	
   

  	
   

  
	
  IV.

  	
  State of
  Organization of Grantor: Delaware

  
	
   

  	
   

  
	
  V.

  	
  Chief Executive
  Office and principal place of business of Grantor:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VI.

  	
  Corporate
  Offices of Grantor:

  
	
   

  	
   

  
	
   

  	
  61 Spit Brook Road

  
	
   

  	
  Nashua, NH 03060

  
	
   

  	
   

  
	
  VII.

  	
  Warehouses:

  
	
   

  	
  None.

  
	
   

  	
   

  
	
  VIII.

  	
  Other Premises
  at which Collateral is Stored or Located:

  
	
   

  	
   

  
	
   

  	
  See attached
  Exhibit A to Schedule III.-M

  
	
   

  	
   

  
	
  IX.

  	
  Locations of
  Records Concerning Collateral:

  
	
   

  	
   

  
	
   

  	
  (see V., VI. and
  VIII. above and Schedule III-O below)

  



 

















 


Exhibit A to Schedule III
- M


 


South Portland, ME


Bedford. NH


Harrisburg, PA


Burlington, MA


Boise, ID


Birmingham, AL


Urbandale, IA (Des Moines)


Braintree, MA (Boston
South)


Indianapolis, IN


Shrewsbury, MA (Boston
West)


Fort Wayne, IN


Redding, CA


Sharon Hill, PA
(Philadelphia)


Mobile, AL


State College, PA


Pittsburgh, PA


East Providence, RI


Elk Grove Village, IL (Chicago)


St. Louis, MO


Wixom, MI (Detroit)


Farmers Branch, TX
(Dallas)


Houston, TX


Tustin, CA (Los Angeles)


Hayward, CA (San
Francisco)


Henderson, NV (Las Vegas)


Reno, NV


Tempe, AZ (Phoenix)


Salt Lake City, UT


Vernon, CT


Norcross, GA


Glen Burnie, MD


Columbia, SC


Greensboro, NC


Lenexa, KS


Ravenna, OH


Dublin, OH


Wildwood, MO


Richmond, VA


Chico, CA


Grand Rapids, MI


Somerset, NJ


Nashua, NH


Spring, TX


 

















 


SCHEDULE III-N


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING BORROWER’S COLLATERAL


 


I.                                         Grantor’s
official name:                     Curative
Health Services Co.


 


II.                                     Type
of entity:                                                                 Corporation


 


III.                                 Organizational
identification number issued by Grantor’s state of incorporation:


 


MN 4T-750


 


IV.                                 State
or Incorporation of Borrower:                                                      Minnesota


 


V.                                     Chief
Executive Office/Corporate Office and principal place of business of Borrower:


 


61
Spit Brook Road


Nashua,
NH 03060


 


VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:


 


61
Spit Brook Road


Nashua,
NH 03060


 


VII.                             Locations
of Records Concerning Collateral:


 


(see V.
and VI. above and Schedule III-O below)


 

















 


SCHEDULE III-O


to


SECURITY AGREEMENT


 


SCHEDULE OF ADDITIONAL STORAGE LOCATIONS 


OF COLLATERAL AND RECORDS CONCERNING COLLATERAL


 


Iron Mountain


17 Hydro Plant Rd


Milton, NH 03851


 


Iron Mountain


3000 2nd Ave South


Birmingham, AL 35233


 


Iron Mountain


Route 9WS


Port Ewen, NY 12466


 


Hall-Lane


67 Mall Drive


Commack, NY 11725


 


Stowaway


2600 Clyde Ave.


State College, PA 16801


 


Idaho Records Management


970 River St.


Boise, ID 83702


 


Attic Plus - Hwy 280/ I-459


4748 Cahaba River Road,
Unit# 308


Birmingham, AL 35243


 


Access Quality Storage


50 Gorham Road


South Portland, ME 04106


 


The Storage Place


2930 Ferguson Road Fort


Wayne, IN 46809


 


Aspin Storage


1845 Aspin Ave.


Redding, CA 96002


 

















 


Shaw Warehouse


3000 2nd Ave. South


Birmingham, AL 35233


 


Nobo - Area 01


175 Bearfoot Road


Northboro, MA 01532


 


North Billerica Facility


96 High Street


N. Billerica, M A 01862


 


Franklin Facility


One Old Forge Hill Road


Franklin, MA 02038


 


Beltline Storage


1268 West I-65 Service Rd
South


Mobile, AL 36609


 

















 


SCHEDULE IV


to


SECURITY AGREEMENT


 


U.S. PATENTS, TRADEMARKS AND COPYRIGHTS


 


Patents:


 


	
   

  	
   

  	
  Registration

  	
   

  	
   

  	
   

  
	
  Owner: Curative Health Services, Inc.

  	
   

  	
  Number:

  	
   

  	
  Issue Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Device for Evaluating Protective Sensation

  	
   

  	
  6,234,976

  	
   

  	
  5/22/2001

  	
   

  
	
  Folding Card Device for Evaluating Protective
  Sensation

  	
   

  	
  6,200,272

  	
   

  	
  3/13/2001

  	
   

  



 


Copyrights:


 


Copyrights
on all forms, documents, and materials developed by Curative Health Services, Inc.,
Apex Therapeutic Care, Inc. and Infinity Infusion Care, Ltd.


 


Trademarks
and Service Marks:


 


	
   

  	
   

  	
  Registration

  	
   

  	
   

  	
   

  
	
  Owner: CHS Services, Inc.

  	
   

  	
  Number:

  	
   

  	
  Issue Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Centro de Cuidado de Herida ®

  	
   

  	
  35,643
  (Puerto Rico) 

  	
   

  	
  7/19/1996

  	
   

  
	
  Curative Health Services (and design) ®

  	
   

  	
  2,114,541

  	
   

  	
  11/18/1997

  	
   

  
	
  Curative Pharmacy Services ®

  	
   

  	
  2,951,482

  	
   

  	
  5/17/2005

  	
   

  
	
  Curative Pharmacy Services ®

  	
   

  	
  2,985,058

  	
   

  	
  8/16/2005

  	
   

  
	
  Footsense ®

  	
   

  	
  2,122,321

  	
   

  	
  12/16/1997

  	
   

  
	
  Medilink SM

  	
   

  	
  2,045,270

  	
   

  	
  3/18/1997

  	
   

  
	
  Sensachek TM

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  Startlink ®

  	
   

  	
  2,381,075

  	
   

  	
  8/29/2000

  	
   

  
	
  Startlink ®

  	
   

  	
  2,474,969

  	
   

  	
  8/7/2001

  	
   

  
	
  Wound Care 2000 TM

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  Wound Care Center ®

  	
   

  	
  2,009,399

  	
   

  	
  10/22/1996

  	
   

  
	
  Wound Care Center ®

  	
   

  	
  35,642
  (Puerto Rico) 

  	
   

  	
  7/19/1996

  	
   

  
	
  Wound Care Management Program SM

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  



 

















 


	
   

  	
   

  	
  Registration

  	
   

  	
   

  	
   

  
	
  Owner: Apex Therapeutic Care, Inc.

  	
   

  	
  Number:

  	
   

  	
  Issue Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Avances ®

  	
   

  	
  2,624,532

  	
   

  	
  9/24/2002

  	
   

  



 


	
   

  	
   

  	
  Registration

  	
   

  	
   

  	
   

  
	
  Owner: Infinity Infusion Care, Ltd.

  	
   

  	
  Number:

  	
   

  	
  Issue Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Infinity Infusion Care TM

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  (Ultimate Care Beyond Compare)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (name and logo)

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
   

  	
   

  	
  Registration

  	
   

  	
   

  	
   

  
	
  Owner: Critical Care Systems, Inc.

  	
   

  	
  Number:

  	
   

  	
  Issue Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chemodirect SM

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  Critical Care Systems ®

  	
   

  	
  2,003,791

  	
   

  	
  9/24/1996

  	
   

  
	
  Critical Care Systems ®

  	
   

  	
  2,927,156

  	
   

  	
  2/22/2005

  	
   

  
	
  Critical Care Systems ®

  	
   

  	
  2,961,656

  	
   

  	
  6/14/2005

  	
   

  
	
  Infusion Care Systems ®

  	
   

  	
  2,826,652

  	
   

  	
  3/23/2004

  	
   

  



 

















 


SCHEDULE V


to


SECURITY AGREEMENT


 


	
  Name of Grantor

  	
   

  	
  Motor Vehicle Make/Model

  	
   

  	
  Model Year

  	
   

  	
  VIN

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Critical Care Systems, Inc.

  	
   

  	
  Subaru/Legacy Brighton

  Wagon

  	
   

  	
  1999

  	
   

  	
  4S3BK4259X7315545

  	
   

  
	
  Critical Care Systems, Inc.

  	
   

  	
  Subaru/Legacy

  	
   

  	
  2005

  	
   

  	
  JF1SG63675H704847

  	
   

  
	
  Critical Care Systems, Inc.

  	
   

  	
  Subaru/Legacy S/W

  	
   

  	
  2001

  	
   

  	
  4S3BH635X17304487

  	
   

  
	
  Critical Care Systems, Inc.

  	
   

  	
  Subaru/Legacy Brighton

  Wagon

  	
   

  	
  1999

  	
   

  	
  4S3BK4258X7313253

  	
   

  
	
  Critical Care Systems, Inc.

  	
   

  	
  Subaru Forrester

  	
   

  	
  2005

  	
   

  	
  JF1SG63635H737182

  	
   

  



 

















 


EXHIBIT A


 


POWER OF ATTORNEY


POWER OF ATTORNEY


 


This
Power of Attorney is executed and delivered by
                        
(“Grantor”), to General Electric Capital Corporation, a Delaware
corporation (hereinafter referred to as “Attorney”), as Agent for the
benefit of Agent and Lenders, under a Debtor In Possession Credit Agreement and
a Borrower Security Agreement, both dated as of March         ,
2006, and other related documents (the “Loan Documents”).  No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated
hereby, shall be required to inquire into or seek confirmation from Grantor as
to the authority of Attorney to take any action described below, or as to the
existence of or fulfillment of any condition to this Power of Attorney, which
is intended to grant to Attorney unconditionally the authority to take and
perform the actions contemplated herein, and Grantor irrevocably waives any
right to commence any suit or action, in law or equity, against any person or
entity which acts in reliance upon or acknowledges the authority granted under
this Power of Attorney.  The power of
attorney granted hereby is coupled with an interest and, prior to the
Termination Date, may not be revoked or canceled by Grantor without Attorney’ s
written consent.


 


Grantor
hereby irrevocably constitutes and appoints Attorney (and all officers,
employees or agents designated by Attorney), with full power of substitution,
as Grantor’s true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Grantor and in the name of Grantor or in
its own name, from time to time in Attorney’s discretion after an Event of
Default has occurred and is continuing, to take any and all appropriate action
and to execute and deliver any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of the Loan Documents and,
without limiting the generality of the foregoing, Grantor hereby grants to
Attorney the power and right, on behalf of Grantor, without notice to or assent
by Grantor, and at any time after an Event of Default has occurred and is
continuing, to do the following: (a) change the mailing address of
Grantor, open a post office box on behalf of Grantor, open mail for Grantor,
and ask, demand, collect, give acquittances and receipts for, take possession
of, endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications, and
notices in connection with any property of Grantor; (b) effect any repairs
to any asset of Grantor, or continue or obtain any insurance and pay all or any
part of the premiums therefor and costs thereof, and make, settle and adjust
all claims under such policies of insurance, and make all determinations and
decisions with respect to such policies; (c) pay or discharge any taxes,
liens, security interests, or other encumbrances levied or placed on or
threatened against Grantor or its property; (d) defend any suit, action or
proceeding brought against Grantor if Grantor does not defend such suit, action
or proceeding or if Attorney believes that Grantor is not pursuing such defense
in a manner that will maximize the recovery to Attorney, and settle, compromise
or adjust any suit, action, or proceeding described above and, in connection
therewith, give such discharges or releases as Attorney may deem appropriate; (e) file
or prosecute any claim, litigation, suit or proceeding in any court of
competent jurisdiction or before any arbitrator, or take any other action
otherwise deemed appropriate by Attorney for the


 

















 


purpose of collecting any and all such moneys due to Grantor whenever payable
and to enforce any other right in respect of Grantor’s property; (f) cause
the certified public accountants then engaged by Grantor to prepare and deliver
to Attorney at any time and from time to time, promptly upon Attorney’s
request, the following reports: (1) a reconciliation of all accounts, (2) an
aging of all accounts, (3) trial balances, (4) test verifications of
such accounts as Attorney may request, and (5) the results of each
physical verification of inventory; (g) communicate in its own name with
any party to any Contract with regard to the assignment of the right, title and
interest of Grantor in and under the Contracts and other matters relating
thereto; (h) to file such financing statements with respect to the
Borrower Security Agreement, with or without Grantor’s signature, or to file a
photocopy of the Borrower Security Agreement in substitution for a financing
statement, as the Agent may deem appropriate and to execute in Grantor’s name
such financing statements and amendments thereto and continuation statements
which may require the Grantor’s signature; and (i) execute, in connection
with any sale provided for in any Loan Document, any endorsements, assignments
or other instruments of conveyance or transfer with respect to the Collateral
and to otherwise direct such sale or resale, all as though Attorney were the
absolute owner of the property of Grantor for all purposes, and to do, at
Attorney’s option and Grantor’s expense, at any time or from time to time, all
acts and other things that Attorney reasonably deems necessary to perfect,
preserve, or realize upon Grantor’s property or assets and Attorney’s Liens
thereon, all as fully and effectively as Grantor might do.  Grantor hereby ratifies, to the extent
permitted by law, all that said Attorney shall lawfully do or cause to be done
by virtue hereof.


 


IN
WITNESS WHEREOF, this Power of Attorney is executed by Grantor, and Grantor has
caused its seal to be affixed pursuant to the authority of its board of
directors this           day of
March, 2006.


 


	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


NOTARY PUBLIC
CERTIFICATE


 


On
this            day of March,
2006,
                
who is personally known to me appeared before me in his/her capacity as the
           of Curative Health
Services, Inc. (“Grantor”) and executed on behalf of Grantor the Power of
Attorney in favor of General Electric Capital Corporation to which this
Certificate is attached.


 


	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  



 

















 


EXHIBIT
F


to


CREDIT
AGREEMENT


 


BORROWER
PLEDGE AGREEMENT


 


BORROWER PLEDGE AGREEMENT (together with all amendments, supplements
and modifications, if any, from time to time hereto, this “Agreement”),
dated as of March 30, 2006, by and among CURATIVE
HEALTH SERVICES, INC.,
a Minnesota corporation, CURATIVE HEALTH SERVICES
CO., a Minnesota corporation, EBIOCARE.COM,
INC., a Delaware corporation, HEMOPHILIA
ACCESS, INC., a Tennessee corporation, APEX THERAPEUTIC CARE, INC., a California corporation, CHS SERVICES, INC., a Delaware corporation,
CURATIVE HEALTH SERVICES OF NEW YORK, INC.,
a New York corporation, OPTIMAL CARE PLUS,
INC., a Delaware corporation, INFINITY
INFUSION, LLC, a Delaware limited liability company, INFINITY INFUSION II, LLC, a Delaware limited
liability company, INFINITY INFUSION CARE,
LTD., a Texas limited partnership, MEDCARE,
INC., a Delaware corporation, CURATIVE
PHARMACY SERVICES, INC., a Delaware corporation, CRITICAL CARE SYSTEMS, INC., a Delaware
corporation, (collectively, the “Borrowers”), CURATIVE
HEALTH SERVICES III CO., a Minnesota
corporation, (the “Guarantor”,
and together with the Borrowers, collectively, the “Pledgors”) and GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, individually and in its capacity as Agent for Lenders (“Agent”).


 


W  I
T  N  E  S  S  E  T  H:


 


WHEREAS, pursuant to that certain Debtor in Possession
Credit Agreement, dated as of the date hereof, by and among the Borrowers, the
other Persons named therein as Credit Parties, Agent and the Persons signatory
thereto from time to time as Lenders (including all annexes, exhibits and
schedules thereto, and as from time to time amended, restated, supplemented or
otherwise modified, the “Credit Agreement”) the Lenders have agreed,
subject to certain terms and conditions, to make Loans to, and incur L/C
Obligations for the benefit of, Pledgors;


 


WHEREAS, Pledgors are the record and beneficial owner
of the shares of Stock listed in Part A of Schedule I hereto and the
owner of the promissory notes and instruments listed in Part B of Schedule I
hereto;


 


WHEREAS, Pledgors benefit from the credit facilities
made available to them under the Credit Agreement;


 


WHEREAS, in order to induce Agent and Lenders to make
the Loans and to incur the L/C Obligations as provided for in the Credit
Agreement, Pledgors have agreed to pledge the Pledged Collateral to Agent in
accordance herewith;


 


NOW, THEREFORE, in consideration of the premises and
the covenants hereinafter contained and to induce Lenders to make Loans and to
incur L/C Obligations under the Credit Agreement, it is agreed as follows:


 

















 


1.             Definitions.
Unless otherwise defined herein, terms defined in the Credit Agreement are used
herein as therein defined, and the following shall have (unless otherwise
provided elsewhere in this Agreement) the following respective meanings (such
meanings being equally applicable to both the singular and plural form of the
terms defined):


 


“Bankruptcy Code” means Title 11, United States
Code, as amended from time to time, and any successor statute thereto.


 


“Code” means the Uniform Commercial Code as the
same may, from time to time, be enacted and in effect in the State of New York;
provided, that to the extent that the Code is used to define any term herein or
in any Loan Document and such term is defined differently in different Articles
or Divisions of the Code, the definition of such term contained in Article or
Division 9 shall govern; provided further, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s or any Lender’s Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term “Code” shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to
such provisions.


 


“Pledged Collateral” has the meaning assigned
to such term in Section 2 hereof.


 


“Pledged Entity” means an issuer of Pledged
Shares or Pledged Indebtedness (other than natural persons).


 


“Pledged Indebtedness” means the Indebtedness
evidenced by promissory notes and instruments listed on Part B of Schedule I
hereto;


 


“Pledged Shares” means those shares listed on
Part A of Schedule I hereto.


 


“Secured Obligations” has the meaning assigned
to such term in Section 3 hereof.


 


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


 


“Unmatured Tax Liens” means Liens for taxes or
assessments or other governmental Charges not yet due and payable or which are
the subject of a Permitted Contest.


 


2.             Pledge. Each
Pledgor hereby pledges to Agent, and grants to Agent for itself and the benefit
of Lenders, a first priority security interest in all of the following
(collectively, the “Pledged Collateral”):


 


2

















 


(a)           the Pledged Shares and the
certificates representing the Pledged Shares, and all dividends, distributions,
cash, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares;


 


(b)           such portion, as determined by Agent
as provided in Section 6(d) below, of any additional shares of stock of a Pledged
Entity from time to time acquired by Pledgors in any manner (which shares shall
be deemed to be part of the Pledged Shares), and the certificates representing
such additional shares, and all dividends, distributions, cash, instruments and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Stock;


 


(c)           the Pledged Indebtedness and the
promissory notes or instruments evidencing the Pledged Indebtedness, and all
interest, cash, instruments and other property and assets from time to time
received, receivable or otherwise distributed in respect of the Pledged
Indebtedness; and


 


(d)           all additional Indebtedness arising
after the date hereof and owing to any Pledgor and evidenced by promissory
notes or other instruments, together with such promissory notes and
instruments, and all interest, cash, instruments and other property and assets
from time to time received, receivable or otherwise distributed in respect of
that Pledged Indebtedness.


 


3.             Security for
Obligations. This Agreement secures, and the Pledged Collateral is security
for, the prompt payment in full when due, whether at stated maturity, by
acceleration or otherwise, and performance of all Obligations of any kind under
or in connection with the Credit Agreement and the other Loan Documents and all
obligations of Pledgors now or hereafter existing under this Agreement
including, without limitation, all fees, costs and expenses whether in
connection with collection actions hereunder or otherwise (collectively, the “Secured
Obligations”).


 


4.             Delivery of Pledged
Collateral. All certificates and all promissory notes and instruments
evidencing the Pledged Collateral shall be or have been delivered to and held
by or on behalf of Agent, for itself and the benefit of Lenders, pursuant
hereto. All Pledged Shares shall be or were accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Agent and all promissory notes or other instruments evidencing
the Pledged Indebtedness shall be endorsed by Pledgors.


 


5.             Representations and
Warranties. Each Pledgor represents and warrants to Agent that:


 


(a)           Pledgor is, and at the time of
delivery of the Pledged Shares to Agent will be, the sole holder of record and
the sole beneficial owner of such Pledged Collateral pledged by such Pledgor
free and clear of any Lien thereon or affecting the title thereto, except for
Unmatured Tax Liens and any Lien created by this Agreement. Such Pledgor is and
at the time of delivery of the Pledged Indebtedness to Agent will be, the sole
owner of such Pledged


 


3

















 


Collateral
free and clear of any Lien thereon or affecting title thereto, except for Unmatured
Tax Liens and any Lien created by this Agreement;


 


(b)           All of the Pledged Shares have been
duly authorized, validly issued and are fully paid and non-assessable. The
Pledged Indebtedness has been duly authorized, authenticated or issued and
delivered by, and is the legal, valid and binding obligations of, the Pledged
Entities, and no such Pledged Entity is in default thereunder;


 


(c)           Pledgor has the right and requisite
authority to pledge, assign, transfer, deliver, deposit and set over the
Pledged Collateral pledged by such Pledgor to Agent as provided herein;


 


(d)           None of the Pledged Shares or Pledged
Indebtedness has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to
which such issuance or transfer may be subject;


 


(e)           All of the Pledged Shares are
presently owned by Pledgor, and are presently represented by the certificates
listed on Part A of Schedule I, hereto or are uncertificated as set
forth on Schedule I hereto. As of the date hereof, there are no existing
options, warrants, calls or commitments of any character whatsoever relating to
the Pledged Shares;


 


(f)            No consent, approval, authorization
or other order or other action by, and no notice to or filing with, any
Governmental Authority or any other Person is required (i) for the pledge by
any Pledgor of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by any Pledgor, or (ii)
for the exercise by Agent of the voting or other rights provided for in this
Agreement or the remedies in respect of the Pledged Collateral pursuant to this
Agreement, except as may be required in connection with such disposition by
laws affecting the offering and sale of securities generally;


 


(g)           The pledge, assignment and delivery
of the Pledged Collateral pursuant to this Agreement will create a valid first
priority Lien on and a first priority perfected security interest in favor of
the Agent for the benefit of Agent and Lenders in the Pledged Collateral and
the proceeds thereof, securing the payment of the Secured Obligations, subject
to no other Lien other than Unmatured Tax Liens;


 


(h)           This Agreement has been duly
authorized, executed and delivered by each of the Pledgors and constitutes a
legal, valid and binding obligation of Pledgors enforceable against Pledgors in
accordance with its terms;


 


(i)            The Pledged Shares constitute 100%
of the issued and outstanding shares of Stock of each Pledged Entity; and


 


(j)            Except as disclosed on Part B of Schedule
I, none of the Pledged Indebtedness is subordinated in right of payment to
other Indebtedness (except for the Secured


 


4

















 


Obligations)
or subject to the terms of an indenture.


 


The representations and warranties set forth in this Section 5 shall survive the execution and
delivery of this Agreement.


 


6.             Covenants. Each
Pledgor covenants and agrees that until the Termination Date:


 


(a)           Without the prior written consent of
Agent, none of the Pledgors will sell, assign, transfer, pledge, or otherwise
encumber any of its rights in or to the Pledged Collateral, or any unpaid
dividends, interest or other distributions or payments with respect to the
Pledged Collateral or grant a Lien in the Pledged Collateral, unless otherwise
expressly permitted by the Credit Agreement;


 


(b)           Each of the Pledgors will, at its
expense, promptly execute, acknowledge and deliver all such instruments and
take all such actions as Agent from time to time may request in order to ensure
to Agent and Lenders the benefits of the Liens in and to the Pledged Collateral
intended to be created by this Agreement, including the filing of any necessary
Code financing statements, which may be filed by Agent with or (to the extent
permitted by law) without the signature of such Pledgor, and will cooperate
with Agent, at such Pledgors’s expense, in obtaining all necessary approvals
and making all necessary filings under federal, state, local or foreign law in
connection with such Liens or any sale or transfer of the Pledged Collateral;


 


(c)           Each of the Pledgors has and will
defend the title to the Pledged Collateral and the Liens of Agent in the
Pledged Collateral against the claim of any Person and will maintain and
preserve such Liens; and


 


(d)           Each of the Pledgors will, upon
obtaining ownership of any additional Stock or promissory notes or instruments
of a Pledged Entity or Stock or promissory notes or instruments otherwise
required to be pledged to Agent pursuant to any of the Loan Documents, which
Stock, notes or instruments are not already Pledged Collateral, promptly (and
in any event within three (3) Business Days) deliver to Agent a Pledge
Amendment, duly executed by such Pledgor, in substantially the form of Schedule
II hereto (a “Pledge Amendment”) in respect of any such additional
Stock, notes or instruments, pursuant to which such Pledgor shall pledge to
Agent all of such additional Stock, notes and instruments. Each of the Pledgors
hereby authorizes Agent to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Shares and Pledged Indebtedness listed on any Pledge
Amendment delivered to Agent shall for all purposes hereunder be considered
Pledged Collateral. In addition to the foregoing, to the extent a Pledgor’s
organizational documents permit the issuance of certificates of any ownership
interest, but which Pledgor has not as of yet issued such certificates, no such
certficates shall be issued without Agent’s consent and the subsequent compliance
herwith.


 


(e)           Each Pledgor consents to each Pledged
Entity’s entering into a Control Agreement with Agent in the form of Schedule
III hereto (a “Control Agreement”)
and agrees to be bound by the terms and conditions of each such Control
Agreement, except that the Agent


 


5

















 


shall
not be entitled to give instructions to any Pledged Entity with respect to the
Pledged Stock issued by such Pledged Entity unless an Event of Default has
occurred and is continuing.


 


7.             Pledgors’ Rights.
As long as no Default or Event of Default shall have occurred and be continuing
and until written notice shall be given to Pledgors in accordance with Section 8(a) hereof:


 


(a)           Pledgors shall have the right, from
time to time, to vote and give consents with respect to the Pledged Collateral,
or any part thereof for all purposes not inconsistent with the provisions of
this Agreement, the Credit Agreement or any other Loan Document; provided,
however, that no vote shall be cast, and no consent shall be given or
action taken, which would have the effect of impairing the position or interest
of Agent in respect of the Pledged Collateral or which would authorize, effect
or consent to (unless and to the extent expressly permitted by the Credit
Agreement or consented to by Agent):


 


(i)            the
dissolution or liquidation, in whole or in part, of a Pledged Entity;


 


(ii)           the
consolidation or merger of a Pledged Entity with any other Person;


 


(iii)          the
sale, disposition or encumbrance of all or substantially all of the assets of a
Pledged Entity, except for Liens in favor of Agent;


 


(iv)          any
change in the authorized number of shares, the stated capital or the authorized
share capital of a Pledged Entity or the issuance of any additional shares of
its Stock; or


 


(v)           the
alteration of the voting rights with respect to the Stock of a Pledged Entity;


 


(b)           Pledgors shall be entitled, from time
to time, to collect and receive for their own use all cash dividends and
interest paid in respect of the Pledged Shares and Pledged Indebtedness to the
extent not in violation of the Credit Agreement other than any and all:
(A) dividends and interest paid or payable other than in cash in respect of any
Pledged Collateral, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral;  (B) dividends and other
distributions paid or payable in cash in respect of any Pledged Shares in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in capital of a Pledged
Entity; and (C) cash paid, payable or otherwise distributed, in respect of
principal of, or in redemption of, or in exchange for, any Pledged Collateral; provided,
however, that until actually paid all rights to such distributions shall
remain subject to the Lien created by this Agreement; and


 


6

















 


(c)           all dividends and interest (other
than such cash dividends and interest as are permitted to be paid to Pledgors
in accordance with clause  (b) above) and all other distributions
in respect of any of the Pledged Shares or Pledged Indebtedness, whenever paid
or made, shall be delivered to Agent to hold as Pledged Collateral and shall,
if received by Pledgors, be received in trust for the benefit of Agent, be
segregated from the other property or funds of Pledgors, and be forthwith
delivered to Agent as Pledged Collateral in the same form as so received (with
any necessary indorsement).


 


8.             Defaults and
Remedies; Proxy.


 


(a)           Upon the occurrence of an Event of
Default and during the continuation of such Event of Default, and concurrently
with written notice to Pledgors, Agent (personally or through an agent) is
hereby authorized and empowered to transfer and register in its name or in the
name of its nominee the whole or any part of the Pledged Collateral, to
exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations,
to exercise the voting and all other rights as a holder with respect thereto,
to collect and receive all cash dividends, interest, principal and other
distributions made thereon, to sell in one or more sales after ten (10) days’ notice
of the time and place of any public sale or of the time at which a private sale
is to take place (which notice Pledgors agree is commercially reasonable) the
whole or any part of the Pledged Collateral and to otherwise act with respect
to the Pledged Collateral as though Agent was the outright owner thereof. Any
sale shall be made at a public or private sale at Agent’s place of business, or
at any place to be named in the notice of sale, either for cash or upon credit
or for future delivery at such price as Agent may deem fair, and Agent may be
the purchaser of the whole or any part of the Pledged Collateral so sold and
hold the same thereafter in its own right free from any claim of Pledgors or
any right of redemption. Each sale shall be made to the highest bidder, but
Agent reserves the right to reject any and all bids at such sale which, in its
discretion, it shall deem inadequate. Demands of performance, except as
otherwise herein specifically provided for or as specifically provided for in
the Credit Agreement, notices of sale, advertisements and the presence of
property at sale are hereby waived and any sale hereunder may be conducted by
an auctioneer or any officer or agent of Agent. EACH OF THE PLEDGORS HEREBY
IRREVOCABLY CONSTITUTES UNTIL THE TERMINATION DATE AND APPOINTS AGENT AS THE
PROXY AND ATTORNEY-IN-FACT OF SUCH PLEDGOR WITH RESPECT TO THE PLEDGED
COLLATERAL, INCLUDING THE RIGHT TO VOTE THE PLEDGED SHARES, WITH FULL POWER OF
SUBSTITUTION TO DO SO AS PROVIDED IN SECTION 7(A) AFTER THE OCCURRENCE OF AN
EVENT OF DEFAULT. THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS
COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE.
IN ADDITION TO THE RIGHT TO VOTE THE PLEDGED SHARES, THE APPOINTMENT OF AGENT
AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER
RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE PLEDGED SHARES
WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF
SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH
MEETINGS) AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT. SUCH PROXY


 


7

















 


SHALL
BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING
ANY TRANSFER OF ANY PLEDGED SHARES ON THE RECORD BOOKS OF THE ISSUER THEREOF)
BY ANY PERSON (INCLUDING THE ISSUER OF THE PLEDGED SHARES OR ANY OFFICER OR
AGENT THEREOF), UPON THE OCCURRENCE OF AN EVENT OF DEFAULT AND DURING THE
CONTINUANCE THEREOF. NOTWITHSTANDING THE FOREGOING, AGENT SHALL NOT HAVE ANY
DUTY TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE
FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.


 


(b)           If, at the original time or times
appointed for the sale of the whole or any part of the Pledged Collateral, the
highest bid, if there be but one sale, shall be inadequate to discharge in full
all the Secured Obligations, or if the Pledged Collateral be offered for sale
in lots, if at any of such sales, the highest bid for the lot offered for sale
would indicate to Agent, in its discretion, that the proceeds of the sales of
the whole of the Pledged Collateral would be unlikely to be sufficient to
discharge all the Secured Obligations, Agent may, on one or more occasions and
in its discretion, postpone any of said sales by public announcement at the
time of sale or the time of previous postponement of sale, and no other notice
of such postponement or postponements of sale need be given, any other notice
being hereby waived; provided, however, that any sale or sales
made after such postponement shall be after ten (10) days’ notice to Pledgors.


 


(c)           [Reserved]


 


(d)           [Reserved].


 


(e)           If, at any time when Agent shall
determine to exercise its right to sell the whole or any part of the Pledged
Collateral hereunder, such Pledged Collateral or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as amended (or any similar statute then in effect) (the
“Act”), Agent may, in its discretion (subject only to applicable requirements
of law), sell such Pledged Collateral or part thereof by private sale in such
manner and under such circumstances as Agent may deem necessary or advisable,
but subject to the other requirements of this Section 8,
and shall not be required to effect such registration or to cause the same to
be effected. Without limiting the generality of the foregoing, in any such
event, Agent in its discretion (x) may, in accordance with applicable securities
laws, proceed to make such private sale notwithstanding that a registration
statement for the purpose of registering such Pledged Collateral or part
thereof could be or shall have been filed under said Act (or similar statute),
(y) may approach and negotiate with a single possible purchaser to effect such
sale, and (z) may restrict such sale to a purchaser who is an accredited
investor under the Act and who will represent and agree that such purchaser is
purchasing for its own account, for investment and not with a view to the
distribution or sale of such Pledged Collateral or any part thereof. In
addition to a private sale as provided above in this Section 8,
if any of the Pledged Collateral shall not be freely distributable to the
public without registration under the Act (or similar statute) at the time of
any proposed sale pursuant to this Section 8, then Agent
shall not be required to effect such registration or cause the same to be
effected but, in its discretion (subject only to applicable requirements of
law), may require that


 


8

















 


any
sale hereunder (including a sale at auction) be conducted subject to
restrictions:


 


(i)            as
to the financial sophistication and ability of any Person permitted to bid or
purchase at any such sale;


 


(ii)           as
to the content of legends to be placed upon any certificates representing the
Pledged Collateral sold in such sale, including restrictions on future transfer
thereof;


 


(iii)          as
to the representations required to be made by each Person bidding or purchasing
at such sale relating to that Person’s access to financial information about
Pledgors and such Person’s intentions as to the holding of the Pledged
Collateral so sold for investment for its own account and not with a view to
the distribution thereof; and


 


(iv)          as
to such other matters as Agent may, in its discretion, deem necessary or
appropriate in order that such sale (notwithstanding any failure so to
register) may be effected in compliance with the Bankruptcy Code and other laws
affecting the enforcement of creditors’ rights and the Act and all applicable
state securities laws.


 


(f)            Each of the Pledgors recognizes that
Agent may be unable to effect a public sale of any or all the Pledged
Collateral and may be compelled to resort to one or more private sales thereof
in accordance with clause (e) above. Each of the Pledgors also
acknowledges that any such private sale may result in prices and other terms
less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall not
be deemed to have been made in a commercially unreasonable manner solely by
virtue of such sale being private. Agent shall be under no obligation to delay
a sale of any of the Pledged Collateral for the period of time necessary to
permit the Pledged Entity to register such securities for public sale under the
Act, or under applicable state securities laws, even if Pledgors and the
Pledged Entity would agree to do so.


 


(g)           Each of the Pledgors agrees to the
maximum extent permitted by applicable law that following the occurrence and
during the continuance of an Event of Default it will not at any time plead,
claim or take the benefit of any appraisal, valuation, stay, extension,
moratorium or redemption law now or hereafter in force in order to prevent or
delay the enforcement of this Agreement, or the absolute sale of the whole or
any part of the Pledged Collateral or the possession thereof by any purchaser
at any sale hereunder, and each of the Pledgors waives the benefit of all such
laws to the extent it lawfully may do so. Each of the Pledgors agrees that it
will not interfere with any right, power and remedy of Agent provided for in
this Agreement or now or hereafter existing at law or in equity or by statute
or otherwise, or the exercise or beginning of the exercise by Agent of any one
or more of such rights, powers or remedies. No failure or delay on the part of
Agent to exercise any such right, power or remedy and no notice or demand which
may be given to or made upon Pledgors by Agent with respect to any such
remedies shall operate as a waiver thereof, or limit or impair Agent’s right to
take any action or to exercise any power or remedy hereunder, without notice or
demand, or prejudice its 


 


9

















 


rights
as against Pledgors in any respect.


 


(h)           Each of the Pledgors further agrees
that a breach of any of the covenants contained in this Section 8
will cause irreparable injury to Agent, that Agent shall have no adequate
remedy at law in respect of such breach and, as a consequence, agrees that each
and every covenant contained in this Section 8 shall be
specifically enforceable against each of the Pledgors, and each of the Pledgors
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that the Secured
Obligations are not then due and payable in accordance with the agreements and
instruments governing and evidencing such obligations.


 


9.             Waiver. No
delay on Agent’s part in exercising any power of sale, Lien, option or other
right hereunder, and no notice or demand which may be given to or made upon any
of the Pledgors by Agent with respect to any power of sale, Lien, option or
other right hereunder, shall constitute a waiver thereof, or limit or impair
Agent’s right to take any action or to exercise any power of sale, Lien,
option, or any other right hereunder, without notice or demand, or prejudice Agent’s
rights as against any Pledgor in any respect.


 


10.           Assignment.
Agent may assign, indorse or transfer any instrument evidencing all or any part
of the Secured Obligations as provided in, and in accordance with, the Credit
Agreement, and the holder of such instrument shall be entitled to the benefits
of this Agreement.


 


11.           Termination.
Immediately following the Termination Date, Agent shall deliver to Pledgors the
Pledged Collateral pledged by Pledgors at the time subject to this Agreement
and all instruments of assignment executed in connection therewith, free and
clear of the Liens hereof and, except as otherwise provided herein, all of
Pledgors’ obligations hereunder shall at such time terminate.


 


12.           Lien Absolute.
All rights of Agent hereunder, and all obligations of Pledgors hereunder, shall
be absolute and unconditional irrespective of:


 


(a)           any lack of validity or
enforceability of the Credit Agreement, any other Loan Document or any other
agreement or instrument governing or evidencing any Secured Obligations;


 


(b)           any change in the time, manner or
place of payment of, or in any other term of, all or any part of the Secured
Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument governing or evidencing any Secured Obligations;


 


(c)           any exchange, release or
non-perfection of any other Collateral, or any release or amendment or waiver
of or consent to departure from any guaranty, for all or any of the Secured
Obligations;


 


(d)           the insolvency of any Credit Party;
or


 


10

















 


(e)           any other circumstance which might
otherwise constitute a defense available to, or a discharge of, Pledgors.


 


13.           Release. Each of
the Pledgors consents and agrees that Agent may at any time, or from time to
time, in its discretion:


 


(a)           renew, extend or change the time of
payment, and/or the manner, place or terms of payment of all or any part of the
Secured Obligations; and


 


(b)           exchange, release and/or surrender
all or any of the Collateral (including the Pledged Collateral), or any part
thereof, by whomsoever deposited, which is now or may hereafter be held by
Agent in connection with all or any of the Secured Obligations; all in such
manner and upon such terms as Agent may deem proper, and without notice to or
further assent from any of the Pledgors, it being hereby agreed that each of
the Pledgors shall be and remain bound upon this Agreement, irrespective of the
value or condition of any of the Collateral, and notwithstanding any such
change, exchange, settlement, compromise, surrender, release, renewal or
extension, and notwithstanding also that the Secured Obligations may, at any
time, exceed the aggregate principal amount thereof set forth in the Credit
Agreement, or any other agreement governing any Secured Obligations. Each of
the Pledgors hereby waives notice of acceptance of this Agreement, and also
presentment, demand, protest and notice of dishonor of any and all of the
Secured Obligations, except as expressly required by the Credit Agreement, and
promptness in commencing suit against any party hereto or liable hereon, and in
giving any notice to or of making any claim or demand hereunder upon any
Pledgor. No act or omission of any kind on Agent’s part shall in any event
affect or impair this Agreement.


 


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


 


15.           Miscellaneous.


 


(a)           Agent may execute any of its duties
hereunder by or through agents or employees and shall be entitled to advice of
counsel concerning all matters pertaining to its duties hereunder.


 


11

















 


(b)           Each of the Pledgors agrees to
promptly reimburse Agent for actual out-of-pocket expenses, including, without
limitation, reasonable counsel fees, incurred by Agent in connection with the
administration and enforcement of this Agreement, exept and only to the extent
prohibited by an order of the Bankruptcy Court.


 


(c)           Neither Agent, nor any of its
respective officers, directors, employees, agents or counsel shall be liable
for any action lawfully taken or omitted to be taken by it or them hereunder or
in connection herewith, except for its or their own gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.


 


(d)           THIS
AGREEMENT SHALL BE BINDING UPON EACH OF THE PLEDGORS AND ITS SUCCESSORS AND
ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF ANY PLEDGOR), AND SHALL
INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, AGENT AND ITS SUCCESSORS AND
ASSIGNS, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE, AND NONE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT
MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT IN WRITING DULY SIGNED FOR
AND ON BEHALF OF AGENT AND PLEDGORS.


 


16.           Severability. If
for any reason any provision or provisions hereof are determined to be invalid
and contrary to any existing or future law, such invalidity shall not impair
the operation of or effect those portions of this Agreement which are valid.


 


17.           Notices. Except
as otherwise provided herein, whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by any other party, or
whenever any of the parties desires to give and serve upon any other party any
communication with respect to this Security Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and shall be given in the manner, and deemed received, as provided for
in the Credit Agreement.


 


18.           Section Titles.
The Section titles contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.


 


19.           Counterparts. This
Agreement may be executed in any number of counterparts, which shall,
collectively and separately, constitute one agreement.


 


20.           Benefit of Lenders.
All security interests granted or contemplated hereby shall be for the benefit
of Agent and Lenders, and all proceeds or payments realized from the Pledged
Collateral in accordance herewith shall be applied to the Obligations in
accordance with the terms of the Credit Agreement.


 


12

















 


[Remainder of page intentionally
left blank]


 


13

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Borrower Pledge Agreement to be duly executed as of the date first written
above.


 


	
   

  	
  PLEDGORS:

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA ACCESS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APEX THERAPEUTIC
  CARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
							



 


 


[Signature Page to
Borrower Pledge Agreement]


 

















 


	
   

  	
  CURATIVE HEALTH
  SERVICES OF NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL CARE PLUS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION,
  LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative
  Health Services Co., its Sole Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION II,
  LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative
  Health Services Co., its Sole Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
						



 

















 


	
   

  	
  INFINITY INFUSION
  CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Infinity Infusion
  II, LLC, its Sole General Partner

  
	
   

  	
   

  
	
   

  	
  By: Curative
  Health Services Co., the Sole Member
  of

  Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE PHARMACY
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  CRITICAL CARE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES III CO

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							



 

















 


	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION, as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


 


[Lender Signature
Page to Borrower Pledge Agreement]

















 


SCHEDULE I


 


PART A


 


PLEDGED SHARES


 


1. Curative Health Services, Inc.


 


	
  Pledged Entity

  	
   

  	
  Class

  of Stock

  	
   

  	
  Stock Certificate

  Number(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage of

  Outstanding Shares

  	
   

  
	
  Curative Health
  Services of New York, Inc.

  	
   

  	
  Common

  	
   

  	
  2

  	
   

  	
  200

  	
   

  	
  100

  	
  %

  
	
  CCurative Health
  Services Co.

  	
   

  	
  Common

  	
   

  	
  1

  	
   

  	
  100

  	
   

  	
  100

  	
  %

  
	
  CCritical Care
  Systems, Inc.

  	
   

  	
  Common

  	
   

  	
  CC-87

  	
   

  	
  250,000

  	
   

  	
  100

  	
  %

  
	
  CCritical Care
  Systems, Inc.

  	
   

  	
  Series A Preferred

  	
   

  	
  AP-15

  	
   

  	
  15,954.769

  	
   

  	
  100

  	
  %

  
	
  CCritical Care
  Systems, Inc.

  	
   

  	
  Series B Preferred

  	
   

  	
  BP-26

  	
   

  	
  7,099.684

  	
   

  	
  100

  	
  %

  



 


2. eBioCare.com, Inc.


 


None.


 


3. Hemophilia Access, Inc.


 


None.


 


4. Apex Therapeutic Care, Inc.


 


None.


 


5. Curative Health Services of New
York, Inc.


 


None.


 


6. CHS Services, Inc.


 


None.


 

















 


7. Optimal Care Plus, Inc.


 


None.


 


8. Infinity Infusion, LLC


 


	
  Pledged Entity

  	
   

  	
  Class

  of Stock

  	
   

  	
  Stock Certificate

  Number(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage of

  Outstanding Shares

  	
   

  
	
  Infinity
  Infusion Care, Ltd.

  	
   

  	
  Limited Partnership
  Interest

  	
   

  	
  G-1

  	
   

  	
  Not Applicable

  	
   

  	
  99.00

  	
  %

  



 


9. Infinity Infusion II, LLC


 


	
  Pledged Entity

  	
   

  	
  Class

  of Stock

  	
   

  	
  Stock Certificate

  Number(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage of

  Outstanding Shares

  	
   

  
	
  Infinity
  Infusion Care, Ltd.

  	
   

  	
  Limited Partnership
  Interest

  	
   

  	
  L-1

  	
   

  	
  Not Applicable

  	
   

  	
  1.00

  	
  %

  



 


10. MedCare, Inc.


 


None.


 


11. Infinity Infusion Care, Ltd.


 


None.


 


12. Curative Pharmacy Services Inc.


 


None.


 


13. Critical Care Systems, Inc.


 


None.


 

















 


14. Curative Health Services Co.


 


	
  Pledged Entity

  	
   

  	
  Class

  of Stock

  	
   

  	
  Stock Certificate

  Number(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage of

  Outstanding Shares

  	
   

  
	
  eBioCare.com,
  Inc.

  	
   

  	
  Common

  	
   

  	
  40

  	
   

  	
  13,086,666

  	
   

  	
  100

  	
  %

  
	
  Hemophilia
  Access, Inc.

  	
   

  	
  Common

  	
   

  	
  2

  	
   

  	
  100

  	
   

  	
  100

  	
  %

  
	
  Apex Therapeutic
  Care, Inc.

  	
   

  	
  Common

  	
   

  	
  13

  	
   

  	
  120,000

  	
   

  	
  100

  	
  %

  
	
  CHS Services,
  Inc.

  	
   

  	
  Common

  	
   

  	
  2

  	
   

  	
  100

  	
   

  	
  100

  	
  %

  
	
  Curative
  Pharmacy Services, Inc.

  	
   

  	
  Common

  	
   

  	
  1

  	
   

  	
  200

  	
   

  	
  100

  	
  %

  
	
  Optimal Care
  Plus, Inc.

  	
   

  	
  Common

  	
   

  	
  1

  	
   

  	
  200

  	
   

  	
  100

  	
  %

  
	
  Infinity
  Infusion, LLC

  	
   

  	
  Uncertificated shares
  of limited liability company interests

  	
   

  	
  100

  	
  %

  
	
  Infinity
  Infusion II, LLC

  	
   

  	
  Uncertificated shares
  of limited liability company interests

  	
   

  	
  100

  	
  %

  
	
  MedCare, Inc.

  	
   

  	
  Common

  	
   

  	
  1

  	
   

  	
  200

  	
   

  	
  100

  	
  %

  
	
  CCurative Health
  Services III Co. B

  	
   

  	
  Common

  	
   

  	
  1

  	
   

  	
  100

  	
   

  	
  100

  	
  %

  



 


15. Curative Health Services III Co.


 


None.


 

















 


SCHEDULE II


 


PLEDGE AMENDMENT


 


This Pledge Amendment, dated                                 ,
       is delivered pursuant to Section 6(d) of the Pledge Agreement
referred to below. All defined terms herein shall have the meanings ascribed
thereto or incorporated by reference in the Pledge Agreement. The undersigned
hereby certifies that the representations and warranties in Section 5 of the Pledge Agreement are and
continue to be true and correct, both as to the promissory notes, instruments
and shares pledged prior to this Pledge Amendment and as to the promissory
notes, instruments and shares pledged pursuant to this Pledge Amendment. The
undersigned further agrees that this Pledge Amendment may be attached to that
certain Borrower Pledge Agreement, dated March     , 2006,
by and among each of the Persons executing the signature page thereof as a
Pledgor and General Electric Capital Corporation, as Agent (as amended,
supplemented, restated or modified from time to time, the “Pledge Agreement”) and that the Pledged
Shares and Pledged Indebtedness listed on this Pledge Amendment shall be and
become a part of the Pledged Collateral referred to in said Pledge Agreement
and shall secure all Secured Obligations referred to in said Pledge Agreement.
The undersigned acknowledges that any promissory notes, instruments or shares
not included in the Pledged Collateral at the discretion of Agent may not
otherwise be pledged by Pledgor to any other Person or otherwise used as
security for any obligations other than the Secured Obligations.


 


 


[NAME OF PLEDGOR]


 


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					



 


	
  Name and

  Address of Pledgor

  	
   

  	
  Pledged Entity

  	
   

  	
  Class

  of Stock

  	
   

  	
  Certificate

  Number(s)

  	
   

  	
  Number

  Of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  Pledged Entity

  	
   

  	
  Initial

  Principal Amount

  	
   

  	
  Issue Date

  	
   

  	
  Maturity Date

  	
   

  	
  Interest Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


SCHEDULE
III


 


CONTROL
AGREEMENT


 


The undersigned                                           ,
a                                           (“Pledged Entity”), hereby acknowledges receipt of a completed
and executed counterpart of the Borrower Pledge Agreement, dated as of March     ,
2006, by and among Curative Health Services Co., Curative Health Services,
Inc., eBioCare.com, Inc., Hemophilia Access, Inc., Apex Therapeutic Care, Inc.,
CHS Services, Inc., Curative Health Services of New York, Inc., Optimal Care
Plus, Inc., Infinity Infusion, LLC, Infinity Infusion II, LLC, Infinity
Infusion Care, Ltd., MedCare, Inc., Curative Pharmacy Services, Inc., Critical Care Systems, Inc., Curative Health Services
III Co. (collectively,
the “Pledgors”) and General Electric Capital
Corporation, as agent (the “Agent”), and
agrees to be bound thereby. The Pledged Entity further agrees that it will
comply with instructions originated by the Agent (or its successors or assigns)
with respect to the Pledged Stock issued by the Pledged Entity without further
consent of the Pledgor. The Pledged Entity further agrees to mark its other
Stock records to reflect that the Pledged Stock issued by the Pledged Entity is
subject to Agent’s security interest.


 


IN WITNESS WHEREOF, the Pledged Entity has executed this Control
Agreement as of the date first above written.


 


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 

















 


GUARANTY


 


This GUARANTY (this “Guaranty”), dated as of March       ,
2006, by and between CURATIVE HEALTH SERVICES
III CO., a Minnesota corporation (the “Guarantor”), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, individually and as agent (in such capacity, “Agent”) for
itself and the lenders from time to time signatory to the Credit Agreement
hereinafter defined (“Lenders”).


 


W  I  T
N  E  S  S  E  T  H:


 


WHEREAS, pursuant to that certain Debtor In Possession
Credit Agreement, dated as of the date hereof among Curative Health Services, Inc.
(“Holdings”), eBioCare.com, Inc., Hemophilia Access, Inc.,
Apex Therapeutic Care, Inc., CHS Services, Inc., Curative Health
Services of New York, Inc., Optimal Care Plus, Inc., Infinity
Infusion, LLC, Infinity Infusion II, LLC, Infinity Infusion Care, Ltd., MedCare, Inc.,
Curative Pharmacy Services, Inc. (each a “Borrower”, and
collectively with Holdings, the “Borrowers”), the other Credit Parties
signatory thereto, Agent and the Persons designated as Lenders in the Credit
Agreement (the “Lenders”) have entered into that certain Credit
Agreement, dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), Lenders
have agreed to make the Loans and to incur the Letter of Credit Obligations on
behalf of Borrowers;


 


WHEREAS, in order to induce Agent and Lenders to enter
into the Credit Agreement and other Loan Documents and to induce Lenders to
make the Loans as provided for in the Credit Agreement, Guarantor has agreed to
guarantee payment of the Obligations;


 


NOW, THEREFORE, in consideration of the premises and
the covenants hereinafter contained, and to induce Lenders to provide the Loans
and other financial accommodations under the Credit Agreement, it is agreed as
follows:


 


1.                                       DEFINITIONS.


 


(a)                                  Capitalized
terms used herein shall have the meanings assigned to them in the Credit
Agreement, unless otherwise defined herein.


 


(b)                                 References
to this “Guaranty” shall mean this Guaranty, including all amendments,
modifications and supplements and any annexes, exhibits and schedules to any of
the foregoing, and shall refer to this Guaranty as the same may be in
effect at the time such reference becomes operative.


 


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


 

















 


2.                                       THE GUARANTY.


 


2.1.                              Guaranty
of Guaranteed Obligations of Borrower. Guarantor hereby unconditionally
guarantees to Agent and Lenders, and their respective successors, endorsees,
transferees and assigns, the prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of the Obligations of Borrower
(hereinafter the “Guaranteed Obligations”). Guarantor agrees that this
Guaranty is a guaranty of payment and performance and not of collection, and
that Guarantor’s obligations under this Guaranty shall be primary, absolute and
unconditional, irrespective of, and unaffected by:


 


(a)                                  the
genuineness, validity, regularity, enforceability or any future amendment of,
or change in this Guaranty, any other Loan Document or any other agreement,
document or instrument to which any Credit Party and/or Guarantor are or may become
a party;


 


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


 


(c)                                  the
existence, value or condition of, or failure to perfect its Lien against, any
Collateral for the Guaranteed Obligations or any action, or the absence of any
action, by Agent in respect thereof (including, without limitation, the release
of any such security);


 


(d)                                 the
insolvency of any Credit Party; or


 


(e)                                  any
other action or circumstances which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor,


 


it being agreed by Guarantor that its obligations
under this Guaranty shall not be discharged until the Termination Date. Guarantor
shall be regarded as a primary obligor with respect to the Guaranteed
Obligations. Guarantor agrees that any notice or directive given at any time to
Agent which is inconsistent with the waiver in the immediately preceding
sentence shall be null and void and may be ignored by Agent and Lenders,
and, in addition, may not be pleaded or introduced as evidence in any
litigation relating to this Guaranty for the reason that such pleading or
introduction would be at variance with the written terms of this Guaranty,
unless Agent and Lenders have specifically agreed otherwise in writing. It is
agreed among Guarantor, Agent and Lenders that the foregoing waivers are of the
essence of the transaction contemplated by the Loan Documents and that, but for
this Guaranty and such waivers, Agent and Lenders would decline to enter into
the Credit Agreement.


 


2

















 


2.2.                              Demand
by Agent or Lenders. In addition to the terms of the Guaranty set forth in Section 2.1 hereof, and in no manner imposing any
limitation on such terms, it is expressly understood and agreed that, if, at
any time, the outstanding principal amount of the Guaranteed Obligations under
the Credit Agreement (including all accrued interest thereon) is declared to be
immediately due and payable, then Guarantor shall, without demand, pay to the
holders of the Guaranteed Obligations the entire outstanding Guaranteed
Obligations due and owing to such holders. Payment by Guarantor shall be made
to Agent in immediately available Federal funds to an account designated by
Agent or at the address set forth herein for the giving of notice to Agent or
at any other address that may be specified in writing from time to time by
Agent, and shall be credited and applied to the Guaranteed Obligations.


 


2.3.                              Enforcement
of Guaranty. In no event shall Agent have any obligation (although it is
entitled, at its option) to proceed against any Borrower or any other Credit
Party or any Collateral pledged to secure Guaranteed Obligations before seeking
satisfaction from the Guarantor, and Agent may proceed, prior or
subsequent to, or simultaneously with, the enforcement of Agent’s rights
hereunder, to exercise any right or remedy which it may have against any
Collateral, as a result of any Lien it may have as security for all or any
portion of the Guaranteed Obligations.


 


2.4.                              Waiver.
In addition to the waivers contained in Section 2.1
hereof, Guarantor waives, and agrees that it shall not at any time insist upon,
plead or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshaling of assets or redemption laws,
or exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by Guarantor of its Guaranteed
Obligations under, or the enforcement by Agent or Lenders of, this Guaranty.
Guarantor hereby waives diligence, presentment and demand (whether for non-payment
or protest or of acceptance, maturity, extension of time, change in nature or form of
the Guaranteed Obligations, acceptance of further security, release of further
security, composition or agreement arrived at as to the amount of, or the terms
of, the Guaranteed Obligations, notice of adverse change in Borrower’s
financial condition or any other fact which might increase the risk to
Guarantor) with respect to any of the Guaranteed Obligations or all other
demands whatsoever and waive the benefit of all provisions of law which are or
might be in conflict with the terms of this Guaranty. Guarantor represents,
warrants and agrees that, as of the date of this Guaranty, its obligations
under this Guaranty are not subject to any offsets or defenses against Agent or
Lenders or any Credit Party of any kind. Guarantor further agrees that its
obligations under this Guaranty shall not be subject to any counterclaims,
offsets or defenses against Agent or any Lender or against any Credit Party of
any kind which may arise in the future.


 


2.5.                              Benefit
of Guaranty. The provisions of this Guaranty are for the benefit of Agent
and Lenders and their respective successors, transferees, endorsees and
assigns, and nothing herein contained shall impair, as between any Credit Party
and Agent or Lenders, the obligations of any Credit Party under the Loan
Documents. In the event all or any part of the Guaranteed Obligations are
transferred, indorsed or assigned by Agent or any Lender to any Person or
Persons, any reference to “Agent” or “Lender” herein shall be deemed to refer
equally to such Person or Persons.


 


3

















 


2.6.                              Modification
of Guaranteed Obligations, Etc. Guarantor hereby acknowledges and agrees
that Agent and Lenders may at any time or from time to time, with or
without the consent of, or notice to, Guarantor:


 


(a)                                  change
or extend the manner, place or terms of payment of, or renew or alter all or
any portion of, the Guaranteed Obligations;


 


(b)                                 take
any action under or in respect of the Loan Documents in the exercise of any
remedy, power or privilege contained therein or available to it at law, equity
or otherwise, or waive or refrain from exercising any such remedies, powers or
privileges;


 


(c)                                  amend
or modify, in any manner whatsoever, the Loan Documents;


 


(d)                                 extend
or waive the time for any Credit Party’s performance of, or compliance with,
any term, covenant or agreement on its part to be performed or observed
under the Loan Documents, or waive such performance or compliance or consent to
a failure of, or departure from, such performance or compliance;


 


(e)                                  take
and hold Collateral for the payment of the Guaranteed Obligations guaranteed
hereby or sell, exchange, release, dispose of, or otherwise deal with, any
property pledged, mortgaged or conveyed, or in which Agent or Lenders have been
granted a Lien, to secure any Obligations;


 


(f)                                    release
anyone who may be liable in any manner for the payment of any amounts owed
by Guarantor or any Credit Party to Agent or any Lender;


 


(g)                                 modify
or terminate the terms of any intercreditor or subordination agreement pursuant
to which claims of other creditors of Guarantor or any Credit Party are
subordinated to the claims of Agent and Lenders; and/or


 


(h)                                 apply
any sums by whomever paid or however realized to any amounts owing by Guarantor
or any Credit Party to Agent or any Lender in such manner as Agent or any
Lender shall determine in its discretion;


 


and Agent and Lenders
shall not incur any liability to Guarantor as a result thereof, and no such
action shall impair or release the Guaranteed Obligations of Guarantor under
this Guaranty.


 


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


 


4

















 


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


 


2.8.                              Deferral
of Subrogation, Etc. Notwithstanding anything to the contrary in this
Guaranty, or in any other Loan Document, Guarantor hereby:


 


(a)                                  expressly
and irrevocably waives, on behalf of itself and its successors and assigns
(including any surety) until the Termination Date, any and all rights at law or
in equity to subrogation, to reimbursement, to exoneration, to contribution, to
indemnification, to set off or to any other rights that could accrue to a
surety against a principal, to a guarantor against a principal, to a guarantor
against a maker or obligor, to an accommodation party against the party
accommodated, to a holder or transferee against a maker, or to the holder of
any claim against any Person, and which Guarantor may have or hereafter
acquire against any Credit Party in connection with or as a result of Guarantor’s
execution, delivery and/or performance of this Guaranty, or any other documents
to which Guarantor is a party or otherwise; and


 


(b)                                 acknowledges
and agrees (i) that this waiver is intended to benefit Agent and Lenders
and shall not limit or otherwise effect Guarantor’s liability hereunder or the
enforceability of this Guaranty, and (ii) that Agent, Lenders and their
respective successors and assigns are intended third party beneficiaries of the
waivers and agreements set forth in this Section 2.8
and their rights under this Section 2.8
shall survive payment in full of the Guaranteed Obligations until the
Termination Date.


 


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


 


5

















 


deficiency claim to which Agent and Lenders might otherwise be entitled
but for such bidding at any such sale.


 


2.10.                        Funds Transfers. If
Guarantor shall engage in any transaction as a result of which any Borrower is
required to make a mandatory prepayment with respect to the Guaranteed
Obligations under the terms of the Credit Agreement (including any issuance or
sale of such Guarantor’s Stock or any sale of its assets), Guarantor shall
distribute to, or make a contribution to the capital of, the Borrower an amount
equal to the mandatory prepayment required under the terms of the Credit
Agreement.


 


3.                                       DELIVERIES.


 


In a form satisfactory
to Agent, Guarantor shall deliver to Agent (with sufficient copies for each
Lender), concurrently with the execution of this Guaranty and the Credit
Agreement, the Loan Documents and other instruments, certificates and documents
as are required to be delivered by Guarantor to Agent under the Credit
Agreement.


 


4.                                       REPRESENTATIONS AND WARRANTIES.


 


To induce Lenders to make the Loans and incur L/C
Obligations under the Credit Agreement, Guarantor makes the representations and
warranties as Guarantor contained in the Credit Agreement, each of which is
incorporated herein by reference, and the following representations and
warranties to Agent and each Lender, each and all of which shall survive the
execution and delivery of this Guaranty:


 


4.1.                              Corporate
Existence; Compliance with Law. Guarantor (i) is a corporation,
limited liability company or limited partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization; (ii) is duly qualified to do business and
is in good standing under the laws of each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification; (iii) has
the requisite corporate power and authority and the legal right to own, pledge,
mortgage and operate its properties, to lease the property it operates under
lease, and to conduct its business as now, heretofore and proposed to be
conducted; (iv) has all licenses, permits, consents or approvals from or
by, and has made all material filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct except where the failure to have or obtain any
of the foregoing could not reasonably be expected to have a Material Adverse
Effect; (v) is in compliance with its charter and by-laws; and (vi) is
in compliance with all applicable provisions of law, except where the failure
to comply, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.


 


4.2.                              Executive
Offices. Guarantor’s executive office and principal place of business are
as set forth in Schedule III of the Guarantor Security Agreement.


 


6

















 


4.3.                              Corporate
Power; Authorization; Enforceable  Guaranteed Obligations. The
execution, delivery and performance of this Guaranty and all other Loan
Documents and all instruments and documents to be delivered by Guarantor
hereunder and under the Credit Agreement are within Guarantor’s corporate
power, have been duly authorized by all necessary or proper corporate action,
including the consent of stockholders and interest holders where required, are
not in contravention of any provision of Guarantor’s charter or by-laws, do not
violate any law or regulation, or any order or decree of any Governmental
Authority, do not conflict with or result in the breach of, or constitute a
default under, or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Guarantor is a party or by which Guarantor or any of its
property is bound, do not result in the creation or imposition of any Lien upon
any of the property of Guarantor, other than those in favor of Agent, for
itself and the benefit of Lenders, and the same do not require the consent or
approval of any Governmental Authority or any other Person except those
referred to in Section 4.2 of the Credit Agreement,
all of which have been duly obtained, made or complied with prior to the
Closing Date. On or prior to the Closing Date, this Guaranty and each of the
Loan Documents to which Guarantor is a party shall have been duly executed and
delivered for the benefit of or on behalf of Guarantor, and each shall then
constitute a legal, valid and binding obligation of Guarantor, enforceable
against Guarantor 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 principals of equity whether
applied by a court of law or equity.


 


5.                                       FURTHER ASSURANCES.


 


Guarantor agrees, upon the written request of Agent or
any Lender, to execute and deliver to Agent or such Lender, from time to time,
any additional instruments or documents reasonably considered necessary by
Agent or such Lender to cause this Guaranty to be, become or remain valid and
effective in accordance with its terms.


 


6.                                       PAYMENTS FREE AND CLEAR OF TAXES.


 


All payments required to be made by Guarantor
hereunder shall be made to Agent and Lenders free and clear of, and without
deduction for, any and all present and future Taxes. If Guarantor shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder, (a) the sum payable shall be increased as much as shall be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 6)
Agent or Lenders, as applicable, receive an amount equal to the sum they would
have received had no such deductions been made, (b) Guarantor shall make
such deductions, and (c) Guarantor shall pay the full amount deducted to
the relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of Taxes, Guarantor shall
furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof. Guarantor shall indemnify and, within ten (10) days of
demand therefor, pay Agent and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under this Section 6) paid by Agent or such Lender, as


 


7

















 


appropriate, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or
not such Taxes were correctly or legally asserted.


 


7.                                       OTHER TERMS.


 


7.1.                              Entire
Agreement. This Guaranty, together with the other Loan Documents,
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements relating to a
guaranty of the loans and advances under the Loan Documents and/or the
Guaranteed Obligations.


 


7.2.                              Headings.
The headings in this Guaranty are for convenience of reference only and are not
part of the substance of this Guaranty.


 


7.3.                              Severability.
Whenever possible, each provision of this Guaranty shall be interpreted in such
a manner to be effective and valid under applicable law, but if any provision
of this Guaranty shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Guaranty.


 


7.4.                              Notices.
Whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or
served upon any of the parties by any other party, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Guaranty, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be addressed
to the party to be notified as follows:


 


(a)                                  If
to Agent, at:


 


General Electric Capital Corporation


2
Bethesda Metro Center


Suite 600


Bethesda,
MD 20814


Attention:  Curative Health Services, Inc. Account
Manager


Facsimile
No: (301) 347-3175


Telephone
No.: (301) 664-9816


 


With a copy to:                                                             Moritt
Hock Hamroff & Horowitz LLP


400 Garden City Plaza


Garden City, NY 11530


Attention:  Marc
L. Hamroff


Facsimile No: (516) 873-2010


Telephone No.: (516) 873-2000


 


(b)                                 If
to any Lender, at the address of such Lender specified in the Credit Agreement.


 


8

















 


(c)                                  If
to Guarantor, at:


 


Curative
Health Services III Co.


c/o
Curative Health Services, Inc.


61
Spit Brook Road


Nashua,
New Hampshire 03060


Attention:  Chief Financial Officer


Facsimile
No: (603) 966-3345


Telephone No.: (603) 888-1500


 


With a copy to:                                                                                                                                                             Curative Health Services, Inc.


61
Spit Brook Road


Nashua,
New Hampshire 03060


Attention: General Counsel


Facsimile
No: (603) 966-3345


Telephone
No.: (603) 888-1500


 


-and-


 


With a copy to:                                                                                                                                                             Linklaters


1345
Avenue of the Americas 

New York, New York 10105 
Attention:  Martin N. Flics
Facsimile No.: (212) 903-9100

Telephone No.:(212) 903-9000


 


or at such other address as may be substituted by
notice given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration or other communication
hereunder shall be deemed to have been validly served, given or delivered (i) upon
the earlier of actual receipt and three (3) Business Days after the same
shall have been deposited with the United States mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (ii) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States mail as otherwise provided in this Section 7.4), (iii) one (1) Business Day
after deposit with a reputable overnight carrier with all charges prepaid, or (iv) when
delivered, if hand-delivered by messenger.


 


7.5.                              Successors
and Assigns. This Guaranty and all obligations of Guarantor hereunder shall
be binding upon the successors and assigns of Guarantor (including a debtor-in-


 


9

















 


possession on behalf of Guarantor) and shall, together with the rights
and remedies of Agent, for itself and for the benefit of Lenders, hereunder,
inure to the benefit of Agent and Lenders, all future holders of any instrument
evidencing any of the Obligations and their respective successors and assigns. No
sales of participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing the
Obligations or any portion thereof or interest therein shall in any manner
affect the rights of Agent and Lenders hereunder. Guarantor may not
assign, sell, hypothecate or otherwise transfer any interest in or obligation
under this Guaranty.


 


7.6.                              No
Waiver; Cumulative Remedies; Amendments. Neither Agent nor any Lender shall
by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies hereunder, and no waiver shall be valid unless in writing,
signed by Agent and then only to the extent therein set forth. A waiver by
Agent, for itself and the ratable benefit of Lenders, of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Agent would otherwise have had on any future occasion. No failure
to exercise nor any delay in exercising on the part of Agent or any
Lender, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law.
None of the terms or provisions of this Guaranty may be waived, altered,
modified, supplemented or amended except by an instrument in writing, duly
executed by Agent and Guarantor.


 


7.7.                              Termination.
This Guaranty is a continuing guaranty and shall remain in full force and
effect until the Termination Date. Upon payment and performance in full of the
Guaranteed Obligations, Agent shall deliver to Guarantor such documents as
Guarantor may reasonably request to evidence such termination.


 


7.8.                              Counterparts.
This Guaranty may be executed in any number of counterparts, each of which
shall collectively and separately constitute one and the same agreement.


 


7.9.                            GOVERNING
LAW; CONSENT TO JURISDICTION AND VENUE. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, THIS GUARANTY AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK. AGENT AND GUARANTOR HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES BANKRUPTCY COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. GUARANTOR IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A


 


10

















 


COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 7.4. NOTHING IN THIS AGREEMENT WILL AFFECT
THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.


 


7.10.                        WAIVER OF JURY TRIAL. AGENT
AND GUARANTOR HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW
WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR
SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.


 


7.11.                        Limitation on Guaranteed
Obligations. Notwithstanding any provision herein contained to the
contrary, Guarantor’s liability hereunder shall be limited to an amount not to
exceed as of any date of determination the greater of:


 


(a)                                  the
net amount of all Loans advanced under the Credit Agreement and directly or
indirectly re-loaned or otherwise transferred to, or incurred for the benefit
of, Guarantor, plus interest thereon at the applicable rate specified in the
Credit Agreement; or


 


(b)                                 the
amount which could be claimed by the Agent and Lenders from Guarantor under
this Guaranty without rendering such claim voidable or avoidable under Section 548
of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law.


 


8.                                       SECURITY.


 


To secure payment of Guarantor’s obligations under
this Guaranty, concurrently with the execution of this Guaranty, Guarantor has
entered into a Guarantor Security Agreement pursuant to which Guarantor has
granted to Agent for the benefit of Lenders a security interest in
substantially all of its personal property and has entered into a Pledge
Agreement pursuant to which Guarantor has pledged all of the Stock of each of
its Subsidiaries to Agent for the benefit of Lenders.


 


9.                                       CREDIT AGREEMENT.


 


Guarantor agrees to perform, comply with and be bound
by the covenants contained in Sections 5 and 6 of the Credit Agreement (which
provisions are incorporated herein by reference) as if Guarantor were a Credit
Party signatory to the Credit Agreement.


 


 


[Remainder of page left
intentionally blank; signature pages follow]


 


11

















 


IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Holdings Guaranty as of the date first above written.


 


	
   

  	
  CURATIVE
  HEALTH SERVICES III CO

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  



 


	
   

  	
  GENERAL
  ELECTRIC CAPITAL

  CORPORATION, as Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  



 






 













 


GUARANTY


 


This GUARANTY (this “Guaranty”), dated as of March 30,
2006, by and between CURATIVE HEALTH SERVICES
III CO., a Minnesota corporation (the “Guarantor”), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, individually and as agent (in such capacity, “Agent”) for
itself and the lenders from time to time signatory to the Credit Agreement
hereinafter defined (“Lenders”).


 


W  I  T
N  E  S  S  E  T  H:


 


WHEREAS, pursuant to that certain Debtor In Possession
Credit Agreement, dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”) among
Curative Health Services, Inc. (“Holdings”), Curative Health
Services Co., Critical Care Systems, Inc., eBioCare.com, Inc.,
Hemophilia Access, Inc., Apex Therapeutic Care, Inc., CHS Services, Inc.,
Curative Health Services of New York, Inc., Optimal Care Plus, Inc.,
Infinity Infusion, LLC, Infinity Infusion II, LLC, Infinity Infusion Care,
Ltd., MedCare, Inc., Curative Pharmacy Services, Inc. (each a “Borrower”,
and collectively with Holdings, “Borrowers”), the other Credit Parties
signatory thereto, Agent and the Lenders , Lenders have agreed to make the
Loans and to incur the L/C Obligations on behalf of Borrowers;


 


WHEREAS, in order to induce Agent and Lenders to enter
into the Credit Agreement and other Loan Documents and to induce Lenders to
make the Loans as provided for in the Credit Agreement, Guarantor has agreed to
guarantee payment of the Guaranteed Obligations (as defined below);


 


NOW, THEREFORE, in consideration of the premises and
the covenants hereinafter contained, and to induce Lenders to provide the Loans
and other financial accommodations under the Credit Agreement, it is agreed as
follows:


 


1.                                       DEFINITIONS.


 


(a)                                  Capitalized
terms used herein shall have the meanings assigned to them in the Credit
Agreement, unless otherwise defined herein.


 


(b)                                 References
to this “Guaranty” shall mean this Guaranty, including all amendments,
modifications and supplements and any annexes, exhibits and schedules to any of
the foregoing, and shall refer to this Guaranty as the same may be in
effect at the time such reference becomes operative.


 


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


 

















 


2.                                       THE GUARANTY.


 


2.1.                              Guaranty
of Guaranteed Obligations of Borrowers. Guarantor hereby unconditionally
guarantees to Agent and Lenders, and their respective successors, endorsees,
transferees and assigns, the prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of the Obligations of Borrowers
(hereinafter the “Guaranteed Obligations”). Guarantor agrees that this
Guaranty is a guaranty of payment and performance and not of collection, and
that Guarantor’s obligations under this Guaranty shall be primary, absolute and
unconditional, irrespective of, and unaffected by:


 


(a)                                  the
genuineness, validity, regularity, enforceability or any future amendment of,
or change in this Guaranty, any other Loan Document or any other agreement,
document or instrument to which any Credit Party and/or Guarantor are or may become
a party;


 


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


 


(c)                                  the
existence, value or condition of, or failure to perfect its Lien against, any
Collateral for the Guaranteed Obligations or any action, or the absence of any
action, by Agent in respect thereof (including, without limitation, the release
of any such security);


 


(d)                                 the
insolvency of any Credit Party; or


 


(e)                                  any
other action or circumstances which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor,


 


it being agreed by Guarantor that its obligations
under this Guaranty shall not be discharged until the Termination Date. Guarantor
shall be regarded as a primary obligor with respect to the Guaranteed
Obligations. Guarantor agrees that any notice or directive given at any time to
Agent which is inconsistent with the waiver in the immediately preceding
sentence shall be null and void and may be ignored by Agent and Lenders,
and, in addition, may not be pleaded or introduced as evidence in any
litigation relating to this Guaranty for the reason that such pleading or
introduction would be at variance with the written terms of this Guaranty, unless
Agent and Lenders have specifically agreed otherwise in writing. It is agreed
among Guarantor, Agent and Lenders that the foregoing waivers are of the
essence of the transaction contemplated by the Loan Documents and that, but for
this Guaranty and such waivers, Agent and Lenders would decline to enter into
the Credit Agreement.


 


2

















 


2.2.                              Demand
by Agent or Lenders. In addition to the terms of the Guaranty set forth in Section 2.1 hereof, and in no manner imposing any
limitation on such terms, it is expressly understood and agreed that, if, at
any time, the outstanding principal amount of the Guaranteed Obligations under
the Credit Agreement (including all accrued interest thereon) is declared to be
immediately due and payable, then Guarantor shall, without demand, pay to the
holders of the Guaranteed Obligations the entire outstanding Guaranteed
Obligations due and owing to such holders. Payment by Guarantor shall be made
to Agent in immediately available Federal funds to an account designated by
Agent or at the address set forth herein for the giving of notice to Agent or
at any other address that may be specified in writing from time to time by
Agent, and shall be credited and applied to the Guaranteed Obligations.


 


2.3.                              Enforcement
of Guaranty. In no event shall Agent have any obligation (although it is
entitled, at its option) to proceed against any Borrower or any other Credit
Party or any Collateral pledged to secure Guaranteed Obligations before seeking
satisfaction from the Guarantor, and Agent may proceed, prior or
subsequent to, or simultaneously with, the enforcement of Agent’s rights
hereunder, to exercise any right or remedy which it may have against any
Collateral, as a result of any Lien it may have as security for all or any
portion of the Guaranteed Obligations.


 


2.4.                              Waiver.
In addition to the waivers contained in Section 2.1
hereof, Guarantor waives, and agrees that it shall not at any time insist upon,
plead or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshaling of assets or redemption laws,
or exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by Guarantor of its Guaranteed
Obligations under, or the enforcement by Agent or Lenders of, this Guaranty.
Guarantor hereby waives diligence, presentment and demand (whether for non-payment
or protest or of acceptance, maturity, extension of time, change in nature or form of
the Guaranteed Obligations, acceptance of further security, release of further
security, composition or agreement arrived at as to the amount of, or the terms
of, the Guaranteed Obligations, notice of adverse change in any Borrower’s
financial condition or any other fact which might increase the risk to
Guarantor) with respect to any of the Guaranteed Obligations or all other
demands whatsoever and waive the benefit of all provisions of law which are or
might be in conflict with the terms of this Guaranty. Guarantor represents,
warrants and agrees that, as of the date of this Guaranty, its obligations
under this Guaranty are not subject to any offsets or defenses against Agent or
Lenders or any Credit Party of any kind. Guarantor further agrees that its
obligations under this Guaranty shall not be subject to any counterclaims,
offsets or defenses against Agent or any Lender or against any Credit Party of
any kind which may arise in the future.


 


2.5.                              Benefit
of Guaranty. The provisions of this Guaranty are for the benefit of Agent
and Lenders and their respective permitted successors, transferees, endorsees
and assigns, and nothing herein contained shall impair, as between any Credit
Party and Agent or Lenders, the obligations of any Credit Party under the Loan
Documents. In the event all or any part of the Guaranteed Obligations are
transferred, indorsed or assigned by Agent or any Lender to any Person or
Persons, as permitted under the Loan Documents, any reference to “Agent” or “Lender”
herein shall be deemed to refer equally to such Person or Persons.


 


3

















 


2.6.                              Modification
of Guaranteed Obligations, Etc. Guarantor hereby acknowledges and agrees
that Agent and Lenders may at any time or from time to time, with or
without the consent of, or notice to, Guarantor:


 


(a)                                  change
or extend the manner, place or terms of payment of, or renew or alter all or
any portion of, the Guaranteed Obligations;


 


(b)                                 take
any action under or in respect of the Loan Documents in the exercise of any
remedy, power or privilege contained therein or available to it at law, equity
or otherwise, or waive or refrain from exercising any such remedies, powers or
privileges;


 


(c)                                  amend
or modify, in any manner whatsoever, the Loan Documents;


 


(d)                                 extend
or waive the time for any Credit Party’s performance of, or compliance with,
any term, covenant or agreement on its part to be performed or observed
under the Loan Documents, or waive such performance or compliance or consent to
a failure of, or departure from, such performance or compliance;


 


(e)                                  take
and hold Collateral for the payment of the Guaranteed Obligations guaranteed
hereby or sell, exchange, release, dispose of, or otherwise deal with, any
property pledged, mortgaged or conveyed, or in which Agent or Lenders have been
granted a Lien, to secure any Obligations;


 


(f)                                    release
anyone who may be liable in any manner for the payment of any amounts owed
by Guarantor or any Credit Party to Agent or any Lender;


 


(g)                                 modify
or terminate the terms of any intercreditor or subordination agreement pursuant
to which claims of other creditors of Guarantor or any Credit Party are
subordinated to the claims of Agent and Lenders; and/or


 


(h)                                 apply
any sums by whomever paid or however realized to any amounts owing by Guarantor
or any Credit Party to Agent or any Lender in such manner as Agent or any
Lender shall determine in its discretion;


 


and Agent and Lenders
shall not incur any liability to Guarantor as a result thereof, and no such
action shall impair or release the Guaranteed Obligations of Guarantor under
this Guaranty.


 


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


 


4

















 


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


 


2.8.                              Deferral
of Subrogation, Etc. Notwithstanding anything to the contrary in this
Guaranty, or in any other Loan Document, Guarantor hereby:


 


(a)                                  expressly
and irrevocably waives, on behalf of itself and its successors and assigns
(including any surety) until the Termination Date, any and all rights at law or
in equity to subrogation, to reimbursement, to exoneration, to contribution, to
indemnification, to set off or to any other rights that could accrue to a
surety against a principal, to a guarantor against a principal, to a guarantor
against a maker or obligor, to an accommodation party against the party
accommodated, to a holder or transferee against a maker, or to the holder of
any claim against any Person, and which Guarantor may have or hereafter
acquire against any Credit Party in connection with or as a result of Guarantor’s
execution, delivery and/or performance of this Guaranty, or any other documents
to which Guarantor is a party or otherwise; and


 


(b)                                 acknowledges
and agrees (i) that this waiver is intended to benefit Agent and Lenders
and shall not limit or otherwise effect Guarantor’s liability hereunder or the
enforceability of this Guaranty, and (ii) that Agent, Lenders and their
respective successors and assigns are intended third party beneficiaries of the
waivers and agreements set forth in this Section 2.8
and their rights under this Section 2.8
shall survive payment in full of the Guaranteed Obligations until the
Termination Date.


 


2.9.                              Election
of Remedies.  If Agent may, under
applicable law, proceed to realize benefits under any of the Loan Documents
giving Agent and Lenders a Lien upon any Collateral owned by any Credit Party,
either by judicial foreclosure or by non-judicial sale or enforcement, Agent
may, at its sole option, determine which of such remedies or rights it may pursue
without affecting any of such rights and remedies under this Guaranty. If, in
the exercise of any of its rights and remedies, Agent shall forfeit any of its
rights or remedies, including its right to enter a deficiency judgment against
any Credit Party, whether because of any applicable laws pertaining to “election
of remedies” or the like, Guarantor hereby consents to such action by Agent and
waive any claim based upon such action, even if such action by Agent shall
result in a full or partial loss of any rights of subrogation which Guarantor
might otherwise have had but for such action by Agent. Any election of remedies
which results in the denial or impairment of the right of Agent to seek a
deficiency judgment against any Credit Party shall not impair Guarantor’s
obligation to pay the full amount of the Guaranteed Obligations. In the event
Agent shall bid at any foreclosure or trustee’s sale or at any private sale
permitted by law or the Loan Documents, Agent may bid all or less than the
amount of the Guaranteed Obligations and the amount of such bid need not be
paid by Agent but shall be credited against the Guaranteed Obligations. The
amount of the successful bid at any such sale shall be conclusively deemed to
be the fair market value of the collateral and the difference between such bid
amount and the remaining balance of the Guaranteed Obligations shall be
conclusively deemed to be the amount of the Guaranteed Obligations guaranteed
under this Guaranty, notwithstanding that any present


 


5

















 


or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which Agent and Lenders might
otherwise be entitled but for such bidding at any such sale.


 


2.10.                        Funds Transfers. If
Guarantor shall engage in any transaction as a result of which any Borrower is
required to make a mandatory prepayment with respect to the Guaranteed
Obligations under the terms of the Credit Agreement (including any issuance or
sale of such Guarantor’s Stock or any sale of its assets), Guarantor shall
distribute to, or make a contribution to the capital of, such Borrower an
amount equal to the mandatory prepayment required under the terms of the Credit
Agreement.


 


3.                                       DELIVERIES.


 


In a form satisfactory
to Agent, Guarantor shall deliver to Agent (with sufficient copies for each
Lender), concurrently with the execution of this Guaranty and the Credit
Agreement, the Loan Documents and other instruments, certificates and documents
as are required to be delivered by Guarantor to Agent under the Credit
Agreement.


 


4.                                       REPRESENTATIONS AND WARRANTIES.


 


To induce Lenders to make the Loans and incur L/C
Obligations under the Credit Agreement, Guarantor makes the representations and
warranties as Guarantor contained in the Credit Agreement, each of which is
incorporated herein by reference, and the following representations and
warranties to Agent and each Lender, each and all of which shall survive the
execution and delivery of this Guaranty:


 


4.1.                              Corporate
Existence; Compliance with Law. Guarantor (i) is a corporation,
limited liability company or limited partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization; (ii) is duly qualified to do business and
is in good standing under the laws of each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification; (iii) has
the requisite corporate power and authority and the legal right to own, pledge,
mortgage and operate its properties, to lease the property it operates under
lease, and to conduct its business as now, heretofore and proposed to be
conducted; (iv) has all licenses, permits, consents or approvals from or
by, and has made all material filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct except where the failure to have or obtain any
of the foregoing could not reasonably be expected to have a Material Adverse
Effect; (v) is in compliance with its charter and by-laws; and (vi) is
in compliance with all applicable provisions of law, except where the failure
to comply, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.


 


4.2.                              Executive
Offices. Guarantor’s executive office and principal place of business are
as set forth in Schedule III of the Guarantor Security Agreement.


 


6

















 


4.3.                              Corporate
Power; Authorization; Enforceable  Guaranteed Obligations. The
execution, delivery and performance of this Guaranty and all other Loan
Documents and all instruments and documents to be delivered by Guarantor
hereunder and under the Credit Agreement are within Guarantor’s corporate
power, have been duly authorized by all necessary or proper corporate action,
including the consent of stockholders and interest holders where required, are
not in contravention of any provision of Guarantor’s charter or by-laws, do not
violate any law or regulation, or any order or decree of any Governmental
Authority, do not conflict with or result in the breach of, or constitute a
default under, or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Guarantor is a party or by which Guarantor or any of its
property is bound, do not result in the creation or imposition of any Lien upon
any of the property of Guarantor, other than those in favor of Agent, for
itself and the benefit of Lenders, and the same do not require the consent or
approval of any Governmental Authority (other than the Interim Order or the
Final Order) or any other Person except those referred to in Sections 4.2 and 4.3 of the Credit Agreement, all of which
have been duly obtained, made or complied with prior to the Closing Date. On or
prior to the Closing Date, this Guaranty and each of the Loan Documents to
which Guarantor is a party shall have been duly executed and delivered for the
benefit of or on behalf of Guarantor, and each shall then constitute a legal,
valid and binding obligation of Guarantor, enforceable against Guarantor 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 principals of equity whether applied by a court of law or
equity.


 


5.                                       FURTHER ASSURANCES.


 


Guarantor agrees, upon the written request of Agent or
any Lender, to execute and deliver to Agent or such Lender, from time to time,
any additional instruments or documents reasonably considered necessary by
Agent or such Lender to cause this Guaranty to be, become or remain valid and
effective in accordance with its terms.


 


6.                                       PAYMENTS FREE AND CLEAR OF TAXES.


 


All payments required to be made by Guarantor
hereunder shall be made to Agent and Lenders free and clear of, and without
deduction for, any and all present and future Taxes. If Guarantor shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder, (a) the sum payable shall be increased as much as shall be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 6)
Agent or Lenders, as applicable, receive an amount equal to the sum they would
have received had no such deductions been made, (b) Guarantor shall make
such deductions, and (c) Guarantor shall pay the full amount deducted to
the relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of Taxes, Guarantor shall
furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof. Guarantor shall indemnify and, within ten (10) days of
demand therefor, pay Agent and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under this Section 6) paid by Agent or such Lender, as


 


7

















 


appropriate, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or
not such Taxes were correctly or legally asserted.


 


7.                                       OTHER TERMS.


 


7.1.                              Entire
Agreement. This Guaranty, together with the other Loan Documents,
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements relating to a
guaranty of the loans and advances under the Loan Documents and/or the
Guaranteed Obligations.


 


7.2.                              Headings.
The headings in this Guaranty are for convenience of reference only and are not
part of the substance of this Guaranty.


 


7.3.                              Severability.
Whenever possible, each provision of this Guaranty shall be interpreted in such
a manner to be effective and valid under applicable law, but if any provision
of this Guaranty shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Guaranty.


 


7.4.                              Notices.
Whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or
served upon any of the parties by any other party, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Guaranty, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be addressed
to the party to be notified as follows:


 


(a)                                  If
to Agent, at:


 


General Electric Capital Corporation


2
Bethesda Metro Center


Suite 600


Bethesda,
MD 20814


Attention:  Curative Health Services, Inc. Account
Manager


Facsimile
No: (301) 347-3175


Telephone
No.: (301) 664-9816


 


With a copy to:                                                             Moritt
Hock Hamroff & Horowitz LLP


400 Garden City Plaza


Garden City, NY 11530


Attention:  Marc
L. Hamroff


Facsimile No: (516) 873-2010


Telephone No.: (516) 873-2000


 


(b)                                 If
to any Lender, at the address of such Lender specified in the Credit Agreement.


 


8

















 


(c)                                  If
to Guarantor, at:


 


Curative
Health Services III Co.


c/o
Curative Health Services, Inc.


61
Spit Brook Road


Nashua,
New Hampshire 03060


Attention:  Chief Financial Officer


Facsimile
No: (603) 966-3345


Telephone No.: (603) 888-1500


 


With a copy to:                                                                                                                                                             Curative Health Services, Inc.


61
Spit Brook Road


Nashua,
New Hampshire 03060


Attention: General Counsel


Facsimile
No: (603) 966-3345


Telephone
No.: (603) 888-1500


 


-and-


With a copy to:                                                                                                                                                             Linklaters


1345
Avenue of the Americas 

New York, New York 10105 
Attention:  Martin N. Flics
Facsimile No.: (212) 903-9100

Telephone No.:(212) 903-9000


 


or at such other address as may be substituted by
notice given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration or other communication
hereunder shall be deemed to have been validly served, given or delivered (i) upon
the earlier of actual receipt and three (3) Business Days after the same
shall have been deposited with the United States mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (ii) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States mail as otherwise provided in this Section 7.4), (iii) one (1) Business Day
after deposit with a reputable overnight carrier with all charges prepaid, or (iv) when
delivered, if hand-delivered by messenger.


 


7.5.                              Successors
and Assigns. This Guaranty and all obligations of Guarantor hereunder shall
be binding upon the successors and assigns of Guarantor and shall, together
with


 


9

















 


the rights and remedies of Agent, for itself and for the benefit of
Lenders, hereunder, inure to the benefit of Agent and Lenders, all future
holders of any instrument evidencing any of the Obligations and their
respective successors and assigns. No sales of participations, other sales,
assignments, transfers or other dispositions of any agreement governing or
instrument evidencing the Obligations or any portion thereof or interest
therein shall in any manner affect the rights of Agent and Lenders hereunder. Guarantor
may not assign, sell, hypothecate or otherwise transfer any interest in or
obligation under this Guaranty.


 


7.6.                              No
Waiver; Cumulative Remedies; Amendments. Neither Agent nor any Lender shall
by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies hereunder, and no waiver shall be valid unless in writing,
signed by Agent and then only to the extent therein set forth. A waiver by
Agent, for itself and the ratable benefit of Lenders, of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Agent would otherwise have had on any future occasion. No failure
to exercise nor any delay in exercising on the part of Agent or any
Lender, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law.
None of the terms or provisions of this Guaranty may be waived, altered,
modified, supplemented or amended except by an instrument in writing, duly
executed by Agent and Guarantor.


 


7.7.                              Termination.
This Guaranty is a continuing guaranty and shall remain in full force and
effect until the Termination Date. Upon payment and performance in full of the
Guaranteed Obligations, Agent shall deliver to Guarantor such documents as
Guarantor may reasonably request to evidence such termination.


 


7.8.                              Counterparts.
This Guaranty may be executed in any number of counterparts, each of which
shall collectively and separately constitute one and the same agreement.


 


7.9.                            GOVERNING
LAW; CONSENT TO JURISDICTION AND VENUE. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, THIS GUARANTY AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK. AGENT AND GUARANTOR HEREBY SUBMIT TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES BANKRUPTCY COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE


 


10

















 


PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.4. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.


 


7.10.                        WAIVER OF JURY TRIAL. AGENT
AND GUARANTOR HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW
WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR
SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.


 


7.11.                        Limitation on Guaranteed
Obligations. Notwithstanding any provision herein contained to the
contrary, Guarantor’s liability hereunder shall be limited to an amount not to
exceed as of any date of determination the greater of:


 


(a)                                  the
net amount of all Loans advanced under the Credit Agreement and directly or
indirectly re-loaned or otherwise transferred to, or incurred for the benefit
of, Guarantor, plus interest thereon at the applicable rate specified in the
Credit Agreement; or


 


(b)                                 the
amount which could be claimed by the Agent and Lenders from Guarantor under
this Guaranty without rendering such claim voidable or avoidable under Section 548
of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law.


 


8.                                       SECURITY.


 


To secure payment of Guarantor’s obligations under
this Guaranty, concurrently with the execution of this Guaranty, Guarantor has
entered into a Guarantor Security Agreement pursuant to which Guarantor has
granted to Agent for the benefit of Lenders a security interest in
substantially all of its personal property and has entered into a Pledge
Agreement pursuant to which Guarantor has pledged all of the Stock of each of
its Subsidiaries to Agent for the benefit of Lenders.


 


9.                                       CREDIT AGREEMENT.


 


Guarantor agrees to perform, comply with and be bound
by the covenants contained in Sections 5 and 6 of the Credit Agreement (which
provisions are incorporated herein by reference) as if Guarantor were a Credit
Party signatory to the Credit Agreement.


 


 


[Remainder of page left
intentionally blank; signature pages follow]


 


11

















 


IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Guaranty as of the date first above written.


 


	
   

  	
  CURATIVE
  HEALTH SERVICES III CO

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  



 


 


	
   

  	
  GENERAL
  ELECTRIC CAPITAL

  CORPORATION, as Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  



 


 


[Signature Page to Guaranty Agreement]


 






 













 


EXHIBIT H


to


CREDIT AGREEMENT


 


GUARANTOR SECURITY AGREEMENT


 


GUARANTOR SECURITY
AGREEMENT (this “Security Agreement”), dated as of March 30, 2006,
among the Grantors signatory hereto (sometimes collectively referred to herein
as “Grantors” and individually as a “Grantor”), and GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, individually and in its capacity as Agent for Lenders (“Agent”).


 


W  I  T
N  E
S  S
T  H:


 


WHEREAS, pursuant to that
certain Debtor in Possession Credit Agreement dated as of the date hereof by
and among Borrowers (the “Borrower”), the Persons named therein as
Credit Parties, Agent and Lenders (including all annexes, exhibits and
schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the “Credit Agreement”), Lenders have agreed,
subject to certain terms and conditions, to make the Loans and to incur L/C
Obligations on behalf of the Borrower;


 


WHEREAS, Grantors are
either direct or indirect subsidiaries of Borrower and as such will derive direct
and indirect economic benefits from the making of the Loans and other financial
accommodations provided to the Borrower pursuant to the Credit Agreement; and


 


WHEREAS, in order to
induce Agent and Lenders to enter into the Credit Agreement and other Loan
Documents and to induce Lenders to make the Loans and to incur L/C Obligations
as provided for in the Credit Agreement, Grantors have entered into that
certain Guaranty Agreement dated as the date hereof (the “Guaranty Agreement”)
in favor of Agent and Lenders, pursuant to which Grantors have unconditionally
guarantied all of the Obligations;


 


WHEREAS, in order to
induce Agent and Lenders to enter into the Credit Agreement and other Loan
Documents and to induce Lenders to make the Loans and to incur L/C Obligations
as provided for in the Credit Agreement, Grantors have agreed to grant a
continuing Lien on the Collateral (as hereinafter defined) to secure the
Obligations;


 


NOW, THEREFORE, in
consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:


 


1.             DEFINED TERMS.


 


Capitalized terms used in this Agreement shall have
the meanings ascribed to them in this Section 1
unless the context indicates otherwise. All capitalized terms used


 

















 


but
not otherwise defined herein have the meanings given to them in Section 1.1 of the Credit Agreement. Any
other terms contained in this Security Agreement not defined in this Agreement
or in the Credit Agreement have the meanings provided for by the Code to the
extent the same are used or defined therein.


 


(a)           “Accounts” means all “accounts,”
as such term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including (a) all accounts receivable, other receivables, book
debts and other forms of obligations (other than forms of obligations evidenced
by Chattel Paper, or Instruments), (including any such obligations that may be
characterized as an account or contract right under the Code), (b) all of
each Credit Party’s rights in, to and under all purchase orders or receipts for
goods or services, (c) all of each Credit Party’s rights to any goods
represented by any of the foregoing (including unpaid sellers’ rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (d) all rights to payment due
to any Credit Party for property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services rendered or to be
rendered by such Credit Party or in connection with any other transaction
(whether or not yet earned by performance on the part of such Credit
Party), (e) all health care insurance receivables and (f) all collateral
security of any kind, given by any Account Debtor or any other Person with
respect to any of the foregoing.


 


(b)           “Chattel Paper” means any “chattel
paper,” as such term is defined in the Code, including electronic chattel
paper, now owned or hereafter acquired by any Credit Party.


 


(c)           “Code” means the Uniform Commercial
Code as the same may, from time to time, be enacted and in effect in the State
of New York; provided, that to the extent that the Code is used to define any
term herein or in any Loan Document and such term is defined differently in
different Articles or Divisions of the Code, the definition of such term
contained in Article or Division 9 shall govern; provided further, that in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, Agent’s or
any Lender’s Lien on any Collateral is governed by the Uniform Commercial
Code as enacted and in effect in a jurisdiction other than the State of New
York, the term “Code” shall mean the Uniform Commercial Code as enacted
and in effect in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.


 


(d)           “Contracts” means all “contracts,”
as such term is defined in the Code, now owned or hereafter acquired by any
Credit Party, in any event, including all contracts, undertakings, or
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which any Credit Party may now or hereafter have
any right, title or interest, including any agreement relating to the terms of
payment or the terms of performance of any Account.


 


2

















 


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


 


(f)            “Copyright License” means any and
all rights now owned or hereafter acquired by any Credit Party under any
written agreement granting any right to use any Copyright or Copyright
registration.


 


(g)           “Copyrights” means all of the
following now owned or hereafter adopted or acquired by any Credit Party: (a) all
copyrights and General Intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications
in connection therewith, including all registrations, recordings and
applications in the United States Copyright Office or in any similar office or
agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof, and (b) all reissues,
extensions or renewals thereof.


 


(h)           “Deposit Accounts” means all “deposit
accounts” as such term is defined in the Code, now or hereafter held in the
name of any Credit Party.


 


(i)            “Documents” means all “documents,”
as such term is defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located.


 


(j)            “Equipment” means all “equipment,”
as such term is defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located and, in any event, including all such Credit
Party’s machinery and equipment, including processing equipment, conveyors,
machine tools, data processing and computer equipment, including embedded
software and peripheral equipment and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a part of
real property, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.


 


(k)           “Fixtures” means all “fixtures” as
such term is defined in the Code, now owned or hereafter acquired by any Credit
Party.


 


3

















 


(l)            “General Intangibles” means all “general
intangibles,” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, including all right, title and interest that such
Credit Party may now or hereafter have in or under any Contract, all
payment intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents,
and all applications therefor and reissues, extensions or renewals thereof,
rights in Intellectual Property, interests in partnerships, joint ventures and
other business associations, licenses, permits, copyrights, trade secrets,
proprietary or confidential information, inventions (whether or not patented or
patentable), technical information, procedures, designs, knowledge, know-how,
software, data bases, data, skill, expertise, experience, processes, models,
drawings, materials and records, goodwill (including the goodwill associated
with any Trademark or Trademark License), all rights and claims in or under
insurance policies (including insurance for fire, damage, loss and casualty,
whether covering personal property, real property, tangible rights or
intangible rights, all liability, life, key man and business interruption
insurance, and all unearned premiums), uncertificated securities, choses in
action, deposit, checking and other bank accounts, rights to receive tax
refunds and other payments, rights to receive dividends, distributions, cash,
Instruments and other property in respect of or in exchange for pledged Stock
and Investment Property, rights of indemnification, all books and records, correspondence,
credit files, invoices and other papers, including without limitation all
tapes, cards, computer runs and other papers and documents in the possession or
under the control of such Credit Party or any computer bureau or service
company from time to time acting for such Credit Party.


 


(m)          “Goods” means all “goods” as
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located, including embedded software to the extent included in “goods”
as defined in the Code, manufactured homes, standing timber that is cut and
removed for sale and unborn young of animals.


 


(n)           “Indemnified Person” means each of
Agent, Lenders and their respective Affiliates, and each such Person’s
respective officers, directors, employees, attorneys, agents and
representatives.


 


(o)           “Instruments” means all “instruments,”
as such term is defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located, and, in any event, including all certificated
securities, all certificates of deposit, and all promissory notes and other
evidences of indebtedness, other than instruments that constitute, or are a part of
a group of writings that constitute, Chattel Paper.


 


(p)           “Intellectual Property” means any
and all Licenses, Patents, Copyrights, Trademarks, and the goodwill associated
with such Trademarks.


 


(q)           “Inventory” means all “inventory,”
as such term is defined in the Code, now owned or hereafter acquired by any
Credit Party, wherever located, and in any event including inventory, merchandise,
goods and other personal property that are held by or on behalf of any Credit
Party for sale or lease or are furnished or are to be furnished under a
contract of service, or that constitute raw materials, work in process,
finished goods, returned goods, or materials or supplies of any kind, nature or
description used or


 


4

















 


consumed
or to be used or consumed in such Credit Party’s business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
all supplies and embedded software.


 


(r)            “Investment Property” means all “investment
property” as such term is defined in the Code now owned or hereafter acquired
by any Credit Party, wherever located, including (i) all securities,
whether certificated or uncertificated, including stocks, bonds, interests in
limited liability companies, partnership interests, treasuries, certificates of
deposit, and mutual fund shares; (ii) all securities entitlements of any
Credit Party, including the rights of any Credit Party to any securities
account and the financial assets held by a securities intermediary in such
securities account and any free credit balance or other money owing by any
securities intermediary with respect to that account; (iii) all securities
accounts of any Credit Party; (iv) all commodity contracts of any Credit
Party; and (v) all commodity accounts held by any Credit Party.


 


(s)           “Letter-of-Credit Rights” means “letter-of-credit
rights” as such term is defined in the Code, now owned or hereafter acquired by
any Credit Party, including rights to payment or performance under a letter of
credit, whether or not such Credit Party, as beneficiary, has demanded or is
entitled to demand payment or performance.


 


(t)            “License” means any Copyright
License, Patent License, Trademark License or other license of rights or
interests now held or hereafter acquired by any Credit Party.


 


(u)           “Patent License” means rights
under any written agreement now owned or hereafter acquired by any Credit Party
granting any right with respect to any invention on which a Patent is in
existence.


 


(v)           “Patents” means all of the
following in which any Credit Party now holds or hereafter acquires any
interest: (a) all letters patent of the United States or of any other
country, all registrations and recordings thereof, and all applications for
letters patent of the United States or of any other country, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State, or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.


 


(w)          “Software” means all “software” as
such term is defined in the Code, now owned or hereafter acquired by any Credit
Party, other than software embedded in any category of Goods, including all
computer programs and all supporting information provided in connection with a
transaction related to any program.


 


(x)            “Supporting Obligations” means all
“supporting obligations” as such term is defined in the Code, including letters
of credit and guaranties issued in support of Accounts, Chattel Paper,
Documents, General Intangibles, Instruments, or Investment Property.


 


(y)           “Termination Date” means the date
on which (a) the Loans have been indefeasibly repaid in full in cash, (b) all
other Obligations under the Credit Agreement and the other Loan Documents have
been completely discharged (c) all L/C Obligations


 


5

















 


have
been cash collateralized, canceled or backed by standby letters of credit in
accordance with Section 2.5
of the Credit Agreement, and (d) the Borrower shall not have any further
right to borrow any monies under the Credit Agreement.


 


(z)            “Trademark License” means rights
under any written agreement now owned or hereafter acquired by any Credit Party
granting any right to use any Trademark.


 


(aa)         “Trademarks” means all of the
following now owned or hereafter existing or adopted or acquired by any Credit
Party: (a) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear,
designs and general intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications
in connection therewith, including registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by
any of the foregoing.


 


(bb)         “Uniform Commercial Code
jurisdiction” means any jurisdiction that has adopted all or substantially
all of Article 9 as contained in the 2000 Official Text of the Uniform Commercial
Code, as recommended by the National Conference of Commissioners on Uniform State
Laws and the American Law Institute, together with any subsequent amendments or
modifications to the Official Text.


 


2.             GRANT OF LIEN.


 


(a)           To secure the prompt and complete
payment, performance and observance of all of the Obligations (specifically
including, without limitation, each Grantor’s Obligations arising under the
Guaranty Agreement), each Grantor hereby grants, assigns, conveys, mortgages,
pledges, hypothecates and transfers to Agent, for itself and the benefit of
Lenders, a Lien upon all of its right, title and interest in, to and under all
personal property and other assets, whether now owned by or owing to, or
hereafter acquired by or arising in favor of such Grantor (including under any
trade names, styles or derivations thereof), and whether owned or consigned by
or to, or leased from or to, such Grantor, and regardless of where located (all
of which being hereinafter collectively referred to as the “Collateral”),
including:


 


i.              all Accounts;


 


ii.             all Chattel Paper;


 


iii.            all Documents;


 


iv.            all General Intangibles (including
payment intangibles and Software);


 


v.             all Goods (including Inventory, Equipment
and Fixtures);


 


6

















 


vi.            all Instruments;


 


vii.           all Investment Property;


 


viii.          all Deposit Accounts, of any Grantor,
including all Blocked Accounts, Government Receivables Deposit Accounts,
Concentration Accounts, Disbursement Accounts, and all other bank accounts and
all deposits therein;


 


ix.            all money, cash or cash equivalents of
any Grantor;


 


x.             all Supporting Obligations and
Letter-of-Credit Rights of any Grantor;


 


xi.            all following commercial tort claims;


 


xii.           all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of
the Collateral described in clauses (i) through (xi) above or are
otherwise necessary or helpful in the collection thereof or realization
thereon; and


 


xiii.          to the extent not otherwise included, all
Proceeds, tort claims, insurance claims and other rights to payments not
otherwise included in the foregoing and products of the foregoing and all
accessions to, substitutions and replacements for, and rents and profits of,
each of the foregoing.


 


(b)           In addition, to secure the prompt and
complete payment, performance and observance of the Obligations and in order to
induce Agent and Lenders as aforesaid, each Grantor hereby grants to Agent, for
itself and the benefit of Lenders, a right of setoff against the property of
such Grantor held by Agent or any Lender, consisting of property described
above in Section 2(a) now
or hereafter in the possession or custody of or in transit to Agent or any
Lender, for any purpose, including safekeeping, collection or pledge, for the
account of such Grantor, or as to which such Grantor may have any right or
power.


 


3.             AGENT’S AND LENDERS’ RIGHTS:
LIMITATIONS ON AGENT’S AND LENDERS’ OBLIGATIONS.


 


(a)           It is expressly agreed by Grantors that,
anything herein to the contrary notwithstanding, each Grantor shall remain
liable under each of its Contracts and each of its Licenses to observe and perform all
the conditions and obligations to be observed and performed by it thereunder. Neither
Agent nor any Lender shall have any obligation or liability under any Contract
or License by reason of or arising out of this Security Agreement or the
granting herein of a Lien thereon or the receipt by Agent or any Lender of any
payment relating to any Contract or License pursuant hereto. Neither Agent nor
any Lender shall be required or obligated in any manner to perform or
fulfill any of the obligations of any Grantor under or pursuant to any Contract
or License, or to make any payment, or to make any inquiry as to the nature or
the sufficiency of any payment


 


7

















 


received
by it or the sufficiency of any performance by any party under any Contract or
License, or to present or file any claims, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.


 


(b)           Agent may at any time after an Event
of Default has occurred and be continuing (or if any rights of set-off (other
than set-offs against an Account arising under the Contract giving rise to the
same Account) or contra accounts may be asserted with respect to the
following), without prior notice to any Grantor, notify Account Debtors and
other Persons obligated on the Collateral that Agent has a security interest
therein, and that payments shall be made directly to Agent. Upon the request of
Agent, each Grantor shall so notify Account Debtors and other Persons obligated
on Collateral. Once any such notice has been given to any Account Debtor or
other Person obligated on the Collateral, the affected Grantor shall not give
any contrary instructions to such Account Debtor or other Person without Agent’s
prior written consent.


 


(c)           Agent may at any time in Agent’s own
name, in the name of a nominee of Agent or in the name of any Grantor
communicate (by mail, telephone, facsimile or otherwise) with Account Debtors,
parties to Contracts and obligors in respect of Instruments to verify with such
Persons, to Agent’s satisfaction, the existence, amount terms of, and any other
matter relating to, Accounts, payment intangibles, Instruments or Chattel Paper.
If a Default or Event of Default shall have occurred and be continuing, each
Grantor, at its own expense, shall cause the independent certified public
accountants then engaged by such Grantor to prepare and deliver to Agent and
each Lender at any time and from time to time promptly upon Agent’s request the
following reports with respect to each Grantor: (i) a reconciliation of
all Accounts; (ii) an aging of all Accounts; (iii) trial balances;
and (iv) a test verification of such Accounts as Agent may request. Each
Grantor, at its own expense, shall deliver to Agent the results of each
physical verification, if any, which such Grantor may in its discretion
have made, or caused any other Person to have made on its behalf, of all or any
portion of its Inventory.


 


4.             REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants that:


 


(a)           Each Grantor has rights in and the power
to transfer each item of the Collateral upon which it purports to grant a Lien
hereunder free and clear of any and all Liens other than Permitted
Encumbrances;


 


(b)           No effective security agreement,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is on file or of
record in any public office, except such as may have been filed (i) by
any Grantor in favor of Agent pursuant to this Security Agreement or the other
Loan Documents, and (ii) in connection with any other Permitted
Encumbrances;


 


(c)           This Security Agreement is effective to
create a valid and continuing Lien on and, upon the filing of the appropriate
financing statements listed on Schedule I hereto, a perfected Lien
in favor of Agent, for itself and the benefit of Lenders, on the Collateral


 


8

















 


with
respect to which a Lien may be perfected by filing pursuant to the Code. Such
Lien is prior to all other Liens, except Permitted Encumbrances that would be
prior to Liens in favor of Agent for the benefit of Agent and Lenders as a
matter of law, and is enforceable as such as against any and all creditors of
and purchasers from any Grantor (other than purchasers and lessees of Inventory
in the ordinary course of business and non-exclusive licensees of General
Intangibles in the ordinary course of business). All action by any Grantor
necessary or desirable to protect and perfect such Lien on each item of the Collateral
has been duly taken;


 


(d)           Schedule II hereto lists all Instruments, Letter of
Credit Rights and Chattel Paper of each Grantor. All action by any Grantor
necessary or desirable to protect and perfect the Lien of Agent on each item
set forth on Schedule II (including the delivery of all originals
thereof to Agent and the legending of all Chattel Paper as required by Section 5(b) hereof) has been
duly taken. The Lien of Agent, for the benefit of Agent and Lenders, on the
Collateral listed on Schedule II hereto is prior to all other
Liens, except Permitted Encumbrances that would be prior to the Liens in favor
of Agent as a matter of law, and is enforceable as such against any and all
creditors of and purchasers from any Grantor;


 


(e)           Each Grantor’s name as it appears in
official filings in the state of its incorporation or other organization, the
type of entity of each Grantor (including corporation, partnership, limited
partnership or limited liability company), organizational identification number
issued by each Grantor’s state of incorporation or organization or a statement
that no such number has been issued, each Grantor’s state of organization or
incorporation, the location of each Grantor’s chief executive office, principal
place of business, offices, all warehouses and premises where Collateral is
stored or located, and the locations of its books and records concerning the
Collateral are set forth on Schedule III. Each Grantor has only one
state of incorporation or organization;


 


(f)            With respect to the Accounts, except as
specifically disclosed in the most recent Collateral Report delivered to Agent (i) they
represent bona fide sales of Inventory or rendering of services to Account
Debtors in the ordinary course of each Grantor’s business and are not evidenced
by a judgment, Instrument or Chattel Paper; (ii) there are no setoffs,
claims or disputes existing or asserted with respect thereto and no Grantor has
made any agreement with any Account Debtor for any extension of time for the
payment thereof, any compromise or settlement for less than the full amount
thereof, any release of any Account Debtor from liability therefor, or any
deduction therefrom except a discount or allowance allowed by such Grantor in
the ordinary course of its business for prompt payment and disclosed to Agent; (iii) to
each Grantor’s knowledge, there are no facts, events or occurrences which in
any way impair the validity or enforceability thereof or could reasonably be
expected to reduce the amount payable thereunder as shown on any Grantor’s
books and records and any invoices, statements and Collateral Reports delivered
to Agent and Lenders with respect thereto; (iv) no Grantor has received
any notice of proceedings or actions which are threatened or pending against
any Account Debtor which might result in any adverse change in such Account
Debtor’s financial condition; and (v) no Grantor has knowledge that any
Account Debtor is unable generally to pay its debts as they become due. Further
with respect to the Accounts (x) the amounts


 


9

















 


shown
on all invoices, statements and Collateral Reports which may be delivered
to the Agent with respect thereto are actually and absolutely owing to such
Grantor as indicated thereon and are not in any way contingent; (y) no payments
have been or shall be made thereon except payments immediately delivered to the
applicable Blocked Accounts or the Agent as required pursuant to the terms of Section 6.16 of the Credit Agreement;
and (z) to each Grantor’s knowledge, all Account Debtors have the capacity to
contract;


 


(g)           With respect to any Inventory scheduled
or listed on the most recent Collateral Report delivered to Agent pursuant to
the terms of this Security Agreement or the Credit Agreement, (i) such
Inventory is located at one of the applicable Grantor’s locations set forth on Schedule III
hereto, as applicable, (ii) no Inventory is now, or shall at any time or
times hereafter be stored at any other location without Agent’s prior consent,
and if Agent gives such consent, each applicable Grantor will concurrently
therewith obtain, to the extent required by the Credit Agreement, bailee,
landlord and mortgagee agreements, (iii) the applicable Grantor has good,
indefeasible and merchantable title to such Inventory and such Inventory is not
subject to any Lien or security interest or document whatsoever except for the
Lien granted to Agent, for the benefit of Agent and Lenders, and except for
Permitted Encumbrances, (iv) except as specifically disclosed in the most
recent Collateral Report delivered to Agent, such Inventory is Eligible
Inventory of good and merchantable quality, free from any defects, (v) such
Inventory is not subject to any licensing, patent, royalty, trademark, trade
name or copyright agreements with any third parties which would require any
consent of any third party upon sale or disposition of that Inventory or the
payment of any monies to any third party upon such sale or other disposition,
and (vi) the completion of manufacture, sale or other disposition of such
Inventory by Agent following an Event of Default shall not require the consent
of any Person and shall not constitute a breach or default under any contract
or agreement to which any Grantor is a party or to which such property is
subject.


 


(h)           No Grantor has any interest in, or title
to, any Patent, Trademark or Copyright except as set forth in Schedule IV
hereto. This Security Agreement is effective to create a valid and continuing
Lien on and, upon filing of the Copyright Security Agreements with the United
States Copyright Office, filing of the Patent Security Agreements and the
Trademark Security Agreements with the United States Patent and Trademark
Office and the filing of appropriate financing statements listed on Schedule I
hereto, such Liens in favor of Agent on such Grantor’s Patents, Trademarks and
Copyrights will be enforceable and perfected. Upon filing of the Copyright
Security Agreements with the United States Copyright Office, filing of the
Patent Security Agreements and the Trademark Security Agreements with the
United States Patent and Trademark Office and the filing of appropriate
financing statements listed on Schedule I hereto, all action
necessary or desirable to protect and perfect Agent’s Lien on each Grantor’s
Patents, Trademarks or Copyrights shall have been duly taken.


 


(i)            All motor vehicles owned by Grantors are
listed on Schedule V hereto, by model, model year and vehicle
identification number (“VIN”). At Agent’s request, Grantors shall
deliver to Agent motor vehicle title certificates for all motor vehicles from
time to time owned by it and shall cause those title certificates to be filed
(with Agent’s lien noted thereon) in the appropriate state motor vehicle filing
office.]


 


10

















 


5.             COVENANTS. Each Grantor
covenants and agrees with Agent, for the benefit of Agent and Lenders, that
from and after the date of this Security Agreement and until the Termination
Date:


 


(a)           Further Assurances: Pledge of Instruments;
Chattel Paper.


 


i.              At any time and from time to time, upon
the written request of Agent and at the sole expense of Grantors, each Grantor
shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further actions as Agent may deem
desirable to obtain the full benefits of this Security Agreement and of the
rights and powers herein granted, including (A) using its best efforts to
secure all consents and approvals necessary or appropriate for the assignment
to or for the benefit of Agent of any License or Contract held by such Grantor
and to enforce the security interests granted hereunder; and (B) filing
any financing or continuation statements under the Code with respect to the
Liens granted hereunder or under any other Loan Document as to those
jurisdictions that are not Uniform Commercial Code jurisdictions.


 


ii.             Unless Agent shall otherwise consent in
writing (which consent may be revoked), each Grantor shall deliver to
Agent all Collateral consisting of negotiable Documents, certificated
securities, Chattel Paper and Instruments (in each case, accompanied by stock
powers, allonges or other instruments of transfer executed in blank) promptly
after such Credit Party receives the same.


 


iii.            Each Grantor shall, in accordance with
the terms of the Credit Agreement, obtain or use its best efforts to obtain
waivers or subordinations of Liens from landlords and mortgagees, and each
Credit Party shall in all instances obtain signed acknowledgements of Agent’s
Liens from bailees having possession of any Grantor’s Goods that they hold for
the benefit of Agent.


 


iv.            If required by the terms of the Credit
Agreement and not waived by Agent in writing (which waiver may be
revoked), each Grantor shall obtain authenticated Control Letters from each
issuer of uncertificated securities, securities intermediary, or commodities
intermediary issuing or holding any financial assets or commodities to or for
any Grantor.


 


v.             To the extent required by Section 6.16 of the Credit Agreement,
each Grantor shall obtain a blocked account, lockbox or similar agreement with
each bank or financial institution holding a Deposit Account for such Grantor.


 


vi.            Each Grantor that is or becomes the
beneficiary of a letter of credit shall promptly after becoming a beneficiary,
notify Agent thereof and enter into tri-party agreements with Agent and the
issuer and/or confirmation bank with respect to Letter-of-Credit Rights
assigning such Letter-of-Credit Rights to Agent and directing all payments
thereunder to the Collection Account, all in form and substance reasonably
satisfactory to Agent.


 


vii.           Each Grantor shall take all steps
necessary to grant the Agent control of all electronic chattel paper in
accordance with the Code and all “transferable records” as defined in each of
the Uniform Electronic Transactions Act and the Electronic Signatures in
Global and National Commerce Act.


 


11

















 


viii.          Each Grantor hereby irrevocably
authorizes the Agent at any time and from time to time to file in any filing
office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as
all assets of such Grantor or words of similar effect, regardless of whether
any particular asset comprised in the Collateral falls within the scope of Article 9
of the Code or such jurisdiction, or (ii) as being of an equal or lesser
scope or with greater detail, and (b) contain any other information
required by part 5 of Article 9 of the Code for the sufficiency or
filing office acceptance of any financing statement or amendment, including (i) whether
such Grantor is an organization, the type of organization and any organization
identification number issued to such Grantor, and (ii) in the case of a
financing statement filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. Each Grantor agrees to furnish any
such information to the Agent promptly upon request. Each Grantor also ratifies
its authorization for the Agent to have filed in any Uniform Commercial
Code jurisdiction any initial financing statements or amendments thereto if
filed prior to the date hereof.


 


ix.            Each Grantor shall promptly, and in any
event within two (2) Business Days after the same is acquired by it,
notify Agent of any commercial tort claim (as defined in the Code) acquired by
it and unless otherwise consented by Agent, such Grantor shall enter into a
supplement to this Security Agreement, granting to Agent a Lien in such
commercial tort claim.


 


(b)           Maintenance of Records. Grantors shall keep and maintain, at
their own cost and expense, satisfactory and complete records of the
Collateral, including a record of any and all payments received and any and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. Grantors shall mark their books and records pertaining to the
Collateral to evidence this Security Agreement and the Liens granted hereby. If
any Grantor retains possession of any Chattel Paper or Instruments with Agent’s
consent, such Chattel Paper and Instruments shall be marked with the following
legend: “This writing and the obligations evidenced or secured hereby are
subject to the security interest of General Electric Capital Corporation, as
Agent, for the benefit of Agent and certain Lenders.”


 


(c)           Covenants Regarding Patent, Trademark and
Copyright Collateral.


 


i.              Grantors shall notify Agent as soon as
possible, but in any event within two (2) business days, if they know or
have reason to know that any application or registration relating to any
Patent, Trademark or Copyright (now or hereafter existing) may become
abandoned or dedicated, or of any adverse determination or development
(including the institution of, or any such


 


12

















 


determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any court) regarding any Grantor’s
ownership of any Patent, Trademark or Copyright, its right to register the
same, or to keep and maintain the same.


 


ii.             In no event shall Grantor, either itself
or through any agent, employee, licensee or designee, file an application for
the registration of any Patent, Trademark or Copyright with the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency without giving Agent prior written notice thereof, and, upon
request of Agent, Grantor shall execute and deliver any and all Patent Security
Agreements, Copyright Security Agreements or Trademark Security Agreements as
Agent may request to evidence Agent’s Lien on such Patent, Trademark or
Copyright, and the General Intangibles of Grantor relating thereto or
represented thereby.


 


iii.            Grantors shall take all actions necessary
or requested by Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the Patents,
Trademarks and Copyrights (now or hereafter existing), including the filing of
applications for renewal, affidavits of use, affidavits of noncontestability
and opposition and interference and cancellation proceedings, unless the
applicable Grantor shall reasonably determine that such Patent, Trademark or
Copyright is not material to the conduct of its business.


 


iv.            In the event that any of the Patent,
Trademark or Copyright Collateral is infringed upon, or misappropriated or
diluted by a third party, such Grantor shall comply with Section 5(a)(ix) of this Security
Agreement. Such Grantor shall, unless such Grantor shall reasonably determine
that such Patent, Trademark or Copyright Collateral is in no way material to
the conduct of its business or operations, promptly take action to protect such
Patent, Trademark or Copyright Collateral (including, but not limited to, suing
for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution), and shall take
such other actions as Agent shall reasonably deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright Collateral.


 


v.             Indemnification. In any suit, proceeding or action
brought by Agent or any Lender relating to any Collateral for any sum owing
with respect thereto or to enforce any rights or claims with respect thereto,
each Grantor will save, indemnify and keep Agent and Lenders harmless from and
against all expense (including reasonable attorneys’ fees and expenses), loss
or damage suffered by reason of any defense, setoff, counterclaim, recoupment
or reduction of liability whatsoever of the Account Debtor or other Person
obligated on the Collateral, arising out of a breach by any Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors


 


13

















 


from such Grantor, except
in the case of Agent or any Lender, to the extent such expense, loss, or damage
is attributable solely to the gross negligence or willful misconduct of Agent
or such Lender as finally determined by a court of competent jurisdiction. All
such obligations of Grantors shall be and remain enforceable against and only
against Grantors and shall not be enforceable against Agent or any Lender.


 


(d)           Compliance with Terms of Accounts, etc. In all material respects, each Grantor
will perform and comply with all obligations in respect of the Collateral
and all other agreements to which it is a party or by which it is bound
relating to the Collateral.


 


(e)           Limitation on Liens on Collateral. No Grantor will create, permit or
suffer to exist, and each Grantor will defend the Collateral against, and take
such other action as is necessary to remove, any Lien on the Collateral except
Permitted Encumbrances, and will defend the right, title and interest of Agent
and Lenders in and to any of such Grantor’s rights under the Collateral against
the claims and demands of all Persons whomsoever.


 


(f)            Limitations on Disposition. No Grantor will sell, license, lease,
transfer or otherwise dispose of any of the Collateral, or attempt or contract
to do so except as permitted by the Credit Agreement.


 


(g)           Further Identification of Collateral. Grantors will, if so requested by
Agent, furnish to Agent, as often as Agent requests, statements and schedules
further identifying and describing the Collateral and such other reports in connection
with the Collateral as Agent may reasonably request, all in such detail as
Agent may specify.


 


(h)           Notices. Grantors will advise Agent promptly, in reasonable
detail, (i) of any Lien (other than Permitted Encumbrances) or claim made
or asserted against any of the Collateral, and (ii) of the occurrence of
any other event which would have a Material Adverse Effect on the aggregate
value of the Collateral or on the Liens created hereunder or under any other
Loan Document.


 


(i)            Good Standing Certificates. Not less frequently than once during
each calendar quarter, each Grantor shall, unless Agent shall otherwise
consent, provide to Agent a certificate of good standing from its state of
incorporation or organization.


 


(j)            No Reincorporation. Without limiting the prohibitions on
mergers involving the Grantors contained in the Credit Agreement, no Grantor
shall reincorporate or reorganize itself under the laws of any jurisdiction
other than the jurisdiction in which it is incorporated or organized as of the date
hereof without the prior written consent of Agent.


 


(k)           Terminations; Amendments Not Authorized. Each Grantor acknowledges that it is
not authorized to file any financing statement or amendment or termination
statement with respect to any financing statement without the prior written
consent of Agent and agrees that it will not do so without the prior written
consent of Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of
the Code.


 


14

















 


(l)            Authorized Terminations. Upon payment in full in cash and
performance of all of the Obligations (other than indemnification Obligations),
termination of the Commitments and a release of all claims against Agent and
Lenders, and so long as no suits, actions, proceedings or claims are pending or
threatened against any Indemnified Person asserting any damages, losses or
liabilities that are indemnified liabilities under Section 9.2 of the Credit Agreement, Agent shall, at
Grantor’s expense, promptly deliver to Grantor or authorize Grantor to prepare
and file termination statements, mortgage releases and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.


 


(m)          Federal Claims. Grantor shall notify Agent of any
Collateral which constitutes a claim against the United States government or
any instrumentality or agency thereof, the assignment of which claim is
restricted by federal law. Upon the request of Agent, Grantor shall take such
steps as may be necessary to comply with any applicable federal assignment
of claims laws and other comparable laws.


 


(n)           Hot Goods. None of the Inventory of Grantor has been or will be
produced in violation of any provision of the Fair Labor Standards Act of 1938,
as amended, or in violation of any other law.


 


6.             AGENT’S APPOINTMENT AS
ATTORNEY-IN-FACT.


 


On the Closing Date each
Grantor shall execute and deliver to Agent a power of attorney (the “Power
of Attorney”) substantially in the form attached hereto as Exhibit A.
The power of attorney granted pursuant to the Power of Attorney is a power
coupled with an interest and shall be irrevocable until the Termination Date. The
powers conferred on Agent, for the benefit of Agent and Lenders, under the
Power of Attorney are solely to protect Agent’s interests (for the benefit of
Agent and Lenders) in the Collateral and shall not impose any duty upon Agent
or any Lender to exercise any such powers. Agent agrees that (a) except
for the powers granted in clause (h) of the Power of Attorney, it shall
not exercise any power or authority granted under the Power of Attorney unless
an Event of Default has occurred and is continuing, and (b) Agent shall
account for any moneys received by Agent in respect of any foreclosure on or
disposition of Collateral pursuant to the Power of Attorney provided that none
of Agent or any Lender shall have any duty as to any Collateral, and Agent and
Lenders shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers. NONE OF AGENT, LENDERS OR THEIR
RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO
ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.


 


15

















 


7.             REMEDIES:  RIGHTS UPON DEFAULT.


 


(a)           In addition to all other rights and
remedies granted to it under this Security Agreement, the Credit Agreement, the
other Loan Documents and under any other instrument or agreement securing,
evidencing or relating to any of the Obligations, if any Event of Default shall
have occurred and be continuing, Agent may exercise all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, each Grantor expressly agrees that in any such event Agent,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon such Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code and other applicable law), may forthwith enter upon
the premises of such Grantor where any Collateral is located through self-help,
without judicial process, without first obtaining a final judgment or giving
such Grantor or any other Person notice and opportunity for a hearing on Agent’s
claim or action and may collect, receive, assemble, process, appropriate
and realize upon the Collateral, or any part thereof, and may forthwith
sell, lease, license, assign, give an option or options to purchase, or sell or
otherwise dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at a public or private sale or sales,
at any exchange at such prices as it may deem acceptable, for cash or on
credit or for future delivery without assumption of any credit risk. Agent or
any Lender shall have the right upon any such public sale or sales and, to the
extent permitted by law, upon any such private sale or sales, to purchase for
the benefit of Agent and Lenders, the whole or any part of said Collateral
so sold, free of any right or equity of redemption, which equity of redemption
each Grantor hereby releases. Such sales may be adjourned and continued
from time to time with or without notice. Agent shall have the right to conduct
such sales on any Grantor’s premises or elsewhere and shall have the right to
use any Grantor’s premises without charge for such time or times as Agent deems
necessary or advisable.


 


If any Event of Default
shall have occurred and be continuing, each Grantor further agrees, at Agent’s
request, to assemble the Collateral and make it available to Agent at a place
or places designated by Agent which are reasonably convenient to Agent and such
Grantor, , whether at such Grantor’s premises or elsewhere. Until Agent is able
to effect a sale, lease, or other disposition of Collateral, Agent shall have
the right to hold or use Collateral, or any part thereof, to the extent
that it deems appropriate for the purpose of preserving Collateral or its value
or for any other purpose deemed appropriate by Agent. Agent shall have no
obligation to any Grantor to maintain or preserve the rights of such Grantor as
against third parties with respect to Collateral while Collateral is in the
possession of Agent. Agent may, if it so elects, seek the appointment of a
receiver or keeper to take possession of Collateral and to enforce any of Agent’s
remedies (for the benefit of Agent and Lenders), with respect to such
appointment without prior notice or hearing as to such appointment. Agent shall
apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Obligations as provided in the Credit
Agreement, and only after so paying over such net proceeds, and after the
payment by Agent of any other amount required by any provision of law, need
Agent account for the surplus, if any, to any Grantor. To the


 


16

















 


maximum extent
permitted by applicable law, each Grantor waives all claims, damages, and
demands against Agent or any Lender arising out of the repossession, retention
or sale of the Collateral except such as arise solely out of the gross
negligence or willful misconduct of Agent or such Lender as finally determined
by a court of competent jurisdiction. Each Grantor agrees that ten (10) days
prior notice by Agent of the time and place of any public sale or of the time
after which a private sale may take place is reasonable notification of
such matters. Grantors shall remain liable for any deficiency if the proceeds
of any sale or disposition of the Collateral are insufficient to pay all
Obligations, including any attorneys’ fees and other expenses incurred by Agent
or any Lender to collect such deficiency.


 


(b)           Except as otherwise specifically provided
herein, each Grantor hereby waives presentment, demand, protest or any notice
(to the maximum extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral.


 


(c)           To the extent that applicable law imposes
duties on the Agent to exercise remedies in a commercially reasonable manner,
each Grantor acknowledges and agrees that it is not commercially unreasonable
for the Agent (i) to fail to incur expenses reasonably deemed significant
by the Agent to prepare Collateral for disposition or otherwise to complete raw
material or work in process into finished goods or other finished products for
disposition, (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other law, to
fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to
exercise collection remedies against Account Debtors and other Persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (v) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other Persons,
whether or not in the same business as the Grantor, for expressions of interest
in acquiring all or any portion of such Collateral, (vii) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, such as title, possession or quiet enjoyment, (xi) to
purchase insurance or credit enhancements to insure the Agent against risks of
loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by the Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist the
Agent in the collection or disposition of any of the Collateral. Each Grantor
acknowledges that the purpose of this Section 7(c) is
to provide non-exhaustive indications of what actions or omissions by the Agent
would not be commercially unreasonable in the Agent’s exercise of remedies
against the Collateral and that other actions or omissions by the Agent shall
not be deemed commercially unreasonable solely on account of not being
indicated in this Section 7(c).
Without 


 


17

















 


limitation
upon the foregoing, nothing contained in this Section 7(c) shall
be construed to grant any rights to any Grantor or to impose any duties on
Agent that would not have been granted or imposed by this Security Agreement or
by applicable law in the absence of this Section 7(c).


 


(d)           Neither the Agent nor the Lenders shall
be required to make any demand upon, or pursue or exhaust any of their rights
or remedies against, any Grantor, any other obligor, guarantor, pledgor or any
other Person with respect to the payment of the Obligations or to pursue or
exhaust any of their rights or remedies with respect to any Collateral therefor
or any direct or indirect guarantee thereof. Neither the Agent nor the Lenders
shall be required to marshal the Collateral or any guarantee of the Obligations
or to resort to the Collateral or any such guarantee in any particular order,
and all of its and their rights hereunder or under any other Loan Document
shall be cumulative. To the extent it may lawfully do so, each Grantor
absolutely and irrevocably waives and relinquishes the benefit and advantage
of, and covenants not to assert against the Agent or any Lender, any valuation,
stay, appraisement, extension, redemption or similar laws and any and all
rights or defenses it may have as a surety now or hereafter existing
which, but for this provision, might be applicable to the sale of any
Collateral made under the judgment, order or decree of any court, or privately
under the power of sale conferred by this Security Agreement, or otherwise.


 


18

















 


8.             GRANT OF LICENSE TO USE
INTELLECTUAL PROPERTY COLLATERAL. For the purpose of enabling
Agent to exercise rights and remedies under Section 7
hereof (including, without limiting the terms of Section 7 hereof, in order to take possession of, hold,
preserve, process, assemble, prepare for sale, market for sale, sell or otherwise
dispose of Collateral) at such time as Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to Agent, for the
benefit of Agent and Lenders, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Grantor) to use,
license or sublicense any Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located, and including in
such license access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof.


 


9.             LIMITATION ON AGENT’S AND LENDERS’
DUTY IN RESPECT OF COLLATERAL. Agent and each Lender shall use
reasonable care with respect to the Collateral in its possession or under its
control. Neither Agent nor any Lender shall have any other duty as to any
Collateral in its possession or control or in the possession or control of any
agent or nominee of Agent or such Lender, or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto.


 


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


 


11.           NOTICES. Except as
otherwise provided herein, whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by any other party, or
whenever any of the parties desires to give and serve upon any other party any
communication with respect to this Security Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and shall be given in the manner, and deemed received, as provided
for in the Credit Agreement.


 


19

















 


12.           SEVERABILITY. Whenever possible,
each provision of this Security Agreement shall be interpreted in a manner as
to be effective and valid under applicable law, but if any provision of this
Security Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining
provisions of this Security Agreement. This Security Agreement is to be read,
construed and applied together with the Credit Agreement and the other Loan
Documents which, taken together, set forth the complete understanding and
agreement of Agent, Lenders and Grantors with respect to the matters referred
to herein and therein.


 


13.           NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor
any Lender shall by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies hereunder, and no waiver shall be valid
unless in writing, signed by Agent and then only to the extent therein set
forth. A waiver by Agent of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which Agent would
otherwise have had on any future occasion. No failure to exercise nor any delay
in exercising on the part of Agent or any Lender, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or future exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law. None of the terms or provisions of this Security
Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Agent and Grantors.


 


14.           LIMITATION BY LAW. All rights,
remedies and powers provided in this Security Agreement may be exercised
only to the extent that the exercise thereof does not violate any applicable
provision of law, and all the provisions of this Security Agreement are
intended to be subject to all applicable mandatory provisions of law that may be
controlling and to be limited to the extent necessary so that they shall not
render this Security Agreement invalid, unenforceable, in whole or in part, or
not entitled to be recorded, registered or filed under the provisions of any
applicable law.


 


15.           TERMINATION OF THIS SECURITY
AGREEMENT. Subject to Section 10
hereof, this Security Agreement shall terminate upon the Termination Date.


 


16.           SUCCESSORS AND ASSIGNS. This Security
Agreement and all obligations of Grantors hereunder shall be binding upon the
successors and assigns of each Grantor and shall, together with the rights and
remedies of Agent, for the benefit of Agent and Lenders, hereunder, inure to
the benefit of Agent and Lenders, all future holders of any instrument
evidencing any of the Obligations and their respective successors and assigns. No
sales of participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing the
Obligations or any portion thereof or interest therein shall in any manner
impair the Lien granted to Agent, for the benefit of Agent and Lenders,
hereunder. No Grantor may assign, sell, hypothecate or otherwise transfer
any interest in or obligation under this Security Agreement.


 


20

















 


17.           COUNTERPARTS. This Security
Agreement may be authenticated in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement. This
Security Agreement may be authenticated by manual signature, facsimile or,
if approved in writing by Agent, electronic means, all of which shall be
equally valid.


 


18.                           GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. GRANTORS
AND AGENT HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES BANKRUPTCY
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH GRANTOR AND THE AGENT IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE PARTIES HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.3
OF THE CREDIT AGREEMENT. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY
PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.


 


19.           WAIVER OF JURY
TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW WAIVES ANY
RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL
DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.


 


20.           SECTION TITLES. The Section titles
contained in this Security Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.


 


21.           NO STRICT CONSTRUCTION. The parties hereto
have participated jointly in the negotiation and drafting of this Security
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Security Agreement shall be construed as if drafted jointly by the
parties hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Security Agreement.


 


21

















 


22.           ADVICE OF COUNSEL. Each of the
parties represents to each other party hereto that it has discussed this
Security Agreement and, specifically, the provisions of Section 18 and Section 19, with its counsel.


 


23.           BENEFIT OF LENDERS. All Liens granted
or contemplated hereby shall be for the benefit of Agent, individually, and
Lenders, and all proceeds or payments realized from Collateral in accordance
herewith shall be applied to the Obligations in accordance with the terms of
the Credit Agreement.


 


[Remainder
of page left intentionally blank; signature pages follow]


 


22

















 


IN
WITNESS WHEREOF, each of the parties hereto has caused this Guarantor Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.


 


	
   

  	
  GRANTOR(S):

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


 


GENERAL
ELECTRIC CAPITAL CORPORATION, as Agent


 


 


	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Its Duly
  Authorized Signatory

  



 


 


[Signature Page to Guarantor Security Agreement]


 

















 


SCHEDULE I


to


SECURITY AGREEMENT


 


FILING JURISDICTIONS


 


	
  Curative Health
  Services III Co.

  	
   

  	
  Minnesota

  



 

















 


SCHEDULE II


to


SECURITY AGREEMENT


 


INSTRUMENTS


CHATTEL PAPER


AND


 


LETTER OF CREDIT RIGHTS


 


 


[None.]


 

















 


SCHEDULE III


to


SECURITY AGREEMENT


 


SCHEDULE OF OFFICES, LOCATIONS OF COLLATERAL


AND RECORDS CONCERNING CURATIVE HEALTH SERVICES III
CO.’S COLLATERAL


 


I.              Grantor’s
official name:       Curative Health Services
III Co.


 


II.            Type of
entity:  Corporation


 


III.           Organizational
identification number issued by Grantor’s state of incorporation or
organization or a statement that no such number has been issued:


 


IV.           State or
Incorporation or Organization of Grantor: Minnesota


 


V.            Chief
Executive Office and principal place of business of Grantor:


 


61
Spit Brook Road, Suite 505,


Nashua,
NH 03060


 


VI.           Corporate
Offices of Grantor:  Curative Health
Services III Co.:


 


61
Spit Brook Road, Suite 505


Nashua,
NH 03060


 


VII.          Warehouses:  None.


 


VIII.        Other
Premises at which Collateral is Stored or Located:


 


61
Spit Brook Road, Suite 505


Nashua,
NH 03060


 


IX.           Locations
of Records Concerning Collateral:  (see
V., VI. and VIII. above)


 

















 


SCHEDULE IV


to


SECURITY AGREEMENT


 


PATENTS, TRADEMARKS AND COPYRIGHTS


 


 


[None.]


 

















 


EXHIBIT A


 


POWER OF ATTORNEY


 


This Power of Attorney is
executed and delivered by the Grantor signatory hereto (“Grantor”) to General Electric Capital
Corporation, a Delaware corporation (hereinafter referred to as “Attorney”), as
Agent for the benefit of Agent and Lenders, under a Credit Agreement, dated as
of              ,
20  , and a Guarantor Security Agreement, dated as of           
  , 20  , and other related documents (the “Loan Documents”). No person to whom this
Power of Attorney is presented, as authority for Attorney to take any action or
actions contemplated hereby, shall be required to inquire into or seek
confirmation from Grantor as to the authority of Attorney to take any action
described below, or as to the existence of or fulfillment of any condition to
this Power of Attorney, which is intended to grant to Attorney unconditionally
the authority to take and perform the actions contemplated herein, and
Grantor irrevocably waives any right to commence any suit or action, in law or
equity, against any person or entity which acts in reliance upon or
acknowledges the authority granted under this Power of Attorney. The power of
attorney granted hereby is coupled with an interest, and may not be
revoked or canceled by Grantor without Attorney’ s written consent.


 


Grantor hereby
irrevocably constitutes and appoints Attorney (and all officers, employees or
agents designated by Attorney), with full power of substitution, as Grantor’s
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of Grantor and in the name of Grantor or in its own name,
from time to time in Attorney’s discretion, to take any and all appropriate
action and to execute and deliver any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of the Loan Documents and,
without limiting the generality of the foregoing, Grantor hereby grants to
Attorney the power and right, on behalf of Grantor, without notice to or assent
by Grantors, and at any time, to do the following: (a) change the mailing
address of Grantor, open a post office box on behalf of Grantor, open mail for
Grantor, and ask, demand, collect, give acquittances and receipts for, take
possession of, endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any property of Grantor; (b) effect
any repairs to any asset of Grantor, or continue or obtain any insurance and
pay all or any part of the premiums therefor and costs thereof, and make,
settle and adjust all claims under such policies of insurance, and make all
determinations and decisions with respect to such policies; (c) pay or
discharge any taxes, liens, security interests, or other encumbrances levied or
placed on or threatened against Grantor or its property; (d) defend any
suit, action or proceeding brought against Grantor if Grantor do not defend
such suit, action or proceeding or if Attorney believes that Grantor are not
pursuing such defense in a manner that will maximize the recovery to Attorney,
and settle, compromise or adjust any suit, action, or proceeding described
above and, in connection therewith, give such discharges or releases as
Attorney may deem appropriate; (e) file or prosecute any claim,
litigation, suit or proceeding in any court of competent jurisdiction or before
any arbitrator, or take any other action otherwise deemed appropriate by
Attorney for the purpose of collecting any and all such moneys due to Grantor
whenever payable and to enforce any other right in respect of Grantor’s
property; (f) cause the certified public accountants then engaged by
Grantor to


 

















 


prepare and
deliver to Attorney at any time and from time to time, promptly upon Attorney’s
request, the following reports: (1) a reconciliation of all accounts, (2) an
aging of all accounts, (3) trial balances, (4) test verifications of
such accounts as Attorney may request, and (5) the results of each
physical verification of inventory; (g) communicate in its own name with
any party to any Contract with regard to the assignment of the right, title and
interest of such Grantor in and under the Contracts and other matters relating
thereto; (h) to file such financing statements with respect to the
Security Agreement, with or without Grantor’s signature, or to file a photocopy
of the Security Agreement in substitution for a financing statement, as the
Agent may deem appropriate and to execute in Grantor’s name such financing
statements and amendments thereto and continuation statements which may require
the Grantor’s signature; and (i) execute, in connection with any sale
provided for in any Loan Document, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral and to
otherwise direct such sale or resale, all as though Attorney were the absolute
owner of the property of Grantor for all purposes, and to do, at Attorney’s
option and Grantor’s expense, at any time or from time to time, all acts and
other things that Attorney reasonably deems necessary to perfect, preserve, or
realize upon Grantor’s property or assets and Attorney’s Liens thereon, all as
fully and effectively as Grantor might do. Grantor hereby ratifies, to the
extent permitted by law, all that said Attorney shall lawfully do or cause to
be done by virtue hereof.


 


IN WITNESS WHEREOF, this
Power of Attorney is executed by Grantor, and Grantor has caused its seal to be
affixed pursuant to the authority of its board of directors this     
day of           , 20  .


 


	
   

  	
  GRANTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES III CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


NOTARY PUBLIC CERTIFICATE


 


On this      
day of            , 20  ,
[             ]
who is personally known to me appeared before me in his/her capacity as the [             ]
of Grantor (“Grantor”) and executed on behalf of Grantor the Power of Attorney
in favor of General Electric Capital Corporation to which this Certificate is
attached.


 


	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  



 






 













 


EXHIBIT K 


DEBTOR IN POSSESSION


CREDIT AGREEMENT


 


CLOSING CHECKLIST


 


DEBTOR IN POSSESSION


CREDIT FACILITY


 


for


 


CURATIVE HEALTH SERVICES, INC.


AND CERTAIN OF ITS SUBSIDIARIES


Closing Date: March     ,
2006


 


Parties and Counsel


 


	
  Agent:

  	
  General Electric
  Capital Corporation (“GE Capital”)

  
	
   

  	
   

  
	
  Lead Arranger:

  	
  GECC Capital
  Markets Group, Inc. (“GECMG”)

  
	
   

  	
   

  
	
  Holdings:

  	
  Curative Health
  Services, Inc., a Minnesota corporation formerly named Curative Holding
  Co.

  
	
   

  	
   

  
	
  Co-Borrowers:

  	
  Certain direct
  and indirect subsidiaries of Holdings as follows (collectively, with
  Holdings, “Borrowers”):

  
	
   

  	
   

  
	
   

  	
  1.

  	
  eBioCare.com, Inc.

  
	
   

  	
  2.

  	
  Hemophilia Access, Inc.

  
	
   

  	
  3.

  	
  Apex Therapeutic Care, Inc.

  
	
   

  	
  4.

  	
  Curative Health Services of New York, Inc.

  
	
   

  	
  5.

  	
  CHS Services, Inc.

  
	
   

  	
  6.

  	
  Curative Pharmacy Services, Inc.

  
	
   

  	
  7.

  	
  Infinity Infusion, LLC

  
	
   

  	
  8.

  	
  Infinity Infusion II, LLC

  
	
   

  	
  9.

  	
  Optimal Care Plus, Inc.

  
	
   

  	
  10.

  	
  Infinity Infusion Care, Ltd.

  
	
   

  	
  11.

  	
  MedCare, Inc.

  
	
   

  	
  12.

  	
  Curative Health Services Co., a Minnesota
  corporation formerly named Curative Health Services, Inc.

  
	
   

  	
  13.

  	
  Critical Care Systems, Inc.

  
	
   

  	
   

  
	
  Guarantors:

  	
  Curative Health
  Services III Co.

  
	
   

  	
   

  
	
  Credit Parties

  	
  Borrowers and
  Guarantors

  



 

















 


	
  Agent’s Counsel:

  	
  Moritt Hock
  Hamroff & Horowitz LLP (“MHH&H”)

  
	
   

  	
   

  
	
  Borrowers’
  Counsel

  	
  Linklaters (“Linklaters”)

  



 

















 


	
  Action/Document

  	
   

  	
  Party

  	
   

  	
  Status

  
	
  l.

  	
  Credit
  Agreement (“Credit Agreement”), executed by Borrowers, Agent and Lenders

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Exhibits
  to Credit Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A

  	
  Revolving
  Note

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B

  	
  [Omitted]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C

  	
  Swingline
  Note

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D-1

  	
  Notice
  of Borrowing

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  D-2

  	
  Notice
  of Swingline Borrowing

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  E

  	
  Borrower
  Security Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  F

  	
  Borrower
  Pledge Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  G

  	
  Subsidiary
  Guaranty Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  H

  	
  Guarantor
  Security Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  I

  	
  Opinion
  of Counsel to the Credit Parties

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  J

  	
  Authorized
  Signatory Letter

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  K

  	
  Closing
  Checklist

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  L

  	
  Assignment
  Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  M

  	
  HIPPA
  Business Associate Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1(b)

  	
  Compliance
  Certificate (Annual)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1(n)

  	
  Compliance
  Certificate (Monthly)

  	
   

  	
   

  	
   

  	
   

  



 

















 


	
  Action/Document

  	
   

  	
  Party

  	
   

  	
  Status

  
	
  3.

  	
  Disclosure
  Schedules to Credit Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  [Reserved]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5(l)

  	
  Existing
  L/Cs

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5(a)

  	
  Financial
  Statements

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5(b)

  	
  Borrowers’
  Financial Budget

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  Litigation

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.13

  	
  Subsidiaries,
  Other Equity Investments

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.19

  	
  Insurance
  Policies

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.15

  	
  Compliance
  Program

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.16(a)

  	
  Government
  Receivables Deposit Accounts and Concentration Account

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.16(c)

  	
  Blocked
  Accounts

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Indebtedness

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Effective
  Date Liens

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.4

  	
  Capital
  Structure

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.9

  	
  Existing
  Investments

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.10(b)

  	
  Existing
  Loans to Employees

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Revolving
  Note, executed by Borrowers

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Swingline
  Note, executed by Borrowers

  	
   

  	
   

  	
   

  	
   

  



 

















 


	
  Action/Document

  	
   

  	
  Party

  	
   

  	
  Status

  
	
  6.

  	
  Borrower
  Security Agreement, executed by Borrowers

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule I

  	
  Filing
  Jurisdictions

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule II

  	
  Instruments,
  Chattel Paper and Letter of Credit Rights

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule III

  	
  Schedule of
  Offices, Locations of Collateral and Records Concerning Collateral

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule IV

  	
  Patents,
  Trademarks and Copyrights

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule V

  	
  Motor
  Vehicles

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Exhibit A

  	
  Power
  of Attorney

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Intellectual
  Property Security Agreement and schedules

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Critical
  Care Systems, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Apex
  Therapeutic Care, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Curative
  Health Services, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Infinity
  Infusion Care, Ltd.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Power
  of Attorney by each Borrower

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Borrower
  Pledge Agreement, executed by each Borrower

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule I

  	
  Pledged
  Securities

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule II

  	
  Pledge
  Amendment

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule III

  	
  Related
  Control Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Stock
  Certificates to be pledged [These should continue from the existing Facility]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Stock
  Powers [These should continue from the existing Facility]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Legal
  Opinion from Linklaters, as counsel to Credit Parties (New York &
  Delaware)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  California
  Legal Opinion

  	
   

  	
   

  	
   

  	
   

  
								



 

















 


	
  Action/Document

  	
   

  	
  Party

  	
   

  	
  Status

  
	
  14.

  	
  Texas
  Legal Opinion

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  Minnesota
  Legal Opinion

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  Tennessee
  Legal Opinion

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
  Senior Officer’s Certificate, executed by
  Borrowers

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  Good
  Standing Certificates of Borrowers

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  Secretary
  Certificates for Borrowers, together with the following attachments:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  a)

  	
  Certificate
  of Incorporation/Formation, certified by applicable Secretary of State

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  b)

  	
  Bylaws/Operating
  Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  c)

  	
  Resolutions
  of Board/Managers/Members, as applicable

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
  Certificate of Secretary of Borrowers, attaching
  and certifying as to true, correct and complete copies of the subordinated
  notes and related subordinated debt documents.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
  Blocked Account Agreements, executed by Agent,
  Wells Fargo, Borrowers, as applicable

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
  Government Receivables Deposit Account
  Agreements, executed by Agent, Wells Fargo, Borrowers, as applicable

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  UCC,
  tax, lien and judgment searches for Borrowers, in the jurisdictions and
  debtor names specified on Schedule I attached hereto

  	
   

  	
  N/A

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
  UCC
  Pre-Filing Authorization Letter, executed by Borrowers

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
  UCC-l
  Financing Statements for Borrowers, to be filed in the jurisdictions
  specified in Schedule 2 attached hereto

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
  HIPAA Business Associate Agreements between one
  or more of the Credit Parties that are covered entities and GE Capital

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
  Bankruptcy
  Court Order

  	
   

  	
   

  	
   

  	
   

  



 

















 


	
  Action/Document

  	
   

  	
  Party

  	
   

  	
  Status

  
	
  28.

  	
  Certificate Regarding Confusing or Similar Names

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
  Payoff
  Letter

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.

  	
  Insurance
  Certificates

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.

  	
  Reaffirmation
  Agreement

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.

  	
  Payment of Closing Fee

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  33.

  	
  Payment
  of fees and expenses of MHH&H and
  internal legal costs of GE Capital

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34.

  	
  Guaranty:
  Curative Health Services III Co.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule I

  	
  Filing
  Jurisdictions

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule II

  	
  Instruments,
  Chattel Paper and Letter of Credit Rights

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule III

  	
  Schedule of
  Offices, Locations of Collateral and Records Concerning Collateral

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Schedule IV

  	
  Patents,
  Trademarks and Copyrights

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Exhibit A

  	
  Power
  of Attorney

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.

  	
  Guarantor
  Pledge Agreement: Curative Health Services III Co.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  36.

  	
  Tennessee Tax Affidavit

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  37.

  	
  Utility
  Escrow Blocked Account Agreements, executed by Agent, Wells Fargo, Borrowers,
  as applicable

  	
   

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT L


to


DEBTOR IN POSSESSION


CREDIT AGREEMENT


 


ASSIGNMENT AGREEMENT


 


[To be prepared if as
and when required by the Agent ]


 

















 


EXHIBIT M


to


DEBTOR IN POSSESSION


CREDIT AGREEMENT


 


HIPAA BUSINESS
ASSOCIATE AGREEMENT


 


[Existing Agreements
Between the Parties Reaffirmed]


 






 













 


EXHIBIT 5.1(n)


 


[FORM OF COMPLIANCE CERTIFICATE (MONTHLY)]


 


                            ,
20      


 


General Electric Capital
Corporation, as Agent


2 Bethesda Metro Center, Suite 600


Bethesda, Maryland  20814


 


Re:                               Compliance
Certificate (Monthly)


 


Ladies and Gentlemen:


 


This certificate is given in accordance with that
certain Debtor in Possession Credit Agreement, dated as of March       ,
2006 (as the same may be amended, supplemented or otherwise modified from time
to time, the “Credit Agreement”), by and among Curative Health Services, Inc.,
a Minnesota corporation formerly known as Curative Holding Co. (“Borrower
Representative”), , eBioCare.com, Inc., Hemophilia Access, Inc.,
Apex Therapeutic Care, Inc., CHS Services, Inc., Curative Health
Services of New York, Inc., Optimal Care Plus, Inc., Infinity
Infusion, LLC, Infinity Infusion II, LLC, Infinity Infusion Care, Ltd., MedCare, Inc.,
Curative Pharmacy Services, Inc., Curative Health Services Co., a
Minnesota corporation formerly known as Curative Health Services, Inc.,
and Critical Care Systems, Inc. (each a “Borrower” and collectively
with Borrower Representative and Curative Health Services III Co., a Minnesota corporation, the “Borrowers”), any
Additional Borrowers that become party thereto, the Lenders listed on the
signature pages thereof, and General Electric Capital Corporation, as
lender and agent. Capitalized terms used herein without definition shall have
the meanings assigned to such terms in the Credit Agreement. I hereby certify
that:


 


(a)                                  I am the Chief Financial Officer of
Borrower Representative;


 


(b)                                 The enclosed unaudited, internally
prepared balance sheet and the related statements of income, retained earnings
and cash flows for the Credit Parties as at the end of and for the month indicated  and for the year -to -date period then ended,
fairly present the financial condition of the Credit Parties as for the month
indicated, and I have reviewed such statements in preparing this certificate


 


(c)                                  I have reviewed the terms of the Credit
Agreement and have made, or caused to be made under my supervision, a review in
reasonable detail of the transactions and financial condition of Credit Parties
during the accounting period covered by the enclosed financial statements.


 

















 


(d)                                 The examination in paragraph (c) did
not disclose and I have no knowledge of the existence of any condition or event
that constitutes a Default or an Event of Default as of the date of this
certificate except as set forth below.


 


Described below (or in a separate attachment hereto) are the
exceptions, if any, to paragraph (d), listing in detail the nature of the
conditions or event, the period during which it has existed and the action
which Credit Parties have taken, are taking or propose to take with respect to
each such condition or event.


 


 


(e)                                  Except as disclosed in paragraph (d) above,
Credit Parties are in compliance with the financial covenants contained in Article 7
of the Credit Agreement, as detailed in the attached work sheet.


 


The foregoing certifications and the financial
statements delivered with this Compliance Certificate in support hereof are
made and delivered this               
day of                           ,
20        .


 


	
   

  	
  BORROWER
  REPRESENTATIVE:

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES, INC.,

  
	
   

  	
  a Minnesota corporation
  formerly known as

  Curative Holding Co., individually and as Borrower

  Representative

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
					



 

















 


Worksheet Regarding


Financial Covenant
Compliance


 


[to
be attached by Borrower Representative]


 

















 


EXHIBIT 5.1(b)


 


[FORM OF COMPLIANCE CERTIFICATE (ANNUAL)]


 


                            ,
20      


 


General Electric Capital
Corporation, as Agent


2 Bethesda Metro Center, Suite 600


Bethesda, Maryland  20814


 


Re:                               Compliance
Certificate (Annual)


 


Ladies and Gentlemen:


 


This certificate is given in accordance with that
certain Debtor in Possession Credit Agreement, dated as of March       ,
2006 (as the same may be amended, supplemented or otherwise modified from time
to time, the “Credit Agreement”), by and among Curative Health Services, Inc.,
a Minnesota corporation formerly known as Curative Holding Co. (“Borrower
Representative”), eBioCare.com, Inc., Hemophilia Access, Inc.,
Apex Therapeutic Care, Inc., CHS Services, Inc., Curative Health
Services of New York, Inc., Optimal Care Plus, Inc., Infinity
Infusion, LLC, Infinity Infusion II, LLC, Infinity Infusion Care, Ltd., MedCare, Inc.,
Curative Pharmacy Services, Inc., Curative Health Services Co., a
Minnesota corporation formerly known as Curative Health Services, Inc.,
and Critical Care Systems, Inc. (each a “Borrower” and collectively
with Borrower Representative and Curative Health Services III Co., a Minnesota corporation, the “Borrowers”), any
Additional Borrowers that become party thereto, the Lenders listed on the
signature pages thereof, and General Electric Capital Corporation, as
lender and agent.  Capitalized terms used
herein without definition shall have the meanings assigned to such terms in the
Credit Agreement. I hereby certify that:


 


(a)                                  I am the Chief Financial Officer of
Borrower Representative;


 


(b)                                 The enclosed audited consolidated and
consolidating balance sheets, and related audited consolidated and
consolidating statements of income, retained earnings and cash flows fairly
present the financial condition of Credit Parties as for the Fiscal Year
indicated, such statements have no qualification or exception, other than a “going
concern” exception relating to the Bankruptcy Cases, by an accounting firm, and
I have reviewed such statements in preparing this certificate;


 


(c)                                  I have reviewed the terms of the Credit
Agreement and have made, or caused to be made under my supervision, a review in
reasonable detail of the transactions and financial condition of Credit Parties
during the accounting period covered by the enclosed financial statements.


 

















 


(d)                                 The examination in paragraph (c) did
not disclose and I have no knowledge of the existence of any condition or event
that constitutes a Default or an Event of Default as of the date of this certificate
except as set forth below.


 


Described below (or in a separate attachment hereto) are the
exceptions, if any, to paragraph (d), listing in detail the nature of the
conditions or event, the period during which it has existed and the action
which Credit Parties have taken, are taking or propose to take with respect to
each such condition or event.


 


 


(e)                                  Except as disclosed in paragraph (d) above,
Credit Parties are in compliance with the financial covenants contained in Article 7
of the Credit Agreement, as detailed in the attached work sheet.


 


The foregoing certifications and the financial
statements delivered with this Compliance Certificate in support hereof are
made and delivered this               
day of                           ,
20        .


 


	
   

  	
  BORROWER
  REPRESENTATIVE:

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES, INC.,

  
	
   

  	
  a Minnesota corporation formerly known as

  Curative Holding Co., individually and as

  Borrower Representative

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
					



 

















 


Worksheet Regarding


Financial Covenant
Compliance


 


[to
be attached by Borrower Representative]