Document:

Exhibit 10.1

Exhibit 10.1

CREDIT AGREEMENT

Dated as of June 30, 2005

COVENTRY HEALTH CARE, INC., a Delaware corporation (the "Borrower"), the banks, financial institutions and other institutional lenders (the "Initial Lenders") and issuers of letters of credit ("Initial Issuing Banks") listed on Schedule I hereto, LEHMAN COMMERCIAL PAPER INC. and BANK OF AMERICA, N.A., as co-syndication agents, JPMORGAN CHASE BANK, N.A. and WACHOVIA BANK, NATIONAL ASSOCIATION, as co-documentation agents, and CITIBANK, N.A. ("Citibank"), as administrative agent (the "Agent") for the Lenders (as hereinafter defined), agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.  Certain Defined Terms.  As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

"Advance" means a Revolving Credit Advance or a Term Advance.

"Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person.  For purposes of this definition, the term "control" (including the terms "controlling", "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 10% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.

"Agent's Account" means the account of the Agent maintained by the Agent at Citibank at its office at Two Penns Way, New Castle, Delaware 19720, Account No. 36852248, Attention:  Bank Loan Syndications.

"Applicable Lending Office" means, with respect to each Lender, such Lender's Domestic Lending Office in the case of a Base Rate Advance and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

"Applicable Margin" means, as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:

 

	
            Public Debt Rating

S&P/Moody's
 	
            Applicable Margin for

Base Rate Advances
 	
            Applicable Margin for

Eurodollar Rate Advances
 
	
            Level 1

BBB+ or Baa1 or above
 	
             

0.000%
 	
             

0.450%
 
	
            Level 2

BBB or Baa2
 	
             

0.000%
 	
             

0.625%
 
	
            Level 3

BBB- or Baa3
 	
             

0.000%
 	
             

0.750%
 
	
            Level 4

BB+ or Ba1
 	
             

0.000%
 	
             

1.250%
 
	
            Level 5

Lower than Level 4
 	
             

0.500%
 	
             

1.750%
 

 

 

 

 

 

"Applicable Percentage" means, as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:

 

	
            Public Debt Rating

S&P/Moody's
 	
            Applicable

Percentage
 
	
            Level 1

BBB+ or Baa1 or above
 	
             

0.100%
 
	
            Level 2

BBB or Baa2
 	
             

0.125%
 
	
            Level 3

BBB- or Baa3
 	
             

0.175%
 
	
            Level 4

BB+ or Ba1
 	
             

0.250%
 
	
            Level 5

Lower than Level 4
 	
             

0.375%
 

 

"Appropriate Lender" means, at any time, with respect to either of the Term Facility or the Revolving Credit Facility, a Lender that has a Commitment with respect to such Facility at such time.

"Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit C hereto.

"Assuming Lender" has the meaning specified in Section 2.18(d).

"Assumption Agreement" has the meaning specified in Section 2.18(d)(ii).

"Available Amount" of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing).

"Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the higher of:

(a)      the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; and

	
            (b)
 	
            1⁄2 of one percent per annum above the Federal Funds Rate.
 

"Base Rate Advance" means an Advance that bears interest as provided in Section 2.07(a)(i).

"Borrower Information" has the meaning specified in Section 8.08.

"Borrowing" means a Revolving Credit Borrowing or a Term Borrowing.

"Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market.

"Capital Expenditures" means, for any period, with respect to any Person, the aggregate of all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and 

 

 

 

improvements during such period) that should be capitalized under GAAP on a consolidated balance sheet of such Person and its Subsidiaries.

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

"Commitment" means a Revolving Credit Commitment, a Letter of Credit Commitment or a Term Commitment.

"Commitment Date" has the meaning specified in Section 2.18(b).

"Commitment Increase" has the meaning specified in Section 2.18(a).

"Consolidated" refers to the consolidation of accounts in accordance with GAAP.

"Consolidated EBITDA" means, for any period, Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Debt (including the Advances), (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs and (e) any extraordinary or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on
sales of assets outside of the ordinary course of business), and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (i) any extraordinary or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on sales of assets outside of the ordinary course of business) and (ii) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it will result in the receipt of cash payments in any future period).  For the purposes of calculating Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a "Reference Period") with respect to any determination of the Consolidated Leverage Ratio, (i) if at any time during such Reference Period the Borrower or any of
its Subsidiaries shall have made any Material Disposition, the Consolidated EBITDA for such Reference Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the property that is the subject of such Material Disposition for such Reference Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Reference Period and (ii) if during such Reference Period the Borrower or any of its Subsidiaries shall have made a Material Acquisition, Consolidated EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Acquisition occurred on the first day of such Reference Period.  As used in this definition, "Material Acquisition" means any acquisition of property or series of related acquisitions of property that
(a) constitutes assets comprising all or substantially all of an operating unit of a business or results in a Person becoming a Subsidiary of the Borrower and (b) involves the payment of consideration by the Borrower and its Subsidiaries in excess of $25,000,000; and "Material Disposition" means any sale, lease, transfer or other disposition of property or series of related sales, leases, transfers or other dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries in excess of $25,000,000.

"Consolidated EBITDAR" means, for any period, Consolidated EBITDA for such period plus, without duplication and to the extent reflected as a charge in the statement of Consolidated Net Income for such period, Consolidated Rental Expense.

 

 

 

 

"Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio of (a) Consolidated EBITDAR for such period less the aggregate amount actually paid by the Borrower and its Subsidiaries during such period on account of (i) Capital Expenditures (excluding an amount equal to the principal amount of Debt (other than any Advances) incurred in connection with such expenditures) and (ii) taxes to (b) Consolidated Fixed Charges for such period.

"Consolidated Fixed Charges" means, for any period, the sum (without duplication) of (a) Consolidated Interest Expense for such period, (b) Consolidated Rental Expense for such period, (c) scheduled payments made during such period on account of principal of Debt of the Borrower or any of its Subsidiaries (including scheduled principal payments in respect of the Term Advances) and (d) Restricted Payments made during such period pursuant to Section 5.02(f)(i).

"Consolidated Interest Expense" means, for any period, total cash interest expense (including that attributable to Capital Lease Obligations) of the Borrower and its Subsidiaries for such period with respect to all outstanding Debt of the Borrower and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs under Hedge Agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP).

"Consolidated Leverage Ratio" means, as at the last day of any period, the ratio of (a) Consolidated Total Debt on such day to (b) Consolidated EBITDA for such period.

"Consolidated Net Income" means, for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form of dividends or other distributions and (c) the undistributed earnings of any Subsidiary of the Borrower
to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under this Agreement or the Notes) or (other than in the case of any such Subsidiary that is an HMO Subsidiary or an Insurance Subsidiary) requirement of law applicable to such Subsidiary.

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

"Consolidated Total Assets" means, at any date, all amounts that would, in conformity with GAAP, be included on a consolidated balance sheet of the Borrower and its Subsidiaries under total assets at such date.

"Consolidated Total Debt" means, at any date, the aggregate principal amount of all Debt of the Borrower and its Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP.

"Convert", "Conversion" and "Converted" each refers to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.08 or 2.09.

"Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of such Person's business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property 

 

 

 

acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (g) the liquidation value of all mandatorily redeemable preferred capital stock of such Person, (h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts
and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, and (j) for the purposes of Section 6.01(d) only, all obligations of such Person in respect of Hedge Agreements.  The Debt of any Person shall include the Debt of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Debt expressly provide that such Person is not liable therefor.

"Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

"Disclosed Litigation" has the meaning specified in Section 4.01(f).

"Domestic Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assumption Agreement or the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent.

"Effective Date" has the meaning specified in Section 3.01.

"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender; and (iii) any other Person approved by the Agent (such approval not to be unreasonably withheld or delayed) and, unless an Event of Default has occurred and is continuing at the time any assignment is effected in accordance with Section 8.07, the Borrower, such approval not to be unreasonably withheld or delayed; provided, however, that neither the Borrower nor an Affiliate of the Borrower shall qualify as an Eligible Assignee.

"Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.

"Environmental Law" means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

"Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

 

 

 

"ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of the Borrower's controlled group, or under common control with the Borrower, within the meaning of Section 414 of the Internal Revenue Code.

"ERISA Event" means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan
pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the Borrower or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f)  the conditions for the imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes
grounds for the termination of, or the appointment of a trustee to administer, a Plan.

"Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

"Eurodollar Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assumption Agreement or the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent.

"Eurodollar Rate" means, for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the rate per annum (rounded upward to the nearest whole multiple of 1/100 of 1% per annum) appearing on Moneyline Telerate Markets Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period or, if for any reason such rate is not available, the average (rounded upward to the nearest whole multiple of 1/100 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by
the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period.  If the Moneyline Telerate Markets Page 3750 (or any successor page) is unavailable, the Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.08.

"Eurodollar Rate Advance" means an Advance that bears interest as provided in Section 2.07(a)(ii).

 

 

 

 

"Eurodollar Rate Reserve Percentage" for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term
equal to such Interest Period.

"Events of Default" has the meaning specified in Section 6.01.

"Facility" means the Revolving Credit Facility, the Letter of Credit Facility or the Term Facility.

"Federal Funds Rate" means, for any period, a fluctuating interest rate per annum for each day during such period equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, 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 that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.

"GAAP" has the meaning specified in Section 1.03.

"Guarantee Obligation" means, as to any Person (the "guaranteeing person"), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Debt, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be
the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith.

"Hazardous Materials" means (a) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

 

 

 

 

"Hedge Agreements" means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements.

"HIPAA" collectively, the Health Insurance Portability and Accountability Act of 1996, as amended, and any successor statute thereto, as interpreted by the rules and regulations thereunder, all as the same may be in effect from time to time.  References to sections of HIPAA shall be construed also to refer to any successor sections.

"HMO" any Person licensed as a health maintenance organization or similar organization by a Governmental Authority having jurisdiction over such Person.

"HMO Regulations" all requirements of law applicable to any HMO Subsidiary (other than provisions of the organizational or governing documents of such HMO Subsidiary) under federal or state law and any regulations, orders and directives promulgated or issued pursuant to the foregoing, including regulations regarding total statutory capital levels.

"HMO Regulator" any governmental authority charged with administration, oversight or enforcement of an HMO Regulation, whether primarily, secondarily or jointly.

"HMO Subsidiary" means any Subsidiary of the Borrower that is an HMO.

"Increase Date" has the meaning specified in Section 2.18(a).

"Increasing Lender" has the meaning specified in Section 2.18(b).

"Indentures" means (a) the Indenture, dated as of February 1, 2002, entered into by the Borrower and Wachovia Bank, National Association, as successor to First Union National Bank, as trustee, in connection with the issuance of the Borrower's 8-1/8% Senior Notes due 2012, (b) the Indenture, dated as of January 28, 2005, entered into by the Borrower and Wachovia Bank, National Association, as trustee, in connection with the issuance of the Borrower's senior notes due 2012 and (c) the Indenture, dated as of January 28, 2005, entered into by the Borrower and Wachovia Bank, National Association, as trustee, in connection with the issuance of the Borrower's senior notes due 2015.

"Information Memorandum" means the information memorandum dated June, 2005 used by the Agent in connection with the syndication of the Commitments.

"Insurance Regulations" all requirements of law applicable to any Insurance Subsidiary (other than provisions of the organizational or governing documents of such Insurance Subsidiary) under federal or state law and any regulations, orders and directives promulgated or issued pursuant to the foregoing, including regulations regarding total statutory capital levels.

"Insurance Regulator" any governmental authority charged with the administration, oversight or enforcement of an Insurance Regulation, whether primarily, secondarily or jointly.

"Insurance Subsidiary" means any Subsidiary of the Borrower that is doing business or is licensed under Insurance Regulations to offer and sell indemnity health and life insurance (or required to so qualify or to be so licensed).

"Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of a Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the 

 

 

 

period selected by the Borrower pursuant to the provisions below.  The duration of each such Interest Period shall be one, two, three or six months, and subject to clause (c) of this definition, nine or twelve months, as the Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:

(a)      the Borrower may not select any Interest Period with respect to any Eurodollar Rate Advance under a Facility that ends after any scheduled principal repayment installment date for such Facility unless, after giving effect to such selection, the aggregate principal amount of Base Rate Advances and of Eurodollar Rate Advances having Interest Periods that end on or prior to such principal repayment installment date for such Facility shall be at least equal to the aggregate principal amount of Advances under such Facility due and payable on or prior to such date;

(b)      Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration;

(c)      the Borrower shall not be entitled to select an Interest Period having duration of nine or twelve months unless, by 2:00 P.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, each Lender has notified the Agent of such Lender's approval of such Interest Period (the failure of any Lender to so respond by such time being deemed for all purposes of this Agreement as an objection by such Lender to the requested duration of such Interest Period); provided that, if any or all of the Lenders object to the requested duration of such Interest Period, the duration of such Interest Period shall be one, two, three or six months, as specified by the Borrower in the applicable Notice of Borrowing or notice of
Conversion as the desired alternative to an Interest Period of nine or twelve months;

(d)      whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and

(e)      whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

"Issuing Bank" means an Initial Issuing Bank or any Lender designated as an "Issuing Bank" hereunder by written notice to such effect to the Agent by the Borrower and such Lender so long as such Lender expressly agrees to perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as an Issuing Bank and notifies the Agent of its Applicable Lending Office (which information shall be recorded by the Agent in the Register).

"L/C Cash Collateral Account" means an interest-bearing cash collateral account to be established and maintained by the Agent, over which the Agent shall have sole dominion and control, upon terms as may be satisfactory to the Agent.

"L/C Related Documents" has the meaning specified in Section 2.06(b)(i).

 

 

 

 

"Lenders" means the Initial Lenders, each Issuing Bank, each Assuming Lender that shall become a party hereto pursuant to Section 2.18 and each Person that shall become a party hereto pursuant to Section 8.07.

"Letter of Credit Agreement" has the meaning specified in Section 2.03(a).

"Letter of Credit Commitment" means, with respect to each Issuing Bank, the obligation of such Issuing Bank to issue Letters of Credit for the account of the Borrower and their specified Subsidiaries in (a) the amount set forth opposite the Issuing Bank's name on the signature pages hereof or (b)in the notice designating such Issuing Bank as an Issuing Bank hereunder, in each case as such amount may be reduced prior to such time pursuant to Section 2.05.

"Letter of Credit Facility" means, at any time, an amount equal to the lesser of (a) the aggregate amount of the Issuing Banks' Letter of Credit Commitments at such time and (b) $60,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.05.

"Letters of Credit" has the meaning specified in Section 2.01(b).

"Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any encumbrance on title to real property that secures debt.

"Material Adverse Change" means any material adverse change in the business, financial condition or results of operations of the Borrower and its Subsidiaries taken as a whole.

"Material Adverse Effect" means a material adverse effect on (a) the business, financial condition or results of operations of the Borrower and its Subsidiaries taken as a whole or (b) the rights and remedies of the Agent or any Lender under this Agreement or any Note.

"Material HMO Subsidiary" means any HMO Subsidiary that is also a Material Subsidiary.

"Material Insurance Subsidiary" means any Insurance Subsidiary that is also a Material Subsidiary.

"Material Subsidiary" means, at any date, a Subsidiary of the Borrower having (a) assets in an amount equal to at least 5% of the amount of total Consolidated assets of the Borrower and its Subsidiaries as of the last day of the most recent fiscal quarter of the Borrower for which financial statements of the Borrower have been furnished pursuant to Section 5.01(i) or (b) revenues in an amount equal to at least 5% of the amount of total Consolidated revenues of the Borrower and its Subsidiaries for the twelve-month period ending on such date.

"Medicaid Regulations" means, collectively, (a) all federal statutes (whether set forth in Title XIX of the Social Security Act or elsewhere) affecting the medical assistance program established by said Title XIX, (b) all applicable provisions of all federal rules promulgated pursuant to or in connection with the statutes described in clause (a) above and all federal administrative, reimbursement and other guidelines of all governmental authorities having the force of law promulgated pursuant to or in connection with the statutes described in clause (a) above; (c) all state statutes and plans for medical assistance enacted in connection with the statutes and provisions described in clauses (a) and (b) above, and (d) all applicable provisions of all rules, regulations, manuals and orders of all governmental authorities
promulgated pursuant to or in connection with the statutes described in clause (c) above and all state administrative, reimbursement and other guidelines of all governmental authorities having the force of law promulgated pursuant to or in connection with the statutes described in clause (b) above.

"Moody's" means Moody's Investors Service, Inc.

 

 

 

 

"Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

"Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or any ERISA Affiliate and at least one Person other than the Borrower and the ERISA Affiliates or (b) was so maintained and in respect of which the Borrower or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

"Note" means a Revolving Credit Note or a Term Note.

"Notice of Borrowing" has the meaning specified in Section 2.02(a).

"Notice of Issuance" has the meaning specified in Section 2.03(a).

"OFAC" means the U.S. Department of Treasury’s Office of Foreign Assets Control. 

"Patriot Act" means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001.

"PBGC" means the Pension Benefit Guaranty Corporation (or any successor).

"Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

"Plan" means a Single Employer Plan or a Multiple Employer Plan.

"Public Debt Rating" means, as of any date, the rating that has been most recently announced by either S&P or Moody's, as the case may be, for any class of non-credit-enhanced long-term senior unsecured debt issued by the Borrower or, if any such rating agency shall have issued more than one such rating, the lowest such rating issued by such rating agency (but not lower than the rating, if any, assigned to the Facilities by such agency).  For purposes of the foregoing, (a) if only one of S&P and Moody's shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage shall be determined by reference to the available rating; (b) if neither S&P nor Moody's shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage will be set in
accordance with Level 5 under the definition of "Applicable Margin" or "Applicable Percentage", as the case may be; (c) if the ratings established by S&P and Moody's shall fall within different levels, the Applicable Margin and the Applicable Percentage shall be based upon the higher rating unless such ratings differ by two or more levels, in which case the applicable level will be deemed to be one level above the lower of such levels; (d) if any rating established by S&P or Moody's shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; and (e) if S&P or Moody's shall change the basis on which ratings are established, each reference herein to the Public Debt Rating announced by S&P or Moody's, as the case may be, shall refer to the then equivalent rating by
S&P or Moody's, as the case may be.

"Ratable Share" of any amount means, with respect to any Revolving Credit Lender at any time, the product of (a) a fraction the numerator of which is the amount of such Lender's Revolving Credit Commitment at such time and the denominator of which is the aggregate Revolving Credit Commitments at such time and (b) such amount.

"Reference Banks" means Citibank, Lehman Commercial Paper Inc. and Bank of America, N.A.

 

 

 

 

"Register" has the meaning specified in Section 8.07(d).

"Required Lenders" means at any time Lenders owed or holding at least a majority in interest of the sum of (a) the aggregate principal amount of the Advances outstanding at such time, (b) the aggregate Available Amount of all Letters of Credit outstanding at such time, (c) the aggregate unused Commitments under the Term Facility at such time and (d) the aggregate Unused Revolving Credit Commitments at such time.  For purposes of this definition, the Available Amount of each Letter of Credit shall be considered to be owed to the Revolving Credit Lenders ratably in accordance with their respective Revolving Credit Commitments.

"Responsible Officer" means the Chief Executive Officer, President, Chief Financial Officer or Vice President, Business Development of the Borrower, but in any event, with respect to financial matters, the Chief Financial Officer or Vice President, Business Development of the Borrower.

"Revolving Credit Advance" means an advance by a Lender to the Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a "Type" of  Revolving Credit Advance).

"Revolving Credit Borrowing" means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by each of the Lenders pursuant to Section 2.01(a).

"Revolving Credit Commitment" means as to any Lender (a) the amount set forth opposite such Lender's name on Schedule I hereto as such Lender's "Revolving Credit Commitment", (b) if such Lender has become a Lender hereunder pursuant to an Assumption Agreement, the amount set forth as such Lender's "Revolving Credit Commitment" in such Assumption Agreement or (c) if such Lender has entered into any Assignment and Acceptance, the amount set forth as such Lender's "Revolving Credit Commitment" in the Register maintained by the Agent pursuant to Section 8.07(d), as such amount may be reduced pursuant to Section 2.05.

"Revolving Credit Facility" means, at any time, the aggregate amount of the Revolving Credit Lenders' Revolving Credit Commitments at such time.

"Revolving Credit Lender" means any Lender that has a Revolving Credit Commitment.

"Revolving Credit Note" means a promissory note of the Borrower payable to the order of a Revolving Credit Lender, delivered pursuant to a request made under Section 2.16 in substantially the form of Exhibit A-1 hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances made by such Lender.

"S&P" means Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc.

"Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or any  ERISA Affiliate and no Person other than the Borrower and the ERISA Affiliates or (b) was so maintained and in respect of which the Borrower or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

"Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or 

 

 

 

more of its other Subsidiaries or by one or more of such Person's other Subsidiaries.  Unless otherwise qualified, all references in this Agreement to a "Subsidiary" or "Subsidiaries" shall refer to a Subsidiary of the Borrower.

"Term Advance" means an advance by a Lender to the Borrower as part of a Term Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a "Type" of Term Advance).

"Term Borrowing" means a borrowing consisting of simultaneous Term Advances of the same Type made by the Term Lenders pursuant to Section 2.01(c).

"Term Commitment" means as to any Lender (a) the amount set forth opposite such Lender's name on Schedule I hereto as such Lender's "Term Commitment" or (b) if such Lender has entered into any Assignment and Acceptance, the amount set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(d) as such Lender's "Term Commitment", as such amount may be reduced pursuant to Section 2.05.

"Term Facility" means, at any time, the aggregate amount of the Term Lenders' Term Commitments at such time.

"Term Lender" means any Lender that has a Term Commitment.

"Term Loan Maturity Date" means June 30, 2010.

"Term Note" means a promissory note of the Borrower payable to the order of a Term Lender, delivered pursuant to a request made under 2.16 in substantially the form of Exhibit A-2 hereto, evidencing the indebtedness of the Borrower to such Lender resulting from the Term Advances made by such Lender.

"Termination Date" means the earlier of (a) June 30, 2010 and (b) the date of termination in whole of the Commitments pursuant to Section 2.05 or 6.01.

"Unissued Letter of Credit Commitment" means, with respect to any Issuing Bank, the obligation of such Issuing Bank to issue Letters of Credit for the account of the Borrower or its specified Subsidiaries in an amount equal to the excess of (a) the amount of its Letter of Credit Commitment over (b) the aggregate Available Amount of all Letters of Credit issued by such Issuing Bank.

"Unused Revolving Credit Commitment" means, with respect to each Revolving Credit Lender at any time, (a) such Lender's Revolving Credit Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all Revolving Credit Advances made by such Lender (in its capacity as a Revolving Credit Lender) and outstanding at such time, plus (ii) such Lender's Ratable Share of the aggregate Available Amount of all the Letters of Credit outstanding at such time.

"Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

SECTION 1.02.  Computation of Time Periods.  In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from"  means "from and including" and the words "to" and "until" each mean "to but excluding".

SECTION 1.03.  Accounting Terms.  All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) ("GAAP").  In the event that any "Accounting 

 

 

 

Change" (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then the Borrower and the Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating the Borrower's financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall have been executed and delivered by the Borrower, the Agent and the Required Lenders, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred.  "Accounting Changes" refers to changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the Securities and Exchange Commission.

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

SECTION 2.01.  The Advances and Letters of Credit.  (a)  Revolving Credit Advances.  Each Revolving Credit Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Credit Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date in an amount not to exceed at any time such Lender's Unused Revolving Credit Commitment.  Each Revolving Credit Borrowing shall be in an aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Revolving Credit Advances of the same Type made on the same day by the Revolving Credit Lenders ratably according to their respective Revolving Credit Commitments.  Within the limits of each Revolving Credit Lender's
Revolving Credit Commitment, the Borrower may borrow under this Section 2.01(a), prepay pursuant to Section 2.10 and reborrow under this Section 2.01(a).

(b)      Letters of Credit.  Each Issuing Bank agrees, on the terms and conditions hereinafter set forth, to issue letters of credit (each, a "Letter of Credit") for the account of the Borrower from time to time on any Business Day during the period from the Effective Date until 30 days before the Termination Date in an aggregate Available Amount (i) for all Letters of Credit issued by each Issuing Bank not to exceed at any time the lesser of (x) the Letter of Credit Facility at such time and (y) such Issuing Bank's Letter of Credit Commitment at such time and (ii) for each such Letter of Credit not to exceed an amount equal to the aggregate Unused Revolving Credit Commitments of the Revolving Credit Lenders at such time.  Each
Letter of Credit shall be for an amount of $100,000 or more.  No Letter of Credit shall have an expiration date (including all rights of the Borrower or the beneficiary to require renewal) later than the earlier of (x) the date that is one year after the date of issuance thereof; provided that any Letter of Credit which provides for automatic one-year extension(s) of such expiration date shall be deemed to comply with the foregoing requirement if the Issuing Bank has the unconditional right to prevent any such automatic extension from taking place or (y) five Business Days prior to the Termination Date.  Within the limits referred to above, the Borrower may request the issuance of Letters of Credit under this Section 2.01(b), repay any Revolving Credit Advances resulting from drawings thereunder pursuant to Section 2.03(c) and request the issuance of additional Letters of Credit under this Section 2.01(b).  Each letter of
credit listed on Schedule 2.01(b) shall be deemed to constitute a Letter of Credit issued hereunder, and each Lender or each Affiliate of a Lender that is an issuer of such a Letter of Credit shall, for purposes of Section 2.03, be deemed to be an Issuing Bank for each such letter of credit, provided than any renewal or replacement of any such letter of credit shall be issued by an Issuing Bank pursuant to the terms of this Agreement.

(c)       The Term Advances.  Each Term Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each, a "Term Advance") to the Borrower on any Business Day on or after the Effective Date and before July 31, 2005 in an amount not to exceed such Lender's Term Commitment at such time.  The Term Borrowing shall consist of Term Advances made simultaneously by the Term Lenders ratably according to their Term Commitments.  Amounts borrowed under this Section 2.01(c) and repaid or prepaid may not be reborrowed.

SECTION 2.02.  Making the Advances.  (a)  Except as otherwise provided in Section 2.03(c), each Borrowing shall be made on notice, given not later than (x) 12:00 Noon (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances or (y) 10:00 A.M. (New York City time) on the date of the proposed Borrowing in the case of a 

 

 

 

Borrowing consisting of Base Rate Advances, by the Borrower to the Agent, which shall give each Appropriate Lender prompt notice thereof by telecopier.  Each such notice of a Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed immediately in writing or by telecopier in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Advance.  Each Appropriate Lender shall, before 12:00 Noon (New York City time) on the date of such Borrowing make available for the account of its Applicable Lending Office to the Agent at the Agent's Account, in same day funds, such
Lender's ratable portion of such Borrowing.  After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower at the Agent's address referred to in Section 8.02.

(b)      Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $10,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the Eurodollar Rate Advances may not be outstanding as part of more than seven separate Borrowings.

(c)       Each Notice of Borrowing shall be irrevocable and binding on the Borrower.  In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Appropriate Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not
made on such date.

(d)      Unless the Agent shall have received notice from an Appropriate Lender prior to the time of any Borrowing under a Facility under which such Lender has a Commitment that such Lender will not make available to the Agent such Lender's ratable portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.  If and to the extent that such Lender shall not have so made such portion available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's Advance as part of such Borrowing for purposes of this Agreement.

(e)       The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

SECTION 2.03.  Issuance of and Drawings and Reimbursement Under Letters of Credit.  (a)  Request for Issuance.  (i) Each Letter of Credit shall be issued upon notice, given not later than 1:00 P.M. (New York City time) on the fifth Business Day prior to the date of the proposed issuance of such Letter of Credit (or on such shorter notice as the applicable Issuing Bank may agree), by the Borrower to any Issuing Bank, and such Issuing Bank shall give the Agent prompt notice thereof by telecopier.  Each such notice of issuance of a Letter of Credit (a "Notice of Issuance") shall be by telephone, confirmed immediately in writing or by telecopier, specifying therein the requested (A) date of such issuance (which shall be a Business Day),
(B) Available Amount of such Letter of Credit, (C) expiration date of such Letter of Credit (which shall not be later than the earlier of the Termination Date or one year after the date of issuance thereof; provided that any Letter of Credit which provides for automatic one-year extension(s) of such expiration date shall be deemed to comply with the foregoing requirement if the Issuing Bank has the unconditional right to prevent any such automatic extension from taking place and each Issuing Bank hereby agrees to exercise such right to the extent necessary to prevent any such Letter 

 

 

 

of Credit from being outstanding after the Termination Date), (D) name and address of the beneficiary of such Letter of Credit and (E) form of such Letter of Credit, and shall be accompanied by such customary application and agreement for letter of credit as such Issuing Bank may specify to the Borrower for use in connection with such requested Letter of Credit (a "Letter of Credit Agreement").  If the requested form of such Letter of Credit is acceptable to such Issuing Bank in its sole discretion, such Issuing Bank will, upon fulfillment of the applicable conditions set forth in Article III, make such Letter of Credit available to the Borrower at its office referred to in Section 8.02 or as otherwise agreed with the Borrower in connection with such issuance.  In the event and to the extent that the provisions of any Letter of Credit
Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern.

(b)      Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Revolving Credit Lenders, such Issuing Bank hereby grants to each Revolving Credit Lender, and each Revolving Credit Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender's Ratable Share of the aggregate amount available to be drawn under such Letter of Credit.  The Borrower hereby agrees to each such participation.  Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Revolving Credit Lender further acknowledges and agrees that its participation in each Letter of Credit will be automatically adjusted to reflect such Lender's Ratable Share of the Available Amount of such Letter of Credit at each time such Lender's Revolving Credit Commitment is amended pursuant to the operation of Section 2.18, by an assignment in accordance with Section 8.07 or otherwise pursuant to this Agreement.

(c)       Drawing and Reimbursement.  The payment by an Issuing Bank of a draft drawn under any Letter of Credit shall constitute for all purposes of this Agreement the making by such Issuing Bank of a Revolving Credit Advance, which shall be a Base Rate Advance, in the amount of such draft.  Each Issuing Bank shall give prompt notice (and such Issuing Bank will use its commercially reasonable efforts to deliver such notice within one Business Day) to the Borrower and the Agent of each drawing under any Letter of Credit issued by it.  Upon written demand by such Issuing Bank, with a copy of such demand to the Agent, each Revolving Credit Lender shall pay to the Agent such Lender's Ratable Share of such outstanding Revolving Credit Advance, by making available for the account of its
Applicable Lending Office to the Agent for the account of such Issuing Bank, by deposit to the Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Revolving Credit Advance to be funded by such Lender.  Promptly after receipt thereof, the Agent shall transfer such funds to such Issuing Bank.  Each Revolving Credit Lender agrees to fund its Ratable Share of such outstanding Revolving Credit Advance on (i) the Business Day on which demand therefor is made by such Issuing Bank, provided that notice of such demand is given not later than 11:00 A.M. (New York City time) on such Business Day, or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time.  If and to the extent that any Revolving Credit Lender shall not have so made the amount of such Revolving Credit Advance available to the Agent, such Lender agrees to
pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by any such Issuing Bank until the date such amount is paid to the Agent, at the Federal Funds Rate for its account or the account of such Issuing Bank, as applicable.  If such Revolving Credit Lender shall pay to the Agent such amount for the account of any such Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute a Revolving Credit Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Revolving Credit Advance made by such Issuing Bank shall be reduced by such amount on such Business Day.

(d)      Letter of Credit Reports.  Each Issuing Bank shall furnish (i) to the Agent on the first Business Day of each month a written report summarizing issuance and expiration dates of Letters of Credit issued by it during the preceding month and drawings during such month under all Letters of Credit and (ii) to the Agent and each Revolving Credit Lender on the first Business Day of each calendar quarter a written report setting forth the average daily aggregate Available Amount during the preceding calendar quarter of all Letters of Credit issued by it.

 

 

 

 

(e)       Failure to Make Revolving Credit Advances.  The failure of any Revolving Credit Lender to make the Revolving Credit Advance to be made by it on the date specified in Section 2.03(c) shall not relieve any other Revolving Credit Lender of its obligation hereunder to make its Revolving Credit Advance on such date, but no Lender shall be responsible for the failure of any other Revolving Credit Lender to make the Revolving Credit Advance to be made by such other Lender on such date.

SECTION 2.04.  Fees.  (a)  Commitment Fee.  The Borrower agrees to pay to the Agent for the account of each Lender a commitment fee on the aggregate amount of such Lender's Unused Revolving Credit Commitment from the date hereof in the case of each Initial Lender and from the effective date specified in the Assumption Agreement or in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing September 30, 2005, and on the Termination Date.

(b)      Letter of Credit Fees.  (i)  The Borrower shall pay to the Agent for the account of each Revolving Credit Lender a commission on such Lender's Ratable Share of the average daily aggregate Available Amount of all Letters of Credit outstanding from time to time at a rate per annum equal to the Applicable Margin for Eurodollar Rate Advances in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing September 30, 2005, and on the Termination Date, and after the Termination Date payable upon demand; provided that the Applicable Margin shall increase by 2% upon the occurrence and during the continuation of an Event of Default if the Borrower is required to pay default
interest pursuant to Section 2.07(b).

(ii)      The Borrower shall pay to each Issuing Bank for its own account such reasonable and customary fronting, issuance, presentation, amendment and other processing fees as may from time to time be agreed in writing between the Borrower and such Issuing Bank.

(c)       Agent's Fees.  The Borrower shall pay to the Agent for its own account such fees as have been agreed between the Borrower and the Agent.

SECTION 2.05.  Optional Termination or Reduction of the Commitments.  The Borrower shall have the right, upon at least three Business Days' notice to the Agent, to terminate in whole or permanently reduce ratably in part the unused portions of the Term Commitments, the Unused Revolving Credit Commitments or the Unissued Letter of Credit Commitments, provided that each partial reduction of a Facility (i) shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) shall be made ratably among the Appropriate Lenders in accordance with their Commitments with respect to such Facility.

SECTION 2.06.  Repayment.  (a)  Revolving Credit Advances.  The Borrower shall repay to the Agent for the ratable account of the Revolving Credit Lenders on the Termination Date the aggregate principal amount of the Revolving Credit Advances then outstanding.

(b)      Letter of Credit Reimbursements.  The obligations of the Borrower under this Agreement, any Letter of Credit Agreement and any other agreement or instrument, in each case, relating to any Letter of Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances (it being understood that any such payment by the Borrower is without prejudice to, and does not constitute a waiver of, any rights the Borrower might have or might acquire as a result of the payment by any Revolving Credit Lender of any draft or the reimbursement by the Borrower thereof):

(i)       any lack of validity or enforceability of this Agreement, any Letter of Credit, any Letter of Credit Agreement or any other agreement or instrument, in each case, relating thereto (all of the foregoing being, collectively, the "L/C Related Documents");

 

 

 

 

(ii)      any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents;

(iii)     the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for which any such beneficiary or any such transferee may be acting), any Issuing Bank, the Agent, any Lender or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction;

(iv)     any statement or any other document presented under a 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;

(v)      payment by any Issuing Bank under a Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit;

(vi)     any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Borrower in respect of the L/C Related Documents; or

(vii)    any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor.

(c)       Term Advances.  The Borrower shall repay to the Agent for the ratable account of the Term Lenders the aggregate outstanding principal amount of the Term Advances in installments of $10,000,000 on each anniversary of the Effective Date, provided, however, that the final principal installment shall be repaid on the Term Loan Maturity Date and in any event shall be in an amount equal to the aggregate principal amount of the Term Advances outstanding on such date.

SECTION 2.07.  Interest on Advances.  (a)  Scheduled Interest.  The Borrower shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:

(i)       Base Rate Advances.  During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full.

(ii)      Eurodollar Rate Advances.  During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Advance plus (y) the Applicable Margin in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full.

(b)      Default Interest.  Upon the occurrence and during the continuance of an Event of Default, the Agent may, and upon the request of the Required Lenders shall, require the Borrower to pay interest ("Default Interest") on (i) the unpaid principal amount of each Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above, as applicable, and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid 

 

 

 

when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above, provided, however, that following acceleration of the maturity of the Advances pursuant to Section 6.01, Default Interest shall accrue and be payable hereunder whether or not previously required by the Agent.

SECTION 2.08.  Interest Rate Determination.  (a)  Each Reference Bank agrees to furnish to the Agent timely information for the purpose of determining each Eurodollar Rate.  If any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks.  The Agent shall give prompt notice to the Borrower and the Appropriate Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.07(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.07(a)(ii).

(b)      If, with respect to any Eurodollar Rate Advances under any Facility, the Lenders owed at least 51% of the aggregate principal amount thereof notify the Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrower and the Appropriate Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (ii) the obligation of the Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended and such Lenders have determined that the circumstances causing
such suspension no longer exist and the Agent shall so notify the Borrower.

(c)       If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Agent will forthwith so notify the Borrower and the Appropriate Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances.

(d)      On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such Advances shall automatically, on the last day of the then existing Interest Period therefor, Convert into Base Rate Advances.

(e)       Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended.

(f)       If Moneyline Telerate Markets Page 3750 is unavailable and fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances,

(i)       the Agent shall forthwith notify the Borrower and the Appropriate Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances,

(ii)      each outstanding Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and

(iii)     the obligation of the Lenders to make Eurodollar Rate Advances or to Convert Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.

 

 

 

 

SECTION 2.09.  Optional Conversion of Advances.  The Borrower may on any Business Day, upon notice given to the Agent not later than 12:00 Noon (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12, Convert all or any portion of Advances of one Type comprising the same Borrowing into Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b),
no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(b) and each Conversion of Advances comprising part of the same Borrowing under any Facility shall be made ratably among the Appropriate Lenders in accordance with their Commitments under such Facility.  Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each such Advance.  Each notice of Conversion shall be irrevocable and binding on the Borrower.

SECTION 2.10. Prepayments of Advances.  The Borrower may, upon notice at least two Business Days prior to the date of such prepayment, in the case of Eurodollar Rate Advances, and not later than 12:00 Noon (New York City time) on the date of such prepayment, in the case of Base Rate Advances, to the Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount of $10,000,000 or
an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c).

SECTION 2.11.  Increased Costs.  (a)  If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation 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 Eurodollar Rate Advances or agreeing to issue or of issuing or maintaining or participating in Letters of Credit (excluding for purposes of this Section 2.11 any  such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.14 shall govern) and (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such
Lender is organized or has its Applicable Lending Office or any political subdivision thereof), then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost; provided, however, that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would avoid the need for, or reduce the amount of, such increased cost and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.  A certificate as to the amount of such increased cost, submitted to the Borrower and the Agent by such Lender, shall be presumed
correct for all purposes, absent manifest error.

(b)      If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend or to issue or participate in Letters of Credit hereunder and other commitments of this type or the issuance or maintenance of or participation in the Letters of Credit (or similar contingent obligations), then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrower shall pay to the Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend or to issue or participate in Letters of Credit hereunder or the issuance or maintenance of or participation in the Letters of Credit.  A certificate as to such amounts submitted to the Borrower and the Agent by such Lender shall be presumed correct for all purposes, absent manifest error.

 

 

 

 

(c)       Notwithstanding anything to the contrary in this Section 2.11, the Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts incurred more than ninety days prior to the date that such Lender notifies the Borrower of such Lender's intention to claim compensation therefor; provided that, if the circumstances giving rise to such claim have a retroactive effect, then such ninety-day period shall be extended to include the period of such retroactive effect.  The obligations of the Borrower pursuant to this Section shall survive the termination of this Agreement and the payment of the Advances and all other amounts payable hereunder.

SECTION 2.12.  Illegality.  Notwithstanding any other provision of this Agreement, if any Lender shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, (a) each Eurodollar Rate Advance will automatically, upon such demand, Convert into a Base Rate Advance and (b) the obligation of the Appropriate Lenders to make Eurodollar Rate Advances or to Convert Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist; provided, however, that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Eurodollar Lending Office if the making of such a designation would allow such Lender or its Eurodollar Lending Office to continue to perform its obligations to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender.

SECTION 2.13.  Payments and Computations.  (a)  The Borrower shall make each payment hereunder, irrespective of any right of counterclaim or set-off,  not later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars to the Agent at the Agent's Account in same day funds.  The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest, fees or commissions ratably (other than amounts payable pursuant to Section 2.04(b)(ii), 2.11, 2.14 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement.  Upon any Assuming Lender
becoming a Lender hereunder as a result of a Commitment Increase pursuant to Section 2.18, and upon the Agent's receipt of such Lender's Assumption Agreement and recording of the information contained therein in the Register, from and after the applicable Increase Date, the Agent shall make all payments hereunder and under any Notes issued in connection therewith in respect of the interest assumed thereby to the Assuming Lender.  Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b)      The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder or under the Note held by such Lender, to charge from time to time against any or all of the Borrower's accounts with such Lender any amount so due.

(c)       All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of fees and Letter of Credit commissions shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable.  Each determination by the Agent of an interest rate hereunder shall be presumed correct for all purposes, absent manifest error.

(d)      Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest, fee or commission, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate 

 

 

 

Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

(e)       Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent the Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate.

SECTION 2.14.  Taxes.  (a)  Any and all payments by the Borrower to or for the account of any Lender or the Agent hereunder or under the Notes or any other documents to be delivered hereunder shall be made, in accordance with Section 2.13 or the applicable provisions of such other documents, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, imposed on such Lender or the Agent (as the case may be) as a result of a present or former connection between such Lender or the Agent and the jurisdiction of the governmental
authority imposing such tax or any political subdivision thereof or taxing authority thereof or therein (other than any such connection arising solely from such Lender or the Agent having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any of the Notes) (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes").  If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note or any other documents to be delivered hereunder to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.14) such Lender or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

(b)      In addition, the Borrower shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or any other documents to be delivered hereunder or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes or any other documents to be delivered hereunder (hereinafter referred to as "Other Taxes").

(c)       The Borrower shall indemnify each Lender and the Agent for and hold it harmless against the full amount of Taxes or Other Taxes (including, without limitation, taxes of any kind imposed or asserted by any jurisdiction on amounts payable under this Section 2.14) imposed on or paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto.  This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor.

(d)      Within 30 days after the date of any payment of Taxes, the Borrower shall furnish to the Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing such payment to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Agent.  In the case of any payment hereunder or under the Notes or any other documents to be delivered hereunder by or on behalf of the Borrower through an account or branch outside the United States or by or on behalf of the Borrower by a payor that is not a United States person, if the Borrower determines that no Taxes are payable in respect thereof, the Borrower shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel
acceptable to the Agent stating that such payment is exempt from Taxes.  For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code.

 

 

 

 

(e)       Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender and on the date of the Assumption Agreement or the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as reasonably requested in writing by the Borrower (but only so long as such Lender remains lawfully able to do so), shall provide each of the Agent and the Borrower with two original Internal Revenue Service Forms W-8BEN or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments
pursuant to this Agreement or the Notes.  If the form provided by a Lender at the time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Lender assignee becomes a party to this Agreement, the Lender assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender assignee on such date.  If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service Form W-8BEN or W-8ECI, that the Lender reasonably considers to be confidential, the Lender shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information.

(f)       For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form, certificate or other document described in Section 2.14(e) (other than if such failure is due to a change in law, or in the interpretation or application thereof, occurring subsequent to the date on which a form, certificate or other document originally was required to be provided, or if such form, certificate or other document otherwise is not required under subsection (e) above), such Lender shall not be entitled to indemnification under Section 2.14(a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender become subject to Taxes because of its failure to deliver a form, certificate or other document required hereunder, the Borrower shall take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes.

(g)       If the Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.14, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.14 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Agent or such Lender and without interest (other than any interest paid by the relevant governmental authority with respect to such refund); provided, that the Borrower, upon the request of the Agent or such Lender, agrees
to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant governmental authority) to the Agent or such Lender in the event the Agent or such Lender is required to repay such refund to such governmental authority.  This paragraph shall not be construed to require the Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

(h)       Any Lender claiming any additional amounts payable pursuant to this Section 2.14 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Eurodollar Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.

SECTION 2.15.  Sharing of Payments, Etc.  If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances owing to it (other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its ratable share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances owing to them as shall be necessary to cause such purchasing Lender to share the 

 

 

 

excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered provided further that, so long as the maturity of the obligations under this
Agreement and the Notes shall not have been accelerated, any excess payment received by any Appropriate Lender shall be shared on a pro rata basis only with other Appropriate Lenders.  The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

SECTION 2.16.  Evidence of Debt.  (a)  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder in respect of Advances. The Borrower agrees that upon notice by any Lender to the Borrower (with a copy of such notice to the Agent) to the effect that a Note is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Advances owing to, or to be made by, such Lender, the Borrower shall promptly execute and deliver to such Lender a Revolving Credit Note and a Term Note, as applicable, in substantially the form of Exhibits
A-1 and A-2 hereto, respectively, payable to the order of such Lender in a principal amount equal to the Revolving Credit Commitment and the Term Commitment, respectively, of such Lender.

(b)      The Register maintained by the Agent pursuant to Section 8.07(d) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assumption Agreement and each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Lender's share thereof.

(c)       Entries made in good faith by the Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided, however, that the failure of the Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall
not limit or otherwise affect the obligations of the Borrower under this Agreement.

SECTION 2.17.  Use of Proceeds.  The proceeds of the Advances shall be available (and the Borrower agrees that it shall use such proceeds) for general corporate purposes of the Borrower and its Subsidiaries, including commercial paper backstop and acquisition financing.

SECTION 2.18.  Increase in the Aggregate Revolving Credit Commitments.  (a) The Borrower may, at any time but in any event not more than once in any calendar year prior to the Termination Date, by notice to the Agent, request that the aggregate amount of the Revolving Credit Commitments be increased by an amount of $10,000,000 or an integral multiple thereof (each a "Commitment Increase") to be effective as of a date that is at least 90 days prior to the scheduled Termination Date then in effect (the "Increase Date") as specified in the related notice to the Agent; provided, however that (i) in no event shall the aggregate amount of the Revolving Credit
Commitments at any time exceed $500,000,000 and (ii) on the date of any request by the Borrower for a Commitment Increase and on the related Increase Date (x) the Public Debt Rating shall be BBB- (stable) or better from S&P or Baa3 (stable) or better from Moody's and (y) the applicable conditions set forth in Article III shall have been satisfied.

 

 

 

 

(b)      The Agent shall promptly notify the Lenders of a request by the Borrower for a Commitment Increase, which notice shall include (i) the proposed amount of such requested Commitment Increase, (ii) the proposed Increase Date and (iii) the date by which Lenders wishing to participate in the Commitment Increase must commit to an increase in the amount of their respective Revolving Credit Commitments (the "Commitment Date").  Each Lender that is willing to participate in such requested Commitment Increase (each an "Increasing Lender") shall, in its sole discretion, give written notice to the Agent on or prior to the Commitment Date of the amount by which it is willing to increase its Revolving Credit Commitment.  If the
Lenders notify the Agent that they are willing to increase the amount of their respective Revolving Credit Commitments by an aggregate amount that exceeds the amount of the requested Commitment Increase, the requested Commitment Increase shall be allocated among the Lenders willing to participate therein in such amounts as are agreed between the Borrower and the Agent.

(c)       Promptly following each Commitment Date, the Agent shall notify the Borrower as to the amount, if any, by which the Lenders are willing to participate in the requested Commitment Increase.  If the aggregate amount by which the Lenders are willing to participate in any requested Commitment Increase on any such Commitment Date is less than the requested Commitment Increase, then the Borrower may extend offers to one or more Eligible Assignees to participate in any portion of the requested Commitment Increase that has not been committed to by the Lenders as of the applicable Commitment Date; provided, however, that the Revolving Credit Commitment of each such Eligible Assignee shall be in an amount of $5,000,000 or
an integral multiple of $1,000,000 in excess thereof.

(d)      On each Increase Date, each Eligible Assignee that accepts an offer to participate in a requested Commitment Increase in accordance with Section 2.18(b) (each such Eligible Assignee and each Eligible Assignee that agrees to an extension of the Termination Date in accordance with Section 2.19(c), an "Assuming Lender") shall become a Lender party to this Agreement as of such Increase Date and the Revolving Credit Commitment of each Increasing Lender for such requested Commitment Increase shall be so increased by such amount (or by the amount allocated to such Lender pursuant to the last sentence of Section 2.18(b)) as of such Increase Date; provided, however, that the Agent
shall have received on or before such Increase Date the following, each dated such date:

(i)       (A) certified copies of resolutions of the Board of Directors of the Borrower or the Executive Committee of such Board approving the Commitment Increase and the corresponding modifications to this Agreement and (B) an opinion of counsel for the Borrower (which may be in-house counsel), in substantially the form of Exhibit D hereto;

(ii)      an assumption agreement from each Assuming Lender, if any, in form and substance satisfactory to the Borrower and the Agent (each an "Assumption Agreement"), duly executed by such Eligible Assignee, the Agent and the Borrower; and

(iii)     confirmation from each Increasing Lender of the increase in the amount of its Revolving Credit Commitment in a writing satisfactory to the Borrower and the Agent.

On each Increase Date, upon fulfillment of the conditions set forth in the immediately preceding sentence of this Section 2.18(d), the Agent shall notify the Lenders (including, without limitation, each Assuming Lender) and the Borrower, on or before 1:00 P.M. (New York City time), by telecopier, of the occurrence of the Commitment Increase to be effected on such Increase Date and shall record in the Register the relevant information with respect to each Increasing Lender and each Assuming Lender on such date.

(e)       On the Increase Date, if any Revolving Credit Advances are then outstanding, the Borrower shall borrow from all or certain of the Revolving Credit Lenders and/or (subject to compliance by the Borrower with Section 8.04(c)) prepay Revolving Credit Advances of all or certain of the Revolving Credit Lenders such that, after giving effect thereto, the Revolving Credit Advances (including, without limitation, the Types and Interest Periods thereof) shall be held by the Revolving Credit Lenders (including for such purposes the Increasing Lenders and the Assuming Lenders) ratably in accordance with their respective Revolving Credit Commitments.  On and after each Increase Date, the Ratable Share of each Revolving Credit Lender's participation in Letters of Credit 

 

 

 

and Revolving Credit Advances from draws under Letters of Credit shall be calculated after giving effect to each such Commitment Increase.

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01.  Conditions Precedent to Effectiveness of Section 2.01.  Section 2.01 of this Agreement shall become effective on and as of the first date (the "Effective Date") on which the following conditions precedent have been satisfied:

	
            (a)
 	
            There shall have occurred no Material Adverse Change since December 31, 2004.
 

(b)      All governmental and third party consents and approvals necessary in connection with the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lenders that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated hereby.

(c)       The Borrower, through the Agent, shall have notified the Agent and each Lender in writing as to the proposed Effective Date.

(d)      The Borrower shall have paid all accrued fees and expenses of the Agent and the Lenders (including the accrued fees and expenses of counsel to the Agent) that the Borrower is obligated to pay on or before the Effective Date pursuant to the terms of this Agreement.

(e)       On the Effective Date, the following statements shall be true and the Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated the Effective Date, stating that:

(i)       The representations and warranties contained in Section 4.01 are correct on and as of the Effective Date, and

	
            (ii)
 	
            No event has occurred and is continuing that constitutes a Default.
 

(f)       The Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for the Notes) in sufficient copies for each Lender:

(i)       The Notes to the order of the Lenders to the extent requested by any Lender pursuant to Section 2.16.

(ii)      Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement and the Notes, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and the Notes.

(iii)    A certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the Notes and the other documents to be delivered hereunder.

(iv)     A favorable opinion of Thomas C. Zielinski, General Counsel of the Borrower, and a favorable opinion of Bass, Berry & Sims PLC, counsel for the Borrower, substantially in the 

 

 

 

form of Exhibits D-1 and D-2 hereto, respectively, and as to such other matters as any Lender through the Agent may reasonably request.

(v)      A favorable opinion of Shearman & Sterling LLP, counsel for the Agent, in form and substance satisfactory to the Agent.

(h)       The Borrower shall have terminated the commitments of the lenders and repaid or prepaid all of the obligations (other than the letters of credit listed on Schedule 2.01(b)) under the $450,000,000 Credit Agreement dated as of January 28, 2005 among the Borrower, the lenders parties thereto and Canadian Imperial Bank of Commerce, as administrative agent, and each of the Lenders that is a party to such credit facility hereby waives, upon execution of this Agreement, any notice required by said Credit Agreement relating to the termination of commitments thereunder.

SECTION 3.02.  Conditions Precedent to Each Revolving Credit Borrowing, Issuance and Commitment Increase.  The obligation of each Lender to make an Advance on the occasion of each Borrowing (other than pursuant to Section 2.03(c)), the obligation of each issuing Bank to issue, extend or renew a Letter of Credit and each Commitment Increase shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Borrowing, such issuance or the applicable Increase Date (a) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing, Notice of Issuance, request for Commitment Increase and the acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing, such
issuance or such Increase Date such statements are true):

(i)       the representations and warranties contained in Section 4.01 (except, in the case of Borrowings or issuances, the representations set forth in the last sentence of subsection (e) thereof) are correct on and as of such date, before and after giving effect to such Borrowing, such issuance, such Commitment Increase and to the application of the proceeds therefrom, as though made on and as of such date, excluding, however, representations and warranties made as of specified earlier date, which shall remain true and correct as of such earlier date, and

(ii)      no event has occurred and is continuing, or would result from such Borrowing, such issuance, such Commitment Increase or from the application of the proceeds therefrom, that constitutes a Default;

and (b) the Agent shall have received such other approvals, opinions or documents as any Lender through the Agent may reasonably request.

SECTION 3.03.  Determinations Under Section 3.01.  For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto.  The Agent shall promptly notify the Lenders of the occurrence of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01.  Representations and Warranties of the Borrower.  The Borrower represents and warrants as follows:

(a)       The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

 

 

 

 

(b)      The execution, delivery and performance by the Borrower of this Agreement and the Notes to be delivered by it, and the consummation of the transactions contemplated hereby, are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's certificate of incorporation or by-laws or (ii) law or any material contractual restriction binding on or affecting the Borrower.

(c)       No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the Borrower of this Agreement or the Notes to be delivered by it, except for those authorizations, approvals, actions, notices and filings listed on Schedule 4.01(c) hereto, all of which have been duly obtained, taken, given or made and are in full force and effect.

(d)      This Agreement has been, and each of the Notes to be delivered by it when delivered hereunder will have been, duly executed and delivered by the Borrower.  This Agreement is, and each of the Notes when delivered hereunder will be, the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

(e)       The Consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2004, and the related Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Ernst & Young LLP, independent public accountants, and the Consolidated balance sheet of the Borrower and its Subsidiaries as at March 31, 2005, and the related Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the three months then ended, duly certified by the chief financial officer of the Borrower, copies of which have been furnished to each Lender, fairly present, subject, in the case of said balance sheet as at March 31, 2005, and said statements of income and cash flows for the
three months then ended, to year-end audit adjustments, the Consolidated financial condition of the Borrower and its Subsidiaries as at such dates and the Consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles consistently applied.  Since December 31, 2004, there has been no Material Adverse Change.

(f)       There is no pending or threatened action, suit, investigation, litigation or proceeding affecting the Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect (other than the matters described on Schedule 4.01(f) hereto (the "Disclosed Litigation")) or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby, and there has been no material adverse change in the status, or financial effect on the Borrower or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 4.01(f) hereto.

(g)       The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

(h)       The Borrower is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended.

(i)       Neither the Information Memorandum nor any other final written information, exhibit or report furnished by or on behalf of the Borrower to the Agent or any Lender in connection with the negotiation and syndication of this Agreement or pursuant to the terms of this Agreement contained, as of the respective dates thereof, any untrue statement of a material fact or omitted to state a material fact 

 

 

 

necessary to make the statements made therein, taken as a whole, not misleading.  The projections and pro forma financial information contained in the material referenced above are based upon good faith estimates and assumptions believed by management of the Borrower to be reasonable at the time made, it being recognized by the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein by a material amount.

(j)       The Borrower and each of its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect (the "Intellectual Property").  No claim has been asserted in writing and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does the Borrower know of any valid basis for any such claim, except, in either case, for such claims that in the aggregate could not reasonably be expected to have a Material
Adverse Effect.  The use of such Intellectual Property by the Borrower and its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(k)       Except as disclosed to the Agent by the Borrower in writing from time to time after the Closing Date, Schedule 4.01(k) sets forth the name and jurisdiction of incorporation of each Subsidiary of the Borrower and, as to each such Subsidiary, the percentage of each class of capital stock owned by any the Borrower and its Subsidiaries and whether such Subsidiary is an HMO Subsidiary or an Insurance Subsidiary.

(l)       The Borrower and each of its Subsidiaries has filed or caused to be filed all Federal and other material tax returns that are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any governmental authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Borrower or such Subsidiary).  No tax Lien has been filed and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or other charge.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION 5.01.  Affirmative Covenants.  So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will:

(a)       Compliance with Laws, Etc.  Comply, and cause each of its Subsidiaries to comply, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with applicable requirements of ERISA, Environmental Laws, HIPAA, Medicaid Regulations, HMO Regulations, Insurance Regulations and the Patriot Act, except to the extent that failure to comply therewith could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b)      Payment of Taxes, Etc.  Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim (i) that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until 

 

 

 

any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors or (ii) if a failure to pay or discharge the same, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(c)       Maintenance of Insurance.  Maintain, and cause each of its Subsidiaries to maintain, such insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates; provided, however, that the Borrower and its Subsidiaries may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates and to the extent consistent with prudent business practice.

(d)      Preservation of Corporate Existence, Etc.  (i) Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its organizational existence and (ii) take, and cause each of its Subsidiaries to take, all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business (including all licenses and certifications required pursuant to any HMO Regulations or Insurance Regulations, all certifications and authorizations necessary to ensure that each of the Borrower's HMO Subsidiaries and Insurance Subsidiaries is eligible for all reimbursements available under HMO Regulations and Insurance Regulations to the extent applicable to HMOs and insurance companies of their type and the products
provided by them, and all material licenses, permits, authorizations and qualifications required under HMO Regulations and Insurance Regulations in connection with the ownership or operation of HMOs and insurance companies), except (x) in each case, as otherwise permitted by Section 5.02(b), (y) the Borrower may permit the dissolution and winding-up of any of its Subsidiaries if such Subsidiary has no material assets, engages in no material business and has no material activities other than activities related to the maintenance of its existence and good standing and (z) in the case of clause (ii) above, to the extent that failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(e)       Visitation Rights.  At any reasonable time and from time to time upon reasonable prior notice and during normal business hours, permit the Agent or any of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants.

(f)       Keeping of Books.  Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time.

(g)       Maintenance of Properties, Etc.  Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.

(h)       Transactions with Affiliates.  Conduct, and cause each of its Subsidiaries to conduct, all transactions otherwise permitted under this Agreement with any of their Affiliates (excluding transactions between or among the Borrower and its Subsidiaries) on terms that are fair and reasonable and no less favorable to the Borrower or such Subsidiary than it would obtain in a comparable arm's-length transaction with a Person not an Affiliate.

	
            (i)
 	
            Reporting Requirements.  Furnish to the Lenders through the Agent:
 

(i)       as soon as available and in any event within 10 days after the date the Company is required to file its Form 10-Q with the Securities and Exchange Commission (without giving 

 

 

 

effect to any extension of such due date, whether obtained by filing the notification permitted by Rule 12b-25 or any successor provision or otherwise), the Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by a Responsible Officer as having been prepared in accordance with generally accepted accounting principles (it being understood that the Borrower's obligations under this clause (i) shall be satisfied in respect of any fiscal quarter by delivery to the Agent in accordance with Section 8.02(b) within the time specified above of the Borrower's quarterly report for such fiscal quarter on Form 10-Q
as filed with the Securities and Exchange Commission) and certificates of a Responsible Officer as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP;

(ii)      as soon as available and in any event within 10 days after the date the Company is required to file its Form 10-K with the Securities and Exchange Commission (without giving effect to any extension of such due date, whether obtained by filing the notification permitted by Rule 12b-25 or any successor provision or otherwise), a copy of the annual audit report for such year for the Borrower and its Subsidiaries, containing the Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year and Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for such fiscal year, in each case accompanied by an opinion reasonably acceptable to the Required Lenders by Ernst & Young LLP or other independent public accountants acceptable to
the Required Lenders (it being understood that the Borrower's obligations under this clause (ii) shall be satisfied in respect of any fiscal year by delivery to the Agent in accordance with Section 8.02(b) within the time specified above of the Borrower's annual report for such fiscal year on Form 10-K as filed with the Securities and Exchange Commission) and certificates of a Responsible Officer as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP;

(iii)    to the extent not otherwise provided in accordance with this Section 5.01(i), promptly after the sending or filing thereof, copies of all quarterly and annual reports and proxy solicitations that the Borrower sends to any of its securityholders, and copies of all reports on form 8-K and registration statements for the public offering (other than pursuant to employee Plans) of securities that the Borrower or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange;

	
            (iv)
 	
            notice of the occurrence of any Default;
 

(v)      notice of any litigation, investigation or proceeding that may exist between the Borrower or any of its Subsidiaries and any governmental authority that if adversely determined would reasonably be expected to have a Material Adverse Effect;

(vi)     notice of any litigation or proceeding affecting the Borrower or any of its Subsidiaries (A) in which the amount involved is $25,000,000 or more and not covered by insurance, (B) in which injunctive or similar relief is sought or (C) that relates to this Agreement or any Note;

 

 

 

 

	
            (vii)
 	
            notice of any ERISA Event;
 

(ix)     notice of the filing or commencement of any action, suit or proceeding by or before any arbitrator or governmental authority (including any HMO Regulator or Insurance Regulator) against or affecting the Borrower or any of its Subsidiaries, or any adverse change in the status of the matters referred to in Section 4.01(f), that, individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect;

(x)      notice of receipt by the Borrower, any Material HMO Subsidiary or any Material Insurance Subsidiary of any notice of loss of licensure, loss of participation under any reimbursement program or loss of applicable health care license or certificate of authority, or loss of any permit, authorization, accreditation, or qualification or any notice relating to the threatened loss of any of the foregoing, from any governmental authority, HMO Regulator or Insurance Regulator that, individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect;

(xi)     notice of receipt by the Borrower, any Material HMO Subsidiary or any Material Insurance Subsidiary of any other deficiency notice, compliance order or adverse reports issued by any governmental authority, HMO Regulator, Insurance Regulator or private insurance company pursuant to a provider agreement that, if not promptly complied with or cured, could reasonably be expected to result in the suspension or forfeiture of any license, certification or licensure necessary for such Material HMO Subsidiary or Material Insurance Subsidiary to carry on its business as then conducted or the termination of any insurance or reimbursement program available to any Material HMO Subsidiary or any Material Insurance Subsidiary and that, individually or in the aggregate, has had, or could reasonably be expected to
have, a Material Adverse Effect;

(xii)    notice of receipt by the Borrower, any Material HMO Subsidiary or any Material Insurance Subsidiary of any correspondence from any governmental authority, HMO Regulator or Insurance Regulator that asserts that the Borrower, any Material HMO Subsidiary or any Material Insurance Subsidiary is not in substantial compliance with any HMO Regulation or Insurance Regulation or that threatens the taking of any action against the Borrower, any Material HMO Subsidiary or any Material Insurance Subsidiary under any HMO Regulation or any Insurance Regulation and that, individually or in the aggregate, had had, or could reasonably be expected to have, a Material Adverse Effect;

(xiii)   notice of any development or event that, individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect; and

(xv)    such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request.

Each notice pursuant clauses (iv) through (xiii) above shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower or the applicable Subsidiary proposes to take with respect there.

SECTION 5.02.  Negative Covenants.  So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not:

(a)       Liens.  Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, any Lien on or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, other than:

 

 

 

 

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

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

(iii)    pledges or deposits in connection with the workers' compensation, unemployment insurance and other social security legislation;

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

(v)      easements, reservations, rights-of-way, covenants, conditions, restrictions and other similar encumbrances incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;

(vi)     Liens in existence on the date hereof listed on Schedule 5.02(a), securing Debt permitted by Section 5.02(d)(iii), provided that no such Lien is spread to cover any additional property after the Effective Date and that the amount of Debt secured thereby is not increased;

(vii)    Liens securing Debt of the Borrower or any other Subsidiary incurred pursuant to Section 5.02(d) (iv) (x) to finance the acquisition of fixed or capital assets or (y) pursuant to a sale and leaseback transaction, provided that (A) such Liens shall be created substantially simultaneously with the acquisition of such fixed or capital assets or such sale and leaseback transaction, as the case may be, (B) such Liens do not at any time encumber any property other than the property financed by such Debt and (C) the amount of Debt secured thereby is not increased;

(viii)  Liens created in connection with this Agreement to secure the Borrower's obligations hereunder;

(ix)     any interest or title of a lessor under any lease entered into by the Borrower or any other Subsidiary in the ordinary course of its business and covering only the assets so leased;

(x)      Liens on property of a Person at the time such Person becomes a Subsidiary of the Borrower and securing Debt of such Person permitted under Section 5.02(d)(v); provided that any such Lien may not extend to any other property of the Borrower or any other Subsidiary of the Borrower that is not a direct Subsidiary of such Person; provided, further, that any such Lien shall not have been incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a Subsidiary of the Borrower;

(xi)     Liens in respect of any writ of execution, attachment, garnishment, judgment or judicial award, if (A) the time for appeal or petition for rehearing has not expired, an appeal or appropriate proceeding for review is being prosecuted in good faith and a stay of execution pending such appeal or proceeding for review has been secured, or (B) the underlying claim is fully covered by insurance, the insurer has acknowledged in writing its responsibility to pay such claim and no action has been taken to enforce such execution, attachment, garnishment, judgment or award; and

 

 

 

 

(xii)    Liens not otherwise permitted by this Section so long as the aggregate outstanding principal amount of the obligations secured thereby does not at any one time exceed (as to the Borrower and all of its Subsidiaries) $100,000,000.

(b)      Mergers, Etc.  Merge or consolidate with or into any Person, or permit any of its Subsidiaries to do so, except that (i) any Subsidiary of the Borrower may merge or consolidate with or into any other Subsidiary of the Borrower, (ii) any Subsidiary of the Borrower may merge into the Borrower, (iii) a Subsidiary of the Borrower may be merged or consolidated with or into another Person as the means of accomplishing a transaction permitted by Section 5.02(e), (iv) any Person may merge into the Borrower so long as the Borrower is the surviving corporation and (v) any Subsidiary of the Borrower may merge with or into another Person provided the survivor is a Subsidiary of the Borrower, provided, in each case, that no Default
shall have occurred and be continuing at the time of such proposed transaction or would otherwise result therefrom.

(c)       Accounting Changes.  Make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles.

(d)      Subsidiary Debt.  Permit any of its Subsidiaries to create or suffer to exist, any Debt other than:

	
            (i)
 	
            Debt owed to the Borrower or to a wholly-owned Subsidiary of the Borrower,
 

(ii)      Guarantee Obligations in respect of obligations of any Subsidiary of the Borrower;

(iii)    Debt existing on the Effective Date and described on Schedule 5.02(d) hereto (the "Existing Debt"), and any Debt extending the maturity of, or refunding or refinancing, in whole or in part, the Existing Debt, provided that the principal amount of such Existing Debt shall not be increased above the principal amount thereof outstanding immediately prior to such extension, refunding or refinancing, and the direct and contingent obligors therefor shall not be changed except as permitted by clause (ii) above, as a result of or in connection with such extension, refunding or refinancing,

(iv)     Debt (including, without limitation, Capital Lease Obligations) secured by Liens permitted by Section 5.02(a)(vii) in an aggregate principal amount not to exceed $100,000,000 at any one time outstanding;

(v)      Debt of a Subsidiary of the Borrower outstanding on the date on which such Subsidiary was acquired by the Borrower (other than Debt incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of transactions pursuant to which such Subsidiary became a Subsidiary of the Borrower or was otherwise acquired by the Borrower) in an aggregate amount (for all Subsidiaries) at any one time outstanding not to exceed $100,000,000; and

(vi)     additional Debt in an aggregate principal amount not to exceed $50,000,000 at any one time outstanding.

(e)       Sales, Etc. of Assets.  Sell, lease, transfer or otherwise dispose of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except:

	
            (i)
 	
            sales of inventory in the ordinary course of its business,
 

 

 

 

 

(ii)      the disposition of obsolete or worn out property in the ordinary course of business;

	
            (iii)
 	
            dispositions of accounts receivable in the ordinary course of business;
 

(iv)     dispositions of investment securities held for investment purposes in the ordinary course of business;

	
            (v)
 	
            dispositions by any Subsidiary to the Borrower or any other Subsidiary;
 

(vi)     the sale or issuance of any Subsidiary's capital stock to the Borrower or any other Subsidiary; and 

(vii)    the disposition after the Effective Date of other property having an aggregate fair market value (after taking into account any liabilities associated with such property) not to exceed 25% of Consolidated Total Assets as at March 31, 2005.

(f)       Restricted Payments.  Declare or pay any dividend (other than dividends payable solely in common stock of the Borrower and cash paid in lieu of fractional shares in connection therewith) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of, any capital stock of the Borrower, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower (collectively, "Restricted Payments"), except that:

(i)       the Borrower may make Restricted Payments in an aggregate amount not to exceed the sum of (i) $100,000,000 and (ii) 66 2/3% of the aggregate amount of Consolidated Net Income accrued during the period commencing with the fiscal quarter ending March 31, 2005 and ending on the last day of the most recent fiscal quarter, if any, ending at least 45 days prior to the date of such Restricted Payment (or if the aggregate amount of Consolidated Net Income for such period shall be a deficit, minus 100% of such deficit); and

(ii)      the Borrower may repurchase shares of, or options to purchase shares of, common stock of the Borrower or any of its Subsidiaries from current or former officers, directors or employees of the Borrower or any of its Subsidiaries (or permitted transferees of such current or former officers, directors or employees), pursuant to the terms of agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of the Borrower under which such individual purchase or sell, or granted the option to purchase or sell, shares of such common stock, provided, however, that (A) the aggregate amount of such repurchases pursuant to this clause (ii) shall not exceed $5,000,000 in any calendar year and (B) at the time of
any such repurchase pursuant to this clause (ii), no Default shall have occurred and be continuing (or result therefrom).

(g)       Change in Nature of Business.  Enter into any material business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on the date hereof or that are reasonably related thereto.

(h)       Clauses Restricting Subsidiary Distributions.  Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the Borrower to (i) make payments in respect of any capital stock of such Subsidiary held by, or pay any Debt owed to, the Borrower or any other Subsidiary of the Borrower, (ii) make loans or advances to, or other investments in, the Borrower or any other Subsidiary of the Borrower or (iii) transfer any of its assets to the Borrower or any other Subsidiary of the Borrower, except for such encumbrances or restrictions existing under or by reason of (A) any restrictions existing under this Agreement or the Indentures, (B) any restrictions with 

 

 

 

respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with the disposition of all or substantially all of the capital stock or assets of such Subsidiary, (C) any restrictions on a Subsidiary imposed by HMO Regulations, Insurance Regulations or other requirements of law, or any agreements entered into pursuant thereto, and (D) any restrictions applicable to a Person at the time such Person becomes a Subsidiary of the Borrower, provided that any such restriction shall not have been created in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a Subsidiary of the Borrower.

(i)       Negative Pledge Clauses.  Enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, other than (i) this Agreement, (ii) the Indentures and (iii) any agreements governing any purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby).

SECTION 5.03.  Financial Covenants.  So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not:

(a)       Leverage Ratio.  Permit, as of the last day of any period of four consecutive fiscal quarters of the Borrower, the Consolidated Leverage Ratio to exceed 2.25 to 1.00, provided that if and so long as the Public Debt Rating is not lower than BBB- (stable) and Baa3 (stable) from S&P and Moody's, respectively, the Borrower shall instead not permit the Consolidated Leverage Ratio to exceed 2.50 to 1.00

(b)      Fixed Charge Coverage Ratio.  Permit the Consolidated Fixed Charge Ratio for any period of four consecutive fiscal quarters of the Borrower to be less than 1.50 to 1.00.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01.  Events of Default.  If any of the following events ("Events of Default") shall occur and be continuing:

(a)       The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable; or the Borrower shall fail to pay any interest on any Advance or make any other payment of fees or other amounts payable under this Agreement or any Note within five days after the same becomes due and payable; or

(b)      Any representation or warranty made by the Borrower herein or by the Borrower in any certificate, document or financial or other statement furnished by it in connection with this Agreement shall prove to have been incorrect in any material respect when made; or

(c)       (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d), (e), (h) or (i), 5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Agent or any Lender; or

(d)      The Borrower or any of its Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal or notional amount of at least $25,000,000 in the aggregate (but excluding Debt outstanding hereunder) of the Borrower or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to Debt in excess of the aforesaid threshold amount; or 

 

 

 

any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any Debt in excess of the aforesaid threshold amount shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or

(e)       The Borrower or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or

(f)       Judgments or orders for the payment of money in excess of $25,000,000 in the aggregate shall be rendered against the Borrower or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment or order shall not be an Event of Default under this Section 6.01(f) if and for so long as (i) the amount of such judgment or order is covered by a valid and binding policy of insurance
between the defendant and the insurer covering payment thereof and (ii) such insurer has been notified of, and has not disputed the claim made for payment of, the amount of such judgment or order; or

(g)       (i) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the Borrower (or other securities convertible into such Voting Stock) representing 35% or more of the combined voting power of all Voting Stock of the Borrower; or (ii) during any period of up to 24 consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Borrower shall cease for any reason (other than due to death or disability) to constitute a majority of the board of directors of the Borrower (except to the extent that
individuals who at the beginning of such 24-month period were replaced by individuals (x) elected by a majority of the remaining members of the board of directors of the Borrower or (y) nominated for election by, or whose nomination for election is recommend by, a majority of the remaining members of the board of directors of the Borrower and thereafter elected as directors by the shareholders of the Borrower); or

(h)       The Borrower or any of its ERISA Affiliates shall incur, or shall be reasonably likely to incur liability in excess of $25,000,000 in the aggregate as a result of one or more of the following:  (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan; or

(i)       the non-compliance by the Borrower or any of its Subsidiaries with any terms or provisions of any applicable HMO Regulation or Insurance Regulation pertaining to the fiscal soundness, solvency or financial condition of the Borrower or any of its Subsidiaries and such non-compliance shall 

 

 

 

not have been cured or waived within 30 days after the applicable statutory grace period (if any), if such non-compliance could reasonably be expected to have a Material Adverse Effect;

then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for
relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Advances, all such interest and all such other amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

SECTION 6.02.  Actions in Respect of the Letters of Credit upon Default.  If any Event of Default shall have occurred and be continuing, the Agent may with the consent, or shall at the request, of the Required Lenders, irrespective of whether it is taking any of the actions described in Section 6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such demand the Borrower will, (a) pay to the Agent on behalf of the Revolving Credit Lenders in same day funds at the Agent's office designated in such demand, for deposit in the L/C Cash Collateral Account, an amount equal to the aggregate Available Amount of all Letters of Credit then outstanding or (b) make such other arrangements in respect of the outstanding Letters of Credit as shall be acceptable to Revolving Credit Lenders having at least 51% of the Revolving Credit
Commitments.  If at any time the Agent determines that any funds held in the L/C Cash Collateral Account are subject to any right or claim of any Person other than the Agent and the Revolving Credit Lenders or that the total amount of such funds is less than the aggregate Available Amount of all Letters of Credit, the Borrower will, forthwith upon demand by the Agent, pay to the Agent, as additional funds to be deposited and held in the L/C Cash Collateral Account, an amount equal to the excess of (a) such aggregate Available Amount over (b) the total amount of funds, if any, then held in the L/C Cash Collateral Account that the Agent determines to be free and clear of any such right and claim.  Upon the drawing of any Letter of Credit, to the extent funds are on deposit in the L/C Cash Collateral Account, such funds shall be applied to reimburse the Issuing Banks to the extent permitted by applicable law.  After (i) no Event of Default shall be continuing or (ii) all such Letters of
Credit shall have expired or been fully drawn upon and all other obligations of the Borrower hereunder and under the Notes shall have been paid in full, the balance, if any, in such L/C Cash Collateral Account shall be returned to the Borrower.

ARTICLE VII

THE AGENT

SECTION 7.01.  Authorization and Action.  Each Lender (in its capacity as a Lender and an Issuing Bank, as applicable) hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto.  As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders and all
holders of Notes; provided, however, that the Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to this Agreement or applicable law.  The Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement.

SECTION 7.02.  Agent's Reliance, Etc.  Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct.  Without limitation of the generality of the foregoing, the Agent:  (i) may treat the Lender that made any Advance as the holder of the Debt resulting 

 

 

 

therefrom until the Agent receives and accepts an Assumption Agreement entered into by an Assuming Lender as provided in Section 2.18 or an Assignment and Acceptance entered into by such Lender, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with  the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance, observance or
satisfaction of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or  the existence at any time of any Default or to inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier or telegram) believed by it to be genuine and signed or sent by the proper party or parties.

SECTION 7.03.  Citibank and Affiliates.  With respect to its Commitments, the Advances made by it and the Note issued to it, Citibank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Borrower, any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or any such Subsidiary, all as if Citibank were not the Agent and without any duty to account therefor to the Lenders.  The Agent shall have no
duty to disclose any information obtained or received by it or any of its Affiliates relating to the Borrower or any of its Subsidiaries to the extent such information was obtained or received in any capacity other than as Agent.

SECTION 7.04.  Lender Credit Decision.  Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  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 taking or not taking action under this Agreement.

SECTION 7.05.  Indemnification.  (a)  Each Lender agrees to indemnify the Agent (to the extent not reimbursed by the Borrower) from and against such Lender's pro rata share (determined as provided below) of any and all liabilities, obligations, losses, damages, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent in its capacity as such under this Agreement (collectively, the "Indemnified Costs"), provided that no Lender shall be liable for any portion of the Indemnified Costs resulting from the Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its Ratable Share of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrower.  In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05(a) applies whether any such investigation, litigation or proceeding is brought by the Agent, any Lender or a third party.  For purposes of this Section 7.05(a), the Lenders' respective pro rata shares of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lenders, (ii) their respective pro rata Shares of the aggregate Available Amount of all Letters of Credit outstanding at such time, (iii) the aggregate unused portions of their Term Commitments at such time and (iv) their respective Unused Revolving Credit Commitments at such time.

 

 

 

 

(b)      Each Revolving Credit Lender severally agrees to indemnify the Issuing Banks (to the extent not promptly reimbursed by the Borrower) from and against such Lender's Ratable Share of any and all liabilities, obligations, losses, damages, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against any such Issuing Bank in any way relating to or arising out of this Agreement or any action taken or omitted by such Issuing Bank in its capacity as such hereunder or in connection herewith; provided, however, that no Revolving Credit Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, actions, judgments, suits, costs, expenses or disbursements resulting from such Issuing Bank's gross negligence or willful misconduct.  Without limitation of the foregoing, each Revolving Credit Lender agrees to reimburse any such Issuing Bank promptly upon demand for its Ratable Share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 8.04, to the extent that such Issuing Bank is not promptly reimbursed for such costs and expenses by the Borrower.

(c)       The failure of any Lender to reimburse the Agent or the Issuing Bank promptly upon demand for its ratable share of any amount required to be paid by the Lenders to the Agent or the Issuing Bank  as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Agent or the Issuing Bank for its Ratable Share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Agent or an Issuing Bank for such other Lender's Ratable Share of such amount.  Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes.

SECTION 7.06.  Successor Agent.  The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Required Lenders.  Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent, which shall be subject to the Borrower's approval (not to be unreasonably withheld or delayed) unless an Event of Default has occurred and is continuing.  If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized under
the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000 and which shall be subject to the Borrower's approval (not to be unreasonably withheld or delayed) unless an Event of Default has occurred and is continuing.  Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement.  After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

SECTION 7.07.  Other Agents.  Each Lender hereby acknowledges that neither the documentation agent nor any other Lender designated as any "agent" on the cover or signature pages hereof has any liability hereunder other than in its capacity as a Lender.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01.  Amendments, Etc.  No amendment or waiver of any provision of this Agreement or the Notes, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders and (with respect to amendments) the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that (a) no amendment, waiver or consent shall, unless in writing and signed by all the Lenders, do any of the following:  (i) waive any of the conditions specified in Section 3.01, (ii) change the percentage of the Revolving Credit Commitments or of the aggregate unpaid principal amount of
the Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder or (iii) amend this Section 8.01 and (b) no amendment, waiver or consent shall, unless in writing and signed by each Lender that is 

 

 

 

directly affected by such amendment, waiver or consent, (i) other than as provided in Section 2.18, increase any Commitment of such Lender (ii) reduce the principal of, or interest on, the Advances or any fees or other amounts payable hereunder to such Lender or (ii) postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder to such Lender; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement or any Note and (y) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Banks in addition to the Lenders required above to take
such action, adversely affect the rights or obligations of the Issuing Banks under this Agreement.

SECTION 8.02.  Notices, Etc.  (a)  All notices and other communications provided for hereunder shall be either (x) in writing (including telecopier communication) and mailed, telecopied, telegraphed or delivered or (y) as and to the extent set forth in Section 8.02(b) and in the proviso to this Section 8.02(a), addressed as follows:  if to the Borrower, at its address at 6705 Rockledge Drive, Suite 800, Bethesda, Maryland  20817, Attention:  Chief Financial Officer; if to any Initial Lender, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assumption Agreement or the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, at its address at Two Penns Way, New Castle, Delaware 19720, Attention: Bank Loan
Syndications Department; or, as to the Borrower or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Agent, provided that materials required to be delivered pursuant to Section 5.01(i)(i), (ii) or (iii) shall be delivered to the Agent as specified in Section 8.02(b) or as otherwise specified to the Borrower by the Agent.  All such notices and communications shall, when mailed, telecopied, telegraphed or e-mailed, be effective when deposited in the mails, telecopied, delivered to the telegraph company or confirmed by e-mail, respectively, except that notices and communications to the Agent pursuant to Article II, III or VII shall not be effective until received by the Agent.  Delivery by telecopier or e-mail of an executed counterpart of any
amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof.

(b)      So long as Citibank or any of its Affiliates is the Agent, materials required to be delivered pursuant to Section 5.01(i)(i), (ii) and (iii) shall be either (x) delivered to the Agent in an electronic medium in a format acceptable to the Agent and the Lenders by e-mail at oploanswebadmin@citigroup.com or (y) deemed to have been delivered when the Borrower provides notice to the Agent by e-mail at oploanswebadmin@citigroup.com that such materials are posted on the SEC's website at www.sec.gov.  The Borrower agrees that the Agent may make such materials, as well as any other written information, documents, instruments and other material relating to the Borrower, any of its Subsidiaries or any other materials or matters relating to this Agreement, the Notes or any of the transactions contemplated hereby
(collectively, the "Communications") available to the Lenders by posting such notices on Intralinks or a substantially similar electronic system (the "Platform").  The Borrower acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution, (ii) the Platform is provided "as is" and "as available" and (iii) neither the Agent nor any of its Affiliates warrants the accuracy, adequacy or completeness of the Communications or the Platform and each expressly disclaims liability for errors or omissions in the Communications or the Platform.  No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code
defects, is made by the Agent or any of its Affiliates in connection with the Platform.

(c)       Each Lender agrees that notice to it (as provided in the next sentence) (a "Notice") specifying that any Communications have been posted to the Platform shall constitute effective delivery of such information, documents or other materials to such Lender for purposes of this Agreement; provided that if requested by any Lender the Agent shall deliver a copy of the Communications to such Lender by email or telecopier.  Each Lender agrees (i) to notify the Agent in writing of such Lender's e-mail address to which a Notice may be sent by electronic transmission (including by electronic communication) on or before the date such Lender becomes a party to this Agreement (and from time to time thereafter to ensure that the
Agent has on record an effective e-mail address for such Lender) and (ii) that any Notice may be sent to such e-mail address.

 

 

 

 

SECTION 8.03.  No Waiver; Remedies.  No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 8.04.  Costs and Expenses.  (a)  The Borrower agrees to pay on demand all reasonable costs and expenses of the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses (subject to any limitations thereon previously agreed by the Borrower and the Agent) and (B) the reasonable fees and expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under this Agreement.  The Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 8.04(a).

(b)      The Borrower agrees to indemnify and hold harmless the Agent and each Lender and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances or
(ii) the actual or alleged presence of Hazardous Materials on any property of the Borrower or any of its Subsidiaries in violation of applicable Environmental Laws or any Environmental Action relating in any way to the Borrower or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct.  In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, equityholders or creditors or an Indemnified Party or any other Person, whether or not any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated.  The Borrower also agrees not to
assert any claim for special, indirect, consequential or punitive damages against the Agent, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, arising out of or otherwise relating to the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances.  The Borrower further agrees to pay any civil penalty or fine assessed by OFAC against the Agent or any Lender and all reasonable costs and expenses (including, without limitation, reasonable counsel fees and expenses) incurred in connection with the defense thereof, as a result of conduct by the Borrower that violates a sanction enforced by OFAC.

(c)       If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.08(e), 2.10 or 2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender other than on the last day of the Interest Period for such Advance upon an assignment of rights and obligations under this Agreement pursuant to Section 8.07 as a result of a demand by the Borrower pursuant to Section 8.07(a), the Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance (but without duplication of any obligation of the Borrower under Section 2.11 or any other provision of this Agreement).

 

 

 

 

(d)      Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes.

SECTION 8.05.  Right of Set-off.  Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, 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 at any time owing by such Lender or such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and the Note held by such Lender, whether or not
such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured.  Each Lender agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have.

SECTION 8.06.  Binding Effect.  This Agreement shall become effective (other than Section 2.01, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Borrower and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders.

SECTION 8.07.  Assignments and Participations.  (a)  Each Lender may and, if demanded by the Borrower (following a demand by such Lender pursuant to Section 2.11 or 2.14 or a suspension of Eurodollar Rate Advances pursuant to Section 2.12 and only if no Event of Default has occurred and is continuing) upon at least five Business Days' notice to such Lender and the Agent, will assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Revolving Credit Commitment, its Term Loan Commitment, the Advances owing to it, its participations in Letters of Credit and the Note or Notes held by it); provided, however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all rights and obligations under and in respect of the Facilities so assigned, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the amount of the Revolving Credit Commitment or Term Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof, unless the Borrower and the Agent otherwise agree, (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by the Borrower pursuant to this Section 8.07(a) shall be arranged by the Borrower after consultation with the Agent and shall be either an assignment of all of the rights
and obligations of the assigning Lender under this Agreement or an assignment of a portion of such rights and obligations made concurrently with another such assignment or other such assignments that together cover all of the rights and obligations of the assigning Lender under this Agreement, (v) no Lender shall be obligated to make any such assignment as a result of a demand by the Borrower pursuant to this Section 8.07(a) unless and until such Lender shall have received, as consideration for such assignment, one or more payments from either the Borrower or one or more Eligible Assignees in an aggregate amount at least equal to the aggregate outstanding principal amount of the Advances owing to such Lender, together with accrued interest thereon to the date of payment of such principal amount and all other amounts payable to such Lender under this Agreement, and (vi) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note subject to such assignment and a processing and recordation fee of $3,500 payable by the parties to each such assignment other than the Borrower, provided, however, that in the case of each assignment made as a result of a demand by the Borrower, such recordation fee shall be payable by the Borrower except that no such recordation fee shall be payable in the case of an assignment made at the request of the Borrower to an Eligible Assignee that is an existing Lender.  Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations 

 

 

 

hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights under Sections 2.11, 2.14 and 8.04 to the extent any claim thereunder relates to an event arising prior to such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(b)      By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender 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 taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender.

(c)       Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any Note or Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower.

(d)      The Agent shall maintain at its address referred to in Section 8.02 a copy of each Assumption Agreement and each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Advances owing to, each Lender from time to time (the "Register").  The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.

(e)       Each Lender may sell participations to one or more banks or other entities (other than the Borrower or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Advances owing to it and any Note or Notes held by it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this
Agreement, (iv) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement or any Note, or any consent to any departure by the Borrower therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or 

 

 

 

postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation.

(f)       Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 8.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Borrower Information relating to the Borrower received by it from such Lender.

(g)       Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and any Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System.

SECTION 8.08.  Confidentiality.  Neither the Agent nor any Lender may disclose to any Person any confidential, proprietary or non-public information of the Borrower furnished to the Agent or the Lenders by the Borrower (such information being referred to collectively herein as the "Borrower Information"), except that each of the Agent and each of the Lenders may disclose Borrower Information (i) to its and its affiliates' employees, officers, directors, agents and advisors on a "need to know" basis (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Borrower Information and instructed to keep such Borrower Information confidential on substantially the same terms as provided herein), (ii) to the extent requested by any
regulatory authority having jurisdiction, (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party to this Agreement, (v) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section 8.08, to any assignee or participant or prospective assignee or participant, (vii) to the extent such Borrower Information (A) is or becomes generally available to the public on a non-confidential basis other than as a result of a breach of this Section 8.08 by the Agent or such Lender, or (B) is or becomes available to the Agent or such Lender on a nonconfidential basis from a source other than the Borrower and (viii) with the consent of the Borrower.

SECTION 8.09.  Governing Law.  This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 8.10.  Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 8.11.  Jurisdiction, Etc.  (a)  Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the Notes, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. The Borrower hereby consents to the service of process in any action or proceeding in such courts by the mailing thereof by
any parties hereto by registered or certified mail, postage prepaid, to the Borrower at its address specified pursuant to Section 8.02.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or the Notes in the courts of any jurisdiction. 

 

 

 

 

(b)      Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the Notes in any New York State or federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 8.12.  No Liability of the Issuing Banks.  The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit.  Neither an Issuing Bank nor any of its officers or directors shall be liable or responsible for:  (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to
the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit; except that the Borrower shall have a claim against such Issuing Bank, and such Issuing Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower that the Borrower proves were caused by (i) such Issuing Bank's willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank's willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit.  In furtherance and not in limitation of the foregoing, such Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation.

SECTION 8.13.  Patriot Act Notice.  Each Lender and the Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.  The Borrower shall provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Agent or any Lenders in order to assist the Agent and the Lenders in maintaining compliance with the Patriot Act.

 

 

 

SECTION 8.14.  Waiver of Jury Trial.  Each of the Borrower, the Agent and the Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the Notes or the actions of the Agent or any Lender in the negotiation, administration, performance or enforcement thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

COVENTRY HEALTH CARE, INC.

By /s/ Shawn M. Guertin   

Title:  Executive Vice President and Chief Financial Officer

CITIBANK, N.A.,

as Agent

By /s/ Wajeeh Faheem   

Title:Vice President

 

 

 

Lenders

 

COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES                                          
                                

 

	
            By /s/ Subash Viswanathan   
 
	
            Title: Senior Vice President
 

 

COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES                                          
                                

 

	
            By /s/ Barbara Peters   
 
	
            Title: Assistant Treasurer
 

 

	
            MIZUHO CORPORATE BANK, LIMITED
 

 

	
            By /s/ Takahiko Ueda   
 
	
            Title: Deputy General Manager
 

 

	
            SUNTRUST BANK
 

 

	
            By /s/ David P. Singleton   
 
	
            Title:  Managing Director
 

 

	
            THE ROYAL BANK OF SCOTLAND PLC
 

 

	
            By /s/ Iain Stewart   
 
	
            Title: Senior Vice President
 

 

	
            UNION BANK OF CALIFORNIA, N.A.
 

 

	
            By /s/ Michael Tschida   
 
	
            Title: Vice President
 

 

	
            AIB DEBT MANAGEMENT LIMITED
 

 

	
            By /s/ Germaine Reusche   
 
	
            Title: Senior Vice President
 

 

	
            AIB DEBT MANAGEMENT LIMITED
 

 

	
            By /s/ Gregory Wiske   
 
	
            Title: Vice President
 

 

	
            BANK LEUMI USA
 

 

	
            By /s/ Joung Hee Hong   
 
	
            Title: Vice President
 

THE BANK OF TOKYO-MITSUBISHI TRUST COMPANY                                          
               

 

	
            By /s/ Michael L. Zion   
 
	
            Title: Vice President
 

 

CHANG HWA COMMERCIAL BANK, LTD., NEW YORK BRANCH                                          
                             

 

	
            By /s/ Jim Chen   
 
	
            Title: VP and General Manager
 

 

	
            COMERICA BANK
 

 

	
            By /s/ Neran Shaya   
 
	
            Title: Vice President
 

 

	
            PNC BANK, NATIONAL ASSOCIATION
 

 

	
            By /s/ Joe Serianni   
 
	
            Title: Vice President
 

 

	
            UFJ BANK LIMITED
 

 

	
            By /s/ Russell Bohner   
 
	
            Title: Vice President
 

 

	
            BANK HAPOALIM B.M.
 

 

	
            By /s/ Helen Gateson   
 
	
            Title: Vice President
 

 

	
            BANK HAPOALIM B.M.
 

 

	
            By /s/ Lenroy Hackett   
 
	
            Title: First Vice President
 

 

	
            E. SUN COMMERCIAL BANK, LTD.,
 
	
            LOS ANGELES BRANCH
 	
             

 

	
            By /s/ Benjamin Lin   
 
	
            Title: E.V.P. and General Manager
 

 

	
            BANK OF COMMUNICATIONS,
 
	
            NEW YORK BRANCH
 	
             

 

	
            By /s/ Hong Tu   
 
	
            Title: General Manager
 

 

Initial Issuing Banks

 

	
            BANK OF AMERICA, N.A.
 

 

	
            By /s/ Amie L. Edwards   
 
	
            Title: Vice President
 

 

	
            CITIBANK, N.A.
 

 

	
            By /s/ Carolyn Kee   
 
	
            Title: Vice President
 

 

Lenders

 

	
            CITIBANK, N.A.
 

 

	
            By /s/ Wajeeh Faheem   
 
	
            Title: Vice President
 

 

	
            LEHMAN COMMERCIAL PAPER INC.
 

 

	
            By /s/ Janine M. Shugan   
 
	
            Title: Authorized Signatory
 

 

	
            BANK OF AMERICA, N.A.
 

 

	
            By /s/ Amie L. Edwards   
 
	
            Title: Vice President
 

 

	
            JPMORGAN CHASE BANK, N.A.
 

 

	
            By /s/ Stephen Zajac   
 
	
            Title: Vice President
 

 

	
            WACHOVIA BANK, NATIONAL ASSOCIATION
 

 

	
            By /s/ William F. Fox   
 
	
            Title: Director
 

 

	
            THE BANK OF NEW YORK
 

 

	
            By /s/ Jonathan Rollins   
 
	
            Title: Vice President
 

 

	
            LASALLE BANK NATIONAL ASSOCIATION
 

 

	
            By /s/ Lora Backofen   
 
	
            Title: FVP
 

	
            U.S. BANK, NATIONAL ASSOCIATION
 

 

	
            By /s/ Mike Dorn   
 
	
            Title: Vice President
 

 

 

 

 

TABLE OF CONTENTS

	
            ARTICLE I
 	
             
 	
             
 	
             
 
	
             
 	
            SECTION 1.01.  Certain Defined Terms
 	
             
 	
             
 
	
             
 	
            SECTION 1.02.  Computation of Time Periods
 	
             
 	
             
 
	
             
 	
            SECTION 1.03.  Accounting Terms
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            ARTICLE II
 	
             
 	
             
 	
             
 
	
             
 	
            SECTION 2.01.  The Advances and Letters of Credit
 	
             
 	
             
 
	
             
 	
            SECTION 2.02.  Making the Advances
 	
             
 	
             
 
	
             
 	
            SECTION 2.03.  Issuance of and Drawings and Reimbursement Under Letters of Credit
 	
             
 	
             
 
	
             
 	
            SECTION 2.04.  Fees
 	
             
 	
             
 
	
             
 	
            SECTION 2.05.  Optional Termination or Reduction of the Commitments
 	
             
 	
             
 
	
             
 	
            SECTION 2.06.  Repayment
 	
             
 	
             
 
	
             
 	
            SECTION 2.07.  Interest on Advances
 	
             
 	
             
 
	
             
 	
            SECTION 2.08.  Interest Rate Determination
 	
             
 	
             
 
	
             
 	
            SECTION 2.09.  Optional Conversion of Advances
 	
             
 	
             
 
	
             
 	
            SECTION 2.10. Prepayments of Advances
 	
             
 	
             
 
	
             
 	
            SECTION 2.11.  Increased Costs
 	
             
 	
             
 
	
             
 	
            SECTION 2.12.  Illegality
 	
             
 	
             
 
	
             
 	
            SECTION 2.13.  Payments and Computations
 	
             
 	
             
 
	
             
 	
            SECTION 2.14.  Taxes
 	
             
 	
             
 
	
             
 	
            SECTION 2.15.  Sharing of Payments, Etc.
 	
             
 	
             
 
	
             
 	
            SECTION 2.16.  Evidence of Debt
 	
             
 	
             
 
	
             
 	
            SECTION 2.17.  Use of Proceeds
 	
             
 	
             
 
	
             
 	
            SECTION 2.18.  Increase in the Aggregate Revolving Credit Commitments
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            ARTICLE III
 	
             
 	
             
 	
             
 
	
             
 	
            SECTION 3.01.  Conditions Precedent to Effectiveness of Section 2.01
 	
             
 	
             
 
	
             
 	
            SECTION 3.02.  Conditions Precedent to Each Revolving Credit Borrowing, Issuance and Commitment Increase.
 	
             
 	
             
 
	
             
 	
            SECTION 3.03.  Determinations Under Section 3.01
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            ARTICLE IV
 	
             
 	
             
 	
             
 
	
             
 	
            SECTION 4.01.  Representations and Warranties of the Borrower
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            ARTICLE V
 	
             
 	
             
 	
             
 
	
             
 	
            SECTION 5.01.  Affirmative Covenants
 	
             
 	
             
 
	
             
 	
            SECTION 5.02.  Negative Covenants
 	
             
 	
             
 
	
             
 	
            SECTION 5.03.  Financial Covenants
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            ARTICLE VI
 	
             
 	
             
 	
             
 
	
             
 	
            SECTION 6.01.  Events of Default
 	
             
 	
             
 
	
             
 	
            SECTION 6.02.  Actions in Respect of the Letters of Credit upon Default
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            ARTICLE VII
 	
             
 	
             
 	
             
 

 

 

 

 

 

 

	
             
 	
            SECTION 7.01.  Authorization and Action
 	
             
 	
             
 
	
             
 	
            SECTION 7.02.  Agent's Reliance, Etc.
 	
             
 	
             
 
	
             
 	
            SECTION 7.03.  Citibank and Affiliates
 	
             
 	
             
 
	
             
 	
            SECTION 7.04.  Lender Credit Decision
 	
             
 	
             
 
	
             
 	
            SECTION 7.05.  Indemnification
 	
             
 	
             
 
	
             
 	
            SECTION 7.06.  Successor Agent
 	
             
 	
             
 
	
             
 	
            SECTION 7.07.  Other Agents.
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            ARTICLE VIII
 	
             
 	
             
 	
             
 
	
             
 	
            SECTION 8.01.  Amendments, Etc.
 	
             
 	
             
 
	
             
 	
            SECTION 8.02.  Notices, Etc.
 	
             
 	
             
 
	
             
 	
            SECTION 8.03.  No Waiver; Remedies
 	
             
 	
             
 
	
             
 	
            SECTION 8.04.  Costs and Expenses
 	
             
 	
             
 
	
             
 	
            SECTION 8.05.  Right of Set-off
 	
             
 	
             
 
	
             
 	
            SECTION 8.06.  Binding Effect
 	
             
 	
             
 
	
             
 	
            SECTION 8.07.  Assignments and Participations
 	
             
 	
             
 
	
             
 	
            SECTION 8.08.  Confidentiality
 	
             
 	
             
 
	
             
 	
            SECTION 8.09.  Governing Law
 	
             
 	
             
 
	
             
 	
            SECTION 8.10.  Execution in Counterparts
 	
             
 	
             
 
	
             
 	
            SECTION 8.11.  Jurisdiction, Etc.
 	
             
 	
             
 
	
             
 	
            SECTION 8.12.  No Liability of the Issuing Banks
 	
             
 	
             
 
	
             
 	
            SECTION 8.13.  Patriot Act Notice
 	
             
 	
             
 
	
             
 	
            SECTION 8.14.  Waiver of Jury TrialFiled by Automated Filing Services Inc. (604) 609-0244 - Entourage Mining Ltd. - Exhibit 4-B

 

 Mining Sublease and Option to Purchase Agreement 

            This Mining Sublease
  and Option to Purchase Agreement (“Agreement”) is made and entered
  into by and between Goodsprings Development Corporation, a Nevada Corporation
  (“Owner”), and Entourage USA Inc., a wholly owned subsidiary of
  Entourage Mining Ltd. (Lessee), a British Columbia corporation. Entourage Mining
  Ltd. hereby accepts the financial responsibility of Entourage USA Inc.’s
  commitments under the terms and conditions of this agreement. 

 Recitals 

            A.       Owner leases
  the Black Warrior patented mining claim USMS 40 and Sunrise USMS 41, and the
  unpatented mining claims BW1-BW5 and BWX1-BWX4, and has located the GBW group
  of unpatented claims situated in T. 1 S., R. 39 E., MDB&M, Esmeralda County,
  Nevada, more particularly described in Exhibit A attached to and by this reference
  incorporated in this Agreement (collectively the “Property”).

             B.      Owner desires to sublease the Property to Lessee and
  to grant to Lessee the option to purchase the Property on the terms and conditions
  of this Agreement. 

            Now, therefore, in consideration of their mutual promises, the parties agree
  as follows: 

 1.           Definitions.
  The following defined terms, wherever used in this Agreement, shall have
  the meaning described below: 

                1.1
  “Area of Interest” means the geographic area within two (2) mile
  from the exterior boundaries of the Property. 

                1.2
  “Closing Date” means the date on which Lessee’s purchase of
  the Property is closed in accordance with Section 5. 

                1.3
  “Effective Date” means June 1, 2004. 

                1.4
  “Governmental Regulations” means all directives, laws, orders, ordinances,
  regulations and statutes of any Federal, state or local agency, court or office.

                1.5
  “Interest Rate” means twelve percent (12%) per annum compounded
  on an annual basis. 

                1.6
  “Lease Year” means each one (1) year period following the Effective
  Date and each anniversary of the Effective Date. 

                1.7
  “Lessee” means Entourage USA Inc., a wholly owned subsidiary of
  Entourage Mining Ltd., a British Columbia corporation, and its successors and
  assigns. 

 1

                1.8
  “Minerals” means all minerals and mineral materials, including gold,
  silver, platinum, and platinum group metals, base metals (including antimony,
  chromium, cobalt, copper, lead, manganese, mercury, nickel, molybdenum, titanium,
  tungsten, zinc), and other metals and mineral materials which are on, in or
  under the Property. 

                1.9
  "Net Smelter Returns" means the net smelter returns from the production of Minerals
  from the Property as calculated and determined in accordance with Exhibit 1
  to Exhibit B, the conveyance to be executed and delivered in accordance with
  Section 5.5. 

                1.10
  “Option” means the Option granted by Owner to Lessee to purchase
  the Property. 

                1.11
  “Owner” means Goodsprings Development Corporation, a Nevada corporation,
  and its successors and assigns.

                1.12
  “Property” means the Black Warrior patented mining claim USMS 40
  and Sunrise USMS 41, and the unpatented mining claims BW1 - BW5, and BWX1-BWX4,
  and the GBW unpatented mining claims situated in T.1 S., R.39 E., MDB&M,
  Esmeralda County, Nevada, plus such additional unpatented mining claims which
  are made subject to this Agreement. 

                1.13
  “Purchase Price” means the purchase price for the Property described
  in Section . 

                1.14
  “Rental Payments” means the rental payments payable by Lessee in
  accordance with Section 4.1. 

                1.15
  "Royalty" means the production royalty payable by Lessee to Owner in accordance
  with Section 4.2. 

                1.16
  "Underlying Agreements" means the Lease and Option to Purchase Agreement between
  Owner and Apex 76 Deep Mines Co., a Nevada corporation, concerning the Black
  Warrior patented mining claim USMS 40 and Sunrise USMS 41, and the unpatented
  mining claims BW1 - BW5, and BWX1-BWX4. 

 2.           Lease
  and Grant of Rights. Owner leases the Property to Lessee and grants Lessee
  the rights and privileges described in this Section. 

                2.1
  Lease and Sublease. Owner leases the Black Warrior group of claims and
  owns the GBW group of claims and hereby subleases both groups of claims, subject
  to the Underlying Agreement, to Lessee for the purpose of exploration for Minerals,
  provided, however, that Lessee shall have no right to construct, develop or
  operate a mine on the Property without first having exercised and closed the
  Option. Lessee agrees and covenants to perform all of Owner's obligations under
  the Underlying Agreements which accrue during the term of this Agreement.

                2.2
  Water Rights. Subject to the regulations of the State of Nevada concerning
  the appropriation and taking of water, Lessee shall have the right to appropriate
  and use water, to drill wells for the water on the Property and to lay and maintain
  all necessary water lines as may be required by Lessee in its operations on
  the Property. If Lessee acquires or files any applica-

 2

 tion for appropriation or a permit, it shall cause each such
  application and permit to be taken jointly in the names of Owner and Lessee.
  On termination of this Agreement, except on Lessee’s exercise and closing
  of the Option, Lessee shall assign and convey to Owner all permits and water
  rights appurtenant to the Property which are acquired by Lessee during the term
  of this Agreement. If Lessee exercises and closes the Option, Owner shall assign
  and convey to Lessee all permits and water rights appurtenant to the Property.

 3.           Term.
  The initial term of this Agreement shall commence on the Effective Date and
  shall expire ten (10) years after the Effective Date, unless this Agreement
  is sooner terminated, canceled or extended. Owner grants to Lessee and Lessee
  shall have the option and right to extend the term of this Agreement for ten
  (10) additional extension terms of one (1) year each on the express condition
  that Lessee is conducting exploration activities on the Property at the expiration
  of the term immediately preceding the proposed extension term and Lessee is
  current in its performance of all of its obligations under this Agreement, including,
  expressly, Lessee’s payment obligations. If Lessee elects to extend the
  term of this Agreement, Lessee shall notify Owner not less than thirty (30)
  days before expiration of the term immediately preceding the proposed extension
  term. 

 4.           Payments.
  Lessee shall make the following payments to Owner: 

                4.1
       Rental Payments. On the dates described below, Lessee
  shall pay to Owner the sums described below: 

	  	 Date  	  	 Payment Amount  
	  
	 	 On the parties’ execution of this Agreement  	 $  	 15,000.00  
	 	 June 1, 2005	 $  	 15,000.00  
	 	 June 1, 2006	 $  	 20,000.00  
	 	 June 1, 2007 and each anniversary thereafter 	 $  	 25,000.00  

The Rental Payments shall be credited against the Purchase Price. 

                 4.2
        Production Royalty. Lessee shall pay to Owner a production
  royalty equal to three percent (3%) of the Net Smelter Returns from the production
  or sale of Minerals from the Property. Lessee shall calculate and pay the Royalty
  in accordance with Exhibit 1 to Exhibit B attached to and by this reference
  incorporated into this Agreement, to be executed and delivered by Owner in accordance
  with section 5.5. Lessee shall pay the Royalty within one month after the last
  day of each month during which Lessee sells or ships any Minerals, materials
  or ores. Lessee shall have he option to purchase one third of the Royalty representing
  a one percent (1%) Net Smelter Return Royalty, for one million dollars ($1,000,000.00),
  in accordance with the terms of the conveyance to be executed and delivered
  in accordance with Section 5.5. Lessee may exercise its option to purchase such
  part of the Royalty at any time during the term of this Agreement or during
  the time prescribed in the conveyance. 

 3

                4.3
        Payment of Mining Claim Staking and Maintenance Costs.
  Not less than sixty (60) days before (a) the legal or regulatory deadlines for
  payment of the Federal annual mining claim maintenance fees, performance of
  annual assessment work, if required, and the filing or recording of proof of
  payment of such fees or of intent to hold the mining claims which comprise the
  Property; and (b) the payments payable by Owner pursuant to the Underlying Agreements,
  Lessee shall pay to Owner the sums for such maintenance, work, filing and recording
  fees, and underlying payments in order that Owner may timely pay and perform
  such obligations. Lessee also agrees to pay for the staking and recording of
  any new claims contiguous with the Property, or to reimburse Owner for its costs
  in staking and recording any new claims contiguous with the Property 

                4.4
       Method of Payment. All payments by Lessee to Owner shall
  be paid by check delivered to Owner at its address for notice purposes or by
  wire transfer to an account designated by Owner. 

                4.5
       Late Charge and Interest. If Lessee does not timely
  pay any Rental Payment or any other amount payable by Lessee under this Agreement
  within ten (10) days after the date on which such payment is due, Lessee shall
  pay to Owner a late charge equal to ten percent (10%) of such overdue amount.
  Owner’s acceptance of the late charge payment shall not constitute a waiver
  of Lessee’s default regarding such overdue amount, nor prevent Owner from
  exercising any of Owner’s other rights and remedies granted under this
  Agreement. If any Rental Payment or other amount payable by Lessee remains delinquent
  for a period in excess of thirty (30) days, Lessee shall pay to Owner, in addition
  to the late charge, interest from and after the due date at the Interest Rate.
  Lessee’s payment of such interest shall not excuse or cure any default
  by Lessee. 

                4.6
       Currency. All monetary sums referred to in this Agreement
  are in United States currency.

 5.           Option.
  Owner grants to Lessee the exclusive right to purchase the Property, subject
  to the Royalty reserved by Owner and subject to Lessee’s obligations under
  the conveyance executed and delivered by Owner on the closing of the Option.
  The Purchase Price for the Property shall be Four Hundred Thousand Dollars ($
  400,000.00) . The Rental Payments paid by Lessee to Owner shall be credited
  against the Purchase Price. 

                5.1
       Notice of Election. If Lessee elects to exercise the
  Option, Lessee shall deliver written notice to Owner. On Owner’s receipt
  of Lessee’s notice of exercise of the Option, the parties shall make diligent
  efforts to close the conveyance of the Property, as applicable, within thirty
  (30) days after Owner’s delivery of the notice. 

                5.2
       Real Property Transfer Taxes. Lessee shall pay the real
  property transfer taxes, if any, the costs of escrow and all recording costs
  incurred in closing of the Option. 

                5.3
        Proration of Taxes. Payment of any and all state and
  local real property and personal property taxies levied on the property and
  not otherwise provided for in this Agreement shall be prorated between the parties
  as of the closing of any transaction on the basis of a thirty (30) day month.

 4

                5.4
       Payment on Closing. On closing of the Option, Lessee
  shall pay the balance of the Purchase Price to Owner, in cash or by wire transfer
  to an account designated by Owner.

                5.5
       Conveyance on Closing. If Lessee exercises and closes
  the Option, Owner shall execute and deliver to Lessee a conveyance of the Property
  in the form of Exhibit B. Owner and Lessee shall execute and deliver such other
  written assurances and instruments as are reasonably necessary for the purpose
  of closing the purchase of the Property. The execution, delivery and recording
  of the conveyance shall not constitute a merger of Lessee's obligations under
  this Agreement which shall survive the closing of the Option.

                5.6
       Effect of Closing. On closing of the Option, Lessee
  shall own the Property, subject to the Royalty reserved by Owner, and Lessee's
  other obligations as stated in the conveyance of the Property. 

 6.           Compliance
  With the Law. Lessee shall, at Lessee’s sole cost, promptly comply
  with all Governmental Regulations relating to the condition, use or occupancy
  of the Property by Lessee, including but not limited to all exploration and
  development work performed by Lessee during the term of this Agreement. Lessee
  shall, at its sole cost, promptly comply with all applicable Governmental Regulations
  regarding reclamation of the Property and Lessee shall defend, indemnify and
  hold harmless Owner from any and all actions, assessments, claims, costs, fines,
  liability and penalties arising from or relating to Lessee’s failure to
  comply with any applicable Governmental Regulations. Owner agrees to cooperate
  with Lessee in Lessee’s application for governmental licenses, permits,
  and approvals, the costs of which shall be borne by Lessee. Promptly following
  the Effective Date, Lessee shall apply and diligently prosecute its application
  for a special use permit for mining operations on the Property. 

 7.           Lessee's
  Work Practices and Reporting. 

                7.1
        Work Practices. Lessee shall act as operator of the
  property and shall work the Property in a miner-like fashion. Lessee has a right
  to sub-contract work on the property providing that any sub-contractor or consultant
  agrees, in performing the work, to be bound by the terms of this agreement as
  though it were the lessee.  

                7.2
        Inspection of Data. During the term of this Agreement,
  Owner shall have the right to examine and make copies of all data regarding
  the Property in Lessee’s possession during reasonable business hours and
  upon prior notice, provided, however, that the rights of the Owner to examine
  such data shall be exercised in a manner that does not interfere with the operations
  of Lessee. 

                7.3
        Reports. On or before February 1 each year this Agreement
  is in effect, Lessee shall deliver to Owner a comprehensive report of all of
  Lessee's activities conducted on the Property during the previous year.

 5

 8.           Scope
  of Agreement. This Agreement shall extend to and include the unpatented
  mining claims described in Exhibit A of this Agreement and in the exhibits which
  are part of this Agreement, and all other interests, mining claims and property
  rights made part of and subject to this Agreement in accordance with this Section.
  All unpatented mining claims located by Owner or Lessee which are partially
  or wholly in the Area of Interest shall be located in Owner’s name and
  shall be part of and subject to this Agreement. On location by a party of any
  mining claims in the Area of Interest, the locating party shall promptly notify
  the other party. The parties shall execute and deliver an amendment of this
  Agreement, in recordable form, which provides that the newly located unpatented
  mining claims are part of the Property and are subject to this Agreement. The
  amendment made be recorded by either party. 

 9.           Liens
  and Notices of Non-Responsibility. Lessee agrees to keep the Property at
  all times free and clear of all liens, charges and encumbrances of any and every
  nature and description done made or caused by Lessee, and to pay, and defend,
  indemnify and hold harmless Owner from and against, all indebtedness and liabilities
  incurred by or for Lessee which may or might become a lien, charge or encumbrance;
  except that Lessee need not discharge or release any such lien, charge or encumbrance
  so long as Lessee disputes or contests the lien, charge or encumbrance and posts
  a bond sufficient to discharge lien acceptable to Owner. Subject to Lessee’s
  right to post a bond in accordance with the foregoing, if Lessee does not within
  thirty (30) days following the imposition of any such lien, charge or encumbrance,
  cause the same to be released of record, Owner shall have, in addition to Owner’s
  contractual and legal remedies, the right, but not obligation to cause the lien
  to be released by such manner as Owner deems proper, including payment of the
  claim giving rise to such lien, charge or encumbrance. All sums paid by Owner
  for and all expenses incurred by it in connection with such purpose, including
  court costs and attorney fees, shall be paid by Lessee to Owner on demand with
  interest at the Interest Rate. Notwithstanding the provisions of this Section,
  Lessee shall have the right to grant a lien and security interest in the Property
  for the purpose of obtaining financing for the development of a mine on the
  Property. 

 10.           Taxes.
  

                10.1
        Real Property Taxes. Owner shall pay any and all taxes
  assessed and due against the Property before the execution of this Agreement.
  Lessee shall pay promptly before delinquency all taxes and assessments, general,
  special, ordinary and extraordinary, that may be levied or assessed during the
  term of this Agreement upon the Property. All such taxes for the year in which
  this Agreement is executed and for the year in which this Agreement terminates
  shall be prorated between the Owner and Lessee, except that neither the Owner
  nor Lessee shall be responsible for the payment of any taxes which are based
  upon income, net proceeds, production or revenues from the Property assessed
  solely to the other party. 

                10.2
        Personal Property Taxes. Each party shall promptly
  when due pay all taxes assessed against such party’s personal property,
  improvements or structures placed or used on the Property. 

 6

                10.3
        Income Taxes. Owner shall not be liable for any taxes
  levied on or measured by income or net proceeds, or other taxes applicable to
  Lessee, based upon payments under this Agreement or under the conveyance executed
  and delivered by Owner on the Closing of the Option. 

                10.4
        Delivery of Tax Notices. If Owner receives tax bills
  or claims which are Lessee’s responsibility, Owner shall promptly forward
  them to Lessee for payment. 

 11.           Insurance
  and Indemnity. 

                11.1
        Lessee’s Liability Insurance. Lessee shall, at
  Lessee’s sole cost, keep in force during this Agreement term a policy
  of commercial general liability insurance covering property damage and liability
  for personal injury occurring on or about the Property, with coverage in amounts
  considered reasonable under Nevada mineral exploration practices and standards,
  and with contractual liability endorsement insuring Lessee’s performance
  of Lessee’s indemnity obligations of this Agreement. 

                11.2
        Form and Certificates. The policy of insurance required
  to be carried by Lessee pursuant to this Section shall be with a company approved
  by Owner and shall have a Best’s Insurance Rating of at least A-VII. Such
  policy shall name Owner as an additional insured and contain a cross-liability
  and sever ability endorsement. Lessee’s insurance policy shall also be
  primary insurance without right of contribution from any policy carried by Owner.
  A certificate of insurance and a copy of Lessee’s insurance policy shall
  be provided to Owner before any entry by Lessee or its agents or employees on
  the Property and shall provide that such policy is not subject to cancellation,
  expiration or change, except upon thirty (30) days prior written notice to Owner.
  The Owner shall not unreasonably refuse to approve an insurance Company or policy
  secured by the lessee. 

                11.3
        Waiver of Subrogation. Lessee and Owner each waives
  any and all rights of recovery against the other, and against the partners,
  members, officers, employees, agents and representatives of the other, for loss
  of or damage to the Property or injury to person to the extent such damage or
  injury is covered by proceeds received under any insurance policy carried by
  Owner or Lessee and in force at the time of such loss or damage. 

                11.4
        Waiver and Indemnification. Owner shall not be liable
  to Lessee and Lessee waives all claims against Owner for any injury to or death
  of any person or damage to or destruction of any personal property or equipment
  or theft of property occurring on or about the Property or arising from or relating
  to Lessee’s business conducted on the Property. Lessee shall defend, indemnify
  and hold harmless Owner and its members, officers, directors, agents and employees
  from and against any and all claims, judgments, damage, demands, losses, expenses,
  costs or liability arising in connection with injury to person or property from
  any activity, work, or things done, permitted or suffered by Lessee or Lessee’s
  agents, partners, servants, employees, invitees or contractors on or about the
  Property, or from any breach or default by Lessee in the performance of any
  obligation on the part of Lessee to be performed under the terms of this Agreement
  (all of the foregoing collectively referred to hereinafter as General Indemnity
  Claims). Lessee agrees to defend all General Indemnity Claims on behalf of Owner,
  with counsel reasonably acceptable to Owner. The obligations of Lessee contained
  in this Section shall survive the expiration of the term or sooner termination
  of this Agreement. 

 7

 12.           Environmental.
  

                12.1
        Definitions. Hazardous Materials means any material,
  waste, chemical, mixture or byproduct which: (a) is or is subsequently defined,
  listed or designated under Applicable Environmental Laws (defined below)
  as a pollutant, or as a contaminant, or as toxic or hazardous; or (b) is harmful
  to or threatens to harm public health, safety, ecology, or the environment and
  which is or hereafter becomes subject to regulation by any Federal, state or
  local governmental authority or agency. Applicable Environmental Laws means
  any applicable Federal, state, or local governmental law (including common law),
  statute, rule, regulation, ordinance, permit, license, requirement, agreement
  or approval, or any applicable determination, judgment, injunction, directive,
  prohibition or order of any governmental authority with jurisdiction at any
  level of Federal, state, or local government, relating to pollution or protection
  of the environment, ecology, natural resources, or public health or safety.

                12.2
        Lessee Hazardous Material Activities. Lessee shall
  limit any use, generation, storage, treatment, transportation, and handling
  of Hazardous Materials in connection with Lessee’s use of the Property
  (collectively “Lessee Hazardous Materials Activities”) to those
  Hazardous Materials, and to quantities of them, that are necessary to perform
  activities permitted under this Agreement. Lessee Hazardous Materials Activities
  include, without limitation, all such activities on or about the Property by
  Lessee’s employees, partners, agents, invitees, contractors and their
  subcontractors. Lessee shall not cause or permit any Hazardous Materials to
  be disposed or abandoned at the Property. Lessee shall cause all Lessee Hazardous
  Materials Activities to be performed in strict conformance to Applicable Environmental
  Laws. Lessee shall promptly notify Owner of any actual or claimed violation
  of Applicable Environmental Laws in connection with Lessee Hazardous Materials
  Activities, and Lessee shall promptly and thoroughly cure any violation of Applicable
  Environmental Laws in connection with Lessee Hazardous Materials Activities.
  If any governmental approval, consent, license or permit is required under Applicable
  Environmental Laws for Lessee to perform any portion of its work at the Property,
  including without limitation any air emission permits, before commencing any
  such work, Lessee shall be solely responsible, at Lessee expense, for obtaining
  and maintaining, and providing copies of, each approval, consent, license or
  permit. All Lessee Hazardous Materials Activities shall be performed by qualified
  personnel who have received proper training with respect to Hazardous Materials,
  including compliance with applicable OSHA laws and regulations. Lessee shall
  cause all Hazardous Materials present at the Property in connection with Lessee
  Hazardous Materials Activities to be safely and securely stored, using double
  containment. Lessee agrees that neither its use of the Property nor Lessee Hazardous
  Materials Activities shall result in contamination of the environment. 

                12.3
        Spills of Hazardous Materials.  Lessee shall promptly
  notify Owner and each governmental regulatory entity with jurisdiction of any
  spills, releases, or leaks of Hazardous Materials that occur in connection with
  Lessee Hazardous Materials Activities or Lessee’s use of 

 8

 the Property, including but not limited to any contamination
  of the environment (collectively “Lessee Contamination”). Lessee
  further shall promptly notify Owner of any claims of which Lessee becomes aware
  regarding any actual or alleged Lessee Contamination. Lessee shall be solely
  responsible at its expense for promptly, diligently and thoroughly investigating,
  monitoring, reporting on, responding to, and cleaning up to completion any and
  all such Lessee Contamination, in full conformance to Applicable Environmental
  Laws (collectively the “Lessee Environmental Response Work”). All
  Lessee Environmental Response Work shall be reported to each governmental regulatory
  entity with jurisdiction on an ongoing basis, and Lessee shall diligently attempt
  to attain written concurrence each such regulatory entity that all Lessee Environmental
  Response Work has been satisfactorily performed and completed. Lessee at its
  expense shall keep Owner timely informed of Lessee’s progress in responding
  to any Lessee Contamination, including but not limited to providing Owner with
  copies, at Lessee’s expense, of all reports, work plans, and communications
  with governmental entities. 

                12.4
        Removal of Stored Hazardous Materials. Before the expiration
  or termination of this Agreement, and not withstanding any other provision of
  this Agreement, and in full conformance to Applicable Environmental Laws, Lessee
  shall: (a) cause to be properly removed from the Property all Hazardous Materials
  stored at the Property in connection with Lessee’s use of the Property
  or in connection with Lessee Hazardous Materials Activities; and (b) cause to
  be properly dismantled, closed and removed from the Property all devices, drums,
  equipment and containments used for handling, storing or treating Hazardous
  Materials Activities. As part of the closure and removal activities described
  in the preceding sentence, Lessee shall cause to be performed representative
  environmental sampling of areas of the Property where such handling, storing
  or treating of Hazardous Materials occurred, to confirm that no contamination
  of the environment has resulted from any Lessee Hazardous Materials Activities.
  Such sampling shall be performed by a qualified environmental consultant acceptable
  to Owner, and such consultant shall promptly issue a written report which describes
  the consultant’s data, findings and conclusions, a copy of which shall
  be provided to Owner at Lessee’s expense. If any Lessee Contamination
  is discovered, Lessee shall immediately initiate Lessee Environmental Response
  Work as prescribed in this Agreement. 

                12.5
        Environmental Indemnity. Lessee shall promptly reimburse,
  defend, indemnify (with legal counsel acceptable to Owner, whose consent shall
  not unreasonably be withheld) and hold harmless Owner, its employees, assigns,
  successors-in-interest, agents and representatives from any and all claims,
  liabilities, obligations, losses, causes of action, demands, governmental proceedings
  or directives, fines, penalties, expenses, costs, (including but not limited
  to reasonable attorney's fees, consultant's fees, and other expert's fees and
  costs), and damages which arise from or relate to: (a) Lessee Hazardous Materials
  Activities; (b) Lessee Contamination; ( c ) any non- compliance with Applicable
  Environmental Laws resulting directly from the Lessee’s use of the Property
  or (d) a breech of any obligation of Lessee under this Section. The Lessee shall
  not be responsible for hazardous material activities, breach of applicable environmental
  law or contamination incurred primarily by another party or incurred primarily
  before or after the terms of this agreement.

 9

                12.6
        Survival. The provisions of this Section shall survive
  expiration or termination of this Agreement . 

 13.           Work
  Obligations and Conversion of Claims. 

                13.1
        Work Obligations.

                          13.1.1
  Annual Assessment Work. To the extent required by law, beginning with the
  annual assessment work period of September 1, 2004, to September 1, 2005, and
  for each following annual assessment work year commencing during the term of
  this Agreement, Lessee shall perform for the benefit of the Property work of
  a type customarily deemed applicable as assessment work and of sufficient value
  to satisfy the annual assessment work requirements of all applicable Federal,
  state and local laws, regulations and ordinances, if any, and shall prepare
  evidence of the same in form proper for recordation and filing, and shall timely
  record and/or file such evidence in the appropriate Federal, state and local
  office as required by applicable Federal, state and local laws, regulations
  and ordinances. If Lessee elects to terminate this Agreement more than two (2)
  months before the deadline for performance of annual assessment work for the
  following annual assessment year, Lessee shall have no obligation to perform
  annual assessment work nor to prepare, record and/or file evidence of the same
  for the following annual assessment year. Lessee’s obligation, if any,
  to perform the annual assessment work for the assessment work period September
  1, 2004 to September 1, 2005, is an unconditional obligation of Lessee which
  shall survive termination of this Agreement. 

                          13.1.2
  Federal Mining Claim Maintenance Fees. If under applicable Federal laws
  and regulations Federal annual mining claim maintenance fees are required to
  be paid for the unpatented mining claims which constitute all or part of the
  Property, beginning with the annual assessment work period of September 1, 2004,
  to September 1, 2005, Lessee shall timely and properly pay the Federal annual
  mining claim maintenance fees and shall execute and record or file, as applicable
  proof of payment of the Federal annual mining claim maintenance fees and of
  Owner’s intention to hold the unpatented mining claims which constitute
  the Property. If Lessee elects to terminate this Agreement more than two (2)
  months before the deadline for payment of the Federal annual mining claim maintenance
  fees for the following annual assessment year, Lessee shall have no obligation
  to pay the Federal annual mining claim maintenance fees for the Property for
  the following assessment year. Lessee’s obligation for payment of Federal
  annual mining claim maintenance fees and recording of the proof of payment and
  notice of intent to hold the claims for the assessment work period September
  1, 2004, to September 1, 2005, is an unconditional obligation of Lessee which
  shall survive termination of this Agreement. 

                13.2
        Amendment of Mining Laws. The parties acknowledge that
  legislation for the amendment or repeal of the mining laws of the United States
  applicable to the Property has been, and in the future may be, considered by
  the United States Congress. The parties desire to insure that any and all interests
  of the parties in the lands subject to the unpatented mining claims which comprise
  all or part of the Property, including any rights or interests acquired in such
  lands under the mining laws as amended, repealed or superseded, shall be part
  of the Property and shall be 

 10

 subject to the Agreement. If the mining laws applicable to
  the unpatented mining claims subject to this Agreement are amended, repealed
  or superseded, the conversion or termination of Owner’s interest in the
  Property pursuant to such amendment, repeal or supersession of the mining laws
  shall not be considered a deficiency or defect in Owner’s title in the
  Property, and Lessee shall have no right or claim against Owner resulting from
  the conversion, diminution, or loss of Owner’s interest in and to the
  Property, except as expressly provided in this Agreement.

 If pursuant to any amendment or supersession of the mining
  laws Owner is granted the right to convert its interests in the unpatented mining
  claims compromising the Property to a permit, license, lease, or other right
  or interest, all converted interests or rights shall be deemed to be part of
  the Property subject to this Agreement. Upon the grant or issuance of such converted
  interests or rights, the parties shall execute and deliver an addendum to this
  Agreement, in recordable form, by which such converted interests or rights are
  made subject to this Agreement. 

 14.           Relationship
  of the Parties. 

                14.1
        No Partnership. This Agreement shall not be deemed
  to constitute any party in its capacity as such, the partner, agent, or legal
  representative of any other party, or to create any joint venture, partnership,
  mining partnership between the parties.

                14.2
        Competition. Except as expressly provided in this Agreement,
  each party shall have the free and unrestricted right independently to engage
  in and receive the full benefits of any and all business endeavors of any sort
  outside the Property or outside the scope of this Agreement, whether or not
  competitive with the endeavors contemplated under this Agreement, without consultation
  with or participation of the other party. In particular, without limiting the
  foregoing, neither party to this Agreement shall have any obligation to the
  other as to any opportunity to acquire any interest, property or right to it
  outside the scope of this Agreement. 

 15.           Inspection.
  Owner or Owner's duty authorized representatives shall be permitted to enter
  on the Property and Lessee's workings at all reasonable times for the purpose
  of inspection, but they shall enter on the Property at their own risk and in
  such a manner which does not unreasonably hinder, delay or interfere with Lessee's
  operations. 

 16.           Title.
  Owner represents that: (a) the unpatented mining claims which are part of
  the Property were properly located in accordance with applicable Federal and
  state laws and regulations; (b) the unpatented mining claims which are part
  of the Property are in good standing; (c) subject to the paramount title of
  the United States, Owner has the good right and full power to lease and to convey
  the unpatented mining claims which are part of the Property and the fee lands
  which are part of the Property described in this Agreement; and (d) the Property
  is free and clear of all liens, claims, and encumbrances and Owner has good
  and marketable title to the Property. Owner disclaims any representation or
  warranty concerning the existence or proof of a discovery of locatable minerals
  on or under the Property. Owner's representations and warranties concerning
  title shall survive termination of this Agreement and the conveyance from Owner
  to Lessee on exercise and closing of the Option. 

 11

 17.           Covenants,
  Warranties and Representations. Each of the parties covenants, warrants
  and represents for itself as follows: 

                17.1
        Compliance with Laws. That is has complied with all
  applicable laws and regulations of any governmental body, Federal, state or
  local, regarding the terms of and performance of its obligations under this
  Agreement. 

                17.2
        No Pending Proceedings. That there are no lawsuits
  or proceedings pending or threatened which affect its liability to perform the
  terms of this Agreement. 

                17.3
        Costs. That it shall pay all costs and expenses incurred
  or to be incurred by it in negotiating and preparing this Agreement and in closing
  and carrying out the transactions contemplated by this Agreement. 

                17.4
        Brokers. That it has had no dealings with any agent,
  broker, or finder in connection with this Agreement, and shall indemnify, defend
  and hold the other party harmless from and against any claims that may be asserted
  through such party that any agent's, broker's or finder's fee is due in connection
  with this Agreement. 

 18.           Termination
  by Owner. Any failure by Lessee to perform any of its covenants, liabilities,
  obligations or responsibilities under this Agreement shall be default. Owner
  may give Lessee written notice of a default. If default is not remedied within
  thirty (30) days after receipt of the notice, provided the default can reasonably
  be cured within that time, or, if not, if Lessee has not within that time commenced
  action to cure the same or does not after such commencement diligently prosecute
  such action to completion, Owner may terminate this Agreement by delivering
  notice to Lessee of Owner’s termination of this Agreement. In case of
  Lessee’s failure to pay the Rental Payments, Owner shall be entitled to
  give Lessee written notice of the default, and if such default is not remedied
  within fifteen (15) days after receipt of the notice, then Owner may terminate
  this Agreement by delivering notice to Lessee of Owner’s termination of
  this Agreement. On termination of this Agreement based on Lessee’s default,
  within ten (10) days Lessee shall execute to Owner a release of this Agreement
  in form acceptable for recording. 

 19.           Termination
  by Lessee. Lessee may terminate this Agreement at any time by giving written
  thirty (30) days advance notice to Owner. If Lessee terminates this Agreement,
  Lessee shall perform all obligations and pay all payments which accrue or become
  due before the termination date. On Lessee’s termination of this Agreement,
  within ten (10) days Lessee shall execute and deliver to Owner a release and
  termination of this Agreement in form acceptable for recording. 

 20.           Surrender
  of Property. Unless the property is purchased pursuant to the terms of this
  agreement, on expiration or termination of this Agreement, Lessee shall surrender
  the Property promptly to Owner and at Lessee’s sole cost shall remove
  from the Property all of Lessee’s equipment, buildings, and structures.
  Lessee shall reclaim the Property in accordance with all applicable Governmental
  Regulations. Lessee shall diligently perform reclamation and restoration of
  the Property such that Lessee’s reclamation and restoration shall be completed
  before expiration or termination of this Agreement and not later than the date
  required under any Governmental Regulations. 

 12

 21.           Data.
  Within thirty (30) days following termination of this Agreement, Lessee shall
  deliver to Owner copies of all data regarding the Property in Lessee’s
  possession at the time of termination which before termination have not been
  furnished to Owner and, at Owner’s request, Lessee shall deliver to Owner
  all drilling core samples and sample splits taken from the Property. 

 22.           Confidentiality.
  The data and information, including the terms of this Agreement, coming into
  Lessee’s possession by virtue of this Agreement shall be deemed confidential
  and shall not be disclosed to outside third parties except as may be required
  to publicly record or protect title to the Property or to publicly announce
  and disclose information under Governmental Regulations or under the rules and
  regulations of any stock exchange on which the stock of any party, or the parent
  or affiliates of any party, is listed. Lessee agrees to inform Owner of the
  content of the announcement or disclosure in sufficient time to permit Owner
  to jointly or simultaneously make a similar public announcement or disclosure.
  If a party negotiates for a transfer of all or any of its interest in the Property
  or under this Agreement or negotiates to procure financing or loans relating
  to the Property, in order to facilitate any such negotiations such party shall
  have the right to furnish information to third parties, provided that each third
  party to whom the information is disclosed agrees to maintain its confidentiality
  in the manner provided in this Section. 

 23.           Assignment.
  

                23.1
        Lessee’s Assignment. Lessee shall not assign,
  convey, encumber, sublease, grant any concession, or license or otherwise transfer
  (each a "Transfer") all or any part of its interest in this Agreement or the
  Property, without, in each case, Owner's prior written consent, which shall
  not be withheld unreasonably, subject to the terms of the Underlying Agreements.
  Any Transfer of this Agreement which is prohibited under this Section shall
  be deemed void and shall constitute a material default under the terms of this
  Agreement. Owner's consent to an assignment shall not waive the terms of this
  Section in respect of any subsequently proposed assignment, nor shall it release
  Lessee of its obligations under this Agreement.

                23.2
        Owner’s Assignment. Owner shall have the right
  to assign, convey, encumber, sublease, grant any concession, or license or otherwise
  transfer all or any part of its interest in this Agreement or the Property.
  No change in ownership of Owner’s interest in the Property shall affect
  Lessee’s obligations under this Agreement unless and until Owner delivers
  and Lessee receives copies of the documents which demonstrate the change in
  ownership of Owner’s interest. Until Lessee receives Owner’s notice
  and the documents required to be delivered under this Section, Lessee may continue
  to make all payments under this Agreement as if the transfer of Owner’s
  ownership interest had not occurred. No division of Owner’s ownership
  as to all or any part of the Property shall enlarge Lessee’s obligation
  or diminish Lessee’s rights under this Agreement. 

 13

 24           Memorandum
  Agreement. The parties shall execute and deliver a memorandum of this Agreement.
  The execution of the memorandum shall not limit, increase or in any manner affect
  any of the terms of this Agreement or any rights, interests or obligations of
  the parties. 

 25.           Notices.
  Any notices required or authorized to be given by this Agreement shall be in
  writing and shall be sent either by commercial courier, facsimile, or by certified
  U.S. mail, postage prepaid and return receipt requested, addressed to the proper
  party at the address stated below or such address as the party shall have designated
  to the other parties in accordance with this Section. Such notice shall be effective
  on the date of receipt by the addressee party, except that any facsimiles received
  after 5:00 p.m. of the addressee’s local time shall be deemed delivered
  the next day. 

	 	 If to Owner:  	 Goodsprings Development Corp  
	 	  	 C/O Ken Brook  
	 	  	 2305 Pleasure Dr.  
	 	 	 Reno, Nevada 89509 
	  
	  
	  
	 	 If to Lessee:  	 Entourage USA Inc., a wholly owned subsidiary of  
	 	 	 Entourage Mining Ltd. 
	 	  	 C/O Greg Kennedy  
	 	 	 212 525 Seymour St. 
	 	  	 Vancouver, B.C. V6B3H7  
	 	  	 Canada  

 26.           Binding
  Effect of Obligations. This Agreement shall be binding upon and inure to
  the benefit of the respective parties and their successors or assigns. 

 27.           Entire
  Agreement. The parties agree that the entire agreement between them is written
  in this Agreement and in a memorandum of agreement of even date. There are no
  terms or conditions, express or implied, other than expressly stated in this
  Agreement. This Agreement may be amended or modified only by a written instrument
  signed by the parties with the same formality as this Agreement. The Owner agrees
  to register this agreement and the original agreement between itself and Apex
  76 Deep Mines Co. forthwith and provide the Lessee copies of such registration.
  

 28.           Governing
  Law and Forum Selection. This Agreement shall be construed and enforced
  in accordance with the laws of the State of Nevada. Any action or proceeding
  concerning the construction, or interpretation of the terms of this Agreement
  or any claim or dispute between the parties shall be commenced and heard in
  the Second Judicial District Court of the State of Nevada, in and for the county
  of Washoe, Reno, Nevada. 

 14

 29.           Multiple
  Counterparts. This Agreement may be executed in any number of counterparts,
  each of which shall be deemed to be an original, but all of which shall constitute
  the same Agreement. 

 30.           Severability.
  If any part, term or provision of this Agreement is held by a court of competent
  jurisdiction to be illegal or in conflict with any Governmental Regulations,
  the validity of the remaining portions or provisions shall not be affected,
  and the rights and obligations of the parties shall be construed and enforced
  as if the Agreement did not contain the particular part, term, or provision
  held to be invalid. 

 31.           Time
  of Essence. Time is of the essence in the performance of the parties’
  obligations under this Agreement. 

The parties have executed this Agreement effective as of the Effective Date. 

	  	 GOODSPRINGS DEVELOPMENT CORP.  
	  
	  
	 	 
	  	  
	  	 By       “DK
      Brook Jr.” 	 
	  	      D.K. Brook Jr. , President  
	  
	  
	  	 ENTOURAGE USA INC., A WHOLLY OWNED  
	 SUBSIDIARY OF ENTOURAGE MINING LTD.  
	  
	  
	  	 By        “Gregory F.
      Kennedy”  	 
	  	       President  
	  
	  
	 STATE OF 	 ) 	  
	 	ss.  	  
	 COUNTY OF	 )  	 

             This mining Lease and Option to Purchase Agreement was acknowledged before me on June 16, 2004, by Gregory F. Kennedy as President of Entourage USA Inc., a wholly owned subsidiary of Entourage Mining Ltd.

	  	Christopher D. Farber  

  15

 

	  	 Notary Public  
	  	 City of Vancouver  
	  	 Province of British Columbia  
	  	 NOTARIAL SEAL  
	  
	 STATE OF NEVADA,  	)  	  
	  	ss.  	  
	 COUNTY OF WASHOE  	) 	  
	  
	             This Mining Lease and Option to Purchase Agreement was acknowledged
      before me on 6-22-04, 2005, by Doyle Kenneth Brook, Jr., as President of
      Goodsprings Development Corporation. 
	  
	  	      “David Gifford”  
	  	 Notary Public  
	  	 NOTARIAL SEAL  

 16

 Exhibit A

  Description of Property 

	 A.  	 Patented Mining Claims  	  	  
	 	 
	  	 Black Warrior patented claim USMS 40 and Sunrise USMS 41 in
      Section 3.1, T. 1 S., R. 39 E., MDB&M, Esmeralda County, Nevada. 
	  	 	  
	  	 APN 000-006-14  	  	  
	  
	 B.  	 Unpatented Mining Claims:  	  
	 	 	 	 
	  	 Claim Name:  	 BLM NMC Nos.  	 Esmeralda County  
	  	  	  	 Book / Page  
	  	 BW1 to BW5  	 773255-58, 789771  	  
	  	 BWX1 to BWX4  	 801552-555  	  

 17

 EXHIBIT B

Recorded at the request of and when recorded return to: 

 Entourage Mining Ltd

  212 525 Seymour St.

  Vancouver, B.C. V6B3H7

  Canada 

 Quitclaim Deed With Reservation of Royalty 

            This Quitclaim Deed
  With Reservation of Royalty ("Deed") is made by and between Goodsprings Development
  Corporation, a Nevada corporation ("GDC"), as Grantor, and Entourage USA Inc.,
  a wholly owned subsidiary of Entourage Mining Ltd. a corporation organized under
  the laws of the Province of British Columbia ("Grantee"). 

 Recitals

 A.       Grantor and Grantee are parties
  to the Mining Sublease and Option to Purchase Agreement dated effective June
  1, 2004 (the "Agreement"), concerning the patented and unpatented lode mining
  claims situated in Esmeralda County, Nevada, more particularly described in
  Exhibit 1 attached to and by this reference incorporated in this Deed (collectively
  the "Royalty Property"), in accordance with which Grantor agreed to sell to
  Grantee all of Grantor's right, title and interest in and to the Royalty Property,
  subject to Grantor's reservation to Grantor of the production royalty (the "Royalty")
  described in this Deed. 

B.       Grantor and Grantee have closed the purchase and sale of the Royalty Property in accordance with the Agreement. 

             In consideration of the parties' rights and obligations under the Agreement, the parties agree as follows: 

            1. Quitclaim.
  Grantor quitclaims to Grantee, and its assigns and successors forever, all of
  Grantor's right, title and interest in the Royalty Property, except and subject
  to Grantor's reserved Royalty and the parties' rights and obligations under
  this Deed. 

             2. Royalty. Grantor grants, reserves and retains to itself, and Grantor's assigns and successors forever, and Grantee agrees and covenants to pay to Grantor, and Grantor's assigns 

 18

 and successors, a production royalty equal to three percent
  (3%) of the Net Smelter Returns; as calculated and determined in accordance
  with Exhibit 2 attached to and by this reference incorporated in this Deed.
  Grantee shall have the option to purchase one third of the Royalty representing
  one percent (1%) of the Net Smelter Returns for one million dollars ($1,000,000.00)
  . Grantee may exercise the option to purchase the Royalty within ninety (90)
  days following the commencement of production of minerals from the Property.
  If Grantee elects to exercise its option to purchase a part of the Royalty,
  it shall deliver written notice to Grantor. The parties shall close Grantee's
  exercise of its option to purchase the Royalty within thirty (30) days following
  Grantee' s delivery of its notice at which time Grantee shall pay the purchase
  price for the part of the Royalty purchased and Grantor shall execute and deliver
  an assignment of the part of the Royalty which Grantee purchases. If Grantee
  does not timely and properly exercise its option to purchase part of the Royalty,
  Grantee shall be deemed to have irrevocably released and waived its option to
  purchase part of the Royalty. 

                 2.1
  Burden on Royalty Property. The Royalty shall burden and run with the Royalty
  Property, including any amendments, conversions to a lease or other form of
  tenure, relocations or patent of all or any of the unpatented mining claims
  which comprise all or part of the Royalty Property. On amendment, conversion
  to a lease or other form of tenure, relocation or patenting of any of the unpatented
  mining claims which comprise all or part of the Royalty Property, Grantee agrees
  and covenants to execute, deliver and record in the office of the recorder in
  which all or any part of the Royalty Property is situated an instrument by which
  Grantee grants to Grantor the Royalty and subjects the amended, converted or
  relocated unpatented mining claims and the patented claims, as applicable, to
  all of the burdens, conditions, obligations and terms of this Deed. 

                2.2
  Payment of Royalty. Grantee shall calculate and pay the Royalty monthly
  in accordance with the provisions of Exhibit 2.

                If
  Grantee does not timely pay the Royalty, Grantor may give written notice to
  Grantee that Grantee is in default of its obligations under this Deed, and unless
  within five (5) business days following receipt by Grantee of such notice Grantor
  receives the delinquent Royalty payment, then Grantee shall pay interest on
  the delinquent payment at the rate often percent (10%) per annum which shall
  accrue from the day the delinquent Royalty payment was due to the date of payment
  of the Royalty and accrued interest. Grantee shall pay all of Grantor's attorney's
  fees and all other costs incurred by Grantor to collect the delinquent Royalty
  payment. 

                2.3
  Production Records. Grantee shall keep true and accurate accounts, books
  and records of all of its activities, operations and production of minerals
  on the Royalty Property. 

 3.           Commingling.
  Grantee shall have the right to commingle minerals from the Royalty Property
  with minerals mined from other properties. Not less than sixty (60) days before
  commencement of commingling, Grantee shall notify Grantor and shall deliver
  to Grantor Grantee's proposed commingling plan for Grantor's review. Before
  Grantee commingles any minerals produced from the Royalty Property with minerals
  from other properties, the minerals produced from the Royalty Property and other
  properties shall be measured and sampled in 

 19

 accordance with sound mining and metallurgical practices for
  metal, commercial minerals and other appropriate content. Grantee shall keep
  detailed accounts and records which show measures, assays of metal, commercial
  minerals, and other appropriate content and penalty substances, and gross metal
  content of the minerals. From this information, Grantee shall determine the
  amount of the Royalty due and payable to Grantor for minerals produced from
  the Royalty Property commingled with minerals from other properties. 

 4.           Reports.
  Not later than February I and August 1 of each year, Grantee shall deliver to
  Grantor a comprehensive report of all exploration, development and mining activities
  and operations conducted by Grantee on or relating to the Property during the
  preceding six (6) months. Such semiannual report shall include estimates of
  proposed expenditures upon, anticipated production from, and estimated remaining
  ore reserves on the Royalty Property for the succeeding year. Grantee shall
  provide Grantor reasonable access to all data and information generated regarding
  the Royalty Property. 

 5.           Inspections.
  Grantor, or its authorized agents or representatives, may enter upon all surface
  and subsurface portions of the Royalty Property for the purpose of inspecting
  the Royalty Property and all improvements and operations on the Royalty Property,
  as well as inspecting and copying all accounts and records, including without
  limitation such accounts and records which are maintained electronically, pertaining
  to all activities and operations on or relating to the Royalty Property, the
  improvements or operations. 

 6.           Compliance
  with Laws, Reclamation, Environmental Obligations and Indemnities. 

                6.1
  Compliance with Laws. Grantee shall at all times comply with all applicable
  federal, state and local laws, regulations and ordinances relating to Grantee's
  activities and operations on or relating to the Royalty Property. 

                6.2
  Reclamation, Environmental Obligations and Indemnities. Grantee shall perform
  all reclamation required under federal, state and local laws, regulations and
  ordinances relating to Grantee's activities or operations on or relating to
  the Royalty Property. Grantee shall defend, indemnify and hold harmless Grantor
  from and against any and all actions, claims, costs, damages, expenses (including
  attorney's fees and legal costs), liabilities and responsibilities arising from
  or relating to Grantee's activities or operations on or relating to the Royalty
  Property, including those under laws, regulations and ordinances intended to
  protect or preserve the environment or to reclaim the Royalty Property. Grantee'
  s obligations under this Section shall survive the abandonment, surrender or
  transfer of the Royalty Property. 

 7.           Tailings
  and Residues. All tailings, residues, waste rock, spoiled leach materials
  and other materials (collectively "Materials") resulting from Grantee's operations
  and activities on the Royalty Property shall be Grantee's sole property, but
  shall remain subject to the Royalty if they are processed or reprocessed and
  Grantee receives revenues from such processing or reprocessing. If Materials
  are processed or reprocessed, the Royalty payable shall be determined by using
  the best engineering, metallurgical and technical practices and standards then
  available. 

 20

 8.           Title
  Maintenance. 

                8.1
  Title Maintenance and Taxes. Grantee shall maintain title to the Royalty
  Property, including without limitation, paying when due all taxes on or with
  respect to the Royalty Property and doing all things and making all payments
  necessary or appropriate to maintain the right, title and interest of Grantee
  and Grantor, respectively, in the Royalty Property and under this Deed. 

                8.2
  Assessment Work. Grantee shall perform all required assessment work on,
  pay all mining claim maintenance fees and make such filings and recordings as
  are necessary to maintain title to the Royalty Property in accordance with applicable
  federal and state laws and regulations. 

                8.3
  Abandonment. If Grantee intends to abandon or surrender any of the Royalty
  Property (the "Abandonment Property"), Grantee shall first give notice of such
  intention to Grantor at least ninety (90) days in advance of the proposed date
  of abandonment or surrender. At any time before the date of Grantee's proposed
  abandonment or surrender of the Royalty Property Grantor may deliver notice
  to Grantee that Grantor desires Grantee to convey the Abandonment Property to
  Grantor. In such case, Grantee shall convey the Abandonment Property to Grantor
  free and clear of any claims, encumbrances or liens created by, through or under
  Grantee. If Grantor does not timely request reconveyance of the Abandonment
  Property, Grantor's right to do so shall be irrevocably terminated. 

 9.           General
  Provisions. 

                9.1
  Conflict. If a conflict arises between the provisions of this Deed and the
  provisions of the Agreement, the provisions of the Agreement shall prevail.

                9.2
  Entire Agreement. This Deed and the Agreement constitute the entire agreement
  between the parties. 

                9.3
  Additional Documents. The parties shall from time to time execute all such
  further instruments and documents and do all such further actions as may be
  necessary to effectuate the purposes of this Deed. 

                9.4
  Binding Effect. All of the covenants, conditions, and terms of this Deed
  shall bind and inure to the benefit of the parties and their successors and
  assigns. 

                9.5
  No Partnership. Nothing in this Deed shall be construed to create, expressly
  or by implication, a joint venture, mining partnership or other partnership
  relationship between the parties. 

                9.6
  Governing Law. This Deed is to be governed by and construed under the laws
  of the State of Nevada. 

 21

                9.7
  Time of Essence. Time is of the essence in this Deed. 

                9.8
  Notices. Any notices required or authorized to be given by this Deed shall
  be in writing and shall be sent either by commercial courier, facsimile, or
  by certified U.S. mail, postage prepaid and return receipt requested, addressed
  to the proper party at the address stated below or such address as the party
  shall have designated to the other parties in accordance with this Section.
  Such notice shall be effective on the date of receipt by the addressee party,
  except that any facsimiles received after 5:00 p.m. of the addressee's local
  time shall be deemed delivered the next day. 

	 If to Grantor: 	  
	 

	
	  	 Goodsprings Development Corporation  
	  	 C/O D. K. Brook Jr.  
	  	 2305 Pleasure Dr.  
	  	 Reno, Nevada 89509  
	 

	
	 

	
	 If to Grantee: 	  
	 

	
	  	 Entourage USA Inc., a wholly owned subsidiary of Entourage
      Mining Ltd.  
	  	 212 525 Seymour St  
	  	 Vancouver, B.C. V6B3H7  
	  	 Canada  

 This Deed is effective _______________________________________ , regardless
  of the date on which the parties execute this Deed. 

Goodsprings Development Corporation 

	 By	 
	      D. Kenneth Brook Jr., President 
	 
	 Entourage USA Inc., a wholly owned subsidiary of Entourage
      Mining Ltd.  
	 
	  	 
	 By        “Gregory F.
      Kennedy” 	 
	 Title: President, Gregory F. Kennedy  

 22

 

	STATE OF NEVADA	 )
	 	ss. 
	COUNTY OF WASHOE	) 

 This Quitclaim Deed With Reservation of Royalty was acknowledged
  before me on _________________________________ , by D. K. Brook Jr. as President
  of Goodsprings Development Corporation. 

	 	 
	 	 Notary Public 	 

	STATE OF	) 
	 	ss.
	COUNTY OF	) 

 This Quitclaim Deed With Reservation of Royalty was acknowledged
  before me on June 16, 2004, by Gregory F. Kennedy as President of Entourage
  USA Inc., a wholly owned subsidiary of Entourage Mining Ltd.

	  	“Christopher D. Farber” 
    
	  	 	Notary Public  
	  	 	City of Vancouver  
	  	 	Province Of British Columbia  
	  	 	NOTARIAL SEAL 

 23

 Exhibit 1

  Description of Property 

	 B.  	 Patented Mining Claims  	  
	 	 
	  	 Black Warrior patented claim USMS 40 and Sunrise
      USMS 41 in Section 3.1, T. 1 S., R. 39 E., MDB&M, Esmeralda County,
      Nevada.  
	  	 
	  	 APN 000-006-14  	  
	  
	 B.  	 Unpatented Mining Claims:  	  
	 	 	 
	  	 Claim Name:  	 BLM Serial #  
	  
	  	 BW1 to BW5  	 773255 -58, 789771  
	  	 BWX1 to BWX4  	 801552 - 555  

 24

 Exhibit 2

  Net Smelter Returns 

	 Payor:  	 Entourage USA Inc., a wholly owned subsidiary of Entourage
      Mining Ltd.  
	 	 
	 Recipient:  	 Goodsprings Development Corporation  

 1.           Definitions.
  The terms defined in the instrument to which this Exhibit is attached and made
  part of shall have the same meanings in this Exhibit. The following definitions
  shall apply to this Exhibit. 

                1.1
  "Gold Production" means the quantity of refined gold outturned to Payor's account
  by an independent third party refinery for gold produced from the Property during
  the month on either a provisional or final settlement basis. 

                1.2
  "Gross Value" shall be determined on a month basis and have the following meanings
  with respect to the following Minerals: 

                          1.2.1
  Gold 

                          (a)
  If Payor sells gold concentrates, dore or ore, then Gross Value shall be the
  value of the gold contained in the gold concentrates, dore and ore determined
  by utilizing: (1) the mine weights and assays for such gold concentrates, dore
  and ore; (2) a reasonable recovery rate for the refined gold recoverable from
  such gold concentrates, dore and ore (which shall be adjusted annually to reflect
  the actual recovery rate of refined metal from such gold concentrates, dore
  and ore); and (3) the Monthly Average Gold Price for the month in which the
  gold concentrates, dore and ore were sold. 

                          (b)
  If Payor produces refined gold (meeting the specifications of the London Bullion
  Market Association, and if the London Bullion Market Association no longer prescribes
  specifications, the specifications of such other association generally accepted
  and recognized in the mining industry) from Minerals, and if Section 1.2.1(a)
  above is not applicable, then for purposes of determining Gross Value, the refined
  gold shall be deemed to have been sold at the Monthly Average Gold Price for
  the month in which it was refined. The Gross Value shall be determined by multiplying
  Gold Production during the month by the Monthly Average Gold Price. 

                          1.2.2
  Silver. 

 25

                          (a)
  If Payor sells silver concentrates, dore or ore, then Gross Value shall be the
  value of the silver contained in the silver concentrates, dore and ore determined
  by utilizing: (1) the mine weights and assays for such silver concentrates,
  dore and ore; (2) a reasonable recovery rate for the refined silver recoverable
  from such silver concentrates, dore and ore (which shall be adjusted annually
  to reflect the actual recovery rate of refined metal from such silver concentrates,
  dore and ore); and (3) the Monthly Average Silver Price for the month in which
  the silver concentrates, dore and ore were sold. 

                          (b)
  If Payor produces refined silver (meeting the specifications for refined silver
  subject to the New York Silver Price published by Handy & Harmon, and if
  Handy & Harmon no longer publishes such specifications, the specifications
  of such other association or entity generally accepted and recognized in the
  mining industry) from Minerals, and if Section 1.2.2( a) above is not applicable,
  the refined silver shall be deemed to have been sold at the Monthly Average
  Silver Price for the month in which it was refined. The Gross Value shall be
  determined by multiplying Silver Production during the month by the Monthly
  Average Silver Price. 

                          1.2.3
  All Other Minerals. 

                          (a)
  If Payor sells any concentrates, dore or ore of Minerals other than gold or
  silver, then Gross Value shall be the value of such Minerals determined by utilizing:
  (1) the mine weights and assays for such Minerals; (2) a reasonable recovery
  rate for the Minerals (which shall be adjusted annually to reflect the actual
  recovery rate of recovered or refined metal or product from such Minerals);
  and (3) the monthly average price for the Minerals or product of the Minerals
  for the month in which the concentrates, dore or ore was sold. The monthly average
  price shall be determined by reference to the market for such Minerals or product
  which is recognized in the mining industry as authoritative and reflective of
  the market for such Minerals or product. 

                          (b)
  If Payor produces refined or processed metals from Minerals other than refined
  gold or refined silver, and if Section 1.2.3(a) above is not applicable, then
  Gross Value shall be equal to the amount of the proceeds received by Payor during
  the month from the sale of such refined or processed metals. Payor shall have
  the right to sell such refined or processed metals to an affiliated party, provided
  that such sales shall be considered, solely for purposes of determining Gross
  Value, to have been sold at prices and on terms no less favorable than those
  that would be obtained from an unaffiliated third party in similar quantities
  and under similar circumstances. 

                1.3
  "Minerals" means gold, silver, platinum, antimony, mercury, copper, lead, zinc,
  and all other mineral elements and mineral compounds, and geothermal resources,
  which are contemplated to exist on the Property or which are after the Effective
  Date discovered on the Property and which can be extracted, mined or processed
  by any method presently known or developed or invented after the Effective Date.

 26

                1.4
  "Monthly Average Gold Price" means the average London Bullion Market Association
  Afternoon Gold Fix, calculated by dividing the sum of all such prices reported
  for the month by the number of days for which such prices were reported during
  that month. If the London Bullion Market Association Afternoon Gold Fix ceases
  to be published, all such references shall be replaced with references to prices
  of gold for immediate sale in another established marked selected by Payor,
  as such prices are published in Metals Week magazine, and if Metals Week magazine
  no longer publishes such prices, the prices of such other association or entity
  generally accepted and recognized in the mining industry. 

                1.5
  "Monthly Average Silver Price" means the average New York Silver Price as published
  daily by Handy & Harmon, calculated by dividing the sum of all such prices
  reported for the month by the number of days in such month for which such prices
  were reported. If the Handy & Harmon quotations cease to be published, all
  such references shall be replaced with references to prices of silver for immediate
  sale in another established market selected by Payor as published in Metals
  Week magazine, and if Metals Week magazine no longer publishes such prices,
  the prices of such other association or entity generally accepted and recognized
  in the mining industry. 

                1.6
  "Net Smelter Returns" means the Gross Value of all Minerals, less the following
  costs, charges and expenses paid or incurred by Payor with respect to the refining
  and smelting of such Minerals: 

                          1.6.1
  Charges for smelting and refining (including sampling, assaying and penalty
  charges), but not any charges or costs of agglomeration, beneficiation, crushing,
  extraction, milling, mining or other processing; and 

                          1.6.2
  Actual costs of transportation (including freight, insurance, security, transaction
  taxes, handling, port, demurrage, delay and forwarding expenses incurred by
  reason of or in the course of such transportation) of concentrates or dore metal
  from the Property to the smelter or refinery, but not any charges or costs of
  transportation of Minerals or ores from any mine on the Property to an autoclave,
  concentrator, crusher, heap or other leach process, mill or plant which is not
  a smelter or refinery. 

                1.7
  "Property" means the real property described in the instrument to which these
  Net Smelter Returns provisions are attached and made a part. 

                1.8
  "Silver Production" means the quantity of refined silver outturned to Payor's
  account by an independent third-party refinery for silver produced from the
  Property during the month on either a provisional or final settlement basis.

 2.           Payment
  Procedures. 

                2.1
  Accrual of Obligation. Payor's obligation to pay the royalty shall accrue
  and become due and payable upon the sale or shipment from the Property of unrefined
  metals, dore metal, concentrates, ores or other Minerals or Minerals products
  or, if refined metals are produced, upon the outturn of refined metals meeting
  the requirements of the specified published price to Payor's account. 

 27

                2.2
  Futures or Forward Sales, Etc.. Except as provided in Sections 1.2.1( a),
  1.2.2(a) and 1.2.3 (a) (regarding sales of unprocessed gold and silver and sales
  of Minerals other than gold and silver), Gross Value shall be determined irrespective
  of any actual arrangements for the sale or other disposition of Minerals by
  Payor, specifically including but not limited to forward sales, futures trading
  or commodities options trading, and any other price hedging, price protection,
  and speculative arrangements that may involve the possible delivery of gold,
  silver or other metals produced from Minerals. 

                2.3
  Monthly Calculations and Payments. Net Smelter Returns royalties shall be
  determined on a monthly basis. Payor shall pay Payor each monthly royalty payment
  on or before the last business day of the month immediately following the month
  in which the royalty payment obligation accrued. Payor acknowledges that late
  payment by Payor to Recipient of royalty payments will cause Recipient to incur
  costs, the exact amount of which will be difficult to ascertain. Accordingly,
  if any amount due and payable by Payor is not received by Recipient within ten
  (10) days after such amount is due, then Payor shall pay to Recipient a late
  charge equal to ten percent (10%) of such overdue amount. Recipient's acceptance
  of such late charge shall not constitute a waiver of Payor' default with respect
  to such overdue amount, nor prevent Recipient from exercising any of Recipient's
  other rights and remedies. If any amount payable by Payor remains delinquent
  for a period in excess of thirty (30) days, Payor shall pay to Recipient, in
  addition to the late payment, interest from and after the due date at the statutory
  interest rate. 

                2.4
  Statements. At the time of payment of the royalty, Payor shall accompany
  such payment with a statement which shows in detail the quantities and grades
  of refined gold, silver or other metals or dore, concentrates or ores produced
  and sold or deemed sold by Payor in the preceding month; the Monthly Average
  Gold Price and Monthly Average Silver Price, as applicable; costs and other
  deductions, and other pertinent information in detail to explain the calculation
  of the payment with respect to such month. Payment shall be made to the address
  provided in the agreement or instrument to which this Exhibit is attached for
  purposes of notices or by wire transfer to an account which Recipient designates.

                2.5
  Inventories and Stockpiles. Payor shall include in all monthly statements
  a description of the quantity and quality of any gold or silver dore that has
  been retained as inventory for more than ninety (90) days. Recipient shall have
  thirty (30) days after receipt of the statement to either: (a) elect that the
  dore be deemed sold, with Gross Value to be determined as provided in Sections
  1.2.1 (b), with respect to gold, and 1.2.2(b), with respect to silver, as of
  such thirtieth (30th) day utilizing the mine weights and assays for such dore
  and utilizing a reasonable recovery rate for refined metal and reasonable deemed
  charges for all deductions which Payor is authorized to take, or (b) elect to
  wait until such time as the royalty payment otherwise would become payable pursuant
  to Sections 1.2.1(b) and 1.2.2(b) . The Payor's failure to respond within such
  time shall be deemed to be an election to use the methods described in Sections
  1.2.1(b) and 1.2.2(b) . 

 28

                2.6
  Audit. Upon reasonable notice and at a reasonable time, the Recipient shall
  have the right to audit and examine the Payor's accounts and records relating
  to the calculation of the Net Smelter Returns royalty payments. If such audit
  determines that there has been a deficiency or an excess in the payment made
  to Recipient, such deficiency or excess shall be resolved by adjusting the next
  monthly royalty payment due Recipient. Recipient shall pay all costs of such
  audit unless a deficiency of three percent (3 %) or more of the royalty payment
  due for the calendar month in question is determined to exist. All books and
  records used by Payor to calculate the royalty payments shall be kept in accordance
  with generally accepted accounting principles applicable to the mining industry.

 3.           Sampling
  and Commingling. Payor shall have the right to commingle Minerals and ores
  from the Property and materials from other properties, provided, that Payor
  first informs Recipient, in writing, of Payor' s intention to commingle and
  delivers to Recipient a detailed written description of Payor's commingling
  plan. Recipient shall have ninety (90) days during which to review, comment
  on and approve Payor's proposed commingling plan. In any and all events, all
  Minerals and ores shall be measured and sampled by Payor in accordance with
  sound mining and metallurgical practices for metal and mineral content before
  commingling of any such Minerals or ores with materials from any other property.
  Representative samples of materials from the Property intended to be commingled
  shall be retained by Payor, and assays of these samples shall be made before
  commingling to determine the metal content of each ore. Detailed records shall
  be kept by Recipient showing measurements, assays of metal content and gross
  metal content of the materials from the Property are commingled. 

 29

Assessor’s Parcel No. 000-- 006 - 14 

 Recorded at the request of

  and when recorded return to: 

 Goodsprings Development Corp.

  2305 Pleasure Dr.

  Reno, Nevada 89509 

 ______________________________________________________________________________

 Memorandum of Mining Lease and Option to Purchase Agreement

             This Memorandum
  of Mining Lease and option to Purchase Agreement “Memorandum”) is
  made and entered into by and between Goodsprings Development Corp. (“Owner”),
  and Entourage USA Inc., a wholly owned subsidiary of Entourage Mining Ltd. (“Lessee”).

             Notice is given
  that Owner and Lessee have entered into the Mining Lease and Option to Purchase
  Agreement dated effective June 1, 2004, in accordance with which Owner has leased
  Lessee the patented and unpatented mining claims situated in T. 1 S., R. 39
  E., MDB&M, Esmeralda County, Nevada, more particularly described in Exhibit
  A attached to and by this reference incorporated in this Memorandum. Owner has
  also granted to Lessee the option to purchase the property subject to this Agreement.

             For the purposes
  of this Agreement and this Memorandum, the parties addresses are: 

	If to Owner:  	  	 Goodsprings Development Corp.  
	 	 	 C/O Ken Brook 
	 	  	 2305 Pleasure Dr.  
	 	  	 Reno, Nevada, 89509  
	  
	If to Lessee:  	  	 Entourage USA Inc., a wholly owned subsidiary of  
	 	  	 Entourage Mining Ltd.  
	 	  	 C/O Greg Kennedy  
	 	  	 212 525 Seymour St.  
	 	  	 Vancouver, B.C. V6B3H7  
	 	  	 Canada  
	  
	  
	Dated June 16, 2004 	  	  	 
	 	  	  	  
	 	  	  	By      “Gregory F. Kennedy”	 
	 	  	  	Lessee	 
	  
	 	 	 	     Entourage Mining Ltd. 
    	 
	 	  	  	Owner 	 

 30

 

	 STATE OF NEVADA,  	)  	  
	  	ss.	  
	 COUNTY OF WASHOE	)  	  
	  
	            
        This Memorandum of Mining Lease and Option to Purchase Agreement was acknowledged
        before me on June 16, 2004, by Gregory F. Kennedy as President of Entourage
        USA Inc., a wholly owned subsidiary of Entourage Mining Ltd. 

	  
	  	 “Christopher D. Farber”  	 
	  	 Notary Public  	 
	  	 City of Vancouver  
	  	 Province of British Columbia  
	  	 NOTARIAL SEAL  
	  
	 STATE OF NEVADA,  	) 	  
	  	ss. 	  
	 COUNTY OF  	)  	  

              This Memorandum of Mining Lease and Option to purchase Agreement was acknowledged
  before me on _____________________ , 20____, by D. K. Brook Jr., as President
  of Goodsprings Development Corp.. 

	 	 	 
	  	Notary Public  	 

 31

 Exhibit A

  Description of Property

	 C.  	 Patented Mining Claims  	  
	 	 
	  	 Black Warrior patented claim USMS 40 and Sunrise USMS 41 in
      Section 3.1, T. 1 S., R. 39 E., MDB&M, Esmeralda County, Nevada. 
	  	 
	  	 APN 000-006-14  	  
	  
	 B.  	 Unpatented Mining Claims:  	  
	 	 	 
	  	 Claim Name:  	 BLM Serial #  
	  
	  	 BW1 to BW5  	 773255 -58, 789771  
	  	 BWX1 to BWX4  	 801552 - 555  

 32

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