Document:

Exhibit 10.6.3 

 THIRD AMENDMENT
  

        THIS
THIRD AMENDMENT TO LEASE (the “Third Amendment”) is made and entered into as of May 7,
2004, by and between CA-METRO PLAZA LIMITED PARTNERSHIP, a Delaware limited partnership
(“Landlord”) and LOGICVISION, INC., a Delaware corporation (“Tenant”). 

 RECITALS
  

	A.  	  	Landlord (as
      successor in interest to Spieker Properties, L.P., a California limited
      partnership) and Tenant (as successor in interest to Logic Vision, Inc.,
      a California corporation) are parties to that certain office lease dated
      August 13, 1998, which lease has been previously amended by the following
      instruments: Extension Agreement dated January 17, 2000 and Second Amendment
      dated as of January 23, 2004 (the “Second Amendment”) (collectively,
      the “Lease”). Pursuant to the Lease, Landlord has leased to Tenant
      space currently containing approximately 17,539 rentable square feet (the
      “Premises”) described as Suite No. 300 on the third floor of the
      building commonly known as Metro Plaza located at 25 Metro Drive, San Jose,
      California (the “Building”). 

	B.  	  	Exhibit
B, Item 8 of the Second Amendment provides Tenant with the          option to increase
the Maximum Amount up to a maximum sum of          $210,468.00 (the “Increased Maximum
Amount”), which shall increase the          Base Rent as specified in Exhibit B, Item 8.
Tenant and Landlord          acknowledge and agree that Tenant has delivered a notice
dated March          31, 2004 to Landlord of Tenant’s election to increase the Maximum
         Amount to the Increased Maximum Amount and desire to amend the Lease to
         provide for such increase. 

        NOW,
THEREFORE, in consideration of the above recitals which by this reference are
incorporated herein, the mutual covenants and conditions contained herein and other
valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant agree as follows: 

	1.  	  	Base Rent.
      Retroactively, as of April 1, 2004, the schedule of Base Rent payable with
      respect to the Premises during the remainder of the current Term and the
      Extended Term is the following: 

	(a) Months of Term or Period	Annual Rate Per Square Foot	Monthly Base Rent
	4/1/2004 - 3/31/2005	$15.534	$22,704.24
	4/1/2005 - 3/31/2006	$15.964	$23,332.72
	4/1/2006 - 3/31/2007	$16.404	$23,975.81
	4/1/2007 - 3/31/2008	$16.864	$24,648.14
	4/1/2008 - 3/31/2009	$17.334	$25,335.09
	4/1/2009 - 3/31/2010	$17.824	$26,051.26

	  	
All
such Base Rent shall be payable by Tenant in accordance with the terms of the Lease. 

	2.  	  	Other Pertinent
      Provisions. Landlord and Tenant agree that, effective as of the date
      of this Third Amendment (unless different effective date(s) is/are specifically
      referenced in this Section), the Lease shall be amended in the following
      additional respects: 

	 	  	Landlord
      Notice Address. The Landlord notice address set forth in the Basic Lease
      Information section of the Lease and Article IX (A) of the Second Amendment
      are hereby deleted and replaced with the following: 

 

	 	
	 

	  	
To
Landlord: 

	  	
CA-Metro Plaza Limited Partnership 

C/o Equity Office 

1740 Technology Drive, Suite 150 

San Jose, California 95110 

Attention:  Property Manager-Metro Plaza 

	  	
With
a copy to: 

	  	
Equity Office 

One Market, Spear Tower, Suite 600 

      San Francisco, CA 94105 

Attention:  General Counsel- San Jose 

	7.  	  	Miscellaneous. 

	  	         7.01.  	  	This
Third Amendment and the attached  exhibits,  which are hereby  incorporated  into and
made a                   part of this Third  Amendment,  set forth the entire  agreement
 between the parties with respect                   to the matters set forth herein.
 There have been no additional  oral or written  representations                   or
 agreements.  Under  no  circumstances  shall  Tenant  be  entitled  to  any  Rent
 abatement,                   improvement  allowance,  leasehold  improvements,  or other
work to the Premises,  or any similar                   economic  incentives  that may
have been  provided  Tenant in  connection  with entering into the
                  Lease, unless  specifically set forth in this Third Amendment.  Tenant
agrees that neither Tenant                   nor its agents or any other  parties  acting
on behalf of Tenant  shall  disclose any matters set                   forth in this
Third  Amendment or  disseminate  or  distribute  any  information  concerning  the
                  terms,  details or conditions hereof to any person,  firm or entity
without obtaining the express                   written consent of Landlord. 

	  	         7.02.  	  	Except
as herein modified or amended, the provisions,                   conditions and terms of
the Lease shall remain unchanged and                   in full force and effect. 

	  	         7.03.  	  	In
the case of any inconsistency between the provisions of the                   Lease and
this Third Amendment, the provisions of this Third                   Amendment shall
govern and control. 

	  	         7.04.  	  	Submission
of this Third Amendment by Landlord is not an offer                   to enter into this
Third Amendment but rather is a                   solicitation for such an offer by
Tenant. Landlord shall not                   be bound by this Third Amendment until
Landlord has executed                   and delivered the same to Tenant. 

	  	         7.05.  	  	The
capitalized terms used in this Third Amendment shall have                   the same
definitions as set forth in the Lease to the extent                   that such
capitalized terms are defined therein and not                   redefined in this Third
Amendment. 

	  	         7.06.  	  	Tenant
hereby represents to Landlord that Tenant has dealt                   with no broker in
connection with this Third Amendment. Tenant                   agrees to indemnify and
hold the Landlord Related Parties                   harmless from all claims of any
brokers claiming to have                   represented Tenant in connection with this
Third Amendment.                   Landlord hereby represents to Tenant that Landlord has
dealt                   with no broker in connection with this Third Amendment.
                  Landlord agrees to indemnify and hold the Tenant Related
                  Parties harmless from all claims of any brokers claiming to
                  have represented Landlord in connection with this Third
                  Amendment. 

	  	         7.07.  	  	Each
signatory of this Third Amendment represents hereby that                   he or she has
the authority to execute and deliver the same on                   behalf of the party
hereto for which such signatory is acting. 

 [SIGNATURES
  ARE ON FOLLOWING PAGE] 

 

	 	
	 

        IN
WITNESS WHEREOF, Landlord and Tenant have duly executed this Third Amendment as of the
day and year first above written. 

	WITNESS/ATTEST: 	  	 	LANDLORD:  

	 	  	 	CA-METRO PLAZA LIMITED
      PARTNERSHIP, a Delaware limited partnership    

	 	  	 	By: EOM GP, L.L.C., a
      Delaware limited liability company, its general partner   

	 	  	 	By:  	 Equity Office Management, L.L.C.,
      a Delaware limited liability company, its non-member manager  
	 	 	 	 	 
	 	 	 	 	By: /S/ JOHN
      W. PETERSEN
	 	 	 	 	 
	 	 	 	 	Name: John W. Petersen
	 	 	 	 	 
	 	 	 	 	Title: Regional Senior Vice President
      

	 	  	 	TENANT:  
      
	 	 	 	 
	 	 	 	LOGICVISION,
      Inc.,
	 	 	 	 
	 	 	 	a Delaware
      corporation 

	 	  	 	By: /S/ BRUCE
      M. JAFFE 
	 	 	 	 
	 	 	 	Name: Bruce
      M. Jaffe 
	 	 	 	 
	 	 	 	Title: Vice
      PresidentExhibit 99.1

Exhibit 10.1
  

$50,000,000  

CREDIT AGREEMENT  

among  

BRADLEY
PHARMACEUTICALS, INC., 
as Borrower,  

and  

CERTAIN SUBSIDIARIES
  OF THE BORROWER,

  as Guarantors, 

THE LENDERS PARTIES
HERETO,  

and  

WACHOVIA BANK, NATIONAL
ASSOCIATION, 
as Administrative Agent  

Dated as of August 10,
2004  

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

 
	 	
	 

 

TABLE OF CONTENTS
 

			 	Page
      

    
	ARTICLE I DEFINITIONS  
      	 	1	 
	 	 	Section 1.1	 	Defined Terms 	 	1	 
	 	 	Section 1.2	 	Other Definitional Provisions
      	 	25	 
	 	 	Section 1.3	 	Accounting Terms 	 	26	 
	 	 	Section 1.4	 	Time References 	 	26	 
	ARTICLE II THE LOANS; AMOUNT AND TERMS  
      	 	26	 
	 	 	Section 2.1	 	Revolving Loans 	 	26	 
	 	 	Section 2.2	 	[Reserved] 	 	28	 
	 	 	Section 2.3	 	Letter of Credit Subfacility
      	 	28	 
	 	 	Section 2.4	 	Swingline Loan Subfacility
      	 	32	 
	 	 	Section 2.5	 	[Reserved] 	 	34	 
	 	 	Section 2.6	 	Fees 	 	34	 
	 	 	Section 2.7	 	Commitment Reductions 	 	34	 
	 	 	Section 2.8	 	Prepayments 	 	35	 
	 	 	Section 2.9	 	Lending Offices 	 	37	 
	 	 	Section 2.10	 	Default Rate 	 	37	 
	 	 	Section 2.11	 	Conversion Options 	 	37	 
	 	 	Section 2.12	 	Computation of Interest and Fees
      	 	38	 
	 	 	Section 2.13	 	Pro Rata Treatment and Payments
      	 	39	 
	 	 	Section 2.14	 	Non-Receipt of Funds by the Administrative
      Agent 	 	41	 
	 	 	Section 2.15	 	Inability to Determine Interest
      Rate 	 	42	 
	 	 	Section 2.16	 	Illegality 	 	43	 
	 	 	Section 2.17	 	Requirements of Law 	 	43	 
	 	 	Section 2.18	 	Indemnity 	 	44	 
	 	 	Section 2.19	 	Taxes 	 	45	 
	 	 	Section 2.20	 	Indemnification; Nature of Issuing
      Lender’s Duties 	 	47	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES  
      	 	48	 
	 	 	Section 3.1	 	Financial Condition 	 	48	 
	 	 	Section 3.2	 	No Change 	 	49	 
	 	 	Section 3.3	 	Corporate Existence; Compliance
      with Law 	 	49	 
	 	 	Section 3.4	 	Corporate Power; Authorization;
      Enforceable Obligations 	 	50	 
	 	 	Section 3.5	 	No Legal Bar; No Default
      	 	51	 
	 	 	Section 3.6	 	No Material Litigation 	 	51	 
	 	 	Section 3.7	 	Investment Company Act 	 	51	 
	 	 	Section 3.8	 	Margin Regulations 	 	51	 
	 	 	Section 3.9	 	ERISA 	 	52	 
	 	 	Section 3.10	 	Environmental Matters 	 	52	 
	 	 	Section 3.11	 	Use of Proceeds 	 	53	 
	 	 	Section 3.12	 	Subsidiaries 	 	53	 
	 	 	Section 3.13	 	Ownership 	 	54	 
	 	 	Section 3.14	 	Indebtedness 	 	54	 
	 	 	Section 3.15	 	Taxes 	 	54	 
	 	 	Section 3.16	 	Intellectual Property 	 	54	 

 
	 	
i	 

    
   
    

	 	 	Section 3.17	 	Solvency 	 	55	 
	 	 	Section 3.18	 	Investments 	 	55	 
	 	 	Section 3.19	 	Location of Collateral 	 	55	 
	 	 	Section 3.20	 	Brokers’ Fees 	 	55	 
	 	 	Section 3.21	 	Labor Matters 	 	56	 
	 	 	Section 3.22	 	Security Documents 	 	56	 
	 	 	Section 3.23	 	Accuracy and Completeness of
      Information 	 	56	 
	 	 	Section 3.24	 	Fraud and Abuse 	 	56	 
	 	 	Section 3.25	 	Licensing and Accreditation
      	 	57	 
	 	 	Section 3.26	 	Other Regulatory Protection
      	 	57	 
	 	 	Section 3.27	 	Material Contracts 	 	57	 
	 	 	Section 3.28	 	Insurance 	 	58	 
	 	 	Section 3.29	 	Reimbursement from Third Party
      Payors 	 	58	 
	 	 	Section 3.30	 	Other Agreements 	 	58	 
	 	 	Section 3.31	 	Classification as Senior Indebtedness
      	 	58	 
	ARTICLE IV CONDITIONS PRECEDENT  
      	 	59	 
	 	 	Section 4.1	 	Conditions to Closing Date and
      Initial Extensions of Credit 	 	59	 
	 	 	Section 4.2	 	Conditions to All Extensions
      of Credit 	 	64	 
	ARTICLE V AFFIRMATIVE COVENANTS  
      	 	65	 
	 	 	Section 5.1	 	Financial Statements 	 	65	 
	 	 	Section 5.2	 	Certificates; Other Information
      	 	67	 
	 	 	Section 5.3	 	Payment of Obligations 	 	67	 
	 	 	Section 5.4	 	Conduct of Business and Maintenance
      of Existence 	 	68	 
	 	 	Section 5.5	 	Maintenance of Property; Insurance
      	 	68	 
	 	 	Section 5.6	 	Inspection of Property; Books
      and Records; Discussions 	 	69	 
	 	 	Section 5.7	 	Notices 	 	69	 
	 	 	Section 5.8	 	Environmental Laws 	 	70	 
	 	 	Section 5.9	 	Financial Covenants 	 	71	 
	 	 	Section 5.10	 	Additional Guarantors 	 	72	 
	 	 	Section 5.11	 	Compliance with Law 	 	72	 
	 	 	Section 5.12	 	Pledged Assets 	 	73	 
	 	 	Section 5.13	 	Post-Closing Covenants 	 	73	 
	ARTICLE VI NEGATIVE COVENANTS  
      	 	74	 
	 	 	Section 6.1	 	Indebtedness 	 	74	 
	 	 	Section 6.2	 	Liens 	 	75	 
	 	 	Section 6.3	 	Nature of Business 	 	75	 
	 	 	Section 6.4	 	Consolidation, Merger, Sale or
      Purchase of Assets, etc 	 	75	 
	 	 	Section 6.5	 	Advances, Investments and Loans
      	 	76	 
	 	 	Section 6.6	 	Transactions with Affiliates
      	 	76	 
	 	 	Section 6.7	 	Ownership of Subsidiaries; Restrictions
      	 	76	 
	 	 	Section 6.8	 	Fiscal Year; Organizational Documents;
      Material Contracts 	 	77	 
	 	 	Section 6.9	 	Limitation on Restricted Actions
      	 	77	 
	 	 	Section 6.10	 	Restricted Payments 	 	77	 
	 	 	Section 6.11	 	Sale Leasebacks 	 	78	 
	 	 	Section 6.12	 	No Further Negative Pledges
      	 	78	 
	 	 	Section 6.13	 	Operating Lease Obligations
      	 	78	 

 
	 	
ii	 

    
   

  

	ARTICLE VII EVENTS OF DEFAULT    
      	 	78	 
	 	 	Section 7.1	 	Events of Default 	 	78	 
	 	 	Section 7.2	 	Acceleration; Remedies 	 	81	 
	ARTICLE VIII THE AGENT    
      	 	82	 
	 	 	Section 8.1	 	Appointment 	 	82	 
	 	 	Section 8.2	 	Delegation of Duties 	 	82	 
	 	 	Section 8.3	 	Exculpatory Provisions 	 	82	 
	 	 	Section 8.4	 	Reliance by Administrative Agent
      	 	83	 
	 	 	Section 8.5	 	Notice of Default 	 	83	 
	 	 	Section 8.6	 	Non-Reliance on Administrative
      Agent and Other Lenders 	 	84	 
	 	 	Section 8.7	 	Indemnification 	 	84	 
	 	 	Section 8.8	 	The Administrative Agent in Its
      Individual Capacity 	 	85	 
	 	 	Section 8.9	 	Successor Administrative Agent
      	 	85	 
	 	 	Section 8.10	 	Other Agents 	 	86	 
	ARTICLE IX MISCELLANEOUS    
      	 	86	 
	 	 	Section 9.1	 	Amendments, Waivers and Release
      of Collateral 	 	86	 
	 	 	Section 9.2	 	Notices 	 	88	 
	 	 	Section 9.3	 	No Waiver; Cumulative Remedies
      	 	89	 
	 	 	Section 9.4	 	Survival of Representations and
      Warranties 	 	89	 
	 	 	Section 9.5	 	Payment of Expenses and Taxes
      	 	89	 
	 	 	Section 9.6	 	Successors and Assigns; Participations;
      Purchasing Lenders 	 	90	 
	 	 	Section 9.7	 	Adjustments; Set-off 	 	93	 
	 	 	Section 9.8	 	Table of Contents and Section
      Headings 	 	94	 
	 	 	Section 9.9	 	Counterparts 	 	94	 
	 	 	Section 9.10	 	Effectiveness 	 	95	 
	 	 	Section 9.11	 	Severability 	 	95	 
	 	 	Section 9.12	 	Integration 	 	95	 
	 	 	Section 9.13	 	Governing Law 	 	95	 
	 	 	Section 9.14	 	Consent to Jurisdiction and Service
      of Process 	 	95	 
	 	 	Section 9.15	 	Arbitration 	 	96	 
	 	 	Section 9.16	 	Confidentiality 	 	97	 
	 	 	Section 9.17	 	Acknowledgments 	 	98	 
	 	 	Section 9.18	 	Waivers of Jury Trial; Waiver
      of Consequential Damages 	 	98	 
	ARTICLE X GUARANTY    
      	 	99	 
	 	 	Section 10.1	 	The Guaranty 	 	99	 
	 	 	Section 10.2	 	Bankruptcy 	 	99	 
	 	 	Section 10.3	 	Nature of Liability 	 	100	 
	 	 	Section 10.4	 	Independent Obligation 	 	100	 
	 	 	Section 10.5	 	Authorization 	 	100	 
	 	 	Section 10.6	 	Reliance 	 	101	 
	 	 	Section 10.7	 	Waiver 	 	101	 
	 	 	Section 10.8	 	Limitation on Enforcement
      	 	102	 
	 	 	Section 10.9	 	Confirmation of Payment 	 	102	 

 
	 	
iii	 

 

Schedules  

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

 
	 	
iv	 

 

        CREDIT
AGREEMENT, dated as of August 10, 2004, among BRADLEY PHARMACEUTICALS, INC., a
Delaware corporation (the “Borrower”), those Domestic Subsidiaries of the
Borrower identified as a “Guarantor” on the signature pages hereto and such
other Domestic Subsidiaries of the Borrower as may from time to time become a party hereto
(each a “Guarantor” and, collectively, the
“Guarantors”), the several banks and other financial institutions as may
from time to time become parties to this Agreement (collectively, the
“Lenders”; and individually, a “Lender”), and
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
administrative agent for the Lenders hereunder (in such capacity, the
“Administrative Agent”). 

W I T N E S S E T H:  

        WHEREAS,
the Borrower has requested that the Lenders make loans and other financial accommodations
to the Borrower in the amount of up to $50,000,000, as more particularly described herein;
and 

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

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

ARTICLE I 

DEFINITIONS 

        Section
  1.1 Defined Terms.  

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

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

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

        “Acquired
Company” shall mean Bioglan Pharmaceuticals, Inc., a Delaware corporation. 

        “Acquisition”
shall mean the purchase of the property and assets of the Acquired Company by the
Borrower. 

 
	 	
1	 

 

        “Acquisition
Documents” shall mean that certain Asset Purchase Agreement by and among
Quintiles Transnational Corp., Quintiles Bermuda Ltd., Quintiles Ireland Limited, Bioglan
Pharmaceuticals Company and the Borrower dated June 8, 2004 and all other agreements and
documents executed in connection with the Acquisition. 

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

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

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

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

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

 
	 	
2	 

 

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

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

	
      

    
	Time Period 	Alternate

      Base Rate Margin 	LIBOR Rate Margin

      and Letter of

      Credit Fee 	Commitment

      Fee 
	
      

    
	Closing Date through	 	2.00%	 	3.00%	 	0.50%	 
	December 31, 2004	 
	
      

    
	January 1, 2005 through	 	2.50%	 	3.50%	 	0.75%	 
	March 31, 2005	 
	
      

    
	April 1, 2005 through	 	3.00%	 	4.00%	 	1.00%	 
	June 30, 2005	 
	
      

    
	July 1, 2005 through	 	3.50%	 	4.50%	 	1.25%	 
	September 30, 2005	 
	
      

    
	October 1, 2005 through	 	4.00%	 	5.00%	 	1.50%	 
	December 31, 2005	 
	
      

    
	January 1, 2006 through	 	4.50%	 	5.50%	 	1.75%	 
	March 31, 2006	 
	
      

    
	April 1, 2006 through	 	5.00%	 	6.00%	 	2.00%	 
	June 30, 2006	 
	
      

    
	July 1, 2006 and thereafter	 	5.50%	 	6.50%	 	2.25%	 
	
      

    

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

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

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

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

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

 
	 	
3	 

 

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

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

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

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

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

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

 
	 	
4	 

 

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

        “Change
of Control” shall mean the occurrence of any of the following: (a) any
“person” or “group” (within the meaning of Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as
defined in Rule l3d-3 under the Securities Exchange Act of 1934) of more than 35% of then
outstanding Voting Stock of the Borrower, measured by voting power rather than the number
of shares, but shall not include any transfer of Voting Stock of the Borrower by Daniel
Glassman for estate planning purposes to any family members of Daniel Glassman, or an
entity controlled by any thereof or a trust for the benefit of any thereof so long as
Daniel Glassman remains chairman of the board of directors and chief executive officer of
the Borrower; (b) Continuing Directors shall cease for any reason to constitute a majority
of the members of the board of directors of the Borrower then in office or (c) the
occurrence of a “Change of Control” (or any comparable term) under, and as
defined in, the documents evidencing or governing any Subordinated Indebtedness. 

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

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

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

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

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

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

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

        “Commitment
Period” shall mean the period from and including the Closing Date to but not
including the Maturity Date. 

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

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

 
	 	
5	 

 

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

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

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

        “Consolidated
Net Income” shall mean, for any period, net income after taxes for such period of
the Borrower and its Subsidiaries on a consolidated basis, as determined in accordance
with GAAP. 

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

 
	 	
6	 

 

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

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

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

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

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

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

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

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

 
	 	
7	 

 

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

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

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

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

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

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

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

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

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

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

 
	 	
8	 

 

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

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

        “Excess
Cash Flow” shall mean, with respect to any fiscal year of the Borrower commencing
with the Borrower’s fiscal year 2004, for the Borrower and its Subsidiaries on a
consolidated basis, an amount equal to (a) Consolidated EBITDA for such period
minus (b) Consolidated Capital Expenditures for such period minus (c)
Scheduled Funded Debt Payments made during such period minus (d) Consolidated
Interest Expense (excluding any Consolidated Interest Expense associated with intercompany
indebtedness) for such period minus (e) amounts paid in cash in respect of federal,
state, local and foreign income taxes of the Borrower and its Subsidiaries with respect to
such period minus (f) increases in Consolidated Working Capital plus (g)
decreases in Consolidated Working Capital minus (h) optional prepayments of
Revolving Loans (to the extent accompanied by a corresponding reduction of the Revolving
Commitments). 

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

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

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

        “Fixed
Charge Coverage Ratio” shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis for the twelve-month period ending on the last day of
any fiscal quarter of the Borrower, the ratio of (i) Consolidated EBITDA for such period
minus Consolidated Capital Expenditures for such period to (ii) the sum of
Consolidated Interest Expense for such period plus Scheduled Funded Debt Payments
for such period plus cash taxes paid or payable during such period plus
Restricted Payments made during such period. 

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

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

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

 
	 	
9	 

 

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

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

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

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

        “Guaranty
Obligations” shall mean, with respect to any Person, without duplication, any
obligations of such Person (other than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) guaranteeing or intended to guarantee
any Indebtedness of any other Person in any manner, whether direct or indirect, and
including without limitation any obligation, whether or not contingent, (i) to purchase
any such Indebtedness or any property  

 
	 	
10	 

 

constituting security therefor, (ii)
to advance or provide funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance sheet condition of
such other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase Property,
securities or services primarily for the purpose of assuring the holder of such
Indebtedness, or (iv) to otherwise assure or hold harmless the holder of such
Indebtedness against loss in respect thereof. The amount of any Guaranty Obligation
hereunder shall (subject to any limitations set forth therein) be deemed to be an amount
equal to the outstanding principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Guaranty Obligation is made.  

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

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

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

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

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

        “Indebtedness”shall
mean, with respect to any Person, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, or upon which interest payments are customarily made, (c)
all obligations of such Person under conditional sale or other title retention agreements
relating to property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary course
of business), (d) all obligations of such Person issued or assumed as the deferred
purchase price of property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months of the incurrence
thereof) which would appear as liabilities on a balance sheet of such Person, (e) all
obligations of such Person under take-or-pay or similar arrangements or under commodities
agreements, (f) all Indebtedness of others secured by (or for which the holder of such  

 
	 	
11	 

 

Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all Guaranty Obligations of such
Person with respect to Indebtedness of another Person, (h) the principal portion of all
obligations of such Person under Capital Leases plus any accrued interest thereon, (i)
all obligations of such Person under Hedging Agreements, (j) the maximum amount of all
letters of credit issued or bankers’ acceptances facilities created for the account
of such Person and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Capital Stock issued by such Person and which by the
terms thereof could be (at the request of the holders thereof or otherwise) subject to
mandatory sinking fund payments, redemption or other acceleration, (l) the principal
balance outstanding under any synthetic lease, tax retention operating lease, off-balance
sheet loan or similar off-balance sheet financing product plus any accrued interest
thereon, and (m) the Indebtedness of any partnership or unincorporated joint venture in
which such Person is a general partner or a joint venturer.  

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

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

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

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

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

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

	  	        (ii)                      thereafter,
each period commencing on the last day of the immediately preceding
               Interest Period applicable to such LIBOR Rate Loan and ending one, two,
three or                six months and, if available, nine or twelve months thereafter,
as selected by                the Borrower by irrevocable notice to the Administrative
Agent not less than                three Business Days prior to the last day of the then
current Interest Period                with respect thereto;  

	  	 provided
      that the foregoing provisions are subject to the following: 

 
	 	
12	 

      
 

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

	  	        (B)
      any Interest Period pertaining to a LIBOR Rate Loan that begins on the last
      Business Day of a calendar month (or on a day for which there is no numerically
      corresponding day in the calendar month at the end of such Interest Period)
      shall end on the last Business Day of the relevant calendar month; 
    

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

	  	        (D)
      any Interest Period in respect of any Loan that would otherwise extend beyond
      the Maturity Date shall end on the Maturity Date;  

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

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

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

        “Issuing
  Lender” shall mean Wachovia.  

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

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

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

 
	 	
13	 

 

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

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

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

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

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

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

	LIBOR Rate =	 	LIBOR
      

      1.00 – Eurodollar Reserve Percentage	 

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

 
	 	
14	 

 

        “Lien”
shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any
preference, priority or other security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any Capital Lease having substantially the same economic effect as
any of the foregoing). 

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

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

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

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

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

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

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

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

        “Material
Contract” shall mean any contract or other arrangement, whether written or oral,
to which any Credit Party or any of its Subsidiaries is a party as to which the breach, 

 
	 	
15	 

 

nonperformance, cancellation or
failure to renew by any party thereto could reasonably be expected to have a Material
Adverse Effect.  

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

        “Maturity
Date” shall mean August 10, 2006. 

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

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

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

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

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

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

 
	 	
16	 

 

participation set forth in the
Medicare Regulations.  

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

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

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

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

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

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

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

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

 
	 	
17	 

 

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

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

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

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

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

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

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

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

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

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

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

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

 
	 	
18	 

 

      “Permitted
  Investments” shall mean: 

	  	        (i)                      cash
and Cash Equivalents;  

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

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

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

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

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

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

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

      “Permitted
  Liens” shall mean: 

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

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

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

	  	        (iv)                      Liens
for taxes, assessments, charges or other governmental levies not yet due
               or as to which the period of grace (not to exceed 90 days), if any,
related                thereto  

 
	 	
19	 

  
   

	  	
has
not expired or which are being contested in good faith by                appropriate
proceedings, provided that adequate reserves with respect                thereto
are maintained on the books of the any Credit Party or its Subsidiaries,
               as the case may be, in conformity with GAAP;  

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

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

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

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

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

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

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

        “Person”
shall mean an individual, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature. 

        “Plan”
shall mean, at any particular time, any employee benefit plan which is covered by Title IV
of ERISA and in respect of which any Credit Party or a Commonly Controlled Entity is (or,
if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to
be) an “employer” as defined in Section 3(5) of ERISA. 

 
	 	
20	 

 

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

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

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

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

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

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

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

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

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

        “Reportable
Event” shall mean any of the events set forth in Section 4043(c) of ERISA, other
than those events as to which the thirty-day notice period is waived under PBGC Reg.
§4043. 

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

        “Requirement
  of Law” shall mean, as to any Person, the Certificate of Incorporation
  and By-laws or other organizational or governing documents of such Person, and
  each law, treaty, rule or regulation or determination of an arbitrator or a
  court or other Governmental Authority, in 

 
	 	
21	 

 

each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its property is
subject.  

        “Responsible
Officer” shall mean, as to (a) the Borrower, any of the President and the Chief
Executive Officer or the Chief Financial Officer or (b) any other Credit Party, any duly
authorized officer thereof. 

        “Restricted
Payments” shall mean (a) any dividend or other distribution, direct or indirect,
on account of any shares of any class of Capital Stock of the Borrower or any of its
Subsidiaries, now or hereafter outstanding, (b) any redemption, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of Capital Stock of the Borrower or any of its Subsidiaries, now or
hereafter outstanding, (c) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding, (d) any
payment with respect to any earnout obligation, (e) any payment or prepayment of principal
of, premium, if any, or interest on, redemption, purchase, retirement, defeasance, sinking
fund or similar payment with respect to, any Subordinated Indebtedness or (f) the payment
by the Borrower or any of its Subsidiaries of any management or consulting fee to any
Person or of any salary, bonus or other form of compensation to any Person who is directly
or indirectly a significant partner, shareholder, owner or executive officer of any such
Person, to the extent such salary, bonus or other form of compensation is not included in
the corporate overhead of the Borrower or such Subsidiary. Notwithstanding the foregoing,
for purposes of calculating the amount of Restricted Payments for the fiscal quarters
ending September 30, 2004, December 31, 2004 and March 31, 2005, the amount of Restricted
Payments shall be annualized during such fiscal quarters such that (i) for the calculation
of the amount of Restricted Payments as of September 30, 2004, the amount of Restricted
Payments for the fiscal quarter then ending will be multiplied by four (4), (ii) for
the calculation of the amount of Restricted Payments as of December 31, 2004, the amount
of Restricted Payments for the two fiscal quarter period then ending will be multiplied by
two (2) and (iii) for the calculation of the amount of Restricted Payments as of
March 31, 2005, the amount of Restricted Payments for the three fiscal quarter period then
ending will be multiplied by one and one-third (1 1/3). 

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

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

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

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

  

	 	
22	 

 

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

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

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

        “Scheduled
Funded Debt Payments” shall mean, as of any date of determination for the
Borrower and its Subsidiaries, the sum of all scheduled payments of principal on Funded
Debt for the applicable period ending on the date of determination (including the
principal component of payments due on Capital Leases during the applicable period ending
on the date of determination). Notwithstanding the foregoing, for purposes of calculating
Scheduled Funded Debt Payments for the fiscal quarters ending September 30, 2004, December
31, 2004 and March 31, 2005, Scheduled Funded Debt Payments shall be annualized during
such fiscal quarters such that (i) for the calculation of Scheduled Funded Debt Payments
as of September 30, 2004, Scheduled Funded Debt Payments for the fiscal quarter then
ending will be multiplied by four (4), (ii) for the calculation of Scheduled Funded
Debt Payments as of December 31, 2004, Scheduled Funded Debt Payments for the two fiscal
quarter period then ending will be multiplied by two (2) and (iii) for the
calculation of Scheduled Funded Debt Payments as of March 31, 2005, Scheduled Funded Debt
Payments for the three fiscal quarter period then ending will be multiplied by one and
one-third (1 1/3). 

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

        “SEC
Letter” shall mean that certain letter, dated July 12, 2004, from the SEC to the
Borrower relating to the Acquisition. 

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

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

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

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

 
	 	
23	 

 

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

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

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

        “Subsidiary”
shall mean, as to any Person, a corporation, partnership, limited liability company or
other entity of which shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified, all references to a
“Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower. 

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

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

        “Swingline
Lender” shall mean Wachovia. 

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

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

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

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

 
	 	
24	 

 

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

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

        “Trademarks”
shall mean (a) all trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade dress and service marks, logos and other source or
business identifiers, and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other country or
any political subdivision thereof, or otherwise, including, without limitation, any
thereof referred to in Schedule 3.16, and (b) all renewals thereof, including,
without limitation, any thereof referred to in Schedule 3.16. 

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

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

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

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

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

        “WCM”
shall mean Wachovia Capital Markets, LLC. 

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

        Section
  1.2 Other Definitional Provisions. 

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

	  	        (b)                      The
words “hereof”, “herein” and “hereunder” and
               words of similar import when used in this Agreement shall refer to this
               Agreement as a whole and not to  

 
	 	
25	 

    
   

 
	  	
any
particular provision of this Agreement, and                Section, subsection, Schedule
and Exhibit references are to this Agreement                unless otherwise specified.  

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

        Section
1.3 Accounting Terms.  

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

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

        Section 1.4
Time References.  

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

ARTICLE II 

THE LOANS; AMOUNT AND
TERMS 

        Section
2.1 Revolving Loans.  

	  	        (a)       Revolving
Commitment. During the Commitment Period, subject to the terms                and
conditions hereof, each Revolving Lender severally, but not jointly, agrees
               to make revolving credit loans (“Revolving Loans”) to the
               Borrower from time to time in an aggregate principal amount of up to FIFTY
               MILLION DOLLARS ($50,000,000) (as such aggregate maximum amount may be
               reduced from time to time as provided in  

 
	 	
26	 

    
   

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

	  	        (b)       Revolving
Loan Borrowings.  

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

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

	  	        (iii)       Advances.
Each Revolving Lender will make its Revolving Commitment                Percentage of
each Revolving Loan borrowing available to the  

 
	 	
27	 

    
   

 
	  	
Administrative
               Agent for the account of the Borrower at the office of the Administrative
Agent                specified in Section 9.2, or at such other office as the
Administrative Agent                may designate in writing, by 1:00 P.M. on the date
specified in the applicable                Notice of Borrowing in Dollars and in funds
immediately available to the                Administrative Agent. Such borrowing will
then be made available to the Borrower                by the Administrative Agent by
crediting the account of the Borrower on the                books of such office with the
aggregate of the amounts made available to the                Administrative Agent by the
Revolving Lenders and in like funds as received by                the Administrative
Agent.  

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

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

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

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

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

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

        Section
2.2 [Reserved]. 

        Section 2.3
Letter of Credit Subfacility. 

	  	        (a)       Issuance.
Subject to the terms and conditions hereof and of the LOC                Documents, if
any, and any other terms and conditions which the Issuing Lender                may
reasonably require, during the Commitment Period the Issuing Lender shall
               issue, and the Revolving Lenders shall participate in, Letters of Credit
for the                account of the Borrower from time to time upon request in a form
acceptable to                the Issuing Lender; provided, however, that
(i) the aggregate                amount of LOC Obligations shall not at any time exceed
TWO MILLION FIVE                HUNDRED THOUSAND DOLLARS ($2,500,000) (the
“LOC Committed                Amount”), (ii) the sum of outstanding
Revolving Loans plus

 
	 	
28	 

    
   

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

	  	        (b)       Notice
and Reports. The request for the issuance of a Letter of Credit                shall
be submitted to the Issuing Lender at least five Business Days prior to
               the requested date of issuance. The Issuing Lender will promptly upon
request                provide to the Administrative Agent for dissemination to the
Revolving Lenders a                detailed report specifying the Letters of Credit which
are then issued and                outstanding and any activity with respect thereto
which may have occurred since                the date of any prior report, and including
therein, among other things, the                account party, the beneficiary, the face
amount, expiry date as well as any                payments or expirations which may have
occurred. The Issuing Lender will further                provide to the Administrative
Agent promptly upon request copies of the Letters                of Credit. The Issuing
Lender will provide to the Administrative Agent promptly                upon request a
summary report of the nature and extent of LOC Obligations then
               outstanding.  

	  	
(c)       Participations.
Each Revolving Lender upon issuance of a Letter of Credit                shall be deemed
to have purchased without recourse a risk participation from the                Issuing
Lender in such Letter of Credit and the obligations arising thereunder                and
any collateral relating thereto, in each case in an amount equal to its
               Revolving Commitment Percentage of the obligations under such Letter of
Credit                and shall absolutely, unconditionally and irrevocably assume, as
primary obligor                and not as surety, and be obligated to pay to the Issuing
Lender therefor and                discharge when due, its Revolving Commitment
Percentage of the obligations                arising under such Letter of Credit. Without
limiting the scope and nature of                each Revolving Lender’s
participation in any Letter of Credit, to the                extent that the Issuing
Lender has not been reimbursed as required hereunder or                under any LOC
Document, each such Revolving Lender shall pay to the Issuing                Lender its
Revolving Commitment Percentage of such unreimbursed drawing in same                day
funds on the day of notification by the Issuing Lender of an unreimbursed 

 
	 	
29	 

   
   

 
	  	
drawing
pursuant to and in accordance with the provisions of subsection (d)
               hereof. The obligation of each Revolving Lender to so reimburse the
Issuing                Lender shall be absolute and unconditional and shall not be
affected by the                occurrence of a Default, an Event of Default or any other
occurrence or event.                Any such reimbursement shall not relieve or otherwise
impair the obligation of                the Borrower to reimburse the Issuing Lender
under any Letter of Credit,                together with interest as hereinafter
provided.  

	  	        (d)       Reimbursement.
In the event of any drawing under any Letter of Credit,                the Issuing Lender
will promptly notify the Borrower and the Administrative                Agent. The
Borrower shall reimburse the Issuing Lender on the day of drawing                under
any Letter of Credit (with the proceeds of a Revolving Loan obtained
               hereunder or otherwise) in same day funds as provided herein or in the LOC
               Documents. If the Borrower shall fail to reimburse the Issuing Lender as
               provided herein, the unreimbursed amount of such drawing shall bear
interest at                a per annum rate equal to the ABR Default Rate. Unless the
Borrower shall                immediately notify the Issuing Lender and the
Administrative Agent of its intent                to otherwise reimburse the Issuing
Lender, the Borrower shall be deemed to have                requested a Revolving Loan in
the amount of the drawing as provided in                subsection (e) hereof, the
proceeds of which will be used to satisfy the                reimbursement obligations.
The Borrower’s reimbursement obligations                hereunder shall be absolute
and unconditional under all circumstances                irrespective of any rights of
set-off, counterclaim or defense to payment the                Borrower may claim or have
against the Issuing Lender, the Administrative Agent,                the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other                Person,
including without limitation any defense based on any failure of the
               Borrower to receive consideration or the legality, validity, regularity or
               unenforceability of the Letter of Credit. The Issuing Lender will promptly
               notify the other Revolving Lenders of the amount of any unreimbursed
drawing and                each Revolving Lender shall promptly pay to the Administrative
Agent for the                account of the Issuing Lender in Dollars and in immediately
available funds, the                amount of such Revolving Lender’s Revolving
Commitment Percentage of such                unreimbursed drawing. Such payment shall be
made on the day such notice is                received by such Revolving Lender from the
Issuing Lender if such notice is                received at or before 2:00 P.M.,
otherwise such payment shall be made at or                before 12:00 Noon on the
Business Day next succeeding the day such notice is                received. If such
Revolving Lender does not pay such amount to the Issuing                Lender in full
upon such request, such Revolving Lender shall, on demand, pay to                the
Administrative Agent for the account of the Issuing Lender interest on the
               unpaid amount during the period from the date of such drawing until such
               Revolving Lender pays such amount to the Issuing Lender in full at a rate
per                annum equal to, if paid within two Business Days of the date of
drawing, the                Federal Funds Effective Rate and thereafter at a rate equal
to the Alternate                Base Rate. Each Revolving Lender’s obligation to
make such payment to the                Issuing Lender, and the right of the Issuing
Lender to receive the same, shall                be absolute and unconditional, shall not
be affected by any circumstance                whatsoever and without regard to the
termination of this Agreement or the                Commitments hereunder, the existence
of a Default or Event of Default or the                acceleration of the Credit Party
Obligations hereunder and shall be made without                any offset, abatement,
withholding or reduction whatsoever.  

 
	 	
30	 

    
   

 
	  	        (e)       Repayment
      with Revolving Loans. On any day on which the Borrower shall have requested,
      or been deemed to have requested, a Revolving Loan to reimburse a drawing
      under a Letter of Credit, the Administrative Agent shall give notice to
      the Revolving Lenders that a Revolving Loan has been requested or deemed
      requested in connection with a drawing under a Letter of Credit, in which
      case a Revolving Loan borrowing comprised entirely of Alternate Base Rate
      Loans (each such borrowing, a “Mandatory LOC Borrowing”)
      shall be immediately made (without giving effect to any termination of the
      Commitments pursuant to Section 7.2) pro rata based on each
      Revolving Lender’s respective Revolving Commitment Percentage (determined
      before giving effect to any termination of the Commitments pursuant to Section
      7.2) and the proceeds thereof shall be paid directly to the Issuing Lender
      for application to the respective LOC Obligations. Each Revolving Lender
      hereby irrevocably agrees to make such Revolving Loans immediately upon
      any such request or deemed request on account of each Mandatory LOC Borrowing
      in the amount and in the manner specified in the preceding sentence and
      on the same such date notwithstanding (i) the amount of Mandatory
      LOC Borrowing may not comply with the minimum amount for borrowings of Revolving
      Loans otherwise required hereunder, (ii) whether any conditions specified
      in Section 4.2 are then satisfied, (iii) whether a Default or an Event of
      Default then exists, (iv) failure for any such request or deemed request
      for Revolving Loan to be made by the time otherwise required in Section
      2.1(b), (v) the date of such Mandatory LOC Borrowing, or (vi) any reduction
      in the Revolving Committed Amount after any such Letter of Credit may have
      been drawn upon; provided, however, that in the event any
      such Mandatory LOC Borrowing should be less than the minimum amount for
      borrowings of Revolving Loans otherwise provided in Section 2.1(b)(ii),
      the Borrower shall pay to the Administrative Agent for its own account an
      administrative fee of $500. In the event that any Mandatory LOC Borrowing
      cannot for any reason be made on the date otherwise required above (including,
      without limitation, as a result of the commencement of a proceeding under
      the Bankruptcy Code with respect to any Credit Party), then each such Revolving
      Lender hereby agrees that it shall forthwith fund (as of the date the Mandatory
      LOC Borrowing would otherwise have occurred, but adjusted for any payments
      received from the Borrower on or after such date and prior to such purchase)
      its Participation Interests in the LOC Obligations; provided, further,
      that in the event any Revolving Lender shall fail to fund its Participation
      Interest on the day the Mandatory LOC Borrowing would otherwise have occurred,
      then the amount of such Revolving Lender’s unfunded Participation Interest
      therein shall bear interest payable by such Revolving Lender to the Issuing
      Lender upon demand, at the rate equal to, if paid within two Business Days
      of such date, the Federal Funds Effective Rate, and thereafter at a rate
      equal to the Alternate Base Rate.  

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

	  	        (g)       Uniform
Customs and Practices. The Issuing Lender shall have the Letters                of
Credit be subject to The Uniform Customs and Practice for Documentary
               Credits, as published as of the date of issue by the International Chamber
of                Commerce  

 
	 	
31	 

   
   

 
	  	
(the
“UCP”), in which case the UCP may be incorporated                therein
and deemed in all respects to be a part thereof.  

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

        Section
2.4 Swingline Loan Subfacility. 

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

	  	        (b)       Swingline
Loan Borrowings.  

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

	  	        (ii)       Repayment
of Swingline Loans. Each Swingline Loan borrowing shall be due                and
payable on the Maturity Date. The Swingline Lender may, at any time, in its
               sole discretion, by written notice to the Borrower and the Administrative
Agent,                demand repayment of its Swingline Loans by way of a Revolving Loan
borrowing, in                which case the Borrower shall be deemed to have requested a
Revolving Loan                borrowing comprised entirely of Alternate Base Rate Loans
in the amount of such                Swingline Loans; provided, however,
that, in the following                circumstances, any such demand shall also be deemed
to have been given one                Business Day prior to each of (A) the Maturity
Date, (B) the occurrence of any                Event of Default described in Section
7.1(f), (C) upon acceleration of the                Credit Party Obligations hereunder,
whether on account of an Event of Default                described in Section 7.1(f) or
any other Event of Default, and (D) the exercise                of  

 
	 	
32	 

   
   

 
	  	
remedies
in accordance with the provisions of Section 7.2 hereof (each such
               Revolving Loan borrowing made on account of any such deemed request
therefor as                provided herein being hereinafter referred to as “Mandatory
Swingline                Borrowing”). Each Revolving Lender hereby irrevocably
agrees to make                such Revolving Loans promptly upon any such request or
deemed request on account                of each Mandatory Swingline Borrowing in the
amount and in the manner specified                in the preceding sentence and on the
same such date notwithstanding (1)                the amount of Mandatory
Swingline Borrowing may not comply with the minimum                amount for borrowings
of Revolving Loans otherwise required hereunder, (2)                whether any
conditions specified in Section 4.2 are then satisfied, (3) whether                a
Default or an Event of Default then exists, (4) failure of any such request or
               deemed request for Revolving Loans to be made by the time otherwise
required in                Section 2.1(b)(i), (5) the date of such Mandatory Swingline
Borrowing, or (6)                any reduction in the Revolving Committed Amount or
termination of the Revolving                Commitments immediately prior to such
Mandatory Swingline Borrowing or                contemporaneously therewith. In the event
that any Mandatory Swingline Borrowing                cannot for any reason be made on
the date otherwise required above (including,                without limitation, as a
result of the commencement of a proceeding under the                Bankruptcy Code),
then each Revolving Lender hereby agrees that it shall                forthwith purchase
(as of the date the Mandatory Swingline Borrowing would                otherwise have
occurred, but adjusted for any payments received from the                Borrower on or
after such date and prior to such purchase) from the Swingline                Lender such
participations in the outstanding Swingline Loans as shall be                necessary to
cause each such Revolving Lender to share in such Swingline Loans                ratably
based upon its respective Revolving Commitment Percentage (determined
               before giving effect to any termination of the Commitments pursuant to
Section                7.2); provided  that (x) all interest payable on the
Swingline Loans                shall be for the account of the Swingline Lender until the
date as of which the                respective participation is purchased, and (y) at the
time any purchase of                participations pursuant to this sentence is actually
made, the purchasing                Revolving Lender shall be required to pay to the
Swingline Lender interest on                the principal amount of such participation
purchased for each day from and                including the day upon which the Mandatory
Swingline Borrowing would otherwise                have occurred to but excluding the
date of payment for such participation, at                the rate equal to, if paid
within two Business Days of the date of the Mandatory                Swingline Borrowing,
the Federal Funds Effective Rate, and thereafter at a rate                equal to the
Alternate Base Rate.  

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

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

 
	 	
33	 

 

        Section
2.5 [Reserved]. 

        Section
  2.6 Fees.  

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

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

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

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

        Section
2.7 Commitment Reductions. 

	  	        (a)       Voluntary
Reductions. The Borrower shall have the right to terminate or
               permanently reduce the unused portion of the Revolving Committed Amount at
any                time or from time to time upon not less than five Business Days’ prior
               notice to the Administrative Agent (which shall notify the Lenders thereof
as                soon as practicable) of each such termination or reduction, which
notice shall                specify the effective date thereof and the amount of any such
reduction which                shall be in a minimum amount of $1,000,000 or a whole
multiple of $500,000 in                excess thereof and shall be irrevocable  

 
	 	
34	 

    
   

 
	  	
and
effective upon receipt by the                Administrative Agent, provided that
no such reduction or termination                shall be permitted if after giving effect
thereto, and to any prepayments of the                Loans made on the effective date
thereof, the sum of the outstanding Revolving                Loans plus outstanding
Swingline Loans plus LOC Obligations would                exceed the Revolving
Committed Amount.  

	  	        (b)       Mandatory
Reductions. On any date that the Revolving Loans are required                to be
prepaid pursuant to the terms of Section 2.8(b) (ii), (iii) and (iv), the
               Revolving Committed Amount shall be automatically permanently reduced by
the                amount of such required prepayment and/or reduction.  

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

        Section
2.8 Prepayments. 

	  	        (a)       Optional
Prepayments. The Borrower shall have the right to prepay Loans                in
whole or in part from time to time; provided, however, that
               each partial prepayment of a Revolving Loan shall be in a minimum
principal                amount of $1,000,000 and integral multiples of $500,000 in
excess thereof, and                each partial prepayment of a Swingline Loan shall be
in a minimum principal                amount of $100,000 and integral multiples of
$100,000 in excess thereof. The                Borrower shall give three Business Days’ irrevocable
notice in the case of                LIBOR Rate Loans and one Business Day’s
irrevocable notice in the case of                Alternate Base Rate Loans, to the
Administrative Agent (which shall notify the                Lenders thereof as soon as
practicable). Amounts prepaid under this Section                2.8(a) shall be applied
to the outstanding Loans as the Borrower may elect; provided that each Lender
shall receive its pro rata share (except with                respect to prepayments of
Swingline Loans) of any such prepayment based on its                Revolving Commitment
Percentage. All prepayments under this Section 2.8(a) shall                be subject to
Section 2.18, but otherwise without premium or penalty. Interest                on the
principal amount prepaid shall be payable on the next occurring Interest
               Payment Date that would have occurred had such Loans not been prepaid or,
at the                request of the Administrative Agent, interest on the principal
amount prepaid                shall be payable on any date that a prepayment is made
hereunder through the                date of prepayment. Amounts prepaid on the Revolving
Loans and the Swingline                Loans may be reborrowed in accordance with the
terms hereof.  

	  	        (b)       Mandatory
      Prepayments.  

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

 
	 	
35	 

    
   

 
	  	        (ii)       Asset
Dispositions. Promptly following any Asset Disposition (or related
               series of Asset Dispositions), the Borrower shall prepay the Loans and
cash                collateralize the LOC Obligations in an aggregate amount equal to the
Net Cash                Proceeds derived from such Asset Disposition (or related series
of Asset                Dispositions) (such prepayment to be applied as set forth in
clause (vi) below).  

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

	  	        (iv)       Recovery
Event. Immediately upon receipt by any Credit Party of proceeds                from
any Recovery Event, the Borrower shall prepay the Loans and cash
               collateralize the LOC Obligations in an aggregate amount equal to one
hundred                percent (100%) of such cash proceeds (such prepayment to be
applied as set forth                in clause (vi) below).  

	  	        (v)       Excess
Cash Flow. Within 90 days after the end of each fiscal year
               (commencing with the fiscal year ending December 31, 2004), the Borrower
shall                prepay the Loans and cash collateralize the LOC Obligations in an
amount equal                to 75% of the Excess Cash Flow earned during such prior
fiscal year (or, for the                fiscal year ending December 31, 2004, earned
during the period from the Closing                Date through the end of such fiscal
year) (such prepayments to be applied as set                forth in clause (vi) below).  

	  	        (vi)       Application
of Mandatory Prepayments. All amounts required to be paid                pursuant to
this Section 2.8(b) shall be applied as follows: (A) with respect to                all
amounts prepaid pursuant to Sections 2.8(b)(i) and (iv), (1) first, to the
               outstanding Swingline Loans, (2) second, to the outstanding Revolving
Loans and                (3) third (after all Revolving Loans have been repaid), to a
cash collateral                account in respect of LOC Obligations, (B) with respect to
all amounts prepaid                pursuant to Sections 2.8(b)(ii), (iii) and (v), (1)
first, to the outstanding                Swingline Loans (with a corresponding permanent
reduction in the Revolving                Committed Amount), (2) second, to the
outstanding Revolving Loans (with a                corresponding permanent reduction in
the Revolving Committed Amount) and (3)                third (after all Revolving Loans
have been repaid), to a cash collateral account                in respect of LOC
Obligations. Within the parameters of the applications set                forth above,
prepayments shall be applied first to Alternate Base Rate Loans and                then
to LIBOR Rate Loans in direct order of Interest Period maturities. Each
               Lender shall receive its pro rata share (except with respect to
prepayments of                Swingline Loans) of any such prepayment based on its
Revolving Commitment                Percentage.  

 
	 	
36	 

    
   

 
	  	
All
prepayments under this Section 2.8(b) shall be subject to                Section 2.18 and
be accompanied by interest on the principal amount prepaid                through the
date of prepayment.  

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

        Section
2.9 Lending Offices. 

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

        Section
2.10 Default Rate. 

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

        Section
2.11 Conversion Options.  

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

 
	 	
37	 

    
   

 
	  	
Period
to such                succeeding Business Day such Loan shall bear interest as if it
were an Alternate                Base Rate Loan.  

	  	        (b)                      Any
LIBOR Rate Loans may be continued as such upon the expiration of an Interest
               Period with respect thereto by compliance by the Borrower with the notice
               provisions contained in Section 2.11(a); provided, that no LIBOR
Rate                Loan may be continued as such when any Default or Event of Default
has occurred                and is continuing, in which case such Loan shall be
automatically converted to                an Alternate Base Rate Loan at the end of the
applicable Interest Period with                respect thereto. If the Borrower shall
fail to give timely notice of an election                to continue a LIBOR Rate Loan,
or the continuation of LIBOR Rate Loans is not                permitted hereunder, such
LIBOR Rate Loans shall be automatically converted to                Alternate Base Rate
Loans at the end of the applicable Interest Period with                respect thereto.  

        Section
2.12 Computation of Interest and Fees. 

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

	  	        (b)                      Each
determination of an interest rate by the Administrative Agent pursuant to
               any provision of this Agreement shall be conclusive and binding on the
Borrower                and the Lenders in the absence of manifest error. The
Administrative Agent                shall, at the request of the Borrower, deliver to the
Borrower a statement                showing the computations used by the Administrative
Agent in determining any                interest rate.  

	  	        (c)                      It
is the intent of the Lenders and the Credit Parties to conform to and
               contract in strict compliance with applicable usury law from time to time
in                effect. All agreements between the Lenders and the Credit Parties are
hereby                limited by the provisions of this paragraph which shall override
and control all                such agreements, whether now existing or hereafter arising
and whether written                or oral. In no way, nor in any event or contingency
(including but not limited                to prepayment or acceleration of the maturity
of any Credit Party Obligation),                shall the interest taken, reserved,
contracted for, charged, or received under                this Credit Agreement, under
the Notes or otherwise, exceed the maximum                nonusurious amount permissible
under applicable law. If, from any possible                construction of any of the
Credit Documents or any other document, interest                would otherwise be
payable in excess of the maximum nonusurious amount, any such                construction
shall be subject to the provisions of this paragraph and such                interest
shall be  

 
	 	
38	 

    
   

 
	  	
automatically
reduced to the maximum nonusurious amount                permitted under applicable law,
without the necessity of execution of any                amendment or new document. If
any Lender shall ever receive anything of value                which is characterized as
interest on the Loans under applicable law and which                would, apart from
this provision, be in excess of the maximum nonusurious                amount, an amount
equal to the amount which would have been excessive interest                shall,
without penalty, be applied to the reduction of the principal amount                owing
on the Loans and not to the payment of interest, or refunded to the
               Borrower or the other payor thereof if and to the extent such amount which
would                have been excessive exceeds such unpaid principal amount of the
Loans. The right                to demand payment of the Loans or any other Indebtedness
evidenced by any of the                Credit Documents does not include the right to
receive any interest which has                not otherwise accrued on the date of such
demand, and the Lenders do not intend                to charge or receive any unearned
interest in the event of such demand. All                interest paid or agreed to be
paid to the Lenders with respect to the Loans                shall, to the extent
permitted by applicable law, be amortized, prorated,                allocated, and spread
throughout the full stated term (including any renewal or                extension) of
the Loans so that the amount of interest on account of such                indebtedness
does not exceed the maximum nonusurious amount permitted by                applicable
law.  

        Section
2.13 Pro Rata Treatment and Payments. 

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

 
	 	
39	 

   
   

 
	  	
succeeding
Business Day, and, with respect to payments of principal, interest                thereon
shall be payable at the then applicable rate during such extension. If                any
payment on a LIBOR Rate Loan becomes due and payable on a day other than a
               Business Day, the maturity thereof shall be extended to the next
succeeding                Business Day unless the result of such extension would be to
extend such payment                into another calendar month, in which event such
payment shall be made on the                immediately preceding Business Day.  

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

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

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

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

	  	        FOURTH,
to the payment of all of the Credit Party Obligations consisting of accrued fees and
interest, including, with respect to any Secured Hedging Agreement, any fees, premiums
and scheduled periodic payments due under such Secured Hedging Agreement and any interest
accrued thereon;  

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

 
	 	
40	 

   
   

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

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

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

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

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

 
	 	
41	 

    
   

 
	  	
at
the applicable rate for the applicable                borrowing pursuant to the Notice of
Borrowing and (ii) from a Lender at the                Federal Funds Effective Rate.  

	  	        (b)                      Unless
the Administrative Agent shall have been notified in writing by the
               Borrower, prior to the date on which any payment is due from it hereunder
(which                notice shall be effective upon receipt) that the Borrower does not
intend to                make such payment, the Administrative Agent may assume that such
Borrower has                made such payment when due, and the Administrative Agent may
in reliance upon                such assumption (but shall not be required to) make
available to each Lender on                such payment date an amount equal to the
portion of such assumed payment to                which such Lender is entitled
hereunder, and if the Borrower has not in fact                made such payment to the
Administrative Agent, such Lender shall, on demand,                repay to the
Administrative Agent the amount made available to such Lender. If                such
amount is repaid to the Administrative Agent on a date after the date such
               amount was made available to such Lender, such Lender shall pay to the
               Administrative Agent on demand interest on such amount in respect of each
day                from the date such amount was made available by the Administrative
Agent to such                Lender to the date such amount is recovered by the
Administrative Agent at a per                annum rate equal to the Federal Funds
Effective Rate.  

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

        Section
  2.15 Inability to Determine Interest Rate. 

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

 
	 	
42	 

 

        Section
  2.16 Illegality. 

        Notwithstanding
any other provision of this Agreement, if the adoption of or any change in any Requirement
of Law or in the interpretation or application thereof by the relevant Governmental
Authority to any Lender shall make it unlawful for such Lender or its LIBOR Lending Office
to make or maintain LIBOR Rate Loans as contemplated by this Agreement or to obtain in the
interbank eurodollar market through its LIBOR Lending Office the funds with which to make
such Loans, (a) such Lender shall promptly notify the Administrative Agent and the
Borrower thereof, (b) the commitment of such Lender hereunder to make LIBOR Rate Loans or
continue LIBOR Rate Loans as such shall forthwith be suspended until the Administrative
Agent shall give notice that the condition or situation which gave rise to the suspension
shall no longer exist, and (c) such Lender’s Loans then outstanding as LIBOR Rate
Loans, if any, shall be converted on the last day of the Interest Period for such Loans or
within such earlier period as required by law to Alternate Base Rate Loans. The Borrower
hereby agrees promptly to pay any Lender, upon its demand, any additional amounts
necessary to compensate such Lender for actual and direct costs (but not including
anticipated profits) reasonably incurred by such Lender including, but not limited to, any
interest or fees payable by such Lender to lenders of funds obtained by it in order to
make or maintain its LIBOR Rate Loans hereunder. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of manifest
error. Each Lender agrees to use reasonable efforts (including reasonable efforts to
change its LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise
be payable pursuant to this Section; provided, however, that such efforts
shall not cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender in its sole discretion to be material. 

        Section
  2.17 Requirements of Law. 

	  	        (a)                      If
the adoption of or any change in any Requirement of Law or in the
               interpretation or application thereof or compliance by any Lender with any
               request or directive (whether or not having the force of law) from any
central                bank or other Governmental Authority made subsequent to the date
hereof:  

	  	        (i)                      shall
subject such Lender to any tax of any kind whatsoever with respect to any
               Letter of Credit, any Participation Interest therein or any application
relating                thereto, any LIBOR Rate Loan made by it, or change the basis of
taxation of                payments to such Lender in respect thereof (except for changes
in the rate of                tax on the overall net income of such Lender);  

	  	        (ii)                      shall
impose, modify or hold applicable any reserve, special deposit, compulsory
               loan or similar requirement against assets held by, deposits or other
               liabilities in or for the account of, advances, loans or other extensions
of                credit by, or any other acquisition of funds by, any office of such
Lender which                is not otherwise included in the determination of the LIBOR
Rate hereunder; or  

	  	        (iii)                      shall
impose on such Lender any other condition;  

 
	 	
43	 

  
   

 
	  	        and
the result of any of the foregoing is to increase the cost to such Lender of making or
maintaining LIBOR Rate Loans or the Letters of Credit (or the Participations Interests
therein) or to reduce any amount receivable hereunder or under any Note, then, in any such
case, the Borrower shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such additional cost or reduced amount receivable
which such Lender reasonably deems to be material as determined by such Lender with
respect to its LIBOR Rate Loans or Letters of Credit. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of manifest
error. Each Lender agrees to use reasonable efforts (including reasonable efforts to
change its Domestic Lending Office or LIBOR Lending Office, as the case may be) to avoid
or to minimize any amounts which might otherwise be payable pursuant to this paragraph of
this Section; provided, however, that such efforts shall not cause the
imposition on such Lender of any additional costs or legal or regulatory burdens deemed by
such Lender in its sole discretion to be material. 

	  	        (b)                      If
any Lender shall have reasonably determined that the adoption of or any
               change in any Requirement of Law regarding capital adequacy or in the
               interpretation or application thereof or compliance by such Lender or any
               corporation controlling such Lender with any request or directive
regarding                capital adequacy (whether or not having the force of law) from
any central bank                or Governmental Authority made subsequent to the date
hereof does or shall have                the effect of reducing the rate of return on
such Lender’s or such                corporation’s capital as a consequence of
its obligations hereunder to a                level below that which such Lender or such
corporation could have achieved but                for such adoption, change or
compliance (taking into consideration such                Lender’s or such
corporation’s policies with respect to capital                adequacy) by an amount
reasonably deemed by such Lender in its sole discretion                to be material,
then from time to time, within fifteen days after demand by such                Lender,
the Borrower shall pay to such Lender such additional amount as shall be
               certified by such Lender as being required to compensate it for such
reduction.                Such a certificate as to any additional amounts payable under
this Section                submitted by a Lender (which certificate shall include a
description of the                basis for the computation), through the Administrative
Agent, to the Borrower                shall be conclusive absent manifest error.  

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

        Section
  2.18 Indemnity. 

        The
Borrower hereby agrees to indemnify each Lender and to hold such Lender harmless from any
funding loss or expense which such Lender may sustain or incur as a consequence of (a)
the failure of the Borrower to pay the principal amount of or interest on any Loan by
such Lender in accordance with the terms hereof, (b) the failure of the Borrower to
accept a borrowing after the Borrower has given a notice in accordance with the terms
hereof, (c) the failure of the Borrower to make any prepayment after the Borrower has
given a notice in accordance with the 

 
	 	
44	 

 

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

        Section
  2.19 Taxes. 

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

	  	        (b)                      Each
Lender that is not a United States person (as such term is defined in
               Section 7701(a)(30) of the Code) agrees to deliver to the Borrower and the
               Administrative Agent on or prior to the Closing Date, or in the case of a
Lender                that is an assignee or transferee of an interest under this Credit
Agreement                pursuant to Section 9.6(d) (unless the respective Lender was
already a Lender                hereunder immediately prior to such assignment or
transfer), on the date of such                assignment or transfer to such Lender, (i)
if the Lender is a “bank”               within the meaning of Section
881(c)(3)(A) of the Code, two accurate and                complete original signed copies
of Internal Revenue Service Form W-8BEN, W-8ECI                or W-8IMY (or successor
forms) certifying such Lender’s entitlement to a                complete exemption
from United States withholding tax with respect to payments                to be  

 
	 	
45	 

    
   
  

  

	  	
made
under this Credit Agreement and under any Note, or (ii) if the Lender                is
not a “bank” within the meaning of Section 881(c)(3)(A) of the
               Code, Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY as set forth
in                clause (i) above, or (x) a certificate in substantially the form of Schedule
               2.19 (any such certificate, a “Tax Exempt Certificate”)
and                (y) two accurate and complete original signed copies of Internal
Revenue Service                Form W-8BEN (or successor form) certifying such Lender’s
entitlement to an                exemption from United States withholding tax with
respect to payments of                interest to be made under this Credit Agreement and
under any Note. In addition,                each Lender agrees that it will deliver upon
the Borrower’s request updated                versions of the foregoing, as
applicable, whenever the previous certification                has become obsolete or
inaccurate in any material respect, together with such                other forms as may
be required in order to confirm or establish the entitlement                of such
Lender to a continued exemption from or reduction in United States
               withholding tax with respect to payments under this Credit Agreement and
any                Note. Notwithstanding anything to the contrary contained in Section
2.19(a), but                subject to the immediately succeeding sentence, (x) the
Borrower shall be                entitled, to the extent it is required to do so by law,
to deduct or withhold                Taxes imposed by the United States (or any political
subdivision or taxing                authority thereof or therein) from interest, fees or
other amounts payable                hereunder for the account of any Lender which is not
a United States person (as                such term is defined in Section 7701(a)(30) of
the Code) for U.S. federal income                tax purposes to the extent that such
Lender has not provided to the Borrower                U.S. Internal Revenue Service
Forms that establish a complete exemption from                such deduction or
withholding and (y) the Borrower shall not be obligated                pursuant to
Section 2.19(a) hereof to gross-up payments to be made to a Lender                in
respect of Taxes imposed by the United States if (I) such Lender has not
               provided to the Borrower the Internal Revenue Service Forms required to be
               provided to the Borrower pursuant to this Section 2.19(b) or (II) in the
case of                a payment, other than interest, to a Lender described in clause
(ii) above, to                the extent that such Forms do not establish a complete
exemption from                withholding of such Taxes. Notwithstanding anything to the
contrary contained in                the preceding sentence or elsewhere in this Section
2.19, the Borrower agrees to                pay additional amounts and to indemnify each
Lender in the manner set forth in                Section 2.19(a) (without regard to the
identity of the jurisdiction requiring                the deduction or withholding) in
respect of any amounts deducted or withheld by                it as described in the
immediately preceding sentence as a result of any changes                after the
Closing Date in any applicable law, treaty, governmental rule,                regulation,
guideline or order, or in the interpretation thereof, relating to                the
deducting or withholding of Taxes.  

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

	  	        (d)                      If
the Borrower pays any additional amount pursuant to this Section 2.19 with
               respect to a Lender, such Lender shall use reasonable efforts to obtain a
refund                of tax or credit against its tax liabilities on account of such
payment; provided that such  

 
	 	
46	 

    
   
  

  

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

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

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

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

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

 
	 	
47	 

   
   

 
	  	
above
shall affect, impair, or prevent the vesting of the Issuing                Lender’s
rights or powers hereunder.  

	  	        (c)                      In
furtherance and extension and not in limitation of the specific provisions
               hereinabove set forth, any action taken or omitted by the Issuing Lender
or any                Revolving Lender, under or in connection with any Letter of Credit
or the                related certificates, if taken or omitted in the absence of gross
negligence or                willful misconduct, shall not put such Issuing Lender or
such Revolving Lender                under any resulting liability to the Borrower. It is
the intention of the                parties that this Credit Agreement shall be construed
and applied to protect and                indemnify the Issuing Lender and each Revolving
Lender against any and all risks                involved in the issuance of the Letters
of Credit, all of which risks are hereby                assumed by the Borrower,
including, without limitation, any and all risks of the                acts or omissions,
whether rightful or wrongful, of any Government Authority.                The Issuing
Lender and the Revolving Lenders shall not, in any way, be liable                for any
failure by the Issuing Lender or anyone else to pay any drawing under                any
Letter of Credit as a result of any Government Acts or any other cause
               beyond the control of the Issuing Lender and the Revolving Lenders.  

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

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

ARTICLE III 

REPRESENTATIONS AND
WARRANTIES 

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

        Section
  3.1 Financial Condition. 

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

 
	 	
48	 

  
   

 
	  	        (a)                      balance
sheets and the related statements of income and of cash flows of (i) the
               Borrower for fiscal years ended December 31, 2002 and December 31, 2003
audited                by Grant Thornton LLP, (ii) the Acquired Company for the
period from                March 23, 2002 through December 31, 2002 and for the fiscal
year ended December                31, 2003 audited by PriceWaterhouseCoopers LLP;  

	  	        (b)                      company-prepared
unaudited (i) monthly balance sheets and related statements of                income and
cash flows for the Borrower through the month most recently ended                prior to
the Closing Date for which such statements are available, (ii) balance
               sheet(s) of the Acquired Company as of March 31, 2004 and, if available,
June                30, 2004, (iii) income statements, cash flows and statements of
equity of the                Acquired Company for the three-month period ended March 31,
2003, for the                six-month period ended June 30, 2003 and, if available, for
the three-month                period ended March 31, 2004 and for the six-month period
ended June 30, 2004 and                (iv) income statements of the Acquired Company for
the three-month periods ended                June 30, 2003, September 30, 2003 and
December 31, 2003;  

	  	        (c) 
an opening pro forma balance sheet of the Borrower as of May 31, 2004 in form and
substance satisfactory to the Administrative Agent and the Lenders giving effect to the
Acquisition, the initial fundings hereunder and the other transactions to occur on the
Closing Date; and 

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

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

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

        Section
  3.3 Corporate Existence; Compliance with Law. 

        Each
of the Borrower and the other Credit Parties (a) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or organization;
(b) has the requisite power and authority and the legal right to own and operate all its
property, to lease the property it operates as lessee and to conduct the business in
which it is currently engaged; (c) is duly qualified to conduct business and in good
standing under the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business  

 
	 	
49	 

 

requires such qualification except
to the extent that the failure to so qualify or be in good standing could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; and (d) is in
compliance with all Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect; provided, however, that the Borrower is not in compliance with certain SEC
requirements as set forth in the SEC Letter but such non-compliance could not reasonably
be expected to have a Material Adverse Effect. Without limiting the generality of the
foregoing, each of the Borrower and the other Credit Parties represents that:  

	  	        (i)                      (A)
There is no Credit Party or individual employed by any Credit Party who may
               reasonably be expected to have criminal culpability or to be excluded or
               suspended from participation in any Medical Reimbursement Program for
their                corporate or individual actions or failures to act where such
culpability,                exclusion and/or suspension has or could be reasonably
expected to result in a                Material Adverse Effect; and (B) there is no
member of management continuing to                be employed by any Credit Party who may
reasonably be expected to have                individual culpability for matters under
investigation by any Governmental                Authority unless such member of
management has been, within a reasonable period                of time after discovery of
such actual or potential culpability, either                suspended or removed from
positions of responsibility related to those                activities under challenge by
the Governmental Authority;  

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

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

        Section
3.4 Corporate Power; Authorization; Enforceable Obligations.  

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

 
	 	
50	 

 

constitutes a legal, valid and
binding obligation of the Borrower or the other Credit Parties, as the case may be,
enforceable against the Borrower or such other Credit Party, as the case may be, in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).  

        Section
  3.5 No Legal Bar; No Default. 

        The
execution, delivery and performance of the Credit Documents, the borrowings thereunder and
the use of the proceeds of the Loans will not violate any Requirement of Law or any
Contractual Obligation of the Borrower or any other Credit Party (except those as to which
waivers or consents have been obtained), and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or revenues
pursuant to any Requirement of Law or Contractual Obligation other than the Liens arising
under or contemplated in connection with the Credit Documents. Neither the Borrower nor
any other Credit Party is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing. 

        Section
3.6 No Material Litigation. 

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

        Section
  3.7 Investment Company Act. 

        Neither
the Borrower nor any other Credit Party is an “investment company”, or a company
“controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. 

        Section
  3.8 Margin Regulations. 

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

 
	 	
51	 

 

aggregate value of all “margin
stock” owned by the Credit Parties and their Subsidiaries taken as a group does not
exceed 25% of the value of their assets.  

        Section
3.9 ERISA.  

        Neither
a Reportable Event nor an “accumulated funding deficiency” (within the meaning
of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year
period prior to the date on which this representation is made or deemed made with respect
to any Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, except to the extent that any such occurrence or failure
to comply would not reasonably be expected to have a Material Adverse Effect. No
termination of a Single Employer Plan has occurred resulting in any liability that has
remained underfunded, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period which could reasonably be expected to have a Material Adverse Effect. The
present value of all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last annual valuation date prior
to the date on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits by an amount which, as determined
in accordance with GAAP, could reasonably be expected to have a Material Adverse Effect.
Neither any Credit Party nor any Commonly Controlled Entity is currently subject to any
liability for a complete or partial withdrawal from a Multiemployer Plan which could
reasonably be expected to have a Material Adverse Effect. 

        Section
  3.10 Environmental Matters. 

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

	  	        (b)                      To
the best knowledge of the Borrower and the other Credit Parties, the
               Properties and all operations of the Borrower and the other Credit Parties
               and/or their Subsidiaries at the Properties are in compliance, and have in
the                last five years been in compliance, in all material respects with all
applicable                Environmental Laws, and there is no contamination at, under or
about the                Properties or violation of any Environmental Law with respect to
the Properties                or the business operated by the Borrower and the other
Credit Parties or any of                their Subsidiaries (the “Business”).  

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

 
	 	
52	 

   
   

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

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

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

        Section
  3.11 Use of Proceeds. 

        The
proceeds of the Extensions of Credit shall be used solely by the Borrower to (i) finance a
portion of the Acquisition, (ii) pay any fees and expenses in connection with the
Acquisition, (iii) pay any fees and expenses owing to the Lenders and the Administrative
Agent in connection with this Agreement and (iv) provide for working capital and other
general corporate purposes. 

        Section
  3.12 Subsidiaries. 

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

 
	 	
53	 

 

        Section
  3.13 Ownership. 

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

        Section
  3.14 Indebtedness. 

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

        Section
  3.15 Taxes. 

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

        Section
  3.16 Intellectual Property. 

        Each
of the Credit Parties and its Subsidiaries owns, or has the legal right to use, all
Intellectual Property necessary for each of them to conduct its business as currently
conducted. Set forth on Schedule 3.16 is a list of all Intellectual Property owned
by each of the Credit Parties and its Subsidiaries or that each of the Credit Parties or
any of its Subsidiaries has the right to use. Except as disclosed in Schedule 3.16hereto,
(a) the specified Credit Party has the right to use the material Intellectual Property
disclosed in Schedule 3.16 hereto in perpetuity and without payment of royalties,
(b) all registrations with and applications to Governmental Authorities in respect of
such material Intellectual Property are valid and in full force and effect and are not
subject to the payment of any taxes or maintenance fees or the taking of any interest
therein, held by any of the Credit Parties to maintain their validity or effectiveness,
and (c) there are no restrictions on the direct or indirect transfer of any Contractual
Obligation, or any interest therein, held by any of the Credit Parties in respect of such
material Intellectual Property which has not been obtained. To the knowledge of the
Credit Parties, none of the Credit Parties is in default (or with the giving of notice or
lapse of time or both, would be in default) under any license to use such material
Intellectual Property; no claim has been asserted and is pending by any Person
challenging or questioning the use of any such material Intellectual Property or the
validity or effectiveness of any such material Intellectual Property, nor do the Credit
Parties or any of their Subsidiaries know of any such claim which could reasonably be
expected to have a Material Adverse Effect; and, to the knowledge of the Credit Parties
or any of their Subsidiaries, the use of such material Intellectual Property by any of
the Credit Parties or any of its  

 
	 	
54	 

 

Subsidiaries does not infringe on
the rights of any Person, in each case which could reasonably be expected to have a
Material Adverse Effect. The Credit Parties have recorded or deposited with and paid to
the United States Copyright Office, the Register of Copyrights, the Copyrights Royalty
Tribunal or other Governmental Authority, all notices, statements of account, royalty
fees and other documents and instruments required under the terms and conditions of any
Contractual Obligation of the Credit Parties and/or under Title 17 of the United States
Code and the rules and regulations issued thereunder (collectively, the “Copyright
Act”), and are not liable to any Person for copyright infringement under the
Copyright Act or any other law, rule, regulation, contract or license as a result of
their business operations. Schedule 3.16 may be updated from time to time by the Borrower
to include new Intellectual Property by giving written notice thereof to the
Administrative Agent.  

        Section
  3.17 Solvency. 

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

        Section
  3.18 Investments. 

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

        Section
  3.19 Location of Collateral. 

        Set
forth on Schedule 3.19(a) is a list of the Properties of the Credit Parties and
their Subsidiaries with street address, county and state where located. Set forth on
Schedule 3.19(b) is a list of all locations where any tangible personal property of
the Credit Parties and their Subsidiaries with a fair market value in excess of $10,000 is
located, including county and state where located. Set forth on Schedule 3.19(c) is
the chief executive office and principal place of business of each of the Credit Parties
and their Subsidiaries and the State of incorporation or organization of each such Person.
Schedule 3.19(a), 3.19(b) and 3.19(c) may be updated from time to
time by the Borrower to include new properties or locations by giving written notice
thereof to the Administrative Agent. 

        Section
  3.20 Brokers’ Fees. 

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

 
	 	
55	 

 

        Section
  3.21 Labor Matters. 

        There
are no collective bargaining agreements or Multiemployer Plans covering the employees of
any of the Credit Parties or any of its Subsidiaries as of the Closing Date, other than as
set forth in Schedule 3.21 hereto, and none of the Credit Parties or any of its
Subsidiaries (i) has suffered any strikes, walkouts, work stoppages or other material
labor difficulty within the last five years, other than as set forth in Schedule 3.21
hereto or (ii) has knowledge of any potential or pending strike, walkout or work
stoppage. Other than as set forth on Schedule 3.21, no unfair labor practice
complaint is pending against any Credit Party or any of its Subsidiaries or, to the best
knowledge of the Credit Parties, before any Governmental Authority. 

        Section
  3.22 Security Documents. 

        The
Security Documents create valid security interests in, and Liens on, the Collateral
purported to be covered thereby, which security interests and Liens are currently (or will
be, upon the filing of appropriate financing statements in favor of the Administrative
Agent, on behalf of the Lenders) perfected security interests and Liens, prior to all
other Liens other than Permitted Liens. 

        Section
  3.23 Accuracy and Completeness of Information.  

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

        Section
  3.24 Fraud and Abuse. 

        Neither
the Credit Parties nor, to the knowledge of the officers of the Credit Parties, any of
their officers or directors, have engaged in any activities which are prohibited under
federal Medicare and Medicaid statutes, 42 U.S.C. §1320a-7b, or 42 U.S.C. §1395nn
or the regulations promulgated pursuant to such statutes or related state or local
statutes or regulations, or which are prohibited by binding rules of professional
conduct, including but not limited to the following: (a) knowingly and willfully making
or causing to be made a false statement or representation of a material fact in any
applications for any benefit or payment; (b) knowingly and willfully making or causing to
be made any false statement or representation of a material fact for use in determining
rights to any benefit or payment; (c) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit or
payment on its own behalf or on behalf of another with the intent to secure such benefit
or 

 
	 	
56	 

 

payment fraudulently; (d) knowingly
and willfully soliciting or receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind or offering to
pay such remuneration (i) in return for referring an individual to a Person for the
furnishing or arranging for the furnishing of any item or service for which payment may
be made in whole or in part by Medicare, Medicaid or other applicable third party payors,
or (ii) in return for purchasing, leasing or ordering or arranging for or recommending
the purchasing, leasing or ordering of any good, facility, service, or item for which
payment may be made in whole or in part by Medicare, Medicaid or other applicable third
party payors.  

        Section
  3.25 Licensing and Accreditation. 

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

        Section
  3.26 Other Regulatory Protection. 

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

        Section
  3.27 Material Contracts. 

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

 
	 	
57	 

 

        Section
  3.28 Insurance. 

        The
present insurance coverage of the Credit Parties and their Subsidiaries is outlined as to
carrier, policy number, expiration date, type and amount on Schedule 3.28 and such
insurance coverage complies with the requirements set forth in Section 5.5(b) or has been
otherwise approved by the Administrative Agent. 

        Section
3.29 Reimbursement from Third Party Payors. 

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

        Section
3.30 Other Agreements. 

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

        Section
3.31 Classification as Senior Indebtedness. 

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

 
	 	
58	 

 

ARTICLE IV 

CONDITIONS PRECEDENT 

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

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

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

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

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

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

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

	  	        (iv)       Good
Standing. Copies of (i) certificates of good standing, existence or
               its equivalent with respect to the each Credit Party certified as of a
recent                date by the appropriate Governmental Authorities of the state of
incorporation                or organization and each other state in which the failure to
so qualify and be                in good standing could reasonably be expected to have a
Material Adverse Effect                on the business or operations of the Credit
Parties and their Subsidiaries in                such state and (ii) a certificate
indicating payment of all corporate  

 
	 	
59	 

    
   

 
	  	
franchise
               taxes certified as of a recent date by the appropriate governmental taxing
               authorities.  

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

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

	  	        (d)       Reliance.
The Administrative Agent shall have received a copy of each                opinion,
report, agreement, and other document required to be delivered pursuant                to
the Acquisition Documents and the transactions contemplated in connection
               therewith, together with evidence that the Administrative Agent and the
Lenders                have been authorized to rely on each such opinion, all in form and
substance                reasonably satisfactory to the Administrative Agent.  

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

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

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

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

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

 
	 	
60	 

  
   

 
	  	
Borrower,
the Acquired Company or any of their Subsidiaries as reasonably                requested
by the Administrative Agent; and  

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

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

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

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

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

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

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

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

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

	  	        (viii)                      zoning
letters from each municipality or other Governmental Authority for each
               jurisdiction in which the Mortgaged Properties listed in Schedule 4.1-4               are
located.  

 
	 	
61	 

   
   

 
	  	        (g)       Liability,
Casualty and Business Interruption Insurance. The                Administrative Agent
shall have received copies of insurance policies or                certificates of
insurance evidencing liability and casualty insurance meeting                the
requirements set forth herein or in the Security Documents and business
               interruption insurance satisfactory to the Administrative Agent. The
               Administrative Agent shall be named as loss payee or mortgagee, as its
interest                may appear, and/or additional insured with respect to any such
insurance                providing coverage in respect of any Collateral, and each
provider of any such                insurance shall agree, by endorsement upon the policy
or policies issued by it                or by independent instruments furnished to the
Administrative Agent, that it                will give the Administrative Agent thirty
days prior written notice before any                such policy or policies shall be
altered or canceled.  

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

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

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

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

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

	  	        (m)       Acquisition
Documents. The Administrative Agent shall have reviewed and                approved
in its sole discretion all of the Acquisition Documents and there shall
               not have been any material modification, amendment, supplement or waiver
to the                Acquisition  

 
	 	
62	 

    
   

 
	  	
Documents
without the prior written consent of the Administrative                Agent, and the
Acquisition shall have been consummated in accordance with the                terms of
the Acquisition Documents (without waiver of any conditions precedent                to
the obligations of any party thereto). The Administrative Agent shall have
               received a copy, certified by an officer of the Borrower as true and
complete,                of each Acquisition Document as originally executed and
delivered, together with                all exhibits and schedules thereto.  

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

	  	        (o)       Due
Diligence. The Administrative Agent and the Arranger shall have
               completed in form and scope reasonably satisfactory thereto their legal
and                environmental due diligence of the Credit Parties and their
Subsidiaries                (including due diligence relating to management, strategy,
material customers                and contracts).  

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

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

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

	  	        (s)       Maximum
Senior Leverage. The Administrative Agent shall have received                evidence
satisfactory thereto provided by the Borrower that the Senior Leverage
               Ratio as of the Closing Date on a Pro Forma Basis shall be no greater than
1.05                to 1.0.  

	  	        (t)       Maximum
Total Leverage. The Administrative Agent shall have received                evidence
satisfactory thereto provided by the Borrower that the Leverage Ratio                as
of the Closing Date on a Pro Forma Basis shall be no greater than 1.81 to
               1.0.  

	  	        (u)       Minimum
Consolidated EBITDA. The Administrative Agent shall have received
               evidence satisfactory thereto provided by the Borrower that the
Consolidated                EBITDA of the Borrower and its Subsidiaries on a Pro Forma
Basis as of the                Closing Date shall be no less than $48,000,000.  

 
	 	
63	 

   
   

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

	  	        (w)       Termination
of Existing Indebtedness. All existing Indebtedness for                borrowed money
of the Borrower, the Acquired Company and their Subsidiaries                shall have
been repaid in full and all commitments relating thereto shall have                been
terminated and all Liens relating thereto shall have been terminated.  

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

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

        Section
4.2 Conditions to All Extensions of Credit.  

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

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

 
	 	
64	 

   
   

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

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

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

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

ARTICLE V 

AFFIRMATIVE COVENANTS 

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

        Section
5.1 Financial Statements. 

        Furnish
to the Administrative Agent and each of the Lenders: 

	  	        (a)       Annual
Financial Statements. As soon as available, and in any event no                later
than the earlier of (i) the date the Borrower is required by the SEC to
               deliver its Form 10-K for any fiscal year of the Borrower and (ii)
               ninety (90) days after the end of each fiscal year of the Borrower, a
copy                of the consolidated and consolidating balance sheet of the Borrower
and its                consolidated Subsidiaries as at the end of such fiscal year and
the related                consolidated and consolidating statements of income and
retained earnings and of                cash flows of the Borrower and its consolidated
Subsidiaries for such year,                audited (with respect to the consolidated
statements only) by a firm of                independent certified public accountants of
nationally recognized standing                reasonably acceptable to the Administrative
Agent, in each case setting forth in                comparative form consolidated  

 
	 	
65	 

  
   

 
	  	
and
consolidating figures for the preceding                fiscal year, reported on
without a “going concern” or like                qualification or exception, or
qualification indicating that the scope of the                audit was inadequate to
permit such independent certified public accountants to                certify such
financial statements without such qualification;  

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

	  	        (c)       Monthly
Financial Statements. As soon as available and in any event                within
thirty (30) days after the end of each month of the Borrower (other than
               at the end of a fiscal quarter, in which case forty-five (45) days after
the end                thereof), a company-prepared consolidated balance sheet of the
Borrower and its                consolidated Subsidiaries as at the end of such period
and related                company-prepared consolidated statements of income for the
Borrower and its                consolidated Subsidiaries for such monthly period and for
the portion of the                fiscal year ending with such period, in each case
setting forth in comparative                form consolidated figures for the
corresponding period or periods of the                preceding fiscal year (subject to
normal recurring year-end audit adjustments);                and  

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

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

 
	 	
66	 

 

        Section
5.2 Certificates; Other Information. 

        Furnish
to the Administrative Agent and each of the Lenders: 

	  	        (a)                      concurrently
with the delivery of the financial statements referred to in                Section
5.1(a) above, a certificate of the independent certified public
               accountants reporting on such financial statements stating that in making
the                examination necessary therefor no knowledge was obtained of any
Default or Event                of Default, except as specified in such certificate;  

	  	        (b)                      concurrently
with the delivery of the financial statements referred to in                Sections
5.1(a) and 5.1(b) above, a certificate of a Responsible Officer stating
               that, to the best of such Responsible Officer’s knowledge, during
such                period each of the Credit Parties observed or performed in all
material respects                all of its covenants and other agreements, and satisfied
in all material                respects every condition, contained in this Agreement to
be observed, performed                or satisfied by it, and that such Responsible
Officer has obtained no knowledge                of any Default or Event of Default
except as specified in such certificate and                such certificate shall include
the calculations in reasonable detail required to                indicate compliance with
Section 5.9 as of the last day of such period;  

	  	        (c)                      within
ten days after the same are sent, copies of all reports (other than those
               otherwise provided pursuant to Section 5.1 and those which are of a
promotional                nature) and other financial information which the Borrower
sends to its members                and equity holders, and within ten days after the
same are filed, copies of all                financial statements and non-confidential
reports which the Borrower may make                to, or file with the Securities and
Exchange Commission or any successor or                analogous Governmental Authority;  

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

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

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

        Section
5.3 Payment of Obligations. 

        Pay,
discharge or otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all its taxes (Federal, state, local and any other taxes) and all its
other obligations and liabilities of whatever nature and any additional costs that are
imposed as a  

 
	 	
67	 

 

result of any failure to so pay,
discharge or otherwise satisfy such obligations and liabilities, except when the amount
or validity of such obligations, liabilities and costs is currently being contested in
good faith by appropriate proceedings and reserves, if applicable, in conformity with
GAAP with respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be.  

        Section
5.4 Conduct of Business and Maintenance of Existence.  

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

        Section
5.5 Maintenance of Property; Insurance. 

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

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

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

 
	 	
68	 

 

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

        Keep
proper books of records and account in which full, true and correct entries in conformity
with GAAP and all Requirements of Law shall be made of all dealings and transactions in
relation to its businesses and activities; and permit, during regular business hours and
upon reasonable notice by the Administrative Agent or any Lender, the Administrative Agent
or any Lender to visit and inspect any of its properties and examine and make abstracts
from any of its books and records (other than materials protected by the attorney-client
privilege and materials which the Borrower may not disclose without violation of a
confidentiality obligation binding upon it) at any reasonable time and as often as may
reasonably be desired, and to discuss the business, operations, properties and financial
and other condition of the Credit Parties and their Subsidiaries with officers and
employees of the Credit Parties and their Subsidiaries and with its independent certified
public accountants, in each case at the Borrower’s expense. 

        Section
5.7 Notices.  

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

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

	  	        (b)                      promptly,
any default or event of default under any Contractual Obligation of                any
Credit Party or any of its Subsidiaries which could reasonably be expected
               to have a Material Adverse Effect or involve a monetary claim in excess of
               $1,000,000;  

	  	        (c)                      promptly,
any litigation, or any investigation or proceeding known to a Credit
               Party, affecting any Credit Party or any of its Subsidiaries which, if
adversely                determined, could reasonably be expected to have a Material
Adverse Effect;  

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

	  	        (e)                      promptly,
of the institution of any investigation or proceeding against any                Credit
Party to suspend, revoke or terminate or which may result in the
               termination of any Medicaid Provider  

 
	 	
69	 

    
   

 
	  	
Agreement,
Medicaid Certification, Medicare                Provider Agreement, Medicare
Certification or exclusion from any Medical                Reimbursement Program;  

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

	  	        (g)                      promptly,
any other development or event which could reasonably be expected to                have
a Material Adverse Effect.  

Each notice pursuant to this Section
shall be accompanied by a statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the Borrower proposes to take with
respect thereto. In the case of any notice of a Default or Event of Default, the Borrower
shall specify that such notice is a Default or Event of Default notice on the face
thereof. 

        Section
5.8 Environmental Laws. 

	  	        (a)                      Comply
in all material respects with, and ensure compliance in all material
               respects by all tenants and subtenants, if any, with, all applicable
               Environmental Laws and obtain and comply in all material respects with and
               maintain, and ensure that all tenants and subtenants obtain and comply in
all                material respects with and maintain, any and all licenses, approvals,
               notifications, registrations or permits required by applicable
Environmental                Laws except to the extent that failure to do so could not
reasonably be expected                to have a Material Adverse Effect;  

	  	        (b)                      Conduct
and complete all investigations, studies, sampling and testing, and all
               remedial, removal and other actions required under Environmental Laws and
               promptly comply in all material respects with all lawful orders and
directives                of all Governmental Authorities regarding Environmental Laws
except to the                extent that the same are being contested in good faith by
appropriate                proceedings and the pendency of such proceedings could not
reasonably be                expected to have a Material Adverse Effect; and  

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

 
	 	
70	 

   
   

 
	  	
indemnification
therefor. The agreements in this paragraph                shall survive repayment of the
Notes and all other amounts payable hereunder.  

        Section
5.9 Financial Covenants. 

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

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

	Period 	 	Ratio 	 
	Closing Date through June 30, 2005	 	1.25 to 1.00	 
	July 1, 2005 and thereafter	 	1.00 to 1.00	 

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

	Period 	 	Ratio 	 
	Closing Date through June 30, 2005	 	2.25 to 1.00	 
	July 1, 2005 through September 30,	 	2.00 to 1.00	 
	October 1, 2005 through March 30,	 	1.75 to 1.0	 
	April 1, 2006 and thereafter	 	1.50 to 1.0	 

	  	        (c)       Fixed
Charge Coverage Ratio. The Fixed Charge Coverage Ratio at all times
               shall be greater than or equal to 2.00 to 1.00.  

	  	        (d)       Consolidated
Capital Expenditures. Consolidated Capital Expenditures as                of the end
of each fiscal year of the Borrower shall be less than or equal to
               $1,750,000 per fiscal year.  

	  	        (e)       Consolidated
EBITDA. At all times during the periods indicated below,                Consolidated
EBITDA for the twelve month period ending on any date of                determination
during any such period shall be greater than or equal to the                amount
indicated below:  

	Period 	 	Amount 	 
	Closing Date through September 30,	 	$ 47,000,000	 
	October 1, 2004 through December 3	 	$ 49,000,000	 
	January 1, 2005 through March 31,	 	$ 47,000,000	 
	April 1, 2005 through June 30, 200	 	$ 45,000,000	 
	July 1, 2005 through September 30,	 	$ 52,000,000	 
	October 1, 2005 through December 3	 	$ 55,000,000	 
	January 1, 2006 through March 31,	 	$ 55,000,000	 
	April 1, 2006 through June 30, 200	 	$ 55,000,000	 

 
	 	
71	 

 

        For
purposes of all calculations made in determining compliance for any applicable period with
this Section 5.9, after consummation of the Acquisition, (i) income statement items and
other balance sheet items (whether positive or negative) attributable to the Acquired
Company shall be included in such calculations to the extent relating to such applicable
period, subject to adjustments mutually reasonably acceptable to the Borrower and the
Administrative Agent and (ii) any Indebtedness of the Acquired Company that is retired on
the Closing Date shall be excluded from such calculations and deemed to have been retired
as of the first day of such applicable period. 

        Section
5.10 Additional Guarantors. 

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

        Section
5.11 Compliance with Law. 

        Each
Credit Party will, and will cause each of its Subsidiaries to, (a) comply with all laws,
rules, regulations and orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its Property if noncompliance with any
such law, rule, regulation, order or restriction could reasonably be expected to have a
Material Adverse Effect and (b) conform with and duly observe in all material respects
all laws, rules and regulations and all other valid requirements of any regulatory
authority with respect to the conduct of its business, including without limitation
Titles XVIII and XIX of the Social Security Act, Medicare Regulations, Medicaid
Regulations, and all laws, rules and regulations of Governmental Authorities, pertaining
to the business of the Credit Parties if noncompliance with any such law, rule,
regulation, order or restriction could reasonably be expected to have a Material Adverse
Effect; and (c) obtain and maintain all licenses, permits, certifications and approvals
of all applicable Governmental Authorities as are required for the conduct of its
business as currently conducted and herein contemplated, including without limitation
professional licenses, Medicaid Certifications and Medicare Certifications, if failure to
do so could have a Material Adverse Effect. Specifically, but without limiting the
foregoing, and except where any such failure to comply could not reasonably be expected
to have a Material Adverse Effect: (i) billing policies, arrangements, protocols and
instructions will comply with reimbursement requirements under Medicare, Medicaid and
other Medical Reimbursement Programs and will be administered by properly trained
personnel; and (ii) medical director compensation arrangements and other arrangements
with referring physicians will comply with applicable state and federal self-referral  

 
	 	
72	 

 

and anti-kickback laws, including
without limitation 42 U.S.C. Section 1320a-7b(b)(1) — (b)(2) 42 U.S.C. and 42 U.S.C.
Section 1395nn.  

        Section
5.12 Pledged Assets. 

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

        Section
5.13 Post-Closing Covenants. 

	  	        (a)                      Within
thirty (30) days after the Closing Date (or such extended period of time
               as agreed to by the Administrative Agent), the Borrower shall deliver to
the                Administrative Agent a good standing certificate with respect to Doak
               Dermatologics, Inc. from the Department of State of the Commonwealth of
               Pennsylvania.  

	  	        (b)                      Within
thirty (30) days after the Closing Date (or such extended period of time
               as agreed to by the Administrative Agent), the Borrower shall deliver to
the                Administrative Agent duly executed account control agreements with
respect to                Collateral for which a control agreement is required for
perfection of the                Administrative Agent’s security interest under the
UCC.  

	  	        (c)                      Within
forty-five (45) days after the Closing Date (or such extended period of
               time as agreed to by the Administrative Agent), the Borrower shall deliver
to                the Administrative Agent such documentation as may be reasonably
required by the                Administrative Agent to correct any chain-of-title issues
in the records of the                United States Patent and Trademark Office and the
United States Copyright Office                with respect to the IP Collateral of the
Credit Parties and to release of record                any security interests filed
against such IP Collateral in favor of any Person                other than the
Administrative Agent.  

	  	        (d)                      The
Borrower shall promptly deliver to the Administrative Agent a certificate of
               dissolution or other comparable document reasonably satisfactory to the
               Administrative Agent from the appropriate Governmental Authority
evidencing the                dissolution of Bradley Pharmaceuticals (Canada) Inc.  

	  	        (e)                      Within
thirty (30) days after the Closing Date (or such extended period of time
               as agreed to by the Administrative Agent), the Borrower shall deliver to
the                Administrative Agent a fully executed landlord agreement, duly
executed by the                Borrower, as the tenant, and Fairfield Business
Properties, L.L.C., as the                landlord, with respect to property located in
Rahway, New Jersey.  

 
	 	
73	 

 

ARTICLE VI 

NEGATIVE COVENANTS 

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

        Section
6.1 Indebtedness. 

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

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

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

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

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

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

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

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

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

        Section
6.2 Liens.  

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

        Section
6.3 Nature of Business. 

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

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

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

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

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

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

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

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

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

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

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

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

        Section
6.5 Advances, Investments and Loans. 

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

        Section
6.6 Transactions with Affiliates. 

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

        Section
6.7 Ownership of Subsidiaries; Restrictions. 

        Each
of the Credit Parties will not, nor will it permit any Subsidiary to, create, form or
acquire any Subsidiaries, except for (a) Domestic Subsidiaries, other than certain
Immaterial Subsidiaries, which are joined as Additional Credit Parties in accordance with
the terms hereof and (b) Immaterial Subsidiaries, subject to the terms of Section 5.10.
The Borrower will not sell, transfer, pledge or otherwise dispose of any Capital Stock or
other equity interests in any of its Subsidiaries, nor will it permit any of its
Subsidiaries to issue, sell, transfer, pledge or otherwise dispose of any of their Capital
Stock or other equity interests, except in a transaction permitted by Section 6.4. 

 
	 	
76	 

 

        Section
6.8 Fiscal Year; Organizational Documents; Material Contracts.  

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

        Section
6.9 Limitation on Restricted Actions. 

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

        Section
6.10 Restricted Payments. 

        Each
of the Credit Parties will not, nor will it permit any Subsidiary to, directly or
indirectly, declare, order, make or set apart any sum for or pay any Restricted Payment,
except (a) to make dividends payable solely in the same class of Capital Stock of such
Person, (b) to make dividends or other distributions payable to any Credit Party (directly
or indirectly through Subsidiaries) and (c) so long as no Default or Event of Default has
occurred and is continuing, the Borrower may pay accrued and unpaid interest on the
Convertible Bonds. 

 
	 	
77	 

 

        Section
6.11 Sale Leasebacks. 

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

        Section
6.12 No Further Negative Pledges. 

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

        Section
6.13 Operating Lease Obligations. 

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

ARTICLE VII 

EVENTS OF DEFAULT 

        Section
7.1 Events of Default. 

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

	  	        (a)                      The
Borrower shall fail to pay any principal on any Loan when due in accordance
               with the terms thereof or hereof; or the Borrower shall fail to reimburse
the                Issuing Lender for any LOC Obligations when due in accordance with the
terms                hereof; or the Borrower shall fail to pay any interest on any Loan
or any fee or                other amount payable hereunder when due in accordance with
the terms thereof or                hereof and such  

 
	 	
78	 

  
   

 
	  	
failure
shall continue unremedied for three Business Days (or                any Guarantor shall
fail to pay on the Guaranty in respect of any of the                foregoing or in
respect of any other Guaranty Obligations thereunder within the                aforesaid
period of time); or  

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

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

	  	        (d)                      Any
Credit Party or any of its Subsidiaries shall (i) default in any payment of
               principal of or interest on any Indebtedness (other than the Notes) in a
               principal amount outstanding of at least $1,000,000 in the aggregate for
the                Credit Parties and their Subsidiaries beyond the period of grace (not
to exceed                30 days), if any, provided in the instrument or agreement under
which such                Indebtedness was created; or (ii) default in the observance or
performance of                any other agreement or condition relating to any
Indebtedness in a principal                amount outstanding of at least $1,000,000 in
the aggregate for the Credit                Parties and their Subsidiaries or contained
in any instrument or agreement                evidencing, securing or relating thereto,
or any other event shall occur or                condition exist, the effect of which
default or other event or condition is to                cause, or to permit the holder
or holders of such Indebtedness or beneficiary or                beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such                holder or holders or
beneficiary or beneficiaries) to cause, with the giving of                notice if
required, such Indebtedness to become due prior to its stated                maturity; or
(iii) breach or default any Secured Hedging Agreement; or  

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

 
	 	
79	 

    
   

 
	  	
established
on                the books of the Borrower or such Subsidiary to the extent required by
GAAP.  

	  	        (f)                      (i)
The Borrower or any of the Borrower’s Subsidiaries shall commence any
               case, proceeding or other action (A) under any existing or future law of
any                jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
               reorganization or relief of debtors, seeking to have an order for relief
entered                with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or                seeking reorganization, arrangement, adjustment, winding-up,
liquidation,                dissolution, composition or other relief with respect to it
or its debts, or (B)                seeking appointment of a receiver, trustee,
custodian, conservator or other                similar official for it or for all or any
substantial part of its assets, or the                Borrower or any Subsidiary shall
make a general assignment for the benefit of                its creditors; or (ii) there
shall be commenced against the Borrower or any of                the Borrower’s
Subsidiaries any case, proceeding or other action of a                nature referred to
in clause (i) above which (A) results in the entry of an                order for relief
or any such adjudication or appointment or (B) remains                undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there                shall be
commenced against the Borrower or any of the Borrower’s                Subsidiaries
any case, proceeding or other action seeking issuance of a warrant                of
attachment, execution, distraint or similar process against all or any
               substantial part of its assets which results in the entry of an order for
any                such relief which shall not have been vacated, discharged, or stayed
or bonded                pending appeal within 60 days from the entry thereof; or (iv)
the Borrower or                any of the Borrower’s Subsidiaries shall take any
action in furtherance of,                or indicating its consent to, approval of, or
acquiescence in, any of the acts                set forth in clauses (i), (ii), or (iii)
above; or (v) the Borrower or any of                its Subsidiaries shall generally not,
or shall be unable to, or shall admit in                writing its inability to, pay its
debts as they become due; or  

	  	        (g)                      One
or more judgments or decrees shall be entered against any Credit Party or
               any of its Subsidiaries involving in the aggregate a liability (to the
extent                not paid when due or covered by insurance) of $1,000,000 or more
and all such                judgments or decrees shall not have been paid and satisfied,
vacated,                discharged, stayed or bonded pending appeal within 30 days from
the entry                thereof; or  

	  	        (h)                      (i)
Any Person shall engage in any “prohibited transaction” (as
               defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan,                (ii) any “accumulated funding deficiency” (as defined in
Section 302                of ERISA), whether or not waived, shall exist with respect to
any Plan or any                Lien in favor of the PBGC or a Plan (other than a
Permitted Lien) shall arise on                the assets of any Credit Party or any
Commonly Controlled Entity, (iii) a                Reportable Event shall occur with
respect to, or proceedings shall commence to                have a trustee appointed, or
a trustee shall be appointed, to administer or to                terminate, any Single
Employer Plan, which Reportable Event or commencement of                proceedings or
appointment of a Trustee is, in the reasonable opinion of the                Required
Lenders, likely to result in the termination of such Plan for purposes                of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
               of Title IV of ERISA, (v) any Credit Party or any of its Subsidiaries or
any                Commonly Controlled Entity shall, or in the reasonable opinion of the
Required                Lenders is likely to, incur any  

 
	 	
80	 

   
   

 
	  	
liability
in connection with a withdrawal from,                or the Insolvency or Reorganization
of, any Multiemployer Plan or (vi) any other                similar event or condition
shall occur or exist with respect to a Plan; and in                each case in clauses
(i) through (vi) above, such event or condition, together                with all other
such events or conditions, if any, could have a Material Adverse                Effect;
or  

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

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

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

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

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

        Section
7.2 Acceleration; Remedies. 

        Upon
the occurrence of an Event of Default, then, and in any such event, (a) if such event is
an Event of Default specified in Section 7.1(f) above, automatically the Commitments
shall immediately terminate and the Loans (with accrued interest thereon), and all other
amounts under the Credit Documents (including without limitation the maximum amount of
all contingent liabilities under Letters of Credit) shall immediately become due and
payable, and (b) if such event is any other Event of Default, any or all of the following
actions may be taken: (i) with the written consent of the Required Lenders, the
Administrative Agent may, or upon the written request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Commitments to be
terminated forthwith, whereupon the Commitments shall immediately terminate; (ii) the
Administrative Agent may, or upon the written request of the Required Lenders, the
Administrative Agent shall, by notice of default to the Borrower, declare  

 
	 	
81	 

 

the Loans (with accrued interest
thereon) and all other amounts owing under this Agreement and the Notes to be due and
payable forthwith and direct the Borrower to pay to the Administrative Agent cash
collateral as security for the LOC Obligations for subsequent drawings under then
outstanding Letters of Credit in an amount equal to the maximum amount of which may be
drawn under Letters of Credit then outstanding, whereupon the same shall immediately
become due and payable; (iii) exercise any rights or remedies of the Administrative Agent
or the Lenders under this Agreement or any other Credit Document, including, without
limitation, any rights or remedies with respect to the Collateral; and (iv) exercise any
rights or remedies available to the Administrative Agent or Lenders under applicable law.  

ARTICLE VIII 

THE AGENT 

        Section
8.1 Appointment. 

        Each
Lender hereby irrevocably designates and appoints Wachovia as the Administrative Agent of
such Lender under this Credit Agreement, and each such Lender irrevocably authorizes
Wachovia, as the Administrative Agent for such Lender, to take such action on its behalf
under the provisions of this Credit Agreement and to exercise such powers and perform such
duties as are expressly delegated to the Administrative Agent by the terms of this Credit
Agreement, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Credit Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those expressly
set forth herein, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read into this
Credit Agreement or otherwise exist against the Administrative Agent. 

        Section
8.2 Delegation of Duties. 

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

        Section
8.3 Exculpatory Provisions. 

        Neither
the Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or affiliates shall be (a) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with this Credit
Agreement  

 
	 	
82	 

 

(except for its or such Person’s
own gross negligence or willful misconduct) or (b) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by any
Credit Party or any officer thereof contained in this Credit Agreement or in any
certificate, report, statement or other document referred to or provided for in, or
received by the Administrative Agent under or in connection with, this Credit Agreement
or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of
any of the Credit Documents or for any failure of any Credit Party to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or performance
by any Credit Party of any of the agreements contained in, or conditions of, this Credit
Agreement, or to inspect the properties, books or records of any Credit Party.  

        Section
8.4 Reliance by Administrative Agent. 

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

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

        Section
8.5 Notice of Default. 

        The
Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default hereunder unless the Administrative Agent has received
notice from a Lender or the Borrower referring to this Credit Agreement, describing  

 
	 	
83	 

 

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

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

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

        Section
8.7 Indemnification. 

        The
Lenders agree to indemnify the Agent in its capacity hereunder (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Commitment Percentages in effect on the date on
which indemnification is sought under this Section, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time (including,
without limitation, at any time following the payment of the Notes or any Reimbursement
Obligation) be imposed on, incurred by or asserted  

 
	 	
84	 

 

against the Agent in any way
relating to or arising out of any Credit Document or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Agent under or in connection with any of the foregoing;
provided, however, that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent resulting from the Agent’s gross negligence
or willful misconduct, as determined by a court of competent jurisdiction. The agreements
in this Section 8.7 shall survive the termination of this Credit Agreement and payment of
the Notes, any Reimbursement Obligation and all other amounts payable hereunder.  

        Section
8.8 The Administrative Agent in Its Individual Capacity.  

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

        Section
8.9 Successor Administrative Agent. 

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

 
	 	
85	 

 

shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent under this
Credit Agreement.  

        Section
8.10 Other Agents. 

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

ARTICLE IX 

MISCELLANEOUS 

        Section
9.1 Amendments, Waivers and Release of Collateral.  

Neither this Credit Agreement, nor
any of the Notes, nor any of the other Credit Documents, nor any terms hereof or thereof
may be amended, supplemented, waived or modified except in accordance with the provisions
of this Section nor may the Borrower or any Guarantor be released except in accordance
with the provisions of this Section 9.1. The Required Lenders may, or, with the written
consent of the Required Lenders, the Administrative Agent may, from time to time, (a)
enter into with the Borrower or any other Credit Party written amendments, supplements or
modifications hereto and to the other Credit Documents for the purpose of adding any
provisions to this Credit Agreement or the other Credit Documents or changing in any
manner the rights of the Lenders or of the Borrower or any other Credit Party hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders may specify
in such instrument, any of the requirements of this Credit Agreement or the other Credit
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, waiver, supplement,
modification or release shall: 

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

 
	 	
86	 

   
   

	  	
Disposition,
Debt Issuance, Equity Issuance, Excess Cash                Flow, or Recovery Event, shall
constitute a reduction of the amount of, or an                extension of the scheduled
date of, any principal installment of any Loan or                Note; or  

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

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

	  	        (iv)                      release
the Borrower or all or substantially all of the Guarantors from their
               respective obligations hereunder or under the Guaranty, without the
written                consent of all of the Lenders and, with respect to the release of
substantially                all of the Guarantors, any Hedging Agreement Provider; or  

	  	        (v)                      release
all or substantially all of the Collateral without the written consent                of
all of the Lenders and any Hedging Agreement Provider; or  

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

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

provided, further, that
no amendment, waiver or consent affecting the rights or duties of the Administrative
Agent, the Issuing Lender or the Swingline Lender under any Credit Document shall in any
event be effective, unless in writing and signed by the Administrative Agent, the Issuing
Lender and/or the Swingline Lender, as applicable, in addition to the Lenders required
hereinabove to take such action. 

        Any
such waiver, any such amendment, supplement or modification and any such release shall
apply equally to each of the Lenders and shall be binding upon the Borrower, the other
Credit Parties, the Lenders, the Administrative Agent and all future holders of the Notes.
In the case of any waiver, the Borrower, the other Credit Parties, the Lenders and the
Administrative Agent shall be restored to their former position and rights hereunder and
under the outstanding Loans and Notes and other Credit Documents, and any Default or Event
of Default permanently waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon. 

        Notwithstanding
any of the foregoing to the contrary, the consent of the Borrower shall not be required
for any amendment, modification or waiver of the provisions of Article VIII 

 
	 	
87	 

 

(other than
the provisions of Section 8.9); provided, however, that the Administrative
Agent will provide written notice to the Borrower of any such amendment, modification or
waiver. In addition, the Borrower and the Lenders hereby authorize the Administrative
Agent to modify this Credit Agreement by unilaterally amending or supplementing
Schedule 2.1(a) from time to time in the manner requested by the Borrower, the
Administrative Agent or any Lender in order to reflect any assignments or transfers of the
Loans as provided for hereunder; provided further, however, that the
Administrative Agent shall promptly deliver a copy of any such modification to the
Borrower and each Lender. 

        Notwithstanding
the fact that the consent of all the Lenders is required in certain circumstances as set
forth above, (x) each Lender is entitled to vote as such Lender sees fit on any bankruptcy
reorganization plan that affects the Loans, and each Lender acknowledges that the
provisions of Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to allow a Credit
Party to use cash collateral in the context of a bankruptcy or insolvency proceeding. 

        Section
9.2 Notices.  

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

	The Borrower	 	Bradley Pharmaceuticals, Inc. 
	and the other	 	383 Route 46 West 
	Credit Parties:	 	Fairfield, New Jersey 07004-2402 
	 	 	Attention: 	R. Brent Lenczycki, 
	 	 	 	Chief Financial Officer
	 	 	Telecopier: 973-575-5366 
	 	 	Telephone: 973-882-1505 (x510) 
	 	 	 
	 	 	with a copy to: 
	 	 	 
	 	 	Epstein Becker & Green, P.C. 
	 	 	250 Park Avenue 
	 	 	New York, NY 10177 
	 	 	Attention: Theodore L. Polin, Esq. 
	 	 	Telecopier: (212) 878-8622 
	 	 	Telephone: (212) 351-4522 

 
	 	
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	The Administrative	 	Wachovia Bank, National Association,
      as Administrative Agent	 
	Agent:	 	Charlotte Plaza	 
	 	 	201 South College Street, CP-8	 
	 	 	Charlotte, North Carolina 28288-0680	 	 	 
	 	 	Attention: Syndication Agency Services	 
	 	 	Telecopier: (704) 383-0288	 
	 	 	Telephone: (704) 715-8946	 
	 	 	 	 
	 	 	with a copy to:	 
	 	 	 	 
	 	 	Wachovia Bank, National Association,	 
	 	 	One Wachovia Center, DC-5	 
	 	 	Charlotte, North Carolina 28288-0737	 	 	 
	 	 	Attention: Christian Bradeen	 
	 	 	Telecopier: (704) 383-7611	 
	 	 	Telephone: (704) 715-7708	 

        Section
9.3 No Waiver; Cumulative Remedies. 

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

        Section
9.4 Survival of Representations and Warranties.  

        All
representations and warranties made hereunder and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes and the making of the Loans; provided
that all such representations and warranties shall terminate on the date upon which the
Commitments have been terminated and all amounts owing under the Credit Documents have
been paid in full. 

        Section
9.5 Payment of Expenses and Taxes. 

        The
Credit Parties agree (a) to pay or reimburse the Administrative Agent and the Arranger
for all their reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation, negotiation, printing and execution of, and any amendment,
supplement or modification to, this Agreement and the other Credit Documents and any
other documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, together with the
reasonable fees and disbursements of counsel to the Administrative Agent and the
Arranger, (b) to pay or reimburse each Lender and the Administrative Agent for all its
costs and expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement and the  

 
	 	
89	 

 

other Credit Documents, including,
  without limitation, the reasonable fees and disbursements of counsel to the
  Administrative Agent and to the Lenders (including reasonable allocated costs
  of in-house legal counsel), and (c) on demand, to pay, indemnify, and hold each
  Lender, the Administrative Agent and the Arranger harmless from, any and all
  recording and filing fees and any and all liabilities with respect to, or resulting
  from any delay in paying, stamp, excise and other similar taxes, if any, which
  may be payable or determined to be payable in connection with the execution
  and delivery of, or consummation or administration of any of the transactions
  contemplated by, or any amendment, supplement or modification of, or any waiver
  or consent under or in respect of, the Credit Documents and any such other documents,
  and (d) to pay, indemnify, and hold each Lender, the Administrative Agent, the
  Arranger and their Affiliates and their respective officers, directors, employees,
  partners, members, counsel, agents, representatives, advisors and affiliates
  (collectively called the “Indemnitees”) harmless from and against,
  any and all other liabilities, obligations, losses, damages, penalties, actions,
  judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever
  with respect to the execution, delivery, enforcement, performance and administration
  of the Credit Documents and any such other documents and the use, or proposed
  use, of proceeds of the Loans (all of the foregoing, collectively, the “indemnified
  liabilities”); provided, however, that the Borrower shall
  not have any obligation hereunder to an Indemnitee with respect to indemnified
  liabilities arising from the gross negligence or willful misconduct of such
  Indemnitee, as determined by a court of competent jurisdiction pursuant to a
  final non-appealable judgment. The agreements in this Section 9.5 shall survive
  repayment of the Loans, Notes and all other amounts hereunder. 

        Section
9.6 Successors and Assigns; Participations; Purchasing Lenders.  

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

	  	        (b)                      Any
Lender may, in the ordinary course of its business and in accordance with
               applicable law, at any time sell to one or more banks or other entities
               (“Participants”) participating interests in any Loan
owing to                such Lender, any Note held by such Lender, any Commitment of such
Lender, or any                other interest of such Lender hereunder. In the event of
any such sale by a                Lender of participating interests to a Participant,
such Lender’s                obligations under this Agreement to the other parties
to this Agreement shall                remain unchanged, such Lender shall remain solely
responsible for the                performance thereof, such Lender shall remain the
holder of any such Note for                all purposes under this Agreement, and the
Borrower and the Administrative Agent                shall continue to deal solely and
directly with such Lender in connection with                such Lender’s rights and
obligations under this Agreement. No Lender shall                transfer or grant any
participation under which the Participant shall have                rights to approve any
amendment to or waiver of this Agreement or any other                Credit Document
except to the extent such amendment or waiver would (i) extend                the
scheduled maturity of any Loan or Note or any installment thereon in which
               such Participant is participating, or reduce the stated rate or extend the
time                of payment of interest or fees thereon (except in connection with a  

 
	 	
90	 

    
   

	  	
waiver
of                interest at the increased post-default rate) or reduce the principal
amount                thereof, or increase the amount of the Participant’s
participation over the                amount thereof then in effect (it being understood
that a waiver of any Default                or Event of Default shall not constitute a
change in the terms of such                participation, and that an increase in any
Commitment or Loan shall be permitted                without consent of any participant
if the Participant’s participation is                not increased as a result
thereof), (ii) release all or substantially all of the                Guarantors from
their obligations under the Guaranty, (iii) release all or                substantially
all of the Collateral, or (iv) consent to the assignment or                transfer by
the Borrower of any of its rights and obligations under this                Agreement. In
the case of any such participation, the Participant shall not have                any
rights under this Agreement or any of the other Credit Documents (the
               Participant’s rights against such Lender in respect of such
participation                to be those set forth in the agreement executed by such
Lender in favor of the                Participant relating thereto) and all amounts
payable by the Borrower hereunder                shall be determined as if such Lender
had not sold such participation; provided that each Participant shall be entitled
to the benefits of                Sections 2.15, 2.16, 2.17 and 9.5 with respect to its
participation in the                Commitments and the Loans outstanding from time to
time; provided further, that no Participant shall be entitled to receive any
greater                amount pursuant to such Sections than the transferor Lender would
have been                entitled to receive in respect of the amount of the
participation transferred by                such transferor Lender to such Participant
had no such transfer occurred.  

	  	        (c)                      Any
Lender may, in the ordinary course of its business and in accordance with
               applicable law, at any time, sell or assign to any Lender or any Affiliate
or                Related Fund thereof and, with the consent of the Administrative Agent
and, so                long as no Default or Event of Default has occurred and is
continuing, the                Borrower (in each case, which consent shall not be
unreasonably withheld or                delayed), to one or more additional banks,
insurance companies, funds or                financial institutions or entities (each
such Lender, Affiliate, Related Fund,                bank, insurance company, fund or
financial institution or entity, a                “Purchasing Lender”),
all or any part of its rights and                obligations under this Agreement and the
Notes in minimum amounts of $2,000,000                with respect to its Revolving
Commitment or its Revolving Loans (or, if less,                the entire amount of such
Lender’s obligations), pursuant to a Commitment                Transfer Supplement,
executed by such Purchasing Lender and such transferor                Lender (and, to the
extent required above, the Administrative Agent and the                Borrower), and
delivered to the Administrative Agent for its acceptance and                recording in
the Register; provided, however, that any sale or                assignment
to an existing Lender or an Affiliate or Related Fund of an existing
               Lender shall not require the consent of the Administrative Agent or the
Borrower                nor shall any such sale or assignment be subject to the minimum
assignment                amounts specified herein. Upon such execution, delivery,
acceptance and                recording, from and after the Transfer Effective Date
specified in such                Commitment Transfer Supplement, (x) the Purchasing
Lender thereunder shall be a                party hereto and, to the extent provided in
such Commitment Transfer Supplement,                have the rights and obligations of a
Lender hereunder with a Commitment as set                forth therein, and (y) the
transferor Lender thereunder shall, to the extent                provided in such
Commitment Transfer Supplement, be released from its                obligations under
this Agreement (and, in the case of a Commitment Transfer                Supplement
covering all or the remaining portion of a transferor Lender’s                rights
and  

 
	 	
91	 

     
   

 
	  	
obligations
under this Agreement, such transferor Lender shall cease                to be a party
hereto; provided, however, that such Lender shall still be                entitled to any
indemnification rights that expressly survive hereunder). Such                Commitment
Transfer Supplement shall be deemed to amend this Agreement to the                extent,
and only to the extent, necessary to reflect the addition of such
               Purchasing Lender and the resulting adjustment of Commitment Percentages
arising                from the purchase by such Purchasing Lender of all or a portion of
the rights                and obligations of such transferor Lender under this Agreement
and the Notes. On                or prior to the Transfer Effective Date specified in
such Commitment Transfer                Supplement, the Borrower, at its own expense,
shall execute and deliver to the                Administrative Agent in exchange for the
Notes delivered to the Administrative                Agent pursuant to such Commitment
Transfer Supplement new Notes to the order of                such Purchasing Lender in an
amount equal to the Commitment assumed by it                pursuant to such Commitment
Transfer Supplement and, unless the transferor                Lender has not retained a
Commitment hereunder, new Notes to the order of the                transferor Lender in
an amount equal to the Commitment retained by it hereunder.                Such new Notes
shall be dated the Closing Date and shall otherwise be in the                form of the
Notes replaced thereby. The Notes surrendered by the transferor                Lender
shall be returned by the Administrative Agent to the Borrower marked                “canceled”.  

	  	        (d)                      The
Administrative Agent shall maintain at its address referred to in Section
               9.2 a copy of each Commitment Transfer Supplement delivered to it and a
register                (the “Register”) for the recordation of the
names and addresses                of the Lenders and the Commitment of, and principal
amount of the Loans owing                to, each Lender from time to time. The entries
in the Register shall be                conclusive, in the absence of manifest error, and
the Borrower, the                Administrative Agent and the Lenders may treat each
Person whose name is                recorded in the Register as the owner of the Loan
recorded therein for all                purposes of this Agreement. The Register shall be
available for inspection by                the Borrower or any Lender at any reasonable
time and from time to time upon                reasonable prior notice.  

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

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

 
	 	
92	 

    
   

 
	  	
Subsidiaries
prior to                becoming a party to this Agreement, in each case subject to
Section 9.15.  

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

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

        Section
9.7 Adjustments; Set-off. 

	  	        (a)                      Each
Lender agrees that if any Lender (a “benefited Lender”)
               shall at any time receive any payment of all or part of its Loans, or
interest                thereon, or receive any collateral in respect thereof (whether
voluntarily or                involuntarily, by set-off, pursuant to events or
proceedings of the nature                referred to in Section 7.1(f), or otherwise) in
a greater proportion than any                such payment to or collateral received by
any other Lender, if any, in respect                of such other Lender’s Loans, or
interest thereon, such benefited Lender                shall purchase for cash from the
other Lenders a participating interest in such                portion of each such other
Lender’s Loan, or shall provide such other                Lenders with the benefits
of any such collateral, or the proceeds thereof, as                shall be necessary to
cause such benefited Lender to share the excess payment or                benefits of
such collateral or proceeds ratably with each of the Lenders; provided, however,
that if all or any portion of such excess                payment or benefits is
thereafter recovered from such benefited Lender, such                purchase shall be
rescinded, and the purchase price and benefits returned, to                the extent of
such recovery, but without interest. The Borrower agrees that each                Lender
so purchasing a portion of another Lender’s Loans may exercise all
               rights of payment (including, without limitation,  

 
	 	
93	 

   
   

 
	  	
rights
of set-off) with                respect to such portion as fully as if such Lender were
the direct holder of                such portion.  

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

        Section
9.8 Table of Contents and Section Headings.  

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

        Section
9.9 Counterparts. 

        This
Agreement may be executed by one or more of the parties to this Agreement on any number of
separate counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same agreement. 

  

 
	 	
94	 

  
   
     

      Section
  9.10 Effectiveness. 

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

        Section
9.11 Severability. 

        Any
provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. 

        Section
9.12 Integration. 

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

        Section
9.13 Governing Law. 

        This
Agreement and the other Credit Documents and the rights and obligations of the parties
under this Agreement and the other Credit Documents shall be governed by, and construed
and interpreted in accordance with, the law of the State of New York. 

        Section
9.14 Consent to Jurisdiction and Service of Process.  

        All
judicial proceedings brought against the Borrower and/or any other Credit Party with
respect to this Agreement, any Note or any of the other Credit Documents may be brought
in any state or federal court of competent jurisdiction in the State of New York, and, by
execution and delivery of this Agreement, each of the Borrower and the other Credit
Parties accepts, for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and irrevocably
agrees to be bound by any final judgment rendered thereby in connection with this
Agreement, any Note or any other Credit Document from which no appeal has been taken or
is available. Each of the Borrower and the other Credit Parties irrevocably agrees that
all service of process in any such proceedings in any such court may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form
of mail), postage prepaid, to it at its address set forth in Section 9.2 or at such other
address of which the Administrative Agent shall have been notified pursuant thereto, such
service being hereby acknowledged by the each of the Borrower and the other Credit
Parties to be effective and binding service in every respect. Each of the Borrower, the
other Credit Parties, the Administrative Agent and the Lenders irrevocably waives any
objection, including, without limitation, any objection to the laying of venue based on
the grounds of forum non conveniens  

 
	 	
95	 

 

which it may now or hereafter have
to the bringing of any such action or proceeding in any such jurisdiction. Nothing herein
shall affect the right to serve process in any other manner permitted by law or shall
limit the right of any Lender to bring proceedings against the Borrower or the other
Credit Parties in the court of any other jurisdiction.  

        Section
9.15 Arbitration. 

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

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

	  	        (b)                      Notwithstanding
the preceding binding arbitration provisions, the Administrative                Agent,
the Lenders, the Borrower and the other Credit Parties agree to preserve,
               without diminution, certain remedies that the Administrative Agent on
behalf of                the Lenders may employ or exercise freely, independently or in
connection with                an arbitration proceeding or after an arbitration action
is brought. The                Administrative Agent on behalf of the Lenders shall have
the right to proceed in                any court of proper jurisdiction or by self-help
to exercise or prosecute the                following remedies, as applicable (i) all
rights to foreclose against any real                or personal property or other
security by exercising a power of sale granted                under Credit Documents or
under applicable law or by judicial foreclosure and                sale, including a
proceeding to confirm the sale; (ii) all rights of self-help                including
peaceful occupation of real property and collection of rents, set-off,                and
peaceful possession of personal property; (iii) obtaining provisional or
               ancillary remedies including injunctive relief, sequestration,
garnishment,                attachment, appointment of  

 
	 	
96	 

    
   

 
	  	
receiver
and filing an involuntary bankruptcy                proceeding; and (iv) when applicable,
a judgment by confession of judgment.                Preservation of these remedies does
not limit the power of an arbitrator to                grant similar remedies that may be
requested by a party in a Dispute.  

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

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

        Section
9.16 Confidentiality. 

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

 
	 	
97	 

 

recognized rating agency that requires access to information about a Lender’s
investment portfolio in connection with ratings issued with respect to such Lender, (j) to
a Person that is an investor or prospective investor in a Securitization (as defined
below) that agrees that its access to information regarding the Borrower and the Loans is
solely for purposes of evaluating an investment in such Securitization; provided
that such Person shall have been made aware of this Section 9.16 and shall have agreed to
be bound by its provisions as if it were a party to this Agreement, or (k) to a Person
that is a trustee, collateral manager, servicer, noteholder or secured party in a
Securitization in connection with the administration, servicing and reporting on the
assets serving as collateral for such Securitization; provided that such Person
shall have been made aware of this Section 9.16 and shall have agreed to be bound by its
provisions as if it were a party to this Agreement. For purposes of this Section
“Securitization” shall mean a public or private offering by a Lender or
any of its affiliates or their respective successors and assigns, of securities which
represent an interest in, or which are collateralized in whole or in part by, the Loans. 

        Section
9.17 Acknowledgments. 

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

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

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

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

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

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

 
	 	
98	 

 

ARTICLE X 

GUARANTY 

        Section
10.1 The Guaranty. 

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

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

        Section
10.2 Bankruptcy. 

        Additionally,
each of the Guarantors unconditionally and irrevocably guarantees jointly and severally
the payment of any and all Credit Party Obligations of the Borrower to the Lenders and
any Hedging Agreement Provider whether or not due or payable by the Borrower upon the
occurrence of any of the events specified in Section 7.1(f), and unconditionally
promises to pay such Credit Party Obligations to the Administrative Agent for the account
of the Lenders and to any such Hedging Agreement Provider, or order, on demand, in lawful
money of the United States. Each of the Guarantors further agrees that to the extent that
the Borrower or a Guarantor  

 
	 	
99	 

 

shall make a payment or a transfer of an interest in any
property to the Administrative Agent, any Lender or any Hedging Agreement Provider, which
payment or transfer or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, or otherwise is avoided, and/or required to be repaid to the
Borrower or a Guarantor, the estate of the Borrower or a Guarantor, a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or equitable
cause, then to the extent of such avoidance or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect as if
said payment had not been made. 

        Section
10.3 Nature of Liability. 

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

        Section
10.4 Independent Obligation. 

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

        Section
10.5 Authorization. 

        Each
of the Guarantors authorizes the Administrative Agent, each Lender and each Hedging
Agreement Provider without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to (a) renew, compromise, extend, increase, accelerate or
otherwise change the time for payment of, or otherwise change the terms of the Credit
Party Obligations or any part thereof in accordance with this Agreement and any Secured
Hedging Agreement, as applicable, including any increase or decrease of the rate of
interest thereon, (b) take and hold security from any Guarantor or any other party for
the payment of this Guaranty or the Credit Party Obligations and exchange, enforce waive
and release any such security, (c) apply such security and direct the order or manner of
sale thereof as the Administrative Agent and the  

 
	 	
100	 

 

Lenders in their discretion may
determine and (d) release or substitute any one or more endorsers, Guarantors, the
Borrower or other obligors.  

        Section
10.6 Reliance. 

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

        Section
10.7 Waiver. 

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

	  	        (b)                      Each
of the Guarantors waives all presentments, demands for performance,
               protests and notices, including without limitation notices of
nonperformance,                notice of protest, notices of dishonor, notices of
acceptance of this Guaranty,                and notices of the existence, creation or
incurring of new or additional Credit                Party Obligations. Each Guarantor
assumes all responsibility for being and                keeping itself informed of the
Borrower’s financial condition and assets,                and of all other
circumstances bearing upon the risk of nonpayment of the Credit                Party
Obligations and the nature, scope and extent of the risks which such
               Guarantor assumes and incurs hereunder, and  

 
	 	
101	 

   
   

 
	  	
agrees
that neither the                Administrative Agent nor any Lender shall have any duty
to advise such Guarantor                of information known to it regarding such
circumstances or risks.  

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

        Section
10.8 Limitation on Enforcement. 

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

        Section
10.9 Confirmation of Payment. 

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

 
	 	
102	 

 

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

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

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

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

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

 
	 	
	 

    
   

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

    	 
	 	 	Name: Chris McCoy	 
	 	 	Title: Vice President

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