Document:

Exhibit 10.1

MANAGEMENT AGREEMENT

          THIS
MANAGEMENT AGREEMENT is made as of ________________, 2007 by and between
CHIMERA INVESTMENT CORPORATION, a Maryland corporation (the “Company”),
and FIXED INCOME DISCOUNT ADVISORY COMPANY, a Delaware corporation (together
with its permitted assignees, the “Manager”). 

          WHEREAS,
the Company is a newly organized corporation that intends to elect to be taxed
as a REIT for federal income tax purposes; and 

          WHEREAS,
the Company desires to retain the Manager to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth, and
the Manager wishes to be retained to provide such services. 

          NOW
THEREFORE, in consideration of the mutual agreements herein set forth, the
parties hereto agree as follows: 

          SECTION
1. DEFINITIONS. The following terms have the following meanings assigned
to them: 

                    (a) 
“Agreement” means this Management Agreement, as amended
from time to time. 

                    (b) 
“Annaly” means Annaly Capital Management, Inc.

                    (c) 
“Bankruptcy” means, with respect to any Person, (a) the filing by such
Person of a voluntary petition seeking liquidation, reorganization, arrangement
or readjustment, in any form, of its debts under Title 11 of the United States
Code or any other federal, state or foreign insolvency law, or such Person’s
filing an answer consenting to or acquiescing in any such petition, (b) the
making by such Person of any assignment for the benefit of its creditors, (c)
the expiration of sixty (60) days after the filing of an involuntary petition
under Title 11 of the Unites States Code, an application for the appointment of
a receiver for a material portion of the assets of such Person, or an
involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other federal, state or foreign insolvency
law, provided that the same shall not have been vacated, set aside or stayed
within such 60-day period or (d) the entry against it of a final and
non-appealable order for relief under any bankruptcy, insolvency or similar law
now or hereinafter in effect.

                    (d) 
“Base Management Fee” means a base management fee equal to
1.75% per annum, calculated and paid (in cash) quarterly in arrears, of the
Stockholders’ Equity. The Base Management Fee will be reduced, but not below
zero, by the Company’s proportionate share of any CDO base management fees the
Manager receives in connection with the CDOs in which the Company invests,
based on the percentage of equity the Company holds in such CDOs.

                    (e) 
“Board of Directors” means the Board of Directors of the
Company.

                    (f) 
“CDO” means a collateralized debt obligation.

                    (g) 
“Change of Control” means the occurrence of any of the
following: 

	
 

	
 

	
 

	
                    (i) 
  the sale, lease or transfer, in one or a series of related
  transactions, of all or substantially all of the assets of the Manager, taken
  as a whole, or Annaly, taken as a whole, to any Person other than Annaly (in
  the case of the Manager) or any of its respective affiliates; or

	
 

	
 

	
 

	
                    (ii) 
  the acquisition by any Person or group (within the meaning of
  Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor
  provision), including any group acting for the purpose of acquiring, holding
  or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the
  Exchange Act), other than Annaly or any of its respective affiliates, in a
  single transaction or in a related series of transactions, by way of merger,
  consolidation or other business combination or purchase of beneficial
  ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
  successor provision) of 50% or more of the total voting power of the voting
  capital interests of the Manager or Annaly. 

                    (h) 
“Code” means the Internal Revenue Code of 1986, as
amended. 

                    (i) 
“Core Earnings” means: 

	
 

	
 

	
 

	
 

	
 

	
          (A) 
  GAAP net income (loss) excluding non-cash equity compensation expense; 

	
 

	
 

	
 

	
 

	
 

	
          (B) 
  excluding any unrealized gains, losses or other items that do not affect
  realized net income (regardless of whether such items are included in other
  comprehensive income or loss, or in net income); and 

	
 

	
 

	
 

	
 

	
 

	
          (C) 
  adjusted to exclude one-time events pursuant to changes in GAAP and certain
  non-cash charges after discussions between the Manager and the Independent
  Directors and approved by a majority of the Independent Directors. 

                    (j) 
“Exchange Act” means the Securities Exchange Act of 1934,
as amended. 

                    (k) 
“GAAP” means generally accepted accounting principles, as
applied in the United States. 

                    (l) 
“Governing Instruments” means, with regard to any entity,
the articles of incorporation and bylaws in the case of a corporation,
certificate of limited partnership (if applicable) and the partnership
agreement in the case of a general or limited partnership, the articles of
formation and the operating agreement in the case of a limited liability
company, the trust instrument in the case of a trust, or similar governing
documents, in each case as amended from time to time. 

                    (m) 
“Incentive Compensation” means an incentive management fee calculated
and paid (in cash) each quarter in arrears equal to 20% of the dollar amount by
which Core 

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Earnings, on a
rolling four-quarter basis and before the Incentive Compensation, exceeds the
product of (1) the weighted average of the issue price per share of all of our
public offerings multiplied by the weighted average number of shares of common
stock outstanding in such quarter and (2) 0.50% plus one-fourth of the average
of the one month LIBOR rate for such quarter and the previous three quarters.
For the initial four quarters after the date of this Agreement, Core Earnings
and the LIBOR rate will each be calculated on the basis of each of the
previously completed fiscal quarters calculated on an annualized basis, with
Core Earnings and the LIBOR rate for the initial fiscal quarter calculated from
the date of this Agreement on an annualized basis. The Incentive Compensation will be reduced, but not
below zero, by the Company’s proportionate share of any CDO incentive
management fees the Manager receives in connection with the CDOs in which the
Company invests, based on the percentage of equity the Company holds in such
CDOs.

                    (n) 
“Independent Directors” means the members of the Board of
Directors who are not officers or employees of the Manager or any Person
directly or indirectly controlling or controlled by the Manager, and who are
otherwise “independent” in accordance with the Company’s Governing Instruments
and, if applicable, the rules of any national securities exchange on which the
Common Stock is listed. 

                    (o) 
“Investment Company Act” means the Investment Company Act
of 1940, as amended. 

                    (p) 
“Investments” means the investments of the Company.

                    (q) 
“LIBOR” means London Interbank Offered Rate.

                    (r) 
“NYSE” means the New York Stock Exchange, Inc.

                    (s) 
“Person” means any individual, corporation, partnership,
joint venture, limited liability company, estate, trust, unincorporated
association, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on
behalf of any of the foregoing. 

                    (t) 
“REIT” means a “real estate investment trust” as defined under the Code.

                    (u) 
“Securities Act” means the Securities Act of 1933, as amended.

                    (v) 
“Stockholders’ Equity” means:

	
 

	
 

	
 

	
 

	
 

	
       (A) 
  the sum of the net proceeds from any issuances of the Company’s equity
  securities since inception (allocated on a pro rata daily basis for such
  issuances during the fiscal quarter of any such issuance), plus 

	
 

	
 

	
 

	
 

	
 

	
       (B) 
  the Company’s retained earnings at the end of such quarter (without taking
  into account any non-cash equity compensation expense incurred in current or
  prior periods), less 

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       (C) 
  any amount that the Company pays for repurchases of its common stock, and
  less any unrealized gains, losses or other items that do not affect realized
  net income (regardless of whether such items are included in other
  comprehensive income or loss, or in net income), as adjusted to exclude

	
 

	
 

	
 

	
       (D) 
  one-time events pursuant to changes in GAAP and certain non-cash charges
  after discussions between the Manager and the Company’s Independent Directors
  and approved by a majority of the Company’s Independent Directors. 

                    (w) 
“Subsidiary” means any subsidiary of the Company; any
partnership, the general partner of which is the Company or any subsidiary of
the Company; and any limited liability company, the managing member of which is
the Company or any subsidiary of the Company. 

                    (x) 
“Treasury Regulations” means the regulations promulgated
under the Code from time to time, as amended. 

          SECTION
2. APPOINTMENT
AND DUTIES OF THE MANAGER. 

                    (a) 
The Company hereby appoints the Manager to manage the assets of
the Company subject to the further terms and conditions set forth in this
Agreement and the Manager hereby agrees to use its commercially reasonable
efforts to perform each of the duties set forth herein. The appointment of the
Manager shall be exclusive to the Manager except to the extent that the Manager
otherwise agrees, in its sole and absolute discretion, and except to the extent
that the Manager elects, pursuant to the terms of this Agreement, to cause the
duties of the Manager hereunder to be provided by third parties. 

                    (b) 
The Manager, in its capacity as manager of the assets and the
day-to-day operations of the Company, at all times will be subject to the
supervision of the Company’s Board of Directors and will have only such
functions and authority as the Company may delegate to it including, without
limitation, the functions and authority identified herein and delegated to the
Manager hereby. The Manager will be responsible for the day-to-day operations
of the Company and will perform (or cause to be performed) such services and
activities relating to the assets and operations of the Company as may be
appropriate, including, without limitation: 

	
 

	
 

	
 

	
                    (i) 
  serving as the Company’s consultant with respect to the
  periodic review of the investment criteria and parameters for the
  Investments, borrowings and operations, any modifications to which shall be
  approved by a majority of the Independent Directors (such policy guidelines
  as initially approved and attached hereto as Exhibit A, as the same
  may be modified with such approval, the “Guidelines”), and other
  policies for approval by the Board of Directors; 

	
 

	
 

	
 

	
                    (ii) 
  investigating, analyzing and selecting possible investment
  opportunities and acquiring, financing, retaining, selling, restructuring, or
  disposing of Investments consistent with the Guidelines; 

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                    (iii) 
  with respect to prospective purchases, sales, or exchanges of
  Investments, conducting negotiations, on behalf of the Company, with sellers
  and purchasers and their respective agents, representatives and investment
  bankers; 

	
 

	
 

	
 

	
                    (iv) 
  negotiating and entering into, on behalf of the Company, credit
  finance agreements, repurchase agreements, securitizations, commercial paper,
  CDOs, interest rate swaps, warehouse facilities and all other agreements and
  instruments required for the Company to conduct its business;

	
 

	
 

	
 

	
                    (v) 
  engaging and supervising, on behalf of the Company and at the
  Company’s expense, independent contractors which provide investment banking,
  mortgage brokerage, securities brokerage, other financial services, due
  diligence services, underwriting review services, and all other services as
  may be required relating to the Investments; 

	
 

	
 

	
 

	
                    (vi) 
  coordinating and managing operations of any joint venture or co-investment
  interests held by the Company and conducting all matters with the joint
  venture or co-investment partners;

	
 

	
 

	
 

	
                    (vii) 
  providing executive and administrative personnel, office space
  and office services required in rendering services to the Company; 

	
 

	
 

	
 

	
                    (viii) 
  administering the day-to-day operations of the Company and
  performing and supervising the performance of such other administrative
  functions necessary in the management of the Company as may be agreed upon by
  the Manager and the Board of Directors, including, without limitation, the
  collection of revenues and the payment of the Company’s debts and obligations
  and maintenance of appropriate computer services to perform such
  administrative functions; 

	
 

	
 

	
 

	
                    (ix) 
  communicating on behalf of the Company with the holders of any
  equity or debt securities of the Company as required to satisfy the reporting
  and other requirements of any governmental bodies or agencies or trading
  markets and to maintain effective relations with such holders; 

	
 

	
 

	
 

	
                    (x) 
  counseling the Company in connection with policy decisions to
  be made by the Board of Directors; 

	
 

	
 

	
 

	
                    (xi) 
  evaluating and recommending to the Board of Directors hedging
  strategies and engaging in hedging activities on behalf of the Company,
  consistent with such strategies, as so modified from time to time, with the
  Company’s status as a REIT, and with the Guidelines; 

	
 

	
 

	
 

	
                    (xii) 
  counseling the Company regarding the maintenance of its status
  as a REIT and monitoring compliance with the various REIT qualification tests
  and other rules set out in the Code and Treasury Regulations thereunder and
  using commercially reasonable efforts to cause the Company to qualify for
  taxation as a REIT; 

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                    (xiii) 
  counseling the Company regarding the maintenance of its
  exemption from the Investment Company Act and monitoring compliance with the
  requirements for maintaining an exemption from that the Investment Company
  Act and using commercially reasonable efforts to cause the Company to
  maintain such exclusion from the status as an investment company under the
  Investment Company Act;

	
 

	
 

	
 

	
                    (xiv) 
  assisting the Company in developing criteria for asset purchase
  commitments that are specifically tailored to the Company’s investment
  objectives and making available to the Company its knowledge and experience
  with respect to mortgage loans, real estate, real estate-related securities,
  other real estate-related assets and non-real estate related assets; 

	
 

	
 

	
 

	
                    (xv) 
  furnishing reports and statistical and economic research to the
  Company regarding the Company’s activities and services performed for the
  Company by the Manager; 

	
 

	
 

	
 

	
                    (xvi) 
  monitoring the operating performance of the Investments and
  providing periodic reports with respect thereto to the Board of Directors,
  including comparative information with respect to such operating performance
  and budgeted or projected operating results; 

	
 

	
 

	
 

	
                    (xvii) 
  investing and re-investing any moneys and securities of the
  Company (including investing in short-term Investments pending investment in
  other Investments, payment of fees, costs and expenses, or payments of
  dividends or distributions to stockholders and partners of the Company) and
  advising the Company as to its capital structure and capital raising; 

	
 

	
 

	
 

	
                    (xviii) 
  causing the Company to retain qualified accountants and legal
  counsel, as applicable, to assist in developing appropriate accounting
  procedures, compliance procedures and testing systems with respect to
  financial reporting obligations and compliance with the provisions of the
  Code applicable to REITs and to conduct quarterly compliance reviews with
  respect thereto; 

	
 

	
 

	
 

	
                    (xix) 
  assisting the Company in qualifying to do business in all
  applicable jurisdictions and to obtain and maintain all appropriate licenses;
  

	
 

	
 

	
 

	
                    (xx) 
  assisting the Company in complying with all regulatory
  requirements applicable to the Company in respect of its business activities,
  including preparing or causing to be prepared all financial statements
  required under applicable regulations and contractual undertakings and all
  reports and documents, if any, required under the Exchange Act and the
  Securities Act or by the NYSE; 

	
 

	
 

	
 

	
                    (xxi) 
  assisting the Company in taking all necessary actions to enable
  the Company to make required tax filings and reports, including soliciting
  stockholders for required information to the extent provided by the
  provisions of the Code applicable to REITs; 

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                    (xxii) 
  placing, or arranging for the placement of, all orders pursuant to its
  investment determinations for the Company either directly with the issuer or
  with a broker or dealer (including any affiliated broker or dealer);

	
 

	
 

	
 

	
                    (xxiii) 
  handling and resolving all claims, disputes or controversies
  (including all litigation, arbitration, settlement or other proceedings or
  negotiations) in which the Company may be involved or to which the Company
  may be subject arising out of the Company’s day-to-day operations (other than
  with the Manager or its affiliates), subject to such limitations or
  parameters as may be imposed from time to time by the Board of Directors;

	
 

	
 

	
 

	
                    (xxiv) 
  using commercially reasonable efforts to cause expenses
  incurred by or on behalf of the Company to be commercially reasonable or
  commercially customary and within any budgeted parameters or expense
  guidelines set by the Board of Directors from time to time;

	
 

	
 

	
 

	
                    (xxv) 
  representing and making recommendations to the Company in
  connection with the purchase and finance of, and commitment to purchase and
  finance, mortgage loans (including on a portfolio basis), real estate, real
  estate-related securities, other real estate-related assets and non-real
  estate-related assets, and the sale and commitment to sell such assets; 

	
 

	
 

	
 

	
                    (xxvi) 
  advising the Company with respect to and structuring long-term
  financing vehicles for the Company’s portfolio of assets, and offering and
  selling securities publicly or privately in connection with any such
  structured financing;

	
 

	
 

	
 

	
                    (xxvii) 
  performing such other services as may be required from time to
  time for management and other activities relating to the assets and business
  of the Company as the Board of Directors shall reasonably request or the
  Manager shall deem appropriate under the particular circumstances; and 

	
 

	
 

	
 

	
                    (xxviii) 
  using commercially reasonable efforts to cause the Company to
  comply with all applicable laws. 

Without limiting the foregoing,
the Manager will perform portfolio management services (the “Portfolio
Management Services”) on behalf of the Company with respect to the
Investments. Such services will include, but not be limited to, consulting with
the Company on the purchase and sale of, and other investment opportunities in
connection with, the Company’s portfolio of assets; the collection of
information and the submission of reports pertaining to the Company’s assets,
interest rates and general economic conditions; periodic review and evaluation
of the performance of the Company’s portfolio of assets; acting as liaison
between the Company and banking, mortgage banking, investment banking and other
parties with respect to the purchase, financing and disposition of assets; and
other customary functions related to portfolio management. Additionally, the
Manager will perform monitoring services (the “Monitoring Services”) on
behalf of the Company with respect to any loan servicing activities provided by
third parties. Such Monitoring Services will include, but not be limited to,
negotiating servicing agreements; acting as a liaison between the servicers of
the assets and the Company; review of

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servicers’
delinquency, foreclosure and other reports on assets; supervising claims filed
under any insurance policies; and enforcing the obligation of any servicer to
repurchase assets. 

                    (c)
For the period and on the terms and conditions set forth in this Agreement, the
Company hereby constitutes, appoints and authorizes the Manager as its true and
lawful agent and attorney-in-fact, in its name, place and stead, to negotiate,
execute, deliver and enter into such credit finance agreements and arrangements
and securities repurchase and reverse repurchase agreements and arrangements,
brokerage agreements, interest rate swap agreements and such other agreements,
instruments and authorizations on its behalf on such terms and conditions as the
Manager, acting in its sole and absolute discretion, deems necessary or
appropriate. This power of attorney is deemed to be coupled with an interest.

                    (d)
The Manager may enter into agreements with other parties,
including its affiliates, for the purpose of engaging one or more parties for
and on behalf, and at the sole cost and expense, of the Company to provide
property management, asset management, leasing, development and/or other
services to the Company (including, without limitation, Portfolio Management
Services and Monitoring Services) pursuant to agreement(s) with terms which are
then customary for agreements regarding the provision of services to companies
that have assets similar in type, quality and value to the assets of the Company;
provided
that (i) any such agreements entered into with affiliates of the Manager shall
be (A) on terms no more favorable to such affiliate than would be obtained from
a third party on an arm’s-length basis and (B) to the extent the same do not fall
within the provisions of the Guidelines, approved by a majority of the
Independent Directors, (ii) with respect to Portfolio Management Services, (A)
any such agreements shall be subject to the Company’s prior written approval
and (B) the Manager shall remain liable for the performance of such Portfolio
Management Services, and (iii) with respect to Monitoring Services, any such
agreements shall be subject to the Company’s prior written approval. 

                    (e)
To the extent that the Manager deems necessary or advisable, the
Manager may, from time to time, propose to retain one or more additional
entities for the provision of sub-advisory services to the Manager in order to
enable the Manager to provide the services to the Company specified by this
Agreement; provided
that any such agreement (i) shall be on terms and conditions substantially
identical to the terms and conditions of this Agreement or otherwise not
adverse to the Company, (ii) shall not result in an increased Base Management
Fee, Incentive Compensation, or expenses to the Company, and (iii) shall be
approved by the Independent Directors of the Company. 

                    (f)
The Manager may retain, for and on behalf and at the sole cost
and expense of the Company, such services of accountants, legal counsel,
appraisers, insurers, brokers, transfer agents, registrars, developers,
investment banks, financial advisors, due diligence firms, underwriting review
firms, banks and other lenders and others as the Manager deems necessary or advisable
in connection with the management and operations of the Company.
Notwithstanding anything contained herein to the contrary, the Manager shall
have the right to cause any such services to be rendered by its employees or
affiliates. The Company shall pay or reimburse the Manager or its affiliates
performing such services for the cost thereof; provided that such costs and
reimbursements are no greater than those which would be payable

8

to outside
professionals or consultants engaged to perform such services pursuant to
agreements negotiated on an arm’s-length basis. 

                    (g)
The Manager may effect transactions by or through the agency of another person
with it or its affiliates which have an arrangement under which that party or
its affiliates will from time to time provide to or procure for the Manager
and/or its affiliates goods, services or other benefits (including, but not
limited to, research and advisory services; economic and political analysis,
including valuation and performance measurement; market analysis, data and
quotation services; computer hardware and software incidental to the above
goods and services; clearing and custodian services and investment related
publications), the nature of which is such that provision can reasonably be
expected to benefit the Company as a whole and may contribute to an improvement
in the performance of the Company or the Manager or its affiliates in providing
services to the Company on terms that no direct payment is made but instead the
Manager and/or its affiliates undertake to place business with that party. 

                    (h)
In executing portfolio transactions and selecting brokers or dealers, the
Manager will use its best efforts to seek on behalf of the Company the best
overall terms available. In assessing the best overall terms available for any
transaction, the Manager shall consider all factors that it deems relevant,
including without limitation the breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. In evaluating the best
overall terms available, and in selecting the broker or dealer to execute a
particular transaction, the Manager may also consider whether such broker or
dealer furnishes research and other information or services to the Manager.

                    (i)
The Manager has no duty or obligation to seek in advance competitive bidding
for the most favorable commission rate applicable to any particular purchase,
sale or other transaction, or to select any broker-dealer on the basis of its
purported or “posted” commission rate, but will endeavor to be aware of the
current level of charges of eligible broker-dealers and to minimize the expense
incurred for effecting purchases, sales and other transactions to the extent
consistent with the interests and policies of the Company. Although the Manager
will generally seek competitive commission rates, it is not required to pay the
lowest commission or commission equivalent, provided that such decision is made
in good faith to affect the best interests of the Company.

                    (j)
As frequently as the Manager may deem necessary or advisable, or
at the direction of the Board of Directors, the Manager shall, at the sole cost
and expense of the Company, prepare, or cause to be prepared, with respect to
any Investment, reports and other information with respect to such Investment
as may be reasonably requested by the Company. 

                    (k)
The Manager shall prepare, or cause to be prepared, at the sole
cost and expense of the Company, all reports, financial or otherwise, with
respect to the Company reasonably required by the Board of Directors in order
for the Company to comply with its Governing Instruments or any other materials
required to be filed with any governmental body or agency, and shall prepare,
or cause to be prepared, all materials and data necessary to complete

9

such reports
and other materials including, without limitation, an annual audit of the
Company’s books of account by a nationally recognized independent accounting
firm. 

                    (l)
The Manager shall prepare regular reports for the Board of
Directors to enable the Board of Directors to review the Company’s
acquisitions, portfolio composition and characteristics, credit quality,
performance and compliance with the Guidelines and policies approved by the
Board of Directors. 

                    (m)
Notwithstanding anything contained in this Agreement to the
contrary, except to the extent that the payment of additional moneys is proven
by the Company to have been required as a direct result of the Manager’s acts
or omissions which result in the right of the Company to terminate this
Agreement pursuant to Section 15 of this Agreement, the Manager shall not be
required to expend money (“Excess Funds”) in connection with any
expenses that are required to be paid for or reimbursed by the Company pursuant
to Section 9 in excess of that contained in any applicable Company Account (as
herein defined) or otherwise made available by the Company to be expended by
the Manager hereunder. Failure of the Manager to expend Excess Funds out-of-pocket
shall not give rise or be a contributing factor to the right of the Company
under Section 13(a) of this Agreement to terminate this Agreement due to the
Manager’s unsatisfactory performance. 

                    (n)
In performing its duties under this Section 2, the Manager shall
be entitled to rely reasonably on qualified experts and professionals
(including, without limitation, accountants, legal counsel and other service
providers) hired by the Manager at the Company’s sole cost and expense. 

          SECTION
3. DEVOTION OF TIME; ADDITIONAL ACTIVITIES. 

                    (a)
The Manager will provide the Company with a management team,
including a Chief Executive Officer, President, a Chief Investment Officer, a
Chief Credit Officer, a Chief Financial Officer, and other support personnel,
to provide the management services to be provided by the Manager to the Company
hereunder, the members of which team shall devote such of their time to the
management of the Company as the Board of Directors reasonably deems necessary
and appropriate, commensurate with the level of activity of the Company from
time to time. 

                    (b)
The Company shall have the benefit of the Manager’s best judgment
and best effort in rendering services and, in furtherance of the foregoing, the
Manager shall not undertake activities which, in its reasonable judgment, will
substantially and adversely affect the performance of its obligations under
this Agreement. 

                    (c)
Except to the extent set forth in clauses (a) and (b) above,
nothing herein shall prevent the Manager or any of its affiliates or any of the
officers and employees of any of the foregoing from engaging in other
businesses or from rendering services of any kind to any other person or entity,
including investment in, or advisory service to others investing in, any type
of investment, including investments which meet the principal investment
objectives of the Company. The Manager and its affiliates may invest for their
own accounts and for the accounts of clients in various investments that are
senior, pari passu or junior to, or have interests different 

10

from or
adverse to, the investments that are owned by the Company. Furthermore, the
Manager serves as investment adviser to other funds and accounts, and its
affiliates manage their own accounts, and the Manager and its affiliates may
make investment decisions for their own accounts and for the accounts of
others, including other funds, that may be different from those that will be
made by the Manager for the Company. When making investment decisions where a
conflict of interest may arise, the Manager will endeavor to act in a fair and
equitable manner as between the Company and other clients. The Manager may at
certain times be simultaneously seeking to purchase (or sell) investments from
the Company and sell (or purchase) the same investment for a similar entity,
including other funds, for which it serves as asset manager now or in the
future, or for its clients or affiliates. All such activities will be conducted
in accordance with the Manager’s allocation policy (as such policy may be
amended from time to time). In addition, the Manager and its affiliates may buy
securities from or sell securities to the Company to the extent permitted by applicable
law. 

                    (d)
Managers, partners, officers, employees and agents of the Manager
or affiliates of the Manager may serve as directors, officers, employees,
agents, nominees or signatories for the Company or any Subsidiary, to the extent
permitted by their Governing Instruments or by any resolutions duly adopted by
the Board of Directors pursuant to the Company’s Governing Instruments. When
executing documents or otherwise acting in such capacities for the Company,
such persons shall use their respective titles in the Company. 

          SECTION
4. AGENCY. The Manager shall act as agent of the
Company in making, acquiring, financing and disposing of Investments,
disbursing and collecting the Company’s funds, paying the debts and fulfilling
the obligations of the Company, supervising the performance of professionals
engaged by or on behalf of the Company and handling, prosecuting and settling
any claims of or against the Company, the Board of Directors, holders of the
Company’s securities or the Company’s representatives or properties. 

          SECTION
5. BANK ACCOUNTS.  At the direction of the Board
of Directors, the Manager may establish and maintain one or more bank accounts
in the name of the Company or any Subsidiary (any such account, a “Company
Account”), and may collect and deposit funds into any such Company Account
or Company Accounts, and disburse funds from any such Company Account or
Company Accounts, under such terms and conditions as the Board of Directors may
approve; and the Manager shall from time to time render appropriate accountings
of such collections and payments to the Board of Directors and, upon request,
to the auditors of the Company or any Subsidiary. 

          SECTION
6. RECORDS; CONFIDENTIALITY. The Manager shall
maintain appropriate books of accounts and records relating to services
performed under this Agreement, and such books of account and records shall be
accessible for inspection by representatives of the Company or any Subsidiary
at any time during normal business hours upon reasonable advance notice. The
Manager shall keep confidential any and all information obtained in connection
with the services rendered under this Agreement and shall not disclose any such
information (or use the same except in furtherance of its duties under this
Agreement) to nonaffiliated third parties except (i) with the prior written
consent of the Board of Directors; (ii) to legal counsel, accountants and other
professional advisors; (iii) to appraisers, financing sources and others in the
ordinary course of the Company’s business; (iv) to governmental officials
having jurisdiction

11

over the
Company; (v) in connection with any governmental or regulatory filings of the
Company or disclosure or presentations to Company investors; or (vi) as
required by law or legal process to which the Manager or any Person to whom
disclosure is permitted hereunder is a party. The foregoing shall not apply to
information which has previously become publicly available through the actions
of a Person other than the Manager not resulting from the Manager’s violation
of this Section 6. The provisions of this Section 6 shall survive the
expiration or earlier termination of this Agreement for a period of one (1)
year. 

SECTION 7. OBLIGATIONS
OF MANAGER; RESTRICTIONS. 

                    (a)
The Manager shall require each seller or transferor of investment
assets to the Company to make such representations and warranties regarding
such assets as may, in the judgment of the Manager, be necessary and appropriate.
In addition, the Manager shall take such other action as it deems necessary or
appropriate with regard to the protection of the Investments. 

                    (b)
The Manager shall refrain from any action that, in its sole
judgment made in good faith, (i) is not in compliance with the Guidelines, (ii)
would adversely affect the status of the Company as a REIT under the Code or
(iii) would violate any law, rule or regulation of any governmental body or
agency having jurisdiction over the Company or any Subsidiary or that would
otherwise not be permitted by the Company’s Governing Instruments. If the
Manager is ordered to take any such action by the Board of Directors, the
Manager shall promptly notify the Board of Directors of the Manager’s judgment
that such action would adversely affect such status or violate any such law,
rule or regulation or the Governing Instruments. Notwithstanding the foregoing,
the Manager, its directors, officers, stockholders and employees shall not be
liable to the Company or any Subsidiary, the Board of Directors, or the
Company’s or any Subsidiary’s stockholders or partners, for any act or omission
by the Manager, its directors, officers, stockholders or employees except as
provided in Section 11 of this Agreement. 

                    (c)
The Board of Directors periodically reviews the Guidelines and
the Company’s portfolio of Investments but will not review each proposed
investment, except as otherwise provided herein. If a majority of the
Independent Directors determine in their periodic review of transactions that a
particular transaction does not comply with the Guidelines, then a majority of
the Independent Directors will consider what corrective action, if any, can be
taken. The Manager shall be permitted to rely upon the direction of the
Secretary of the Company to evidence the approval of the Board of Directors or
the Independent Directors with respect to a proposed investment. 

                    (d)
The Company shall not invest in CDOs or any security structured or managed by
the Manager or any affiliate thereof, unless (i) the Investment is made in
accordance with the Guidelines and (ii) such Investment is approved in advance
by a majority of the Independent Directors.

                    (e)
The Manager shall at all times during the term of this Agreement
maintain “errors and omissions” insurance coverage and other insurance coverage
which is customarily carried by property, asset and investment managers
performing functions similar to those of the Manager under this Agreement with
respect to assets similar to the assets of the Company, in an

12

amount which
is comparable to that customarily maintained by other managers or servicers of
similar assets. 

          SECTION
8. COMPENSATION. 

                    (a)
During the Initial Term and any Renewal Term (each as defined
below), the Company shall pay the Manager the Base Management Fee quarterly in
arrears commencing with the quarter in which this Agreement was executed (with
such initial payment pro-rated based on the number of days during such quarter
that this Agreement was in effect). 

                    (b)
The Manager shall compute each installment of the Base Management
Fee within thirty (30) days after the end of the fiscal quarter with respect to
which such installment is payable. A copy of the computations made by the
Manager to calculate such installment shall thereafter, for informational
purposes only and subject in any event to Section 13(a) of this Agreement,
promptly be delivered to the Board of Directors and, upon such delivery,
payment of such installment of the Base Management Fee shown therein shall be
due and payable no later than the date which is five (5) business days after
the date of delivery to the Board of Directors of such computations. 

                    (c)
The Base Management Fee is subject to adjustment pursuant to and
in accordance with the provisions of Section 13(a) of this Agreement. 

                    (d)
In addition to the Base Management Fee otherwise payable
hereunder, the Company shall pay the Manager quarterly Incentive Compensation.
The Company shall pay the Incentive Compensation quarterly in arrears
commencing with the quarter in which this Agreement was executed (with such
initial payment pro-rated based on the number of days during such quarter that
this Agreement was in effect).

                    (e)
The Manager shall compute each installment of the Incentive
Compensation within thirty (30) days after the end of each fiscal quarter with
respect to which such installment is payable. A copy of the computations made
by the Manager to calculate such installment shall thereafter, for
informational purposes only and subject in any event to Section 13(a) of this
Agreement, promptly be delivered to the Board of Directors and, upon such
delivery, payment of such installment of the Incentive Compensation shown
therein shall be due and payable no later than the date which is five (5)
business days after the date of delivery to the Board of Directors of such
computations. 

          SECTION
9. EXPENSES OF THE COMPANY. The Company shall
pay all of its expenses and shall reimburse the Manager for documented expenses
of the Manager incurred on its behalf (collectively, the “Expenses”)
excepting those expenses that are specifically the responsibility of the
Manager as set forth herein. Expenses include all costs and expenses which are
expressly designated elsewhere in this Agreement as the Company’s, together
with the following: 

                    (a)
expenses in connection with the issuance and transaction costs
incident to the acquisition, disposition and financing of Investments; 

13

                    (b)
costs of legal, tax, accounting, consulting, auditing,
administrative and other similar services rendered for the Company by providers
retained by the Manager or, if provided by the Manager’s employees, in amounts
which are no greater than those which would be payable to outside professionals
or consultants engaged to perform such services pursuant to agreements negotiated
on an arm’s-length basis; 

                    (c)
the compensation of the Independent Directors and expenses of the
Company’s directors and the cost of liability insurance to indemnify the
Company’s directors and officers; 

                    (d)
costs associated with the establishment and maintenance of any
credit facilities or other indebtedness of the Company (including commitment
fees, accounting fees, legal fees, closing and other similar costs) or any
securities offerings of the Company; 

                    (e)
expenses connected with communications to holders of securities
of the Company or its Subsidiaries and other bookkeeping and clerical work
necessary in maintaining relations with holders of such securities and in
complying with the continuous reporting and other requirements of governmental
bodies or agencies, including, without limitation, all costs of preparing and
filing required reports with the Securities and Exchange Commission, the costs
payable by the Company to any transfer agent and registrar in connection with
the listing and/or trading of the Company’s stock on any exchange, the fees
payable by the Company to any such exchange in connection with its listing,
costs of preparing, printing and mailing the Company’s annual report to its
stockholders and proxy materials with respect to any meeting of the
stockholders of the Company; 

                    (f)
costs associated with any computer software or hardware,
electronic equipment or purchased information technology services from third
party vendors that is used solely for the Company; 

                    (g)
expenses incurred by managers, officers, employees and agents of
the Manager for travel on the Company’s behalf and other out-of-pocket expenses
incurred by managers, officers, employees and agents of the Manager in
connection with the purchase, financing, refinancing, sale or other disposition
of an Investment or establishment and maintenance of any credit facilities and
other indebtedness or any securities offerings of the Company; 

                    (h)
costs and expenses incurred with respect to market information
systems and publications, research publications and materials, and settlement,
clearing and custodial fees and expenses; 

                    (i)
compensation and expenses of the Company’s custodian and transfer
agent, if any; 

                    (j)
the costs of maintaining compliance with all federal, state and
local rules and regulations or any other regulatory agency; 

                    (k)
all taxes and license fees; 

14

                    (l)
all insurance costs incurred in connection with the operation of
the Company’s business except for the costs attributable to the insurance that
the Manager elects to carry for itself and its employees; 

                    (m)
costs and expenses incurred in contracting with third parties,
including affiliates of the Manager, for the servicing and special servicing of
assets of the Company;

                    (n)
all other costs and expenses relating to the Company’s business
and investment operations, including, without limitation, the costs and
expenses of acquiring, owning, protecting, maintaining, developing and
disposing of Investments, including appraisal, reporting, audit and legal fees;

                    (o)
expenses relating to any office(s) or office facilities,
including but not limited to disaster backup recovery sites and facilities,
maintained for the Company or Investments separate from the office or offices
of the Manager; 

                    (p)
expenses connected with the payments of interest, dividends or
distributions in cash or any other form authorized or caused to be made by the
Board of Directors to or on account of the holders of securities of the Company
or its Subsidiaries, including, without limitation, in connection with any
dividend reinvestment plan;

                    (q)
any judgment or settlement of pending or threatened proceedings
(whether civil, criminal or otherwise) against the Company or any Subsidiary,
or against any trustee, director or officer of the Company or of any Subsidiary
in his capacity as such for which the Company or any Subsidiary is required to
indemnify such trustee, director or officer by any court or governmental
agency; and

                    (r)
all other expenses actually incurred by the Manager which are
reasonably necessary for the performance by the Manager of its duties and
functions under this Agreement. 

          In
addition, the Company will be required to pay the Company’s pro rata portion of
rent, telephone, utilities, office furniture, equipment, machinery and other
office, internal and overhead expenses of the Manager and its affiliates
required for the Company’s operations. These expenses will be allocated between
the Manager and the Company based on the ratio of the Company’s proportion of
gross assets compared to all remaining gross assets managed by the Manager as
calculated at each quarter end. The Manager and the Company will modify this
allocation methodology, subject to the Board of Directors’ approval if the
allocation becomes inequitable (i.e., if the Company becomes highly leveraged
compared to the Manager’s other funds and accounts). The Manager hereby waives
its right to request reimbursement from the Company of these expenses until such
time as it determines to rescind that waiver.

          The
Manager may, at its option, elect not to seek reimbursement for certain
expenses during a given quarterly period, which determination shall not be
deemed to construe a waiver of reimbursement for similar expenses in future
periods. Except as noted above, the Manager is responsible for all costs
incident to the performance of its duties under this Agreement, including
compensation of the Manager’s executives and employees and other related expenses
and overhead (except those expenses that are specifically the responsibility of
the Manager as set forth herein). In the event that the Company’s initial
public offering is consummated, the 

15

Company will
reimburse the Manager for all organizational, formation and offering costs it
has incurred on behalf of the Company. 

          The
provisions of this Section 9 shall survive the expiration or earlier
termination of this Agreement to the extent such expenses have previously been
incurred or are incurred in connection with such expiration or termination. 

          SECTION
10. CALCULATIONS OF EXPENSES. 

          The
Manager shall prepare a statement documenting the Expenses of the Company and
the Expenses incurred by the Manager on behalf of the Company during each
fiscal quarter, and shall deliver such statement to the Company within 30 days
after the end of each fiscal quarter. Expenses incurred by the Manager on
behalf of the Company shall be reimbursed by the Company to the Manager on the
fifth (5th) business day immediately following the date of delivery
of such statement; provided,
however, that such reimbursements may be offset by the Manager against amounts
due to the Company. The provisions of this Section 10 shall survive the
expiration or earlier termination of this Agreement. 

          SECTION
11. LIMITS OF MANAGER RESPONSIBILITY; INDEMNIFICATION. 

                    
(a) The Manager assumes no responsibility under this Agreement
other than to render the services called for under this Agreement in good faith
and shall not be responsible for any action of the Board of Directors in
following or declining to follow any advice or recommendations of the Manager,
including as set forth in Section 7(b) of this Agreement. The Manager, its
officers, directors, employees, any Person controlling or controlled by the
Manager and any Person providing sub-advisory services to the Manager and the
officers, directors and employees of the Manager, its officers, directors,
employees and any such Person will not be liable to the Company or any
Subsidiary, to the Board of Directors, or the Company’s or any Subsidiary’s
stockholders or partners for any acts or omissions by any such Person, pursuant
to or in accordance with this Agreement, except by reason of acts constituting
bad faith, willful misconduct, gross negligence or reckless disregard of the
Manager’s duties under this Agreement. The Company shall, to the full extent
lawful, reimburse, indemnify and hold the Manager, its officers, stockholders,
directors, employees, any Person controlling or controlled by the Manager and
any Person providing sub-advisory services to the Manager, together with the
managers, officers, directors and employees of the Manager, its officers,
members, directors, employees, and any such Person (each a “Manager
Indemnified Party”), harmless of and from any and all expenses, losses,
damages, liabilities, demands, charges and claims of any nature whatsoever
(including attorneys’ fees) in respect of or arising from any acts or omissions
of such Manager Indemnified Party made in good faith in the performance of the
Manager’s duties under this Agreement and not constituting such Manager
Indemnified Party’s bad faith, willful misconduct, gross negligence or reckless
disregard of the Manager’s duties under this Agreement. 

                    (b)
The Manager shall, to the full extent lawful, reimburse,
indemnify and hold the Company (or any Subsidiary), its stockholders,
directors, officers and employees and each other Person, if any, controlling
the Company (each, a “Company Indemnified Party” and together with a
Manager Indemnified Party, the “Indemnitee”), harmless of and from any
and all 

16

expenses,
losses, damages, liabilities, demands, charges and claims of any nature
whatsoever (including attorneys’ fees) in respect of or arising from the
Manager’s bad faith, willful misconduct, gross negligence or reckless disregard
of its duties under this Agreement. 

                    (c)
The Indemnitee will promptly notify the party against whom indemnity is claimed
(the “Indemnitor”) of any claim for which it seeks indemnification;
provided, however, that the failure to so notify the Indemnitor will not
relieve the Indemnitor from any liability which it may have hereunder, except
to the extent such failure actually prejudices the Indemnitor. The Indemnitor
shall have the right to assume the defense and settlement of such claim;
provided, that the Indemnitor notifies the Indemnitee of its election to assume
such defense and settlement within thirty (30) days after the Indemnitee gives
the Indemnitor notice of the claim. In such case, the Indemnitee will not
settle or compromise such claim, and the Indemnitor will not be liable for any
such settlement made without its prior written consent. If the Indemnitor is
entitled to, and does, assume such defense by delivering the aforementioned
notice to the Indemnitee, the Indemnitee will (i) have the right to approve the
Indemnitor’s counsel (which approval will not be unreasonably withheld, delayed
or conditioned), (ii) be obligated to cooperate in furnishing evidence and
testimony and in any other manner in which the Indemnitor may reasonably
request and (iii) be entitled to participate in (but not control) the defense
of any such action, with its own counsel and at its own expense.

          SECTION
12. NO JOINT VENTURE. Nothing in this Agreement
shall be construed to make the Company and the Manager partners or joint
venturers or impose any liability as such on either of them. 

          SECTION
13. TERM; TERMINATION. 

                    (a)
Until this Agreement is terminated in accordance with its terms, this
Agreement shall be in effect until December 31, 2010 (the “Initial Term”)
and shall be automatically renewed for a one-year term each anniversary date
thereafter (a “Renewal Term”) unless at least two-thirds of the
Independent Directors or the holders of a majority of the outstanding shares of
common stock (other than those shares held by Annaly or its affiliates) agree
that (i) there has been unsatisfactory performance by the Manager that is
materially detrimental to the Company or (ii) the compensation payable to the
Manager hereunder is unfair; provided that the Company shall not have
the right to terminate this Agreement under clause (ii) above if the Manager
agrees to continue to provide the services under this Agreement at a reduced
fee that at least two-thirds of the Independent Directors determines to be fair
pursuant to the procedure set forth below. If the Company elects not to renew
this Agreement at the expiration of the Initial Term or any Renewal Term as set
forth above, the Company shall deliver to the Manager prior written notice (the
“Termination Notice”) of the Company’s intention not to renew this
Agreement based upon the terms set forth in this Section 13(a) not less than
one hundred eighty (180) days prior to the expiration of the then existing
term. If the Company so elects not to renew this Agreement, the Company shall
designate the date (the “Effective Termination Date”), not less than one
hundred eighty (180) days from the date of the notice, on which the Manager
shall cease to provide services under this Agreement and this Agreement shall
terminate on such date; provided, however, that in the event that
such Termination Notice is given in connection with a determination that the
compensation payable to the Manager is unfair, the Manager shall have the right
to renegotiate such compensation by delivering to the Company, 

17

no fewer than
forty-five (45) days prior to the prospective Effective Termination Date,
written notice (any such notice, a “Notice of Proposal to Negotiate”) of
its intention to renegotiate its compensation under this Agreement. Thereupon,
the Company (represented by the Independent Directors) and the Manager shall
endeavor to negotiate in good faith the revised compensation payable to the
Manager under this Agreement. Provided that the Manager and at least two-thirds
of the Independent Directors agree to the terms of the revised compensation to
be payable to the Manager within forty-five (45) days following the receipt of
the Notice of Proposal to Negotiate, the Termination Notice shall be deemed of
no force and effect and this Agreement shall continue in full force and effect
on the terms stated in this Agreement, except that the compensation payable to
the Manager hereunder shall be the revised compensation then agreed upon by the
parties to this Agreement. The Company and the Manager agree to execute and
deliver an amendment to this Agreement setting forth such revised compensation
promptly upon reaching an agreement regarding same. In the event that the
Company and the Manager are unable to agree to the terms of the revised
compensation to be payable to the Manager during such 45-day period, this
Agreement shall terminate, such termination to be effective on the date which
is the later of (A) ten (10) days following the end of such 45-day period and
(B) the Effective Termination Date originally set forth in the Termination
Notice. 

                    (b)
In the event that this Agreement is terminated in accordance with
the provisions of Section 13(a) of this Agreement, the Company shall pay to the
Manager, on the date on which such termination is effective, a termination fee
(the “Termination Fee”) equal to three (3) times the sum of (a) the
average annual Base Management Fee and (b) the average annual Incentive
Compensation earned by the Manager during the 24-month period immediately
preceding the date of such termination, calculated as of the end of the most
recently completed fiscal quarter prior to the date of termination. The
obligation of the Company to pay the Termination Fee shall survive the
termination of this Agreement. 

                    (c)
No later than one hundred eighty (180) days prior to the
anniversary date of this Agreement of any year during the Initial Term or
Renewal Term, the Manager may deliver written notice to the Company informing
it of the Manager’s intention to decline to renew this Agreement, whereupon
this Agreement shall not be renewed and extended and this Agreement shall
terminate effective on the anniversary date of this Agreement next following
the delivery of such notice. The Company is not required to pay to the Manager
the Termination Fee if the Manager terminates this Agreement pursuant to this
Section 13(c). 

                    (d)
If this Agreement is terminated pursuant to Section 13, such
termination shall be without any further liability or obligation of either
party to the other, except as provided in Sections 6, 9, 10, 13(b), 15(b), and
16 of this Agreement. In addition, Sections 11 and 21 of this Agreement shall
survive termination of this Agreement. 

          SECTION
14. ASSIGNMENT.

                    (a)
Except as set forth in Section 14(b) of this Agreement, this Agreement shall
terminate automatically in the event of its assignment, in whole or in part, by
the Manager, unless such assignment is consented to in writing by the Company
with the consent of a majority of the Independent Directors; provided,
however, that no such consent shall be required in the case of an assignment by
the Manager to an affiliate of Annaly. Any such permitted assignment 

18

shall bind the
assignee under this Agreement in the same manner as the Manager is bound, and
the Manager shall be liable to the Company for all errors or omissions of the
assignee under any such assignment. In addition, the assignee shall execute and
deliver to the Company a counterpart of this Agreement naming such assignee as
Manager. This Agreement shall not be assigned by the Company without the prior
written consent of the Manager, except in the case of assignment by the Company
to another REIT or other organization which is a successor (by merger,
consolidation, purchase of assets, or similar transaction) to the Company, in
which case such successor organization shall be bound under this Agreement and
by the terms of such assignment in the same manner as the Company is bound
under this Agreement. 

                    (b)
Notwithstanding any provision of this Agreement, the Manager may subcontract
and assign any or all of its responsibilities under Sections 2(b), 2(c) and
2(d) of this Agreement to any of its affiliates in accordance with the terms of
this Agreement applicable to any such subcontract or assignment, and the
Company hereby consents to any such assignment and subcontracting. In addition,
provided that the Manager provides prior written notice to the Company for
informational purposes only, nothing contained in this Agreement shall preclude
any pledge, hypothecation or other transfer of any amounts payable to the
Manager under this Agreement. In addition, the Manager may assign this
Agreement to any of its affiliates without the Company’s approval if such
assignment does not require the Company’s approval under the Investment
Advisers Act of 1940, as amended.

          SECTION
15. TERMINATION FOR CAUSE. 

                    (a)
The Company may terminate this Agreement effective upon thirty
(30) days’ prior written notice of termination from the Company to the Manager,
without payment of any Termination Fee, if (i) the Manager, its agents or its
assignees materially breaches any provision of this Agreement and such breach
shall continue for a period of thirty (30) days after written notice thereof specifying
such breach and requesting that the same be remedied in such 30-day period (or
forty-five (45) days after written notice of such breach if the Manager takes
steps to cure such breach within thirty (30) days of the written notice), (ii)
the Manager engages in any act of fraud, misappropriation of funds, or
embezzlement against the Company, (iii) there is an event of any gross
negligence on the part of the Manager in the performance of its duties under
this Agreement, (iv) there is a commencement of any proceeding relating to the
Manager’s Bankruptcy or insolvency, (v) there is a dissolution of the Manager,
(vi) there is a Change of Control, or (vii) the Manager is convicted of
(including a plea of nolo contendere) a felony.

                    (b)
The Manager may terminate this Agreement effective upon sixty
(60) days’ prior written notice of termination to the Company in the event that
the Company shall default in the performance or observance of any material
term, condition or covenant contained in this Agreement and such default shall
continue for a period of thirty (30) days after written notice thereof
specifying such default and requesting that the same be remedied in such 30-day
period. The Company is required to pay to the Manager the Termination Fee if
the termination of this Agreement is made pursuant to this Section 15(b).

                    (c)
The Manager may terminate this Agreement, without payment of any
Termination Fee, in the event the Company becomes regulated as an “investment
company” 

19

under the
Investment Company Act, with such termination deemed to have occurred
immediately prior to such event. 

          SECTION
16. ACTION UPON TERMINATION. From and after the
effective date of termination of this Agreement, pursuant to Sections 13 or 15
of this Agreement, the Manager shall not be entitled to compensation for
further services under this Agreement, but shall be paid all compensation
accruing to the date of termination and, if terminated pursuant to Section
13(a) or Section 15(b), the applicable Termination Fee. Upon such termination,
the Manager shall forthwith: 

	
 

	
 

	
 

	
 

	
                    (i)
  after deducting any accrued compensation and reimbursement for
  its expenses to which it is then entitled, pay over to the Company or a Subsidiary
  all money collected and held for the account of the Company or a Subsidiary
  pursuant to this Agreement; 

	
 

	
 

	
 

	
 

	
                    (ii)
  deliver to the Board of Directors a full accounting, including
  a statement showing all payments collected by it and a statement of all money
  held by it, covering the period following the date of the last accounting
  furnished to the Board of Directors with respect to the Company or a
  Subsidiary; and 

	
 

	
 

	
 

	
 

	
                    (iii)
  deliver to the Board of Directors all property and documents of
  the Company or any Subsidiary then in the custody of the Manager. 

          SECTION
17. RELEASE OF MONEY OR OTHER PROPERTY UPON WRITTEN REQUEST.
The Manager agrees that any money or other property of the Company or
Subsidiary held by the Manager
under this Agreement shall be held by the Manager as custodian for the Company
or Subsidiary, and the Manager’s records shall be appropriately marked clearly
to reflect the ownership of such money or other property by the Company or such
Subsidiary. Upon the receipt by the Manager of a written request signed by a
duly authorized officer of the Company requesting the Manager to release to the
Company or any Subsidiary any money or other property then held by the Manager
for the account of the Company or any Subsidiary under this Agreement, the
Manager shall release such money or other property to the Company or any
Subsidiary within a reasonable period of time, but in no event later than
thirty (30) days following such request. The Manager shall not be liable to the
Company, any Subsidiary, the Independent Directors, or the Company’s or a
Subsidiary’s stockholders or partners for any acts performed or omissions to
act by the Company or any Subsidiary in connection with the money or other property
released to the Company or any Subsidiary in accordance with the second
sentence of this Section 17. The Company and any Subsidiary shall indemnify the
Manager and its officers, directors, employees, managers, officers and
employees against any and all expenses, losses, damages, liabilities, demands,
charges and claims of any nature whatsoever, which arise in connection with the
Manager’s release of such money or other property to the Company or any
Subsidiary in accordance with the terms of this Section 17. Indemnification
pursuant to this provision shall be in addition to any right of the Manager to
indemnification under Section 11 of this Agreement. 

          SECTION
18. NOTICES. Unless expressly provided otherwise
in this Agreement, all notices, requests, demands and other communications
required or permitted under this 

20

Agreement
shall be in writing and shall be deemed to have been duly given, made and
received when delivered against receipt or upon actual receipt of (i) personal
delivery, (ii) delivery by reputable overnight courier, (iii) delivery by
facsimile transmission with telephonic confirmation or (iv) delivery by
registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below: 

	
 

	
 

	
 

	
 

	
(a)

	
If to the
  Company: 

	
 

	
 

	
 

	
 

	
 

	
Chimera
  Investment Corporation

  1211 Avenue of the Americas 

  Suite 2902

  New York, New York 10036

  Attention: Matthew Lambiase

	
 

	
 

	
 

	
 

	
(b)

	
If to the
  Manager: 

	
 

	
 

	
 

	
 

	
 

	
Fixed Income
  Discount Advisory Company 

  1211 Avenue of the Americas 

  Suite 2902

  New York, New York 10036

  Attention: R. Nicholas Singh, Esq.

Either party
may alter the address to which communications or copies are to be sent by
giving notice of such change of address in conformity with the provisions of
this Section 18 for the giving of notice. 

          SECTION
19. BINDING NATURE OF AGREEMENT; SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
permitted assigns as provided in this Agreement. 

          SECTION
20. ENTIRE AGREEMENT. This Agreement contains the
entire agreement and understanding among the parties hereto with respect to the
subject matter of this Agreement, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject matter of
this Agreement. The express terms of this Agreement control and supersede any
course of performance and/or usage of the trade inconsistent with any of the
terms of this Agreement. This Agreement may not be modified or amended other
than by an agreement in writing signed by the parties hereto. 

          SECTION
21. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES TO THE CONTRARY (BUT WITH
REFERENCE TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATION LAW, WHICH BY
ITS TERMS APPLIES TO THIS AGREEMENT).

21

          SECTION
22. NO WAIVER; CUMULATIVE REMEDIES. No failure
to exercise and no delay in exercising, on the part of any party hereto, 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. No waiver of any
provision hereto shall be effective unless it is in writing and is signed by
the party asserted to have granted such waiver. 

          SECTION
23. HEADINGS. The headings of the sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed part of this Agreement. 

          SECTION
24. COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts of this Agreement, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories. 

          SECTION
25. SEVERABILITY. Any provision of this
Agreement that 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
26. GENDER. Words used herein regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context requires. 

[SIGNATURE
PAGE FOLLOWS]

22

          IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above. 

	
 

	
 

	
 

	
 

	
CHIMERA INVESTMENT CORPORATION

	
 

	
 

	
 

	
By: 

	
 

	
 

	
 

	

	
 

	
Name:

	
 

	
Title:

	
 

	
 

	
FIXED INCOME DISCOUNT ADVISORY COMPANY

	
 

	
 

	
 

	
By: 

	
 

	
 

	
 

	

	
 

	
Name:

	
 

	
Title:

Exhibit A

	
 

	
 

	
•

	
No
  investment shall be made that would cause the Company to fail to qualify as a
  REIT for federal income tax purposes;

	
 

	
 

	
•

	
No
  investment shall be made that would cause the Company to be regulated as an
  investment company under the Investment Company Act;

	
 

	
 

	
•

	
With the
  exception of real estate and housing, no single industry shall represent
  greater than 20% of the securities or aggregate risk exposure in the
  Company’s portfolio; and

	
 

	
 

	
•

	
Investments
  in non-rated or deeply subordinated Asset-Backed Securities or other
  securities that are non-qualifying assets for purposes of the 75% REIT asset
  test will be limited to an amount not to exceed 50% of the Company’s
  stockholders’ equity.EX-10.1

 

Exhibit 10.1

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

Dated as of September 26, 2007

Among

MIM FUNDING, LLC,

BIOSCRIP PHARMACY SERVICES, INC.,

BIOSCRIP INFUSION SERVICES, INC.,

BIOSCRIP PHARMACY (NY), INC.,

BIOSCRIP PBM SERVICES, LLC,

BIOSCRIP PHARMACY, INC.,

NATURAL LIVING, INC.,

and

BIOSCRIP INFUSION SERVICES, LLC

as Borrowers,

and

HFG HEALTHCO-4 LLC

as Lender

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I. COMMITMENT;
AMOUNTS AND TERMS OF THE REVOLVING LOAN	 	 	1	 
	§ 1.01.

	 	Revolving Advances
	 	 	1	 
	§ 1.02.

	 	Revolving Commitment and Borrowing Limit
	 	 	2	 
	§ 1.03.

	 	Notice of Borrowing; Borrower’s Certificate
	 	 	2	 
	§ 1.04.

	 	Termination of Revolving Commitment
	 	 	2	 
	§ 1.05.

	 	Interest and Fees
	 	 	3	 
	§ 1.06.

	 	Voluntary Reductions
	 	 	3	 
	§ 1.07.

	 	Computation of Interest; Payment of Fees
	 	 	3	 
	§ 1.08.

	 	Procedures for Payment
	 	 	3	 
	§ 1.09.

	 	Indemnities
	 	 	4	 
	§ 1.10.

	 	Telephonic Notice
	 	 	5	 
	§ 1.11.

	 	Maximum Interest
	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE II. GENERAL PAYMENT MECHANICS; GOVERNMENTAL ENTITIES PAYMENT MECHANICS; MISDIRECTED	 	 	 	 
	 	 	PAYMENTS	 	 	6	 
	§ 2.01.

	 	General Payment Mechanics
	 	 	6	 
	§ 2.02.

	 	Governmental Entities Payment Mechanics
	 	 	7	 
	§ 2.03.

	 	Misdirected Payments; EOB’s
	 	 	7	 
	§ 2.04.

	 	No Rights of Withdrawal
	 	 	8	 
	 
	 	 	 	 	 	 
	ARTICLE III. COLLECTION AND DISTRIBUTION	 	 	8	 
	§ 3.01.

	 	Collections on the Receivables
	 	 	8	 
	§ 3.02.

	 	Distribution of Funds
	 	 	8	 
	§ 3.03.

	 	Distribution of Funds at the Maturity Date or Upon an Event of Default
	 	 	8	 
	§ 3.04.

	 	Allocation of Servicing Responsibilities
	 	 	8	 
	§ 3.05.

	 	Distributions to the Borrowers Generally
	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE IV. REPRESENTATIONS AND WARRANTIES; COVENANTS; EVENTS OF DEFAULT	 	 	9	 
	§ 4.01.

	 	Representations and Warranties; Covenants
	 	 	9	 
	§ 4.02.

	 	Events of Default; Remedies
	 	 	9	 
	§ 4.03.

	 	Attorney-in-Fact
	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE V. SECURITY	 	 	10	 
	§ 5.01.

	 	Grant of Security Interest
	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE VI. MISCELLANEOUS	 	 	10	 
	§ 6.01.

	 	Amendments, etc
	 	 	10	 
	§ 6.02.

	 	Notices, etc
	 	 	11	 
	§ 6.03.

	 	Assignability
	 	 	11	 
	§ 6.04.

	 	Further Assurances
	 	 	12	 
	§ 6.05.

	 	Costs and Expenses; Collection Costs
	 	 	12	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	§ 6.06.

	 	Confidentiality
	 	 	13	 
	§ 6.07.

	 	Term and Termination; Early Termination Fee; Prepayment Fee
	 	 	14	 
	§ 6.08.

	 	No Liability of Lender
	 	 	15	 
	§ 6.09.

	 	Joint and Several Liability; Designation and Appointment of
Borrower Representative
	 	 	15	 
	§ 6.10.

	 	Entire Agreement; Severability
	 	 	16	 
	§ 6.11.

	 	GOVERNING LAW
	 	 	16	 
	§ 6.12.

	 	WAIVER OF JURY TRIAL, JURISDICTION AND VENUE
	 	 	16	 
	§ 6.13.

	 	Execution in Counterparts
	 	 	17	 
	§ 6.14.

	 	No Proceedings
	 	 	17	 
	§ 6.15.

	 	Survival of Termination
	 	 	17	 
	§ 6.16.

	 	Addition or Removal of Borrowers
	 	 	17	 
	§ 6.17.

	 	USA PATRIOT ACT
	 	 	18	 

ii 

 

	 	 	 
	EXHIBITS
	 	 

	 
	 	 

	Exhibit I
	 	Definitions

	Exhibit II
	 	Conditions Precedent

	Exhibit III
	 	Representations and Warranties

	Exhibit IV
	 	Covenants

	Exhibit V
	 	Events of Default

	Exhibit VI
	 	Eligibility Criteria

	Exhibit VII-A
	 	Form of Borrowing Base Certificate

	Exhibit VII-B
	 	Form of Borrower’s Certificate

	Exhibit VIII
	 	Receivable Information

	Exhibit IX-A
	 	Form of Notice to Governmental Entities

	Exhibit IX-B
	 	Form of Notice to Non-Governmental Entities

	Exhibit X
	 	Servicing Responsibilities

	Exhibit XI
	 	[Intentionally Omitted]

	Exhibit XII
	 	Interface with Program Manager

	Exhibit XIII
	 	Form of Depositary Agreement

	Exhibit XIV
	 	Form of Guaranty

	Exhibit XV
	 	Form of Subscription Agreement

	 	 	 

	SCHEDULES
	 	 

	 
	 	 

	Schedule I
	 	Addresses for Notices

	Schedule II
	 	Credit and Collection Policy

	Schedule III
	 	Disclosures

	Schedule IV
	 	Lockbox Information

	Schedule V
	 	Net Value Factors

	Schedule VI
	 	Monthly Financial Reporting

iii 

 

          AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of September 26, 2007, among MIM
Funding, LLC, a limited liability company organized under the laws of the State of Delaware (“MIM
Funding”), BioScrip Pharmacy Services, Inc., a corporation organized under the laws of the State of
Ohio (“Pharmacy Services”), BioScrip Infusion Services, Inc., a corporation organized under the
laws of the State of California (“Infusion Services Inc”), BioScrip Pharmacy (NY), Inc., a
corporation organized under the laws of the State of New York (“Pharmacy (NY)”), BioScrip PBM
Services, LLC, a limited liability company organized under the laws of the State of Delaware (“PBM
Services”), BioScrip Pharmacy, Inc., a corporation organized under the laws of the State of
Minnesota (“Pharmacy”), Natural Living, Inc., a corporation organized under the laws of the State
of New York (“Natural Living”) and BioScrip Infusion Services, LLC, a limited liability company
organized under the laws of the State of Delaware (“Infusion Services LLC” and together with MIM
Funding, Pharmacy Services, Infusion Services Inc, Pharmacy (NY), PBM Services, Pharmacy and
Natural Living, each a ““Borrower” and collectively, jointly and severally, the “Borrowers”) and
HFG HEALTHCO-4 LLC, a Delaware limited liability company (together with its successors and assigns,
the “Lender”).

          Certain terms that are capitalized and used throughout this Agreement are defined in Exhibit I
to this Agreement. References herein, and in the Exhibits and Schedules hereto, to the “Agreement”
refer to this Agreement, as amended, restated, modified or supplemented from time to time in
accordance with its terms (this “Agreement”).

          Reference is hereby made to that certain Loan and Security Agreement, dated as of November 1,
2000, between MIM Funding and the Lender (as amended, modified or supplemented prior to the date
hereof, the “Original Agreement”). MIM Funding intends on the Initial Funding Date to restructure
and refinance the Original Agreement to add the other Borrowers and restructure the financing
terms, including revolving advances to the Borrowers, jointly and severally, on a continuing basis
secured by substantially all of the assets of the Borrowers, including their Receivables. The
Lender is prepared to make Revolving Loans to the Borrowers, secured by substantially all of the
assets of the Borrowers, including their Receivables and guarantied by the Guaranty provided by the
Parent, on the terms and subject to the conditions set forth herein.

          Accordingly, the parties hereby amend and restate the Original Agreement as follows:

ARTICLE I.

COMMITMENT; AMOUNTS AND TERMS OF THE REVOLVING LOAN

               § 1.01.      Revolving Advances. (a) The Lender agrees to lend from time to time to the
Borrowers, subject to and upon the terms and conditions herein set forth, on any Funding Date, such
amounts as, in accordance with the terms hereof, may be requested by the Borrower Representative on
behalf of the Borrowers from time to time (each such borrowing, a “Revolving Advance” and the
aggregate outstanding principal balance of all Revolving Advances from time to time, the “Revolving
Loan”).

 

 

          (b) Each Revolving Advance shall be made on the date specified in the Borrower’s Certificate,
or telephonic notice confirmed in writing, as described in Section 1.03 hereof.

               § 1.02.      Revolving Commitment and Borrowing Limit. (a) The Revolving Loan at any time
shall not exceed an amount equal to the lesser of (i) $75,000,000 (such amount, or such other
amount after giving effect to any increase pursuant to the provisions of Section 1.02(d) hereof,
the “Revolving Commitment”), and (ii) the Borrowing Base as of such time (the lesser of (i) and
(ii) being the “Borrowing Limit”).

          (b) Subject to the limitations herein and of Exhibit II hereof, the Borrowers may borrow,
repay (without premium or penalty) and reborrow under the Revolving Commitment from time to time
during the term of this Agreement. The Revolving Loan shall not exceed, and the Lender shall not
have any obligation to make any Revolving Advance which shall result in the Revolving Loan being in
excess of, the Revolving Commitment.

          (c) If at any time the Revolving Loan exceeds the Borrowing Limit at such time, the Borrowers
shall promptly, in accordance with Article III hereof, eliminate such excess by paying an amount
equal to such excess until such excess is eliminated in full.

          (d) The Borrowers may request the Lender to increase the Revolving Commitment up to a maximum
of $100,000,000 and the Lender, in its sole discretion upon any such request, may decide to
increase the Revolving Commitment. Each such increase shall be in an amount equal to $5,000,000 or
an integral multiple thereof and the Borrowers shall, upon the effective date of such increase, pay
to the Lender a fee in an amount equal to 0.70% of any increase in the Revolving Commitment.

               § 1.03.      Notice of Borrowing; Borrower’s Certificate. Whenever the Borrowers desire a
Revolving Advance be made, the Borrower Representative shall give the Lender, not later than 11:00
a.m. (New York time) on the Business Day of the proposed Funding Date of such Revolving Advance,
Written Notice or telephonic notice from an Authorized Representative confirmed promptly by a
Written Notice (which notice, in each case, shall be irrevocable) of the desire to make a borrowing
of a Revolving Advance. Each notice of borrowing under this Section 1.03 shall (i) be signed by an
Authorized Representative of the Borrower Representative, and (ii) be substantially in the form of
Exhibit VII-B hereto (each, a “Borrower’s Certificate”) and specify the date on which the Borrowers
desire to make a borrowing of a Revolving Advance (which in each instance shall be a Funding Date),
the amount of the proposed Revolving Advance and shall have attached to it the most recent
Borrowing Base Certificate.

               § 1.04.      Termination of Revolving Commitment. On the Maturity Date, the Revolving
Commitment shall be cancelled automatically. In addition, prior to the Maturity Date, the
Borrowers may terminate the Revolving Commitment pursuant to Section 6.07(b). Upon such
cancellation, the Revolving Loan (together with all other Lender Debt) shall become, without
further action by any Person, immediately due and payable together with all accrued interest
thereon to such date plus any fees (including, as applicable, the Early Termination Fee) premiums,
charges or costs provided for hereunder.

2

 

               § 1.05.      Interest and Fees. (a) Interest. The Borrowers shall, upon demand,
pay interest on the Revolving Loan on (i) each Interest Payment Date and (ii) the Maturity Date
(whether by acceleration or otherwise), in each case, at an interest rate per annum equal to LIBOR
plus the Applicable Margin.

          (b) Default Interest. Notwithstanding anything to the contrary contained herein,
while any Event of Default is continuing, interest on the Revolving Loan shall be payable on demand
at a rate per annum equal to 4.00% in excess of the rate then otherwise applicable to the Revolving
Loan

          (c) Non-Utilization Fee. The Borrowers shall pay to the Lender on the first Funding
Date of each Month and the Maturity Date a fee (the “Non-Utilization Fee”) equal to 0.35% per annum
on the average amount, calculated on a daily basis, by which the Commitment exceeded, during the
prior Month, the Revolving Loan.

          (d) A/R Fee. The Borrowers shall pay to the Lender the A/R Fee on the first Business
Day of each Month.

          (e) Payments on Due Date. The Borrowers shall on the date when due and payable make
payments of any amounts due hereunder in immediately available funds, and if such amounts are not
received on the date when due and payable, the Borrowers shall have been deemed to have requested a
Revolving Advance in such amount, which Revolving Advance, to the extent that conditions precedent
have been satisfied with respect thereto, shall be applied by the Lender to satisfy in full such
payment obligation.

               § 1.06.      Voluntary Reductions. The Borrowers may on any Funding Date reduce the
outstanding principal amount of the Revolving Loan.

               § 1.07.      Computation of Interest; Payment of Fees. (a) Interest on the Revolving
Loans and fees and other amounts calculated by the Lender on the basis of a rate per annum shall be
computed on the basis of actual days elapsed over a 360-day year.

          (b) Whenever any payment to be made hereunder or under any other Document shall be stated to
be due and payable on a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall in such case be included in computing
interest on such payment.

               § 1.08.      Procedures for Payment. (a) Each payment hereunder and under the other
Documents shall be made not later than 12:00 noon (New York City time) on the day when due in
lawful money of the United States of America to the Lender without counterclaim, offset, claim or
recoupment of any kind and free and clear of, and without deduction for, any present or future
withholding or other taxes, duties or charges of any nature imposed on such payments or prepayments
by or on behalf of any Governmental Entity thereof or therein, except for Excluded Taxes. If any
such taxes, duties or charges are so levied or imposed on any payment to the Lender, the Borrowers
will make additional payments in such amounts as may be necessary so that the net amount received
by the Lender, after withholding or deduction for or on account of all taxes, duties or charges,
including deductions applicable to additional sums payable under this Section 1.08, will be equal
to the amount provided for herein.

3

 

Whenever any taxes, duties or charges are payable by the Borrowers with respect to any payments
hereunder, the Borrowers shall furnish promptly to the Lender information, including certified
copies of official receipts (to the extent that the relevant governmental authority delivers such
receipts), evidencing payment of any such taxes, duties or charges so withheld or deducted. If the
Borrowers fail to pay any such taxes, duties or charges when due to the appropriate taxing
authority or fails to remit to the Lender the required information evidencing payment of any such
taxes, duties or charges so withheld or deducted, the Borrowers shall indemnify the Lender for any
incremental taxes, duties, charges, interest or penalties that may become payable by the Lender as
a result of any such failure.

          (b) Notwithstanding anything to the contrary contained in this Agreement, the Borrowers agree
to pay any present or future stamp or documentary taxes, any intangibles tax or any other sales,
excise or property taxes, charges or similar levies now or hereafter assessed that arise from and
are attributable to any payment made hereunder or from the execution, delivery of, or otherwise
with respect to, this Agreement or any other Documents and any and all recording fees relating to
any Documents securing any Lender Debt (“Other Taxes”).

          (c) The Borrowers shall indemnify the Lender for the full amount of any taxes, duties or
charges other than Excluded Taxes (including, without limitation, any taxes other than Excluded
Taxes imposed by any jurisdiction on amounts payable under this Section 1.08) duly paid or payable
by the Lender and any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto. Indemnification payments shall be made within 30 days from the date the
Lender makes written demand therefor. The Lender shall provide to the Borrowers a statement,
supported when applicable by documentary evidence, explaining the amount of any such liability it
incurs, which statement shall be conclusive absent manifest error.

          (d) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the
agreements and obligations of the Borrowers contained in this Section 1.08 shall survive the
payment in full of principal and interest hereunder.

               § 1.09.      Indemnities. (a) The Borrowers hereby agree to indemnify the Lender on
demand against any loss or expense which the Lender or a branch or an Affiliate of the Lender
actually incurs as a consequence of: (i) any default in payment or prepayment of the principal
amount of any Revolving Advance made to it or any portion thereof or interest accrued thereon, as
and when due and payable (at the due date thereof, by irrevocable notice of payment or prepayment,
or otherwise); (ii) the effect of the occurrence of any Event of Default upon any Revolving Advance
made to it; (iii) the payment or prepayment of the principal amount of any Revolving Advance made
to it or any portion thereof, on any day other than a Funding Date; or (iv) the failure by the
Borrowers to accept a Revolving Advance after it has requested such borrowing, conversion or
renewal; in each case including, but not limited to, any loss or expense sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or maintain such Revolving
Advance or any portion thereof; provided, however, that so long as no Event of Default is
continuing, no payment shall be made with respect to any loss or expense that is being contested in
good faith by the Borrower. The Lender shall provide to the Borrowers a statement, supported when
applicable by documentary evidence, explaining the amount of any such loss or expense it incurs,
which statement shall be conclusive absent manifest error.

4

 

          (b) The Borrowers hereby agree to indemnify and hold harmless the Lender, the Program Manager
and their respective Affiliates, (together with their respective directors, officers, agents,
representatives, shareholders, lenders, counsel and employees, each an “Indemnified Party”), from
and against any and all losses, claims, damages, costs, expenses (including reasonable counsel fees
and disbursements) and liabilities which are actually incurred by such Indemnified Party arising
out of the commitments hereunder to make the Revolving Advances, or the financings contemplated
hereby, the other Documents, the Collateral (including, without limitation, the use thereof by any
of such Persons or any other Person, the exercise by the Lender of rights and remedies or any power
of attorney with respect thereto, and any action or inaction of the Lender under and in accordance
with any Documents), the use of proceeds of any financial accommodations provided hereunder, any
investigation, litigation or other proceeding (brought or threatened) relating thereto, or the role
of any such Person or Persons in connection with the foregoing, whether or not any Indemnified
Party is named as a party to any legal action or proceeding (“Claims”). The Borrowers will not,
however, be responsible to any Indemnified Party hereunder for any Claims to the extent that a
court having jurisdiction shall have determined by a final nonappealable judgment that any such
Claim shall have arisen out of or resulted directly and principally from (i)(1) actions taken or
omitted to be taken by such Indemnified Party by reason of the bad faith, willful misconduct or
gross negligence of any Indemnified Party, or (2) in violation of any law or regulation applicable
to such Indemnified Party (except to the extent that such violation is attributable to any breach
of any representation, warranty or agreement by or on behalf of any Borrower or any of its
designees, in each case, as determined by a final nonappealable decision of a court of competent
jurisdiction), or (ii) a successful claim by a Borrower against such Indemnified Party (“Excluded
Claims”). The Indemnified Party shall give the Borrowers prompt Written Notice of any Claim
setting forth a description of those elements of the Claim of which such Indemnified Party has
knowledge. The Lender, as an Indemnified Party, shall be permitted hereunder to select counsel to
defend such Claim with the consent of the Borrowers, such consent not to be unreasonably withheld,
at the expense of the Borrowers and, if such Indemnified Party shall decide to do so, then all such
Indemnified Parties shall select the same counsel to defend such Indemnified Parties with respect
to such Claim; provided, however, that if any such Indemnified Party shall in its reasonable
opinion consider that the retention of one joint counsel as aforesaid shall result in a conflict of
interest, such Indemnified Party may, at the expense of the Borrower, select its own counsel to
defend such Indemnified Party with respect to such Claim. The Indemnified Parties and the
Borrowers and their respective counsel shall cooperate with each other in all reasonable respects
in any investigation, trial and defense of any such Claim and any appeal arising therefrom.

               § 1.10.      Telephonic Notice. Without in any way limiting the Borrowers’ obligation to
confirm in writing any telephonic notice of a borrowing, conversion or renewal, the Lender may act
without liability upon the basis of telephonic notice believed by the Lender in good faith to be
from an Authorized Representative of any Borrower or the Borrower Representative prior to receipt
of written confirmation.

               § 1.11.      Maximum Interest. (a) No provision of this Agreement shall require the
payment to the Lender or permit the collection by the Lender of interest in excess of the maximum
rate of interest from time to time permitted (after taking into account all

5

 

consideration which constitutes interest) by laws applicable to the Lender Debt and binding on the
Lender (such maximum rate being the Lender’s “Maximum Permissible Rate”).

          (b) If the amount of interest (computed without giving effect to this Section 1.11) payable on
any Interest Payment Date in respect of the preceding interest computation period would exceed the
amount of interest computed in respect of such period at the Maximum Permissible Rate, the amount
of interest payable to the Lender on such date in respect of such period shall be computed at the
Maximum Permissible Rate.

          (c) If at any time and from time to time: (i) the amount of interest payable to any Lender on
any Interest Payment Date shall be computed at the Maximum Permissible Rate pursuant to the
preceding subsection (b); and (ii) in respect of any subsequent interest computation period the
amount of interest otherwise payable to the Lender would be less than the amount of interest
payable to the Lender computed at the Maximum Permissible Rate, then the amount of interest payable
to the Lender in respect of such subsequent interest computation period shall continue to be
computed at the Maximum Permissible Rate until the amount of interest payable to the Lender shall
equal the total amount of interest which would have been payable to the Lender if the total amount
of interest had been computed without giving effect to the preceding subsection (b).

ARTICLE II.

GENERAL PAYMENT MECHANICS; GOVERNMENTAL ENTITIES PAYMENT

MECHANICS; MISDIRECTED PAYMENTS

               § 2.01.      General Payment Mechanics. (a) On or prior to the Initial Funding Date, each
of the Borrower Representative, the applicable Borrowers, the Lender and each Lockbox Bank shall
have entered into the Depositary Agreements and shall have caused the Lockbox Banks to establish
the Lender Lockboxes and the Lender Lockbox Accounts.

          (b) Each Borrower shall prepare, execute and deliver to each non-Governmental Entity who is or
is proposed to be a payor of Receivables and that has not previously received such Notice or is not
sending payments to a Lender Lockbox or Lender Lockbox Account in the manner required hereunder,
with copies to the Lender, on or prior to the Initial Funding Date, a Notice to Obligors addressed
to each such non-Governmental Entity, which Notice to Obligors shall state that all present and
future Receivables owing to such Borrower are subject to a Lien in favor of the Lender and that all
checks from such non-Governmental Entity on account of Receivables shall be sent to a Lender
Lockbox and all wire transfers from such non-Governmental Entity on account of Receivables shall be
wired directly into a Lender Lockbox Account.

          (c) Each Borrower covenants and agrees that, on and after the Initial Funding Date, all
invoices (and, if provided by such Borrower, return envelopes) to be sent to non-Governmental
Entities shall set forth only the address of a Lender Lockbox as a return address for payment of
Receivables, and only a Lender Lockbox Account with respect to wire transfers for payment of
Receivables. Each Borrower hereby further covenants and agrees to instruct and notify each of the
members of its accounting and collections staff to provide identical information in communications
with non-Governmental Entities with respect to Collections.

6

 

               § 2.02.      Governmental Entities Payment Mechanics. (a) On or prior to the Initial
Funding Date, each of the Borrower Representative, the applicable Borrowers, the Lender and each
Lockbox Bank shall have entered into the Depositary Agreements, and the Borrowers shall have caused
the Lockbox Banks to establish the Borrower Lockboxes and the Borrower Lockbox Accounts. Each
Borrower shall prepare, execute and deliver to each Governmental Entity or its fiscal intermediary
who is or is proposed to be an Obligor of Receivables and that has not previously received such
Notice or is not sending payments to a Borrower Lockboxes or a Borrower Lockbox Account in the
manner required hereunder, with copies to the Lender, on or prior to the Initial Funding Date,
Notices to Governmental Entities, which Notices to Governmental Entities shall provide that all
checks from Governmental Entities on account of Receivables shall be sent to a Borrower Lockbox and
all wire transfers on account of Receivables shall be wired directly into a Borrower Lockbox
Account.

          (b) Each Borrower covenants and agrees that, on and after the Initial Funding Date, all
invoices to be sent to Governmental Entities (and, if provided by such Borrower, return envelopes)
shall set forth only the address of a Borrower Lockbox as a return address for payment of
Receivables, and only a Borrower Lockbox Account with respect to wire transfers for payment of
Receivables. Each Borrower further covenants and agrees to instruct and notify each of the members
of its accounting and collections staff to provide identical information in communications with
Governmental Entities with respect to Collections.

          (c) Each Borrower shall maintain its Borrower Lockbox Accounts exclusively for the receipt of
payments on account of Receivables from Governmental Entities. Each Borrower shall take all
actions necessary to ensure that no payments from any Person other than a Governmental Entity shall
be deposited in the Borrower Lockbox Accounts.

               § 2.03.      Misdirected Payments; EOB’s. (a) In the event that any Borrower receives a
Misdirected Payment in the form of a check, such Borrower shall immediately send such Misdirected
Payment, in the form received by such Borrower, by overnight delivery service to the appropriate
Lender Lockbox or Borrower Lockbox, as the case may be, together with the envelope in which such
payment was received. In the event a Borrower receives a Misdirected Payment in the form of cash or
wire transfer, such Borrower shall immediately wire transfer the amount of such Misdirected Payment
directly to a Lender Lockbox Account. All Misdirected Payments shall be sent promptly upon receipt
thereof, and in no event later than the close of business, on the first Business Day after receipt
thereof.

          (b) [Intentionally Omitted.]

          (c) Each Borrower hereby agrees and consents to the Lender taking such actions, solely during
the continuation of an Event of Default, as are reasonably necessary to ensure that future payments
from the Obligor of a Misdirected Payment shall be made in accordance with the Notice previously
delivered to such Obligor, including, without limitation, to the maximum extent permitted by law,
(i) the Lender, its assigns or designees, or any member of the Lender Group executing on such
Borrower’s behalf and delivering to such Obligor a new Notice, and (ii) the Lender, its assigns or
designees, or any member of the Lender Group contacting such Obligor by telephone to confirm the instructions previously set forth in the
Notice to such Obligor. At any time, upon the Lender’s request, a Borrower shall promptly (and

7

 

in any event, within two Business Days from such request) take such similar actions as the
Lender may request..

               § 2.04.      No Rights of Withdrawal. None of the Borrowers nor the Borrower Representative
shall have any rights of direction or withdrawal with respect to amounts held in the Lender Lockbox
Accounts.

ARTICLE III.

COLLECTION AND DISTRIBUTION

               § 3.01.      Collections on the Receivables. The Lender shall be entitled with respect to
all Receivables, (i) to receive and to hold as collateral all Receivables and all Collections on
Receivables in accordance with the terms of the Depositary Agreements, and (ii) to have and to
exercise any and all rights to collect, record, track and, during the continuance of an Event of
Default, take all actions to obtain Collections with respect to all Receivables.

               § 3.02.      Distribution of Funds. On each Funding Date, and provided, that (i) no Event
of Default is continuing, and (ii) the Program Manager shall have received all Receivable
Information for the period since the immediately prior Funding Date, the Lender shall distribute
any and all Collections received in the Collection Account prior to 12:00 p.m. (New York City time)
on the immediately prior Funding Date as follows: FIRST, to the Lender, an amount in cash equal to
the Fee and Interest Shortfall, if any, until such amount has been paid in full; SECOND, to the
Lender, an amount in cash equal to the Borrowing Base Deficiency, if any, until such amount is paid
in full; THIRD, to the Lender, an amount in cash equal to the payment, if any, of principal on the
Revolving Loan due and payable on such Funding Date, until such amount has been paid in full;
FOURTH, to the Lender, an amount in cash equal to the payment of any other Lender Debt due and
payable on such Funding Date, if any, until such amount has been paid in full; FIFTH, to the
Borrower Representative on behalf of the Borrowers, all remaining amounts of Collections, as
requested.

               § 3.03.      Distribution of Funds at the Maturity Date or Upon an Event of Default. At
the Maturity Date or upon the occurrence and during the continuance of an Event of Default, subject
to the rights and remedies of the Lender pursuant to Section 4.02 hereof, the Lender shall
distribute any and all Collections as follows: FIRST, to the Lender, an amount in cash equal to
any and all accrued fees and collection costs as set forth in Sections 1.05 and 6.05, until such
amount has been paid in full; SECOND, to the Lender, an amount in cash equal to all accrued and
unpaid interest on the Revolving Loan (at the rates established under Section 1.05) until such
amount has been paid in full; THIRD, to the Lender, an amount in cash equal to the principal amount
of the Revolving Loan, until such amount is paid in full; FOURTH, to the Lender, an amount in cash
equal to the payment of any other Lender Debt due and payable on such date, until such amount has
been paid in full; and FIFTH, to the Borrower Representative on behalf of the Borrowers, all
remaining amounts of Collections.

               § 3.04.      Allocation of Servicing Responsibilities. (a) Tracking of Collections and
other transactions pertaining to the Receivables shall be administered by the Program Manager in a
manner consistent with the terms of this Agreement. The responsibilities

8

 

of the Borrowers to the Program Manager have been set forth in Exhibit X attached hereto. Each
Borrower shall cooperate fully with the Program Manager in establishing and maintaining the
Transmission of the Receivable Information, including, without limitation, the matters described in
Exhibit X, and shall provide promptly to the Program Manager such other information necessary or
desirable for the administration of Collections on the Receivables as may be reasonably requested
from time to time.

          (b) Each Borrower hereby agrees to perform the administration and servicing obligations set
forth in Exhibit X hereto with respect to its Receivables (the “Servicing Responsibilities”). The
Lender may, at any time following the occurrence of an Event of Default (and shall, without
requirement of notice to any party, upon an Event of Default resulting from the events described in
clauses (f) or (m) of Exhibit V hereto) appoint another Person to succeed any Borrower in the
performance of the Servicing Responsibilities (which replacement shall be effectuated through the
outplacement to a third-party collection firm obligated to use commercially reasonable efforts to
maximize collections in accordance with the provisions of Article 9 of the UCC).

               § 3.05.      Distributions to the Borrowers Generally. Distributions to the Borrowers on
each Funding Date shall be deposited in the Borrower Account.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES; COVENANTS;

EVENTS OF DEFAULT

               § 4.01.      Representations and Warranties; Covenants. Each Borrower makes on the Initial
Funding Date and on each subsequent Funding Date, the representations and warranties set forth in
Exhibit III hereto, and hereby agrees to perform and observe the covenants set forth in Exhibit IV
hereto.

               § 4.02.      Events of Default; Remedies. (a) If any Event of Default shall occur and be
continuing, the Lender may, by Written Notice to the Borrower Representative, take either or both
of the following actions: (x) declare the Maturity Date to have occurred, and (y) without limiting
any rights hereunder and subject to applicable law, replace any Borrower in the performance of any
or all of the Servicing Responsibilities; provided, that with respect to the Event of Default in
clause (f) of Exhibit V, the Maturity Date shall be deemed to have occurred automatically and
without notice. Upon any such declaration or designation, the Lender shall have, in addition to
the rights and remedies which it may have under this Agreement, all other rights and remedies
provided after default under the UCC and under other applicable law, which rights and remedies
shall be cumulative.

          (b) Right of Set-Off. Each Borrower hereby irrevocably authorizes and instructs the Lender
to set-off the full amount of any Lender Debt due and payable against (i) any Collections, or
(ii) the principal amount of any Revolving Advance requested on or after such
due date. No further notification, act or consent of any nature whatsoever is required prior to
the right of the Lender to exercise such right of set-off; provided, however, a member of the
Lender Group shall promptly notify the Borrower Representative: (1)  a set-off pursuant to this
Section

9

 

4.02 occurred, (2) the amount of such set-off and (3) a description of the Lender Debt that was due
and payable.

               § 4.03.      Attorney-in-Fact. Each Borrower hereby irrevocably designates and appoints
the Lender, the Program Manager and each other Person in the Lender Group, to the extent permitted
by applicable law and regulation, as such Borrower’s attorneys-in-fact, which irrevocable power of
attorney is coupled with an interest, with authority, upon the continuance of an Event of Default
(and to the extent not prohibited under applicable law and regulations) to (i) endorse or sign such
Borrower’s name to financing statements, remittances, invoices, assignments, checks, drafts, or
other instruments or documents in respect of the Collateral, including the Receivables,
(ii) notify Obligors to make payments on the Receivables directly to the Lender, and (iii) bring
suit in such Borrower’s name and settle or compromise such Receivables as the Lender or the Program
Manager may, in its discretion, deem appropriate.

ARTICLE V.

SECURITY

               § 5.01.      Grant of Security Interest. (a) As collateral security for the Borrower’s
joint and several obligations to pay the Lender Debt when due and payable and its indemnification
obligations hereunder, each Borrower hereby grants to the Lender a first priority Lien on and
security interest in and right of set-off against all of the rights, title and interest of the
Borrowers in and to: (i) to the maximum extent permitted by law, the Lockboxes and the Lockbox
Accounts; (ii) all Receivables of the Borrowers whether now owned or hereafter acquired; (iii) any
and all amounts held in any Accounts maintained at Bank of America, N.A., UMB Bank or any other
bank in respect of any of the foregoing or in compliance with any terms of this Agreement; (iv) all
shares of capital stock, limited liability company interests, membership interests and all other
interests held by a Borrower in a Subsidiary of such Borrower, whether held now or obtained in the
future by such Borrower; and (v) all proceeds of the foregoing; (all of the foregoing clauses (i)
through (v) inclusive, the “Collateral”). This Agreement shall be deemed to be a security agreement
as understood under the UCC.

          (b) Each Borrower agrees to execute, and hereby authorizes the Lender to file, one or more
financing statements or continuation statements or amendments thereto or assignments thereof in
respect of the Lien created pursuant to this Section 5.01 which may at any time be required or, in
the opinion of the Lender, be desirable, and to do so without the signature of such Borrower where
permitted by law.

ARTICLE VI.

MISCELLANEOUS

               § 6.01.      Amendments, etc. (a) No amendment or waiver of any provision of this
Agreement or consent to any departure therefrom by a party hereto shall be effective unless in a
writing signed by the Lender and the Borrowers and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given. No failure on the part of the Lender or the Borrowers to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial

10

 

exercise of any right hereunder preclude any other or further exercise thereof or the exercise of
any other right.

          (b) The parties hereto agree to make any change, modification or amendment to this Agreement
as may be requested by Fitch Ratings, Moody’s Investors Service, Inc. or any other rating agency
then rating the receivables finance program of the Lender, so long as any such change, modification
or amendment does not materially adversely affect the parties hereto (each a “Rating Agency
Amendment”).

               § 6.02.      Notices, etc. (a) All notices and other communications hereunder shall,
unless otherwise stated herein, be in writing (which may include facsimile communication) and shall
be faxed or delivered or sent by electronic mail, (i) to the Lender (and the Lender hereby agrees
that notices to or for its benefit may be delivered to the Program Manager and such delivery to the
Program Manager shall be deemed received by the Lender), at its address set forth under its name on
Schedule I hereof or at such other address as shall be designated by such party in a Written Notice
to the other parties hereto, and (ii) to any Borrower (and the Borrowers hereby agree that notices
to or for their benefit may be delivered to the Borrower Representative and such delivery to the
Borrower Representative shall be deemed received by the Borrowers) at the address set forth on
Schedule I hereof or at such other address as shall be designated by such party in a Written Notice
to the other parties hereto, (iii) to the Program Manager at the addresses set forth on Schedule I
attached hereto and as such schedule may be amended from time to time by the Lender. Notices and
communications by facsimile shall be effective when sent and confirmation received (and shall be
promptly followed by hard copy), and notices and communications sent by other means shall be
effective when received. Notices delivered through electronic communications to the extent
provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

          (b) Notices and other communications hereunder may be delivered or furnished by electronic
communication pursuant to commercially reasonable procedures mutually approved by the Borrower
Representative, the Program Manager and the Lender; provided that the foregoing shall not
apply to any notices or other communications to any party if such party has notified the other
parties that it is incapable of receiving or does not wish to receive notices and other
communications by electronic communication. Such electronic communications may be limited by the
Program Manager or the Lender to particular notices or communications. All notices and other
communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement); provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next business day
for the recipient.

               § 6.03.      Assignability. (a) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective permitted successors and assigns.

          (b) The Borrowers may not assign their rights or obligations hereunder or any interest herein
without the prior written consent of the Lender.

11

 

               § 6.04.      Further Assurances. Each Borrower shall, at its cost and expense, upon the
reasonable request of the Lender, duly execute and deliver, or cause to be duly executed and
delivered, to the Lender such further instruments and do and cause to be done such further acts as
may be necessary or proper in the reasonable opinion of the Lender to carry out more effectively
the provisions and purposes of this Agreement.

               § 6.05.      Costs and Expenses; Collection Costs. (a) The Borrowers jointly and
severally agree to pay (i) on the Initial Funding Date and (ii) with respect to costs and expenses
incurred thereafter, within seven days of invoicing therefor and after reasonable verification by
the Borrowers of such costs and expenses, which shall in no event exceed such seven-day period, all
reasonable costs and expenses in connection with the preparation, execution and delivery of this
Agreement and any waiver, modification, supplement or amendment hereto, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the Lender and its
Affiliates and all costs and expenses, if any (including reasonable counsel fees and expenses), of
the Lender and its Affiliates in connection with the waiver, amendment and enforcement of this
Agreement.

          (b) The Borrowers jointly and severally further agree to pay on the Initial Funding Date (and
with respect to costs and expenses incurred following the Initial Funding Date, within seven days
of invoicing therefor) (i) all reasonable costs and expenses incurred by the Lender or its agent in
connection with (x) semi-annual audits of the Receivables, (y) all audits conducted in connection
with any material change in the Receivables or a change in the Credit and Collection Policy (z) and
all audits conducted during the continuance of an Event of Default, (ii) all reasonable costs and
expenses incurred by the Program Manager to accommodate any significant coding or data system
changes necessitated by the Borrowers that would affect the transmission or interpretation of data
received through the interface, and (iii) all reasonable costs and expenses incurred by the Lender
for additional time and material expenses of the Program Manager resulting from a lack of either
cooperation or responsiveness of the Borrowers to agreed-upon protocol and schedules with the
Program Manager; provided, that the Borrowers have been informed of the alleged lack of cooperation
or responsiveness and has been provided the opportunity to correct such problems.

          (c) In the event that the Lender shall retain an attorney or attorneys to collect, enforce,
protect, maintain, preserve or foreclose its interests with respect to this Agreement, any other
Documents, any Lender Debt, any Receivable or the Lien on any Collateral or any other security for
the Lender Debt or under any instrument or document delivered pursuant to this Agreement, or in
connection with any Lender Debt, the Borrowers shall jointly and severally pay all of the
reasonable costs and expenses of such collection, enforcement, protection, maintenance,
preservation or foreclosure, including reasonable attorneys’ fees, which amounts shall be part of
the Lender Debt, and the Lender may take judgment for all such amounts. The attorneys’ fees
arising from such services, including those of any appellate proceedings, and all reasonable
out-of-pocket expenses, charges, costs and other fees incurred by such counsel in any way or with
respect to or arising out of or in connection with or relating to any of the events or actions
described in this Section 6.05 shall be payable by the Borrowers, on an a joint and
several basis, to the Lender on demand (with interest accruing from the eighth day following
the date of such demand, and shall be additional obligations under this Agreement). Without
limiting the generality of the foregoing, such expenses, costs, charges and fees may include:

12

 

recording costs, appraisal costs, paralegal fees, costs and expenses; accountants’ fees, costs
and expenses; court costs and expenses; photocopying and duplicating expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges; telegram charges;
telecopier charges; secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal services.

               § 6.06.      Confidentiality. (a) Each of the Borrowers and the Lender hereby acknowledge
that this Agreement, the other Documents and documents delivered hereunder, thereunder or in
connection with, including, without limitation, any information relating to the Borrowers or any
member of the Lender Group contain confidential and proprietary information. Unless otherwise
required by applicable law, the Borrowers and the Lender each hereby agrees to maintain the
confidentiality of this Agreement (and all drafts, memos and other documents delivered in
connection therewith including, without limitation, any information relating to the Borrowers or
any member of the Lender Group delivered hereunder or under the other Documents) in communications
with third parties and otherwise and to take all reasonable actions to prevent the unauthorized use
or disclosure of and to protect the confidentiality of such confidential information; provided,
that, such confidential information may be disclosed to a third party (i) subject to an agreement
to keep same confidential (1) the Borrowers’ legal counsel, accountants, auditors, investors and
creditors, (2) the Program Manager, the Parent, the Person then fulfilling the “Servicing
Responsibilities” hereunder, each member of the Lender Group, investors in and creditors of the
Lender, appropriate rating agencies with respect to the Lender, and each of their respective legal
counsel, accountants, advisers and auditors, (3) to any other Person with the written consent of
the applicable other party hereto, which consent shall not be unreasonably withheld; (ii) subject
to reasonable prior notice to the extent practicable and not prohibited by law, (1) pursuant to
subpoena or other court or legal process and (2) to the extent reasonably required in connection
with any litigation or proceeding to which any party hereto is a party; (iii) to any Person if such
information otherwise becomes available to such Person or publicly available through no fault of
any party governed by this Section 6.06; (iv) to any Governmental Entity requesting such
information; and (v) in compliance with any law, rule, regulation or order applicable to one of the
parties hereto.

          (b) The parties hereto understand and agree that the other parties may suffer irreparable harm
if any party breaches its obligations under this Section 6.06 and that monetary damages shall be
inadequate to compensate the injured party for such breach. Accordingly, each party agrees that,
in the event of a breach by such party of Section 6.06(a), the injured party, in addition and not
in limitation of its rights and remedies under law, shall be entitled to a temporary restraining
order, preliminary injunction and permanent injunction to prevent or restrain any such breach.

          (c) The Lender and the Borrowers each hereby agrees to, and the Lender shall take reasonable
steps to cause each member of the Lender Group to, comply with all applicable state or federal
statutes or regulations relating to patient medical record confidentiality.

     Notwithstanding anything to the contrary described herein, from the commencement of
discussions with respect to the transactions, each of the Borrowers and the Lender, and each of
their respective employees, representatives or other agents, are, and hereby confirm that they have
been, permitted to disclose to any and all persons, without limitations of any kind, the tax

13

 

treatment and tax structure of the transactions and all materials of any kind (including
opinions or other tax analyses) that are or have been provided to such parties related to such tax
treatment and tax structure; provided, however, that the foregoing permission to disclose the tax
treatment and tax structure does not permit the disclosure of the identity of the parties to the
transactions or the amounts paid in connection with the transactions; and provided further, that
the tax treatment and tax structure shall be kept confidential to the extent necessary to comply
with federal or state securities laws.

               § 6.07.      Term and Termination; Early Termination Fee; Prepayment Fee. (a) This
Agreement shall have an initial term commencing on the Initial Funding Date and expiring on
November 1, 2010 (the “Initial Term”). Thereafter, the term of this Agreement shall be
automatically extended for annual successive terms (each, a “Renewal Term”) commencing on the first
day following the Initial Term or a Renewal Term, as the case may be, and expiring on the date
twelve months thereafter, unless the Lender or the Borrower Representative provides Written Notice
not less than 90 days prior to the expiration of the Initial Term or a Renewal Term, as the case
may be, that such Person does not intend to extend the term of this Agreement; provided, however,
that if an Event of Default shall have occurred and be continuing at the end of the Initial Term or
a Renewal Term, as the case may be, this Agreement will not automatically be extended without the
prior written consent of the Lender. Any Borrower shall pay to the Lender on the first day of each
Renewal Term a fee equal to 0.20% of the Commitment then in effect. Upon the payment in full of
all Lender Debt, the Lender shall take all actions and deliver all assignments, certificates,
releases, notices and other documents, at the Borrowers’ expense, as the Borrowers may reasonably
request to effect such termination.

          (b) The Borrowers may terminate this Agreement at any time prior to the Maturity Date upon (i)
lapse of not less than ten days’ prior Written Notice (which shall be irrevocable) to the Lender
and (ii) payment in full of all Lender Debt, including, without limitation, all applicable accrued
and unpaid fees, charges and costs, all as provided hereunder, and in such occurrence of clauses
(i) and (ii) the commitment hereunder shall be deemed to be terminated.

          (c) Upon the termination of this Agreement (for any reason other than the default hereof by
the Lender or a Rating Agency Amendment that the Borrowers, in their reasonable judgment and in
good faith determines is unacceptable) prior to the Scheduled Maturity Date, the Borrowers shall
jointly and severally pay to the Lender an early termination fee in an amount equal to the Early
Termination Fee.

          (d) The termination of this Agreement shall not affect any rights of the Lender or any
obligations of the Borrowers arising on or prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all Lender Debt incurred on or prior
to such termination has been paid and performed in full.

          (e) Upon the giving of notice that an Event of Default has occurred and is continuing under
this Agreement, all Lender Debt shall be due and payable on the date of such Event of Default
specified in such notice. Upon the (i) the termination of all commitments and obligations of the
Lender, and (ii) the payment in full of all Lender Debt, the Lender shall, at the Borrowers’
request and sole cost and expense, execute and deliver to the Borrower

14

 

Representative such documents as the Borrower Representative shall reasonably request to
evidence such termination.

          (f) The Liens and rights granted to the Lender hereunder with respect to the Collateral shall
continue in full force and effect, notwithstanding the termination of this Agreement, until all of
the Lender Debt has been indefeasibly paid in full in cash.

          (g) Notwithstanding the foregoing, if after receipt of any payment of all or any part of the
Lender Debt, the Lender is for any reason compelled to surrender such payment to any Person or
entity because such payment is determined to be void or voidable as a preference, an impermissible
setoff, a diversion of trust funds or for any other reason, this Agreement shall continue in full
force (except that the Revolving Commitment of the Lender shall have been terminated), and the
Borrowers shall be jointly and severally liable to, and shall indemnify and hold the Lender
harmless for the amount of such payment surrendered until the Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by the Lender in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to the Lender’s rights
under this Agreement and shall be deemed to have been conditioned upon such payment having become
final and irrevocable.

               § 6.08.      No Liability of Lender. (a) Neither this Agreement nor any document executed
in connection herewith shall constitute an assumption by the Lender of any obligation to any
Obligor or any plan participant of the Obligor, or any obligation of the Borrowers.

          (b) Notwithstanding any other provision herein, no recourse under any obligation, covenant,
agreement or instrument of the Lender contained herein or with respect hereto shall be had against
any Related Person whether arising by breach of contract, or otherwise at law or in equity
(including any claim in tort), whether express or implied, it being understood that the agreements
and other obligations of the Lender herein and with respect hereto are solely its corporate
obligations; provided, however, nothing herein above shall operate as a release of any liability
which may arise as a result of such Related Person’s gross negligence or willful misconduct. The
provisions of this Section 6.08 shall survive the termination of this Agreement.

               § 6.09.      Joint and Several Liability; Designation and Appointment of Borrower
Representative. (a)   Each Borrower agrees that each reference to “the Borrowers” in this
Agreement shall be deemed to refer to each such Borrower, jointly and severally with the other
Borrowers. Each Borrower (i) shall be jointly and severally liable for the obligations, duties and
covenants of each other such Borrower under this Agreement and the acts and omissions of each other
such Borrower including, without limitation, under Article VI hereof, and (ii) jointly and
severally makes each representation and warranty for itself and each
other such Borrower under this Agreement. Notwithstanding the foregoing, if, in any action to
enforce the Lender Debt against any Borrower or any proceeding to allow or adjudicate a claim
hereunder, a court of competent jurisdiction determines that enforcement of the joint and several
obligations of all of the Borrowers against such Borrower for the full amount of the Lender Debt is
not lawful under, or would be subject to avoidance under Section 548 of the United States

15

 

Bankruptcy Code or any applicable provision of Federal or state law, the liability of such Borrower
hereunder shall be limited to the maximum amount lawful and not subject to avoidance under such
law.

          (b) Each Borrower hereby irrevocably designates and appoints BioScrip Pharmacy Services, Inc.
as its exclusive representative under this Agreement (the “Borrower Representative”) to deliver and
receive all notices and Written Notices on behalf of such Borrower and to receive on behalf of such
Borrower and distribute all distributions of the Borrowers in accordance with the respective
interests of the Borrowers and to take such other actions as are set forth in this Agreement. Each
Borrower hereby unconditionally releases the Lender, the Program Manager and any member of the
Lender Group with respect to any claims, obligations or duties that such Persons may otherwise have
been deemed to possess absent the designation and appointment contained in this Section 6.09(b)

               § 6.10.      Entire Agreement; Severability. (a) This Agreement, including all
exhibits and schedules hereto and the documents referred to herein, embody the entire agreement and
understanding of the parties concerning the subject matter contained herein. This Agreement
supersedes any and all prior agreements and understandings between the parties, whether written or
oral.

          (b) If any provision of this Agreement shall be declared invalid or unenforceable, the parties
hereto agree that the remaining provisions of this Agreement shall continue in full force and
effect.

               § 6.11.      GOVERNING LAW. THIS AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF
THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST GRANTED HEREUNDER, OR REMEDIES RELATED THERETO, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

               § 6.12.      WAIVER OF JURY TRIAL, JURISDICTION AND VENUE. EACH OF THE PARTIES HERETO
HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION WITH RESPECT TO ANY
MATTER RELATED TO THIS AGREEMENT, AND HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE
AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK CITY, NEW YORK IN CONNECTION WITH ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN ANY SUCH LITIGATION, EACH OF
THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT
SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE

16

 

PARTIES HERETO AT THEIR ADDRESSES SET FORTH ON THE SIGNATURE PAGE HEREOF.

                   § 6.13 Execution in Counterparts. This Agreement may be executed in counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken together shall
constitute one and the same agreement.

                   § 6.14 No Proceedings. The Borrowers hereby agree that they will not institute against the Lender
any proceeding of the type referred to in clause (f) of Exhibit V so long as any senior
indebtedness issued by the Lender shall be outstanding or there shall not have elapsed one year
plus one day since the last day on which any such senior indebtedness shall have been outstanding.

                   § 6.15 Survival of Termination. All indemnities contained herein shall survive the termination
hereof unless otherwise provided. In addition, the provisions of Sections 4.02(b), 6.05, 6.06,
6.08, 6.09, 6.14 and this Section 6.15 shall survive any termination of this Agreement.

                   § 6.16 Addition or Removal of Borrowers. (a) Subject to the conditions set forth below, upon
30-days’ prior written request from time to time of the Borrower Representative, the Lender hereby
agrees to the adding of other Persons designated by the Borrower Representative as additional
Borrowers hereunder (each such event, an “Addition”); provided, that, in the reasonable commercial
judgment of the Lender and its designees and assignees):

               (i) the Lender, in its commercially reasonable discretion, shall have agreed in writing to such
Addition;

               (ii) no Event of Default is existing and the proposed Addition shall not cause, or not reasonably
be expected to cause, an Event of Default unless waived in writing by the Lender;

               (iii) as of the effective date of such Addition, such applicable conditions precedent set forth in
Exhibit II hereto shall have been fulfilled with respect to such Person;

               (iv) as of the effective date of such Addition, each applicable representation and warranty set
forth in Exhibit III hereto shall be true and correct in all material respects with respect to such
Person;

               (v) the Lender shall have received a certificate from the Program Manager stating that all
computer linkups and interfaces necessary or desirable, in the sole
discretion of the Program Manager, to effectuate the transactions and information transfers
under this Agreement with respect to the Addition are fully operational to the satisfaction of the
Program Manager and the Program Manager shall have received an interface fee for each additional
computer interface;

17

 

               (vi) such Person shall execute such agreements, instruments and documents as the Purchaser may
reasonably request, in form and substance satisfactory to the Purchaser to effectuate the Addition,
including without limitation (x) the appropriate subscription agreement in the form of Exhibit XV
attached (the “Subscription Agreement”) to this Agreement whereby such Person agrees to be bound by
the terms of this Agreement, and (y) financing statements covering Collateral, including
Receivables, of such Person; and

               (vii) the Lender shall have been provided with such information (whether financial or otherwise) and
time necessary and desirable (in the sole discretion of the Lender) to make the assessments
hereunder; and

          (b) Subject to the conditions set forth below, upon 30-days’ prior written request from time to
time of the Borrower Representative, the Lender hereby agrees to the removal of any Borrower
designated by the Borrower Representative from time to time (each such event, a “Removal”);
provided, that, in the reasonable commercial judgment of the Lender:

               (i) the Lender, in its sole discretion, shall have agreed in writing to such Removal;

               (ii) no Event of Default is existing and the proposed Removal shall not cause, or not reasonably be
expected to cause, an Event of Default;

               (iii) after giving effect to such Removal, the aggregate minimum Tangible Net Worth of the remaining
Borrowers hereunder shall (x) equal at least $5,000,000, and (y) not have decreased as a result of
the Removal (combined with all other Removals) by greater than 25%;

               (iv) such Person shall execute such agreements, instruments and documents as the Lender may
reasonably request, in form and substance satisfactory to the Lender to effectuate the Removal,
including without limitation an amendment to this Agreement effectuating such Removal;

               (v) the Lender, have been provided with such information (whether financial or otherwise) and time
necessary and desirable (in the sole discretion of the Lender) to make the assessments hereunder;
and

               (vi) the Lender shall have received all Collections with respect to Eligible Receivables (that have
not become Denied Receivables) attributable to such Person.

          (c) Notwithstanding any Removal of a Person as a Borrower made in accordance with the provisions
of Section 6.16(b), the provisions of Article IV (and the representations and warranties with
respect thereto) and Sections 1.08, 1.09, 6.05, 6.06. 6.08 and 6.14 shall, with respect to such
Person, survive such Removal.

               § 6.17 USA PATRIOT ACT. Each Borrower acknowledges and consents that, in accordance with the
reporting requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October
26, 2001)) (the “Act”), the Lender may require

18

 

information to obtain, verify and record information that identifies such Borrower, which information
includes the name and addresses of such Borrower and its principals, as well as any other information
that will allow the Lender to identify such Borrower and its principals in accordance with, and otherwise
comply with the requirements of, the Act.

19

 

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

HFG HEALTHCO-4 LLC,

as Lender

By: HFG Healthco-4, Inc.,

a member

	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	BIOSCRIP INFUSION SERVICES, INC.	 	MIM FUNDING, LLC
	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Name:
	 	 	 	Name:
	 

	 	Title:
	 	 	 	Title:
	 
	 	 	 	 	 	 
	BIOSCRIP PBM SERVICES, LLC	 	BIOSCRIP PHARMACY SERVICES, INC.
	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Name:
	 	 	 	Name:
	 

	 	Title:
	 	 	 	Title:
	 
	 	 	 	 	 	 
	NATURAL LIVING, INC.	 	BIOSCRIP PHARMACY (NY), INC.
	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Name:
	 	 	 	Name:
	 

	 	Title:
	 	 	 	Title:
	 
	 	 	 	 	 	 
	BIOSCRIP INFUSION SERVICES, LLC	 	BIOSCRIP PHARMACY, INC.
	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	Name
	 	 	 	Name:
	 

	 	Title
	 	 	 	Title:

 

 

EXHIBIT I

DEFINITIONS

          As used in the Agreement (including its Exhibits and Schedules), the following terms shall
have the following meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):

          “Accounts” means all accounts (including, without limitation, all Receivables), all general
intangibles, related goodwill and all other obligations for the payment of money arising out of a
Borrower’s sale of merchandise or rendition of services in the ordinary course of business, whether
now existing or hereafter arising, including all rights to reimbursement under any agreements with
and payments from Obligors and all proceeds of any of the foregoing.

          “Accounts Receivable Turnover” means, at any date, for the 12-month period then most recently
ended, the product obtained by multiplying (a) the quotient obtained by dividing (i) the average of
the Receivables of the Borrowers over the three month period ending on such date, by (ii) average
revenue of the Borrowers generated from Receivables over the three month period ending on such
date, by (b) 365 days.

          “Accrued Amounts” means, as at any date, the aggregate amount of accrued but unpaid (whether
or not due and payable) (a) interest, (b) Non-Utilization Fees, and (c) A/R Fees.

          “Acquisition” means the acquisition by a Borrower of a business or of businesses through
asset purchase, stock purchase, assumption of obligations, merger, consolidation or similar
business combination.

          “Addition” has the meaning set forth in Section 6.16(a).

          “Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by or is under common control with such Person or is a director or
officer of such Person. For the purposes of this definition, “control”, when used with respect to
any specified Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by contract or
otherwise.

          “Agreement” has the meaning set forth in the preamble hereto.

          “Applicable Margin” for any Interest Period, means the relevant amount, based on the
Debt/EBITDA Ratio for the fiscal quarter ended immediately prior to the commencement of such
Interest Period, set forth in the table below as the “Applicable Margin”:

	 	 	 	 	 
	Debt/EBITDA Ratio is:	 	Applicable Margin:
	< 1.00:1.00
	 	1.00	%	 
	3 1.00:1.00 but <1.50:1.00
	 	1.45	%	 
	> 1.50:1.00 but < 2.00:1.00
	 	1.75	%	 
	3  2.00:1.00
	 	2.00	%	 

I-1

 

          “A/R Fee” means the account receivable tracking fee, due on the first Business Day of each
Month, in an amount equal to:

	 	 	 	 	 
	 

	 	AORA x TD x 0.25%
	 	 
	 

	 	 	 	 
	 

	 	 360 	 	 

               where:

          AORA = The average outstanding amount of the Revolving Loan for the prior Month, calculated as
the arithmetic average of all daily balances

          TD = The actual amount of days in such prior Month.

          “Authorized Representative” means each Person designated from time to time, as appropriate, in
a Written Notice by the Borrowers to the Lender for the purposes of giving notices of borrowing,
conversion or renewal of Revolving Advances, which designation shall continue in force and effect
until terminated in a Written Notice to the Lender.

          “Availability” means, at any date of determination, the amount of the difference between (i)
the Borrowing Limit and (ii) the Lender Debt.

          “Borrower” and “Borrowers” has the meaning set forth in the preamble hereto.

          “Borrower Account” means initially account # 000009069730 at Bank of America, N.A., ABA #
011500010, or, thereafter, such other bank account designated by the Borrower Representative by
Written Notice to the Lender and the Program Manager from time to time.

          “Borrower Lockbox” means the lockboxes set forth on Schedule IV hereto to receive checks with
respect to Receivables payable by Governmental Entities.

          “Borrower Lockbox Account” means the accounts set forth on Schedule IV hereto in the name of
the Borrowers and associated with the Borrower Lockbox established and controlled by the Borrowers
to deposit Collections from Governmental Entities, including Collections received in the Borrower
Lockbox and Collections
received by wire transfer directly from Governmental Entities, all as more fully set forth in
the Depositary Agreement.

          “Borrower Representative” has the meaning set forth in Section 6.09(b).

          “Borrower’s Certificate” has the meaning set forth in Section 1.03.

I-2

 

          “Borrowing Base” means, as of any time, an amount equal to (i) 85% of the Expected Net Value
of Eligible Receivables as of such time (subject to adjustment upward to 90% upon the request of
the Borrower Representative and the approval of the Lender based upon mutually acceptable terms,
such approval not to be unreasonably withheld) in each case and at all times as determined by
reference to and as set forth in the most recent Borrowing Base Certificate delivered to the Lender
by the Borrowers as of such time pursuant to Exhibit IV, clause (k)(i) minus (ii) Accrued Amounts
and unpaid expenses under Sections 1.05 and 6.05 as of such time.

          “Borrowing Base Certificate” means a certificate (which may be sent by Transmission) signed by
the Borrowers and the Borrower Representative, substantially in the form of Exhibit VII-A hereto,
which shall provide the most recently available information (including updated information) with
respect to the Eligible Receivables of the Borrowers (segregated by the classes set forth in
Schedule V attached hereto) that is set forth in the general trial balance of each of the
Borrowers.

          “Borrowing Base Deficiency” means, as of any date, the positive difference, if any, between
(x) the Revolving Loan, minus (y) the Borrowing Base indicated on the most recent Borrowing Base
Certificate.

          “Borrowing Limit” has the meaning set forth in Section 1.02.

          “Business Day” means any day on which banks are not authorized or required to close in New
York City, New York.

          “ Capital Expenditures” means, with respect to any Person for any period, the aggregate of all
expenditures (including, without limitation, obligations created under Capital Leases in the year
in which created but excluding payments made thereon) of any Person in respect of the purchase or
other acquisition of fixed or capital assets.

          “Capital Lease” means, as applied to any Person, any lease of any Property (whether real,
personal or mixed) by that Person as lessee, the obligations of which are required, in accordance
with GAAP, to be capitalized on the balance sheet of that Person.

          “Chief Financial Officer” means the Chief Financial Officer or the Vice President — Finance of
the Borrowers.

          “Change of Control” means any Borrower shall have consummated or have entered into any
transaction or agreement which shall result in the consummation of (a) the sale, lease, transfer,
assignment or other disposition of all or substantially all of the assets or Property of a Borrower to
any Person or group (as such term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended); (b) the liquidation or dissolution of (or the adoption of a plan of liquidation by) a Borrower;
(c) the merger or consolidation of any Borrower into or with another Person; (d) the acquisition of all or a
substantial portion of the assets of any Person; or (e) any transaction the result of which is that
any Person or group (as such term is defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended)

I-3

 

beneficially owns, directly or indirectly, more of the voting stock of a Borrower
than is owned on the date hereof, other than a Permitted Acquisition.

          “Claims” has the meaning set forth in Section 1.09(b).

          “CMS” means the Centers for Medicare and Medicaid Services of the United States Department of
Health and Human Services.

          “Collateral” has the meaning set forth in Section 5.01(a).

          “Collection Account” means the Lender’s account maintained at The Bank of New York, ABA #
021000018, GLA 111565, For Further Credit to Account #205779, Ref: HEALTHCO-4/LCHI, Attn: Scott
Tepper, or such other bank account designated by the Lender from time to time.

          “Collections” means all cash collections, wire transfers, electronic funds transfers and other
cash proceeds of Receivables deposited in or transferred to the Collection Account, including,
without limitation, all cash proceeds thereof.

          “Consolidated Capital Expenditure” means, for any period, the Capital Expenditures of the
Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with
GAAP.

          “Consolidated EBITDA” means, for any period, the EBITDA of the Parent and its Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP.

          “Consolidated Fixed Charge Coverage Ratio” for any period, means the ratio of (x) Consolidated
EBITDA of the Parent and its Subsidiaries for such period, to (y) the sum of each of the following
items to the extent paid or payable by the Borrowers in cash during such period: (i) the current
portion long-term Debt, plus (ii) the current portion of Capital Leases, plus (iii) Consolidated
Capital Expenditures (to the extent not funded by or being acquired under permitted purchase money
loans or capital leases), plus (iv) Consolidated Interest Expense, plus (v) taxes, plus (vi)
payment of dividends, distributions, advances, and loans to officers, Affiliates, and shareholders.

          “Consolidated Interest Expense” means, for any period, the Interest Expense of the Parent and
its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

          “Consolidated Liquidity” means, at any date of determination, the positive difference, if any,
between (x) the Borrowing Base (without regard to the Revolving Commitment), and (y) the principal
amount then outstanding under the Revolving Loan.

          “Consolidated Net Worth” means, at any date of determination, an amount equal to (a) the total
assets of the Parent and its Subsidiaries on a consolidated basis minus (b) the Total
Liabilities.

I-4

 

          “Consolidated Tangible Net Worth” means with respect to the Parent and its Subsidiaries
determined on a consolidated basis, at any date of determination, (i) the sum of capital stock,
capital in excess of par or stated value of shares of its capital stock, retained earnings and any
other account which, in accordance with GAAP constitutes stockholder’s equity, less (ii) treasury
stock and any minority interest in subsidiaries, less (iii) the amount of any write-up subsequent
to the date of the Original Agreement in the value of any asset above the cost or depreciated cost
thereof and less (iv) all intangible assets, including, without limitation, goodwill, which would
be classified as such in accordance with GAAP.

          “Consolidated Total Net Income” means, for any period, the total Net Income of the Parent and
its Subsidiaries for such period, determined on a consolidated basis.

          “Consolidated Working Capital” means at any date of determination, an amount equal to Current
Assets minus Current Liabilities.

          “Credit and Collection Policy” means those receivables credit and collection policies and
practices of the Borrowers in effect on the date of the Agreement and attached as Schedule II
hereto.

          “Current Assets” means, at any date of determination, the aggregate amount of all assets of
the Parent and its Subsidiaries on a consolidated basis that would be classified as current assets
at such date, computed and calculated in accordance with GAAP, adjusted for prepaid expenses and
“other current assets”.

          “Current Liabilities” means, at any date of determination, the aggregate amount of all
liabilities of the Parent and its Subsidiaries on a consolidated basis (including tax and other
proper accruals) which would be classified as current liabilities at such date, computed and
calculated in accordance with GAAP and shall exclude any borrowings under the Agreement.

          “Debt” means as to any Person (without duplication): (i) all obligations of such party for
borrowed money, (ii) all obligations of such party evidenced by bonds, notes, debentures, or other
similar instruments, (iii) all obligations of such party to pay the deferred purchase price of
property or services (other than trade payables in the ordinary course of business), (iv) all
Capital Leases of such party, (v) all Debt of others directly or indirectly Guaranteed (which term
shall not include endorsements in the ordinary course of business) by such party, (vi) all
obligations secured by a Lien existing on property owned by such party, whether or not the
obligations secured thereby have been assumed by such party or are non-recourse to the credit of such party (but only to the
extent of the value of such property), and (vii) all reimbursement obligations of such party
(whether contingent or otherwise) in respect of letters of credit, bankers’ acceptance and similar
instruments.

          “Debt/EBITDA Ratio” means the ratio, as determined as at the end of each fiscal quarter of the
Parent, of (x) Debt of the Borrowers to (y) Consolidated EBITDA for the immediately prior fiscal
quarter period considered on an annualized basis (by multiplying such amount by 4); provided that
restructuring charges not exceeding the positive difference, if any, between (i) $5,000,000 minus
(ii) restructuring charges excluded from the calculation of the

I-5

 

Debt/EBITDA Ratio in the three immediately prior fiscal quarters, shall be added back to Consolidated EBITDA
to the extent that such charges had reduced Consolidated EBITDA.

          “Default” means an event, act or condition which with the giving of notice or the lapse of
time, or both, would constitute an Event of Default.

          “Defaulted Receivable” means a Receivable (i) as to which the Obligor thereof or any other
Person obligated thereon has taken any action, or suffered any event to occur, of the type
described in paragraph (f) of Exhibit V, or (ii) which, consistent with the Credit and Collection
Policy, would be written off the applicable Borrower’s books as uncollectible.

          “Delinquent Receivable” means a Receivable (a) that has not been paid in full on or following
the 180th day following the date of original invoicing thereof, or (b) that is a Denied Receivable.

          “Denied Receivable” means any Receivable as to which any related representations or warranties
have been discovered at any time to have been breached.

          “Depositary Agreements” means those certain Depositary Account Agreements, dated the date
hereof, among the applicable Borrowers, the Lender, and each Lockbox Bank, in substantially the
form attached hereto as Exhibit XIII, as such agreement may be amended, modified or supplemented
from time to time in accordance with its terms.

          “Documents” means this Agreement, the Depositary Agreement, each Borrower’s Certificate, each
Borrowing Base Certificate, and each other document or instrument now or hereafter executed and
delivered to the Lender by or on behalf of any Borrower pursuant to or in connection herewith or
therewith.

          “Early Termination Fee” as a percentage of the Commitment, means (i) from September 26, 2007
until and including November 1, 2007, 1.50%, (ii) from November 2, 2007 until and including
November 1, 2008, 1.00%, (iii) from November 2, 2008 until and including November 1, 2009, 0.50%,
and (iv) from November 2, 2009 until November 1, 2010, 0.25%.

          “EBITDA” means, for any period, the sum (determined without duplication on a consolidated
basis) for the Borrowers and Subsidiaries of (a) net income (or net loss) of the Borrowers and
Subsidiaries (calculated before extraordinary items), plus (b) Consolidated Interest Expense for
such period deducted in the determination of such net income (or net loss) plus (c) depreciation,
amortization and other non-cash items for such period to the extent included in the determination
of net income (or net loss) (which shall include, to the extent included in the determination of
net income (or net loss), non-cash option expenses in accordance with GAAP under Financial
Accounting Standards Board Section 123(R)) plus or minus (d) all taxes accrued for such period on
or measured by income to the extent deducted or credited in determining such net income (or net
loss) minus or plus (e) gains (or losses) from asset dispositions or liquidations outside of the
normal course of business to the extent included in determining such net income (or net loss) plus
(f) losses due to asset impairment.

          “Eligibility Criteria” means the criteria and basis for determining whether a

I-6

 

Receivable qualifies as an Eligible Receivable, all as set forth in Exhibit VIII hereto, as such
Eligibility Criteria may be modified from time to time by the Lender in its good faith discretion
and based on historical performance and other Borrower-related or Obligor-related factually-based
credit criteria upon Written Notice to the Borrower Representative.

     “Eligible Investments” means one or more of the following:

          (a) direct obligations of, and obligations fully guaranteed by, the United States of
America, or any agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America, that are
non-callable, that have a fixed dollar amount of principal due at maturity that cannot vary
or change, and, if rated by Standard & Poor’s, do not have an ‘r’ highlighter affixed to its
rating; or

          (b) securities bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States of America or any State thereof which have
a long-term unsecured debt rating in the highest rating category of at least two rating
agencies; and, in the case of Standard & Poor’s rating, that such securities do not have an
‘r’ highlighter affixed to its rating; or

          (c) commercial paper with (i) an original maturity of less than 270 days, (ii) a rating
in the highest rating category of at least two rating agencies, and (iii) if rated by
Standard & Poor’s, no ‘r’ highlighter affixed to its rating; or

          (d) certificates of deposit of, banker’s acceptances issued by, or federal funds sold
by, any depository institution or trust company (including any bank incorporated under the
laws of the United States of America or any State thereof and subject to supervision and
examination by federal and/or state authorities) so long as at the time of such investment
or contractual commitment providing for such investment such depository institution or trust
company has a short-term unsecured debt rating in the highest rating category (without
regard to modifiers such as “+” or “-”) of at least two rating agencies and provided, that
each such investment has an original maturity of less than 365 days, and provided, further
that in the case of a Standard & Poor’s rating, that such investment does not have an ‘r’
highlighter affixed to its rating; or

          (e) repurchase agreements governing direct general obligations of the United States of
America having a maturity of not more than 60 days from the date of acquisition with an
obligor having the highest rating category of at least two rating agencies at the time of
such investment provided, that in the case of a Standard & Poor’s rating, that such
investment does not have an ‘r’ highlighter affixed to its rating; or

          (f) shares of no-load money market funds (i) rated in the highest rating category by at
least two rating agencies or (ii) the assets of which are invested solely in investments of
the type specified in clauses (a), (b), (c) or (d) of the definition of Eligible
Investments.

     “Eligible Receivables” means Receivables that satisfy the Eligibility Criteria.

I-7

 

          “Employee Benefit Plan” means any employee benefit plan within the meaning of § 3(3) of ERISA
maintained by any Borrower, any of its respective ERISA Affiliates, or with respect to which any of
them have any liability.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

          “ERISA Affiliate” means any entity which is under common control with any Borrower within the
meaning of ERISA or which is treated as a single employer with such Borrower under the Internal
Revenue Code of 1986, as amended.

          “Event of Default” means any of the events specified in Exhibit V hereto.

          “Excluded Claims” has the meaning set forth in Section 1.09(b).

          “Excluded Taxes” means taxes upon or determined by reference to the Lender’s net income
imposed by the jurisdiction in which such Lender is organized or has its principal or registered
office.

          “Expected Net Value” means, with respect to any Eligible Receivable, the gross unpaid amount
of such Receivable on date of creation thereof, times the Net Value Factor.

          “Fee and Interest Shortfall” as of any Funding Date, shall mean the amount, if any, of fees or
interest that is due and payable and has not otherwise been paid in full by the Borrower.

          “Funding Date” means, at the sole discretion of the Lender, each Business Day after the
Initial Funding Date until the Maturity Date or such other dates as the Lender may establish from
time to time, provided that there shall be a minimum of one Funding Date per week for the Borrowers
to be able to borrow.

          “GAAP” means generally accepted accounting principles in the United States of America, applied
on a consistent basis as set forth in Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants or in statements of the Financial Accounting Standards
Board or the rules and regulations of the Securities and Exchange Commission or their respective
successors and which are applicable in the circumstances as of the date in question.

          “Governmental Entity” means the United States of America, any state, any political subdivision
of a state and any agency or instrumentality of the United States of America or any state or
political subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government. Payments from Governmental
Entities shall be deemed to include payments governed under the Social Security Act (42 U.S.C.
§§ 1395 et seq.), including payments under Medicare, Medicaid and TRICARE/CHAMPUS, and payments
administered or regulated by CMS.

          “Guaranty” by any Person means any obligation, contingent or otherwise, of such

I-8

 

Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay), or
(ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee of such Debt or other obligation of the
payment thereof or to protect the obligee against loss in respect thereof (in whole or in part),
provided that the term Guaranty shall not include endorsements for collection or deposit in the
ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

          “Indemnified Party” has the meaning set forth in Section 1.09.

          “Initial Funding Date” means the date of the initial Revolving Advance hereunder.

          “Initial Term” has the meaning set forth in Section 6.07(a).

          “Interest Expense” means, with respect to any Person for any period, the gross interest
expense of such Person (exclusive of interest income) during such period as determined in
accordance with GAAP.

          “Interest Payment Date” means the last day of each Interest Period, or if such day is not a
Business Day, the next succeeding Business Day.

          “Interest Period” means, with respect to a Revolving Advance, the period commencing on, as the
case may be, the borrowing or conversion date with respect to such Revolving Advance and ending one
month thereafter; provided, that no Interest Period may be selected that expires later than the
Scheduled Maturity Date; and provided, further, that any Interest Period that begins on the last
Business Day of a Month (or on a day for which there is no numerically corresponding day in the
Month at the end of the Interest Period) shall, subject to the foregoing proviso, end on the last
Business Day of a Month.

          “Invoice
Date” means, with respect to any Receivable, the date set forth on the related invoice or statement.

          “Last Service Date” means, with respect to any Receivable that is not a Rebate Receivable, the
earlier of (i) the date on which the applicable Borrower has received the data required to bill
such Receivable and (ii) the last day for submission of the related claim under any related
contracts.

          “Lender” has the meaning set forth in the preamble hereto.

          “Lender Debt” means, without duplication, and includes any and all amounts due, whether now
existing or hereafter arising, under the Agreement, including, without limitation, any and all
principal, interest, penalties, fees, charges, premiums, indemnities and costs owed or owing to the
Lender, the Program Manager or the Program Manager by any Borrower, or any

I-9

 

Affiliate of a Borrower, arising under or in connection with this Agreement or the Depositary
Agreement, in each instance, whether absolute or contingent, direct or indirect, secured or
unsecured, due or not, arising by operation of law or otherwise, and all interest and other charges
thereon, including, without limitation, post-petition interest whether or not such interest is an
allowable claim in a bankruptcy.

          “Lender Group” means (i) the Lender, the Program Manager and the Program Manager, and (ii) the
Lender’s agents and delegates identified from time to time to effectuate this Agreement.

          “Lender Lockbox” means the lockboxes located at the address set forth on Schedule IV to
receive checks with respect to Receivables payable by Insurers.

          “Lender Lockbox Account” means the accounts at the Lockbox Bank as set forth on Schedule IV as
associated with the Lender Lockbox and established by the Borrowers to deposit Collections,
including Collections received in the Lender Lockbox and Collections received by wire transfer
directly from Insurers, all as more fully set forth in the Depositary Agreement.

          “LIBOR” for any Interest Period, means the rate per annum established by the Program Manager
two Business Days prior to the first day of each Interest Period based on an annualized 30-day
interest rate (calculated on the basis of actual days elapsed over a 360-day year) equal to the
offered rate for deposits in U.S. dollars in the London interbank market which is published by the
British Bankers’ Association and currently appears on the Reuters Screen LIBO Page (or any
successor page) as of 11:00 a.m. (London time) on such day, provided that if more than one rate is
specified on Reuters Screen LIBO Page, LIBOR shall be a rate per annum equal to the arithmetic mean
of all such rates

          “Lien” means any lien, mortgage, security interest, tax lien, pledge, hypothecation,
assignment, preference, priority, other charge or encumbrance, or any other type of preferential
arrangement of any kind or nature whatsoever by or with any Person (including, without limitation,
any conditional sale or title retention agreement), whether arising by contract, operation of law,
or otherwise.

          “Lockbox” means either the Borrower Lockbox or the Lender Lockbox, as the context requires.

          “Lockbox Account” means either the Borrower Lockbox Account or the Lender Lockbox Account,
each associated with the respective Lockbox to deposit Collections, including Collections received
by wire transfer directly, all as more fully set forth in the Depositary Agreement.

          “Lockbox Banks” means each of Bank of America, N.A. and UMB Bank as lockbox bank under the
applicable Depositary Agreement

          “Material Adverse Effect” means any event, condition, change or effect that (a) has a
materially adverse effect on the business, Properties, operations or financial condition of (i) the
Borrowers on a consolidated basis, (ii) any Borrower, or the Parent on a consolidated basis,

I-10

 

(b) materially impairs the ability of the Borrowers on a consolidated basis or any Borrower to
perform their respective obligations under this Agreement or any other Document, (c) materially
impairs the validity or enforceability of, or materially impairs the rights, remedies or benefits
available to the Lender under this Agreement or any other Document

          “Maturity Date” means the earlier of (a) the Scheduled Maturity Date, and (b) the occurrence
of an Event of Default unless such event is waived by the Lender in writing.

          “Maximum Permissible Rate” has the meaning set forth in Section 1.11(a).

          “Misdirected Payment” means any form of payment in respect of a Receivable made by an Obligor
in a manner other than as provided in the Notice sent to such Obligor.

          “Month” means a calendar month.

          “Multiemployer Plan” means a plan, within the meaning of § 3(37) of ERISA, as to which any
Borrower or any ERISA Affiliate contributed or was required to contribute within the preceding five
years.

          Net Income” means, for any period, for any Person, the net income (loss) of such Person for
such period determined in accordance with GAAP.

          “Net Value Factor” means, initially, the percentages set forth on Schedule V attached hereto,
as such percentages may be adjusted, upwards or downwards on a prospective basis with Written
Notice to the Borrower, in the good faith discretion of the Lender but in consultation with the
Borrowers, based on (i) the historical actual final collections received on the Receivables within
180 days of the Invoice Date of such Receivables (without regard to the factors set forth in the
definition of “Defaulted Receivable”), divided by (ii) the gross value of such Receivables.

          “Non-Utilization Fee” has the meaning set forth in Section 1.05(c).

          “Notice to Governmental Entities” means a notice letter on a Borrower’s corporate letterhead
in substantially the form attached hereto as Exhibit IX-A.

          “Notice to non-Governmental Entities” means a notice letter on a Borrower’s corporate
letterhead in substantially the form attached hereto as Exhibit IX-B.

          “Notice to Obligors” means either a Notice to Governmental Entities or a Notice to
non-Governmental Entities, as the context requires.

          “Obligor” means each Person who is responsible for the payment of all or any portion of a
Receivable.

          “Original Agreement” has the meaning set forth in the preamble.

          “Other Taxes” has the meaning set forth in Section 1.08.

I-11

 

          “Parent” means BioScrip, Inc.

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

          “Permitted Acquisition” means an Acquisition; provided that (1) both before and immediately
after giving effect to such proposed Acquisition (including without limitation, compliance with the
financial covenants on a pro forma basis after giving effect to the proposed Acquisition), no
Default or Event of Default has or will occur or be continuing, (2) the proposed Acquisition is of
a business or businesses involving the rendition of pharmacy benefit (including specialty pharmacy
products and services) and/or formulary management services or rebate administration services, the
sale of medical and/or pharmaceutical products or the rendition of medical services, (3) the
proposed Acquisition is accretive to both (x) EBITDA and (y) the sum of Net Income plus the
amortization of goodwill related to the Acquisition of the acquiring Borrower, (4) the proposed
Acquisition is not subject to, and is not reasonably likely to subject any Borrower to, any
governmental investigation, material litigation or other material liabilities for which adequate
reserves are not available or have not been taken, (5) the applicable Borrower is the surviving
Person, (6) such surviving Person shall have a Tangible Net Worth that is no less than the Tangible
Net Worth of such Borrower, (7) the applicable Borrower has delivered to the Lender and Healthco-4
financial statements for the trailing 12 month period prior to the Acquisition on a pro forma basis
giving effect to the proposed Acquisition and such financial statements show that the Acquisition
would not cause and would not be reasonably likely to cause an Event of Default, (8) with respect
to any single Acquisition (i) the Total Consideration (as hereinafter defined) does not exceed
$50,000,000 and (ii) the cash paid in connection with such Acquisition, together with any
liabilities assumed in connection therewith, does not exceed $25,000,000, and (9) with respect to
any two or more Acquisitions in a 12-month period (i) the aggregate Total Consideration does not
exceed $70,000,000 and (ii) the aggregate cash paid in connection with such Acquisitions, together
with any liabilities assumed in connection therewith, does not exceed $55,000,000. For the
purposes hereof, the “Total Consideration” of an Acquisition shall mean the aggregate of all cash
paid, liabilities assumed and the fair market value of any equity interests issued as consideration
for such Acquisition.

          “Permitted Lien” means a Lien that is expressly subordinated in writing to the Lien created
hereunder in a manner acceptable to the Lender, in its sole discretion, and, with respect to any
such Lien existing on the Initial Funding Date, is described on Schedule III hereto.

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

          “Pledge Agreement” means that certain Pledge Agreement, dated as of December 29, 2006 made by
Parent and each Borrower in favor of the Lender, as such agreement may be amended, modified or
supplemented from time to time in accordance with its terms.

          “Program Manager” means (i) Healthcare Finance Group, Inc. or (ii) any other Person then
identified by the Lender to the Borrower Representative as being authorized to

I-12

 

provide administrative services with respect to the Lender and the Lender’s finance, funding
and collection of healthcare-related receivables.

          “Property” means property of all kinds, movable, immovable, corporeal, incorporeal, real,
personal or mixed, tangible or intangible (including, without limitation, all rights relating
thereto), whether owned or acquired on or after the date of this Agreement.

          “Rating Agency Amendment” has the meaning set forth in Section 6.01(b).

          “Rebate Receivable” means a Receivable, the Obligor of which is a manufacturer or distributor
of pharmaceutical products.

          “Receivable Information” means the information listed on Exhibit ViI hereto (as such Exhibit
may be modified by the Lender from time to time).

          “Receivables” means all accounts receivable or general intangibles (including health care
insurance receivables), owing (or in the case of Unbilled Receivables, to be owing) to the
Borrower, including those arising out of the rendition of pharmacy benefit and formulary management
or rebate administration services provided to any Person (including the provision of market
information) or the sale of medical and/or pharmaceutical products by a Borrower and any medical
services rendered in connection therewith, including, without limitation, all amounts due from
manufacturers or distributors of pharmaceutical products based on contractual payments and all
rights to reimbursement under any agreements with and payments from Obligors, together with, to the
maximum extent permitted by law, all accounts receivable and general intangibles related thereto,
all rights, remedies, guaranties, security interests and Liens in respect of the foregoing, all
books, records and other Property evidencing or related to the foregoing, and all proceeds of any
of the foregoing.

          “Related Person” means any incorporator, stockholder, Affiliate (other than the Program
Manager), agent, attorney, officer, director, member, manager, employee or partner of the Lender or
its members or its stockholders.

          “Removal” has the meaning set forth in Section 6.16(b).

          “Renewal Term” has the meaning set forth in Section 6.07(a).

          “Revolving Advance” has the meaning set forth in Section 1.01(a).

          “Revolving Commitment” has the meaning set forth in Section 1.02.

          “Revolving Loan” has the meaning set forth in Section 1.01(a).

          “Scheduled Maturity Date” means November 1, 2010, as such date may be extended pursuant to
Section 6.07(a) hereof.

          “Servicing Responsibilities” has the meaning set forth in Section 3.04(b) hereto.

          “Subscription Agreement” has the meaning set forth in Section 6.16(a).

I-13

 

          “Subsidiary” means, with respect to any Borrower, any corporation or entity of which at least
a majority of the outstanding shares of stock or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors (or Persons performing
similar functions) of such corporation or entity (irrespective of whether or not at the time, in
the case of a corporation, stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Borrower.

          “Tangible Net Worth” with respect to the Borrower, means, at any time, the excess of (i) the
Expected Net Value of all Receivables owned by the Borrowers and not financed by the Lender, plus
cash, plus investments, plus amounts which are owing from the Lender to the Borrowers minus
(ii) the sum of all accrued unpaid monetary obligations and accrued unpaid fees and expenses
payable hereunder or otherwise owed by the Borrower.

          “Total Liabilities” means, at any date of determination, the total liabilities of the Parent
and its Subsidiaries on a consolidated basis which would be classified as liabilities at such date
(including, without limitation, Current Liabilities and long-term liabilities), computed and
calculated in accordance with GAAP, excluding, however, borrowings under the Agreement

          “Transmission” means, upon establishment of computer interface between the Borrowers and the
Program Manager in accordance with the specifications established by the Program Manager, the
transmission of Receivable Information through computer interface to the Program Manager in a
manner satisfactory to the Program Manager.

          “TRICARE/CHAMPUS” means the Civilian Health and Medical Program of the Uniformed Service, a
program of medical benefits covering former and active members of the uniformed services and
certain of their dependents, financed and administered by the United States Departments of Defense,
Health and Human Services and Transportation and established pursuant to 10 USC §§ 1071-1106, and
all regulations promulgated thereunder including without limitation (a) all federal statutes
(whether set forth in 10 USC §§ 1071-1106 or elsewhere) affecting TRICARE/CHAMPUS; and (b) all
rules, regulations (including 32 CFR 199), manuals, orders and administrative, reimbursement and
other guidelines of all Governmental Entities (including, without limitation, the Department of
Health and Human Services, the Department of Defense, the Department of Transportation, the
Assistant Secretary of Defense (Health Affairs), and the Office of TRICARE/CHAMPUS, or any Person
or entity succeeding to the functions of any of the foregoing) promulgated pursuant to or in
connection with any of the foregoing (whether or not having the force of law) in each case as may
be amended, supplemented or otherwise modified from time to time.

          “UCC” means the Uniform Commercial Code as from time to time in effect in the specified
jurisdiction.

          “Unbilled Receivable” means a Receivable in respect of which the goods have been shipped, or
the services rendered, and rights to payment thereon have accrued, but the invoice has not been
rendered to the applicable Obligor.

I-14

 

          “Written Notice” and “in writing” means any form of written communication or a communication
by means of telex, telecopier device, telegraph or cable as provided in Section 6.02.

          Other Terms. All accounting terms not specifically defined herein shall be construed
in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.

I-15

 

EXHIBIT II

CONDITIONS OF REVOLVING ADVANCES

               1. Conditions Precedent to the Effectiveness. The effectiveness of this Agreement as
an amendment and restatement of the Original Agreement is subject to the conditions precedent that
the Lender shall have received on or before such date the following, each (unless otherwise
indicated) dated such date, in form and substance reasonably satisfactory to the Lender:

          (a) For each Borrower and Parent, certified copies of all documents evidencing necessary
company action and governmental approvals, if any, with respect to the Agreement.

          (b) Acknowledgment or time stamped receipt copies of proper amendments to financing statements
duly filed on or before the date hereof under the UCC of all jurisdictions that the Lender may deem
necessary or reasonably desirable in order to perfect the security interests contemplated by the
Agreement.

          (c) Duly executed amendments to the Depositary Agreements with each of Bank of America, N.A.
and UMB Bank.

          (d) Proof of payment of all reasonable attorneys’ fees and disbursements incurred by the
Lender and the Lender Group.

          (e) Copies of all Notices to Obligors required pursuant to Article II of the Agreement, if
any, together with evidence satisfactory to the Lender that such Notices to Obligors have been or
will be delivered to the addressees thereof.

          (f) Duly executed Guaranty by the Parent in substantially the form attached hereto as Exhibit
XIV.

          (g) A duly executed amendment to the Pledge Agreement.

          (h) A duly executed termination agreement relating to the Receivables Purchase and Transfer
Agreement, dated as of November 1, 2000 (as amended and modified as of the date hereof), and
related documents, together with UCC financing statement terminations relating thereto.

          (i) Originally executed copies of all other Documents and related documentation required to be
delivered with respect to this Agreement and the other Documents, all in form and substance
satisfactory to the Administrative Agent, which agreements shall be in full force and effect and
enforceable in accordance with their respective terms.

                2. Conditions Precedent All Funding Dates. Each Revolving Advance on a Funding Date
(including the Initial Funding Date) shall be subject to the further conditions precedent that the
Borrowers and the Lender shall have agreed upon the terms of such Revolving Advance and also that:

I-16

 

          (a) the Borrower Representative shall have delivered to the Lender, by 10:00 a.m. New York
City time, at least one Business Day prior to such Funding Date, in form and substance satisfactory
to the Lender a completed Borrower’s Certificate and a Borrowing Base Certificate, together with
such additional information as may reasonably be requested by the Lender or the Program Manager;

          (b) to the extent not previously provided, executed Notice to Obligors to each Obligor
responsible for the payment of any of the Receivables, directing such Obligors to make payment to
the addresses and accounts designated in such Notice to Obligors, as set forth in Article II
hereof, together with evidence that such Notice to Obligors has been delivered to such Obligors.

          (c) on such Funding Date the following statements shall be true (and acceptance of the
proceeds of such Revolving Advance shall be deemed a representation and warranty by the Borrowers
that such statements are then true):

          (i) the representations and warranties contained in Exhibits III and VII are true and
correct in all material respects on and as of the date of such Revolving Advance as though
made on and as of such date (except any representation or warranty that expressly indicates
that it is being made as of a specific date, in which case such representation or warranty
shall be correct on and as of such date), and

          (ii) no event has occurred and is continuing, or would result from such Revolving
Advance or any actions connected therewith, that constitutes a Default or an Event of
Default;

          (d) the Lender shall have received such other approvals, opinions or documents as it may
reasonably request.

II-2

 

EXHIBIT
III

REPRESENTATIONS AND WARRANTIES

          Each Borrower represents and warrants as follows:

          (a) It is a corporation or limited liability company, as applicable, duly organized, validly
existing and in good standing under the laws of its state of its incorporation, and is duly
qualified to do business, and is in good standing, in every jurisdiction where the nature of its
business requires it to be so qualified, except in any jurisdiction other than that of its chief
executive offices where the failure to be so qualified would not have a Material Adverse Effect.

          (b) The execution, delivery and performance by it of the Agreement and the other documents to
be delivered by it thereunder, (i) are within its corporate or limited liability company powers,
(ii) have been duly authorized by all necessary organizational action, (iii) do not contravene
(1) its charter or by-laws or certificate of formation or operating agreement, as applicable,
(2) any material law, rule or regulation applicable to it, (3) any material contractual restriction
binding on or affecting it or its Property, or (4) any order, writ, judgment, award, injunction or
decree binding on or affecting it or its Property, and (iv) do not result in or require the
creation of any Lien upon or with respect to any of its Properties, other than the security
interests created by the Agreement. The Agreement has been duly executed and delivered by it. It
has furnished to the Lender a correct and complete copy of its charter or by-laws or certificate of
formation or operating agreement, as applicable, including all amendments thereto.

          (c) Except for financing statements, financing statement amendments or termination statements
that have been delivered to the Lender for filing in accordance with subsections 1(c) and (j) of
Exhibit II, no authorization or approval or other action by, and no notice to or filing with, any
Governmental Entity is required for the due execution, delivery and performance by it of the
Agreement or any other document to be delivered hereunder.

          (d) The Agreement constitutes the legal, valid and binding obligation of it, enforceable
against it in accordance with its terms, except as limited by bankruptcy, insolvency, moratorium,
fraudulent conveyance or other laws relating to the enforcement of creditors’ rights generally and
general principles of equity (regardless of whether enforcement is sought at equity or law).

          (e) Except as disclosed on Schedule III hereto, it has all power and authority, and has all
permits, licenses, accreditations, certifications, authorizations, approvals, consents and
agreements of all Obligors, Governmental Entities, accreditation agencies and any other Person
(including without limitation, accreditation by the appropriate Governmental Entities and industry
accreditation agencies and accreditation and certifications necessary to receive payment and
compensation and to participate under Medicare, Medicaid, TRICARE/CHAMPUS, Blue Cross/Blue Shield
and other equivalent programs relevant to any Borrower), necessary or required for it (i) to own
the assets (including Receivables) that it now owns, (ii) to carry on its business as now
conducted, except where failure to have such permits, licenses, authorizations, approvals,
consents, agreements with third-party payors, accreditation and certifications (including, without
limitation, accreditation by the appropriate Governmental Entities and industry accreditation
agencies and accreditation and certifications necessary to receive payment

III-1

 

and compensation and to
participate under Medicare, Medicaid, TRICARE/CHAMPUS, Blue Cross/Blue Shield and other equivalent
programs) would not have a Material Adverse Effect, (iii) to execute, deliver and perform the
Agreement and any other document to be delivered hereunder. and (iv) to receive payments from the
Obligors in the manner contemplated in the Agreement.

          (f) Except as disclosed on Schedule III hereto, it has not been notified by any Obligor,
Governmental Entity or instrumentality, accreditation agency or any other Person, during the
immediately preceding 24 month period, that such party has rescinded or not renewed, or is
reasonably likely to rescind or not renew, any such material permit, license, accreditation,
certification, authorization, approval, consent or agreement granted to it or to which it is a
party.

          (g) As of the Initial Funding Date, all conditions precedent set forth in Exhibit II have been
fulfilled or waived in writing by the Lender, and as of each Funding Date, the conditions precedent
set forth in paragraph 2 of such Exhibit II shall have been fulfilled or waived in writing by the
Lender.

          (h) The balance sheets of the Parent and its Subsidiaries as at December 31, 2006 and the
related statements of income and expense, cash flows and retained earnings of the Parent and its
Subsidiaries for the fiscal periods then ended, copies of which have been furnished to the Lender,
fairly present the financial condition of the Parent and its Subsidiaries as at such date and the
results of the operations of the Parent and its Subsidiaries for the period ended on such date, all
in accordance with GAAP, and since December 31, 2006 there has been no change resulting in a
Material Adverse Effect.

          (i) Except as disclosed on Schedule III hereto, there is no pending or, to its knowledge,
threatened action or proceeding or injunction, writ or restraining order affecting any Borrower or
any Subsidiary before any court, Governmental Entity or arbitrator which could reasonably be
expected to result in a Material Adverse Effect or which purports to affect the legality, validity
or enforceability of the Agreement or any other Document, and no Borrower nor any Subsidiary is
currently the subject of, or has any present intention of commencing, an insolvency proceeding or
petition in bankruptcy. Furthermore, to its knowledge, there are no pending civil or criminal
investigations by any Governmental Entity involving it or its officers or directors and neither it
nor any of its officers or directors has been involved in, or is the subject of, any civil or
criminal investigation by any Governmental Entity.

          (j) It is the legal and beneficial owner of its Collateral (including its Receivables) free
and clear of any Lien (other than Permitted Liens); the Lender has acquired, or, upon the
effectiveness of this Agreement shall acquire, a valid security interest in the Collateral,
including the Receivables and in the Collections with respect thereto, subject to no third-party
claims of interest thereon. No effective financing statement or other instrument similar in effect
covering any Collateral, Receivables or the Collections with respect thereto or any proceeds
thereof, is on file in any recording office, except those filed in accordance with the terms of the
Original Agreement and no competing notice or notice inconsistent with the transactions
contemplated in the Agreement remains in effect with respect to any Obligor.

III-2

 

          (k) All Receivable Information, information provided in the application for the program
effectuated by the Agreement, and each other document, report and Transmission provided by any
Borrower to the Lender Group is or shall be accurate in all material respects as of its date and as
of the date so furnished, and no such document contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they were made and when
taken as a whole, not misleading.

          (l) The principal place of business and chief executive office of each Borrower and the office
where such Borrower keeps its records concerning the Receivables are located at the respective
address referred to on Schedule I hereof and, except as disclosed on Schedule III hereto, there
have been no other such locations for the four immediately prior months.

          (m) Each Receivable identified in the Borrowing Base Certificate is, as of the date of such
Borrowing Base Certificate, an Eligible Receivable.

          (n) The provisions of the Agreement create, on the Initial Funding Date, legal and valid Liens
in all of the Collateral (including the Receivables) owned or held by each Borrower in the Lender’s
favor, and when all proper filings and other actions necessary to perfect such Liens have been
completed, will constitute a perfected and continuing Lien on all of such Collateral, having
priority over all other Liens on such Collateral, enforceable against each Borrower and all third
parties.

          (o) All required Notices have been prepared and delivered to each Obligor, and all invoices
now bear only the appropriate remittance instructions for payment direction to the applicable
Lockbox or Lockbox Account, as the case may be.

          (p) Except as disclosed on Schedule III hereto, no Borrower has changed its principal place of
business or chief executive office in the last five years.

          (q) The exact name of each Borrower is as set forth on the signature pages of the Agreement
and, except as set forth on Schedule III, such Borrower has not changed its name in the last five
years and, except as set forth opposite such Borrower’s name on Schedule III, during such period
such Borrower has not used, nor does such Borrower now use, any other fictitious, assumed or trade
name.

          (r) With respect to itself or any of its Subsidiaries taken as a whole, there exists no event
which could reasonably be expected to result in a Material Adverse Effect.

          (s) It is not in violation under any applicable statute, rule, order, decree or regulation of
any court, arbitrator or governmental body or agency having jurisdiction over it which has or is
reasonably likely to have a Material Adverse Effect.

          (t) It has filed on a timely basis all tax returns (federal, state and local) required to be
filed and has paid, or made adequate provision for payment of, all taxes, assessments and other
governmental charges due from it, unless contested in good faith by appropriate proceedings. No
tax Lien has been filed and is now effective against it or any of its Properties, except any Lien
in respect of taxes and other charges not yet due or contested in good faith by

III-3

 

appropriate proceedings. To its knowledge, there are no pending investigations of it by any taxing authority
or any pending but unassessed tax liability of it. It does not have any obligation under any tax
sharing agreement.

          (u) It is solvent and will not become insolvent after giving effect to the transactions
contemplated by the Agreement; it has not incurred debts or liabilities beyond its ability to pay;
it will, after giving effect to the transaction contemplated by the Agreement, have an adequate
amount of capital to conduct its business in the foreseeable future; the grant of a security
interest in the Receivables is made in good faith and without intent to hinder, delay or defraud
its present or future creditors.

          (v) The Lockboxes are the only post office boxes and the Lockbox Accounts are the only lockbox
accounts maintained for Receivables; and no direction of any Borrower is in effect directing
Obligors to remit payments on Receivables other than to the Lockboxes or Lockbox Accounts.

          (w) Each pension plan or profit sharing plan to which it is a party has been fully funded in
accordance with its obligations as set forth in such plan.

          (x) The primary business of each Borrower is the provision of independent pharmacy benefit and
formulary management services, the sale of medical and/or pharmaceutical products and the rendition
of medical services in connection therewith (other than MIM Funding, the primary business of which
is as provided in its organizational documents).

          (y) There are no pending civil or criminal investigations by any Governmental Entity involving
it or any of its respective officers or directors and none of the Borrowers or any of their
respective officers or directors has been involved in, or the subject of, any civil or criminal
investigation by any Governmental Entity.

          (z) Its assets are free and clear of any Liens in favor of the Internal Revenue Service, any
Employee Benefit Plan, any Multiemployer Plan or the PBGC other than inchoate tax Liens resulting
from an assessment of a Borrower.

          (aa) With respect to each Employee Benefit Plan of it, including to its knowledge as to any
Multiemployer Plan, such Employee Benefit Plan has complied and been administered in accordance
with its terms and in substantial compliance with all applicable provisions of ERISA and the
Internal Revenue Code of 1986, as amended; neither it nor any ERISA Affiliate has been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA; and it has no material unpaid liability for
any Employee Benefit Plan.

          (bb) None of the Receivables constitutes or has constituted an obligation of any Person which
is an Affiliate of the Borrower.

          (cc) The Obligor of each Eligible Receivable has not been the Obligor of any Defaulted
Receivables in the past 12 months (other than, for the purpose of this clause, as a result of good
faith disputes).

III-4

 

          (dd) No transaction contemplated under this Agreement requires compliance with any bulk sales
act or similar law.

          (ee) It is not engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation T, U, or X of the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any extension of credit under this Agreement will be used to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or carrying margin stock.

          (ff) It has no Debt except hereunder.

          (gg) Each Receivable that is an Unbilled Receivable will be, or has been, billed to the
Obligor of such Receivable within 30 days of the Last Service Date, or in the case of a Rebate
Receivable, will be, or has been, billed to the Obligor of the Rebate Receivable within 60 days
after the end of the fiscal quarter in which such Rebate Receivable became due and payable.

          (hh) It is not in violation of any applicable material patient confidentiality law.

III-5

 

EXHIBIT IV

COVENANTS

          Until the payment in full of all Lender Debt and the termination of the Revolving Commitment
hereunder, each Borrower agrees as follows:

          (a) Compliance with Laws, etc. It will comply in all material respects with all
applicable laws, rules, regulations and orders and preserve and maintain its corporate existence,
rights, franchises, qualifications, and privileges except to the extent that the failure so to
comply with such laws, rules and regulations or the failure so to preserve and maintain such
existence, rights, franchises, qualifications, and privileges would not result in a Material
Adverse Effect.

          (b) Offices, Records and Books of Account. It will keep its principal place of
business and chief executive office and the office where it keeps its records concerning the
Receivables and the Collateral at the address set forth under its name on the signature page to the
Agreement or, upon 30 days’ prior Written Notice to the Lender, at any other locations in
jurisdictions where all actions reasonably requested by the Lender or otherwise necessary to
protect, perfect and maintain the Lender’s interest in the Collateral (including the Receivables)
and all proceeds thereof have been taken and completed. The Borrower shall keep its books and
accounts in accordance with GAAP and shall not make any notation on its books and records,
including any computer files, that is inconsistent with the assignment of the Receivables to the
Lender. The Borrower shall maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing Receivables and related
contracts in the event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or advisable for collecting
all Receivables (including, without limitation, records adequate to permit the daily identification
of each Receivable and all Collections of and adjustments to each existing Receivable) and for
providing the Receivable Information.

          (c) Performance and Compliance With Contracts and Credit and Collection Policy. It
will, at its expense, timely and fully perform and comply with all material provisions, covenants
and other promises required to be observed by it under the contracts and other documents related to
the Receivables and other Collateral, and timely and fully comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related contract, and it shall
maintain, at its expense, in full operation each of the Lockbox Accounts and Lockboxes. It shall
do nothing, nor suffer or permit any other Person, to impede or interfere with the collection by
the Lender, or the Program Manager on behalf of the Lender, of the Receivables.

          (d) Notice of Breach of Representations and Warranties. It shall promptly (and in no
event later than five Business Days following actual knowledge thereof) inform the Lender and the
Program Manager of any breach of covenants or representations and warranties hereunder and under
any other Document, including, without limitation, upon discovery of a breach of the Eligibility
Criteria set forth in Exhibit VI hereof and thereof.

IV-1

 

          (e) Debt, Sales, Liens, etc. It will not incur or assume any Debt or issue any
securities except for (i) the Debt created hereunder; (ii) Debt existing on the date hereof and set
forth in Schedule III, and (iii) Debt of any Borrower or any Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets, including obligations with respect to Capital Leases and any Debt
assumed in connection with the acquisition of any such assets or secured by a Lien on any such
assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Debt
that do not increase the outstanding principal amount thereof; provided, that (1) such Debt
is incurred prior to or within 90 days after such acquisition or the completion of such
construction or improvement, (2) the aggregate principal amount of Debt permitted by this clause
(iii) shall not exceed $1,000,000 at any time and (3) no such Debt shall be assumed or otherwise
incurred if a Default has occurred and is then continuing or would result therefrom. It will not
sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Liens upon or with respect to, its Receivables or any other Collateral, or upon or with
respect to any account to which any Collections are sent, or assign any right to receive income in
respect thereof except (i) Permitted Liens and (ii) those Liens in favor of the Lender or any
assignee of the Lender relating to the Agreement,

          (f) [Intentionally Omitted.]

          (g) Extension or Amendment of Receivables. It shall not amend, waive or otherwise
permit or agree to any material deviation from the terms or conditions of any Receivable except in
accordance with the Credit and Collection Policy.

          (h) Change in Business or Credit and Collection Policy. It will not make any change
in the Credit and Collection Policy or make any change in the character of its business that, in
either event, could reasonably be expected to result in a Material Adverse Effect, and it will not
make any other material changes in the Credit and Collection Policy without the prior written
consent of the Lender; provided, however, that if an Event of Default has occurred and is
continuing, it will not make any material change in the Credit and Collection Policy.

          (i) Audits and Visits. It will, at any time and from time to time during regular
business hours as requested by the Lender, permit the Lender, or its agents or representatives
(including the Program Manager), upon reasonable notice and without interfering with the Borrowers’
businesses or operations and subject to compliance with applicable law in the case of review of
plan participant/patient/customer information, or its agents or representatives (including the
Master Sevicer), (i) on a confidential basis, to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes and disks) in its
possession or under its control relating to Receivables including, without limitation, the related
contracts, and (ii) to visit its offices and properties for the purpose of examining and auditing
such materials described in clause (i) above, and to discuss matters relating to Receivables or its
performance hereunder or under the contracts with any of its officers or employees having knowledge
of such matters. It shall permit the Program Manager to have at least one agent or representative
physically present in its administrative office during normal business hours to assist it in
performing its obligations under the Agreement, including its obligations with respect to the
collection of Receivables pursuant to Article I of the Agreement. Notwithstanding the foregoing,
and provided that no Event of Default or event

IV-2

 

which, with the giving of notice or lapse of time,
or both, would constitute an Event of Default shall have occurred and be continuing, all visits and
examinations shall be scheduled at mutually convenient times.

          (j) Change in Payment Instructions. It will not terminate any Lockbox or any Lockbox
Account, or make any change or replacement in the instructions contained in any invoice, Notice or
otherwise, or regarding payments with respect to Receivables to be made to the Lockboxes or the
Lockbox Accounts except upon the prior and express written consent of the Program Manager or the
Lender.

          (k) It will provide or make available to the Lender (in multiple copies, if requested by the
Lender) the following:

          (i) [Intentionally Omitted.]

          (ii) as soon as available and in any event within 45 days after the end of each of the
first three quarters of each fiscal year of the Parent, (x) consolidated and consolidating
balance sheets of the Parent and its Subsidiaries as of the end of such quarter and
consolidated and consolidating statements of income, cash flows and retained earnings of the
Parent and its Subsidiaries for the period commencing at the beginning of the current fiscal
year and ending with the end of such quarter or (y) a copy of the Parent’s quarterly reports
on Form 10-Q for such quarters as filed with the Securities and Exchange Commission, in
either case, certified by the Chief Financial Officer of the Parent and accompanied by a
certificate of an Authorized Representative of each Borrower stating that, as of such date,
(i) no Event of Default or event which, with the giving of notice or lapse of time, or both,
would constitute an Event of Default has occurred and is continuing, (ii) all representations
and warranties set forth in the Agreement are true and correct in all material respects
(except any representation or warranty that expressly indicates that it is being made as of a
specific date, in which case such representation or warranty shall be true and correct on and
as of such date) and (iii) the conditions precedent set forth in paragraph 2 of Exhibit II
have been fulfilled or waived in writing by the Lender, and detailing such Borrower’s
compliance for such fiscal period with all financial covenants contained in the Agreement,
and to the extent any Event of Default or other event or non-compliance exists, a description
of the steps being taken by such Borrower to address such Event of Default, other event or
non-compliance;

          (iii) as soon as available and in any event within 90 days after the end of each fiscal
year of the Parent, (x) a copy of the audited consolidated financial statements (together
with explanatory notes thereon) and the auditor’s report letter for such year for the Parent
and its Subsidiaries, containing financial statements for such year audited by independent
public accountants of recognized national standing acceptable to the Lender or (y) a copy of
the Parent’s annual report on Form 10-K as filed with the Securities and Exchange Commission,
in either case, accompanied by a certificate of an Authorized Representative of each Borrower
stating that, as of such date, no Event of Default or event which, with the giving of notice
or lapse of time, or both, would constitute an Event of Default has occurred and is
continuing, (ii) all representations and

IV-3

 

warranties set forth in the Agreement are true and
correct in all material respects (except any representation or warranty that expressly
indicates that it is being made as of a specific date, in which case such representation or
warranty shall be true and correct on and as of such date) and (iii) the conditions precedent
set forth in paragraph 2 of Exhibit II have been fulfilled or waived in writing by the
Lender, and detailing such Borrower’s compliance for such fiscal period with all the
financial covenants contained in the Agreement, and to the extent any Default or Event of
Default exists, a description of the steps being taken by such Borrower to address such
Default or Event of Default;

          (iv) on or before the 25th day of each month, monthly and year-to-date statistical and
financial reports, in substantially the form attached hereto as Schedule VI;

          (v) promptly and in any event within five Business Days following actual knowledge
thereof by a Borrower of an Event of Default or an event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default, a statement of the Chief
Financial Officer of the Borrowers setting forth details of such Event of Default or event, and the action that
it has taken and proposes to take with respect thereto;

          (vi) promptly after the sending or filing thereof, if any, copies of all reports and
registration statements that the Parent, any Borrower or any Subsidiary files with the
Securities and Exchange Commission or any national securities exchange and official
statements that any Borrower or any Subsidiary files with respect to the issuance of
tax-exempt indebtedness and after an Event of Default, copies of all reports (if any) that
any Borrower or any Subsidiary sends to any of its security holders;

          (vii) promptly after the filing or receiving thereof, copies of all reports and notices
that any Borrower or any of its Affiliates files under ERISA with the Internal Revenue
Service or the PBGC or the U.S. Department of Labor or that any Borrower or any of its
Affiliates receives from any of the foregoing or from any Multiemployer Plan to which any
Borrower or any of its Affiliates is or was, within the preceding five years, a contributing
employer, in each case in respect of the assessment of withdrawal liability or an event or
condition which could, in the aggregate, result in the imposition of liability on any
Borrower or any such Affiliate in excess of $100,000;

          (viii) at least ten Business Days prior to any change in any Borrower’s name or any
implementation of a new trade/assumed name, a Written Notice setting forth the new name or
trade name and the proposed effective date thereof and copies of all documents required to be
filed in connection therewith;

          (ix) promptly (and in no event later than five Business Days following actual knowledge
or receipt thereof), Written Notice in reasonable detail, of (x) any Lien asserted or claim
made against a Receivable, (y) the occurrence of any other event which could have a Material
Adverse Effect on the value of a Receivable or on the interest of the Lender in a
Receivable or (z) the results of any material cost report, investigation or similar audit
being conducted by any federal, state or county Governmental Entity or its agents or
designees;

IV-4

 

          (x) promptly upon approval by the Board of Directors, and in no event later than March
31st in each year, a consolidated and consolidating operating plan (together with
a complete statement of the assumptions on which such plan is based) of the Parent and its
Subsidiaries approved by its Board of Directors, which shall include monthly budgets for the
prospective year in reasonable detail acceptable to the Lender and will integrate operating
profit and cash flow projections and personnel, capital expenditures, and facilities plans;

          (xi) promptly upon receipt thereof (and solely to the extent actually prepared and
delivered), a copy of any management letter or written report submitted to the Parent by
independent certified public accountants with respect to the Subsidiaries, business,
condition (financial or otherwise), operations, prospects, or Properties of the Borrowers;

          (xii) no later than five Business Days after the commencement thereof, Written Notice
of all actions, suits, and proceedings before any Governmental Entity or arbitrator
affecting any Borrower which, if determined adversely to any Borrower, could have a Material
Adverse Effect;

          (xiii) promptly after the furnishing thereof, copies of any statement or report furnished
by a Borrower to any other party pursuant to the terms of any indenture, loan, or credit or
similar agreement in excess of $1,000,000 and not otherwise required to be furnished to the
Lender pursuant to this Agreement;

          (xiv) except as otherwise required to be furnished to the Lender pursuant to this
Agreement, as soon as available, (A) one copy of each financial statement, report, notice or
proxy statement sent by the Parent or any Borrower to its stockholders generally, (B) and
one copy of each regular, periodic or special report, registration statement, or prospectus
filed by any Borrower or any of its Subsidiaries with any securities exchange or the
Securities and Exchange Commission or any successor agency or the Bankruptcy Court, and
(C) all press releases and other statements made available by any Borrower to the public
concerning developments in the business of any Borrower;

          (xv) within the sixty (60) day period prior to the end of each fiscal year of each
Borrower, a report satisfactory in form to the Lender, listing all material insurance
coverage maintained as of the date of such report by such Borrower and all material
insurance planned to be maintained by such Borrower in the subsequent fiscal year; and

          (xvi) such other information respecting the Receivables or the other Collateral or the
condition or operations, financial or otherwise, of any Borrower or any Subsidiary or
Affiliate as the Lender may from time to time reasonably request.

       (1) Notice of Proceedings; Overpayments. The Borrower Representative shall promptly
notify the Program Manager (and modify the next Borrowing Base Certificate to be delivered
hereunder) in the event of any action, suit, proceeding, dispute, set-off, deduction, defense or
counterclaim involving in excess of $100,000 that is or has been threatened to be

IV-5 

 

asserted by an Obligor with respect to any Receivable. Each applicable Borrower shall make
any and all payments to the Obligors necessary to prevent the Obligors from offsetting any earlier
overpayment to any Borrower against any amounts the Obligors owe on any Receivables.

     (m) Officer’s Certificate. On the dates the financial statements referred to in
clause (k) above are to be delivered after the Initial Funding Date, the Chief Financial Officer of
each Borrower shall deliver a certificate to the Lender, stating that, as of such date, (i) all
representations and warranties are true and correct in all material respects (except any
representation or warranty that expressly indicates that it is being made as of a specific date, in
which case such representation or warranty shall be true and correct as of such specific date),
(ii) the conditions precedent set forth in paragraph 2 of Exhibit II have been fulfilled or waived
in writing by the Lender, and (iii) no Event of Default exists and is continuing.

     (n) Further Instruments, Continuation Statements. Each Borrower shall, at its
expense, promptly execute and deliver all further instruments and documents, and take all further
action that the Program Manager or the Lender may reasonably request, from time to time, in order
to perfect, protect or more fully evidence the assignment as security of the Receivables and the
other Collateral, or to enable the Lender or the Program Manager to exercise or enforce the rights
of the Lender hereunder or under the Receivables or the other Collateral. Without limiting the
generality of the foregoing, each Borrower will upon the request of the Program Manager execute and
file such UCC financing or continuation statements, or amendments thereto or assignments thereof,
and such other instruments or notices, as may be, in the opinion of the Program Manager, necessary
or appropriate. Each Borrower hereby authorizes the Program Manager or its designees, upon two
Business Days’ notice, to file one or more financing or continuation statements and amendments
thereto and assignments thereof, relative to all or any of the Receivables and other Collateral
now existing or hereafter arising without the signature of such Borrower where permitted by law.
If a Borrower fails to perform any of its agreements or obligations under the Agreement, the
Program Manager may (but shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Program Manager incurred in connection therewith
shall be payable by the Borrowers.

     (o) Taxes. The Borrowers shall pay any and all taxes (excluding the Lender’s income,
gross receipts, franchise, doing business or similar taxes) relating to the transactions
contemplated under the Agreement, including but not limited to the assignment of each Receivable
except for any such taxes being contested in good faith by appropriate proceedings and the
applicable Borrower shall have set aside on its books adequate reserves in accordance with GAAP
with respect thereto, and such contest operates to suspend collection of the contested tax and
enforcement of a Lien.

     (p) Lender’s Lien in the Collateral. It shall not prepare or permit to be prepared
any financial statements which shall account for the transactions contemplated hereby in a manner
which is, or in any other respect account for the transactions contemplated hereby in a manner
which is, inconsistent with the Lender’s first priority Lien on the Collateral.

     (q) No “Instruments”. It shall not take any action which would allow, result in or
cause any Receivable to be evidenced by an “instrument” within the meaning of the UCC of the
applicable jurisdiction.

IV-6 

 

     (r) Implementation of New Invoices. It shall take all reasonable steps to ensure that
all invoices rendered or dispatched on or after the Initial Funding Date contain only the
remittance instructions required under Article II of this Agreement.

     (s) Notice of Termination or Suspension of Contracts. It shall promptly (and in no
event later than one Business Day following actual knowledge thereof) inform the Lender and the
Program Manager of any termination or suspension of any of its contracts which could reasonably be
expected to reduce revenue by 3% or more.

     (t) Maintain Properties. It shall maintain, keep, and preserve all of its Properties
necessary or useful in the proper conduct of its business in good repair, working order, and
condition (ordinary wear and tear excepted) and make all necessary repairs, renewals, replacements,
betterments, and improvements thereof.

     (u) Payment of Taxes, etc. It shall pay or discharge at or before maturity or before
becoming delinquent (i) all taxes, levies, assessments, and governmental charges imposed on it or
its income or profits or any of its Property, except any taxes, levies, assessments, and
governmental charges contested in good faith by appropriate proceedings and (ii) all lawful claims
for labor, material, and supplies, which, if unpaid, might become a Lien upon any of its Property.

     (v) Merger, Consolidation. It shall not merge with or into, consolidate with or into,
or enter into any agreement to merge or consolidate with or into, another Person, or convey,
transfer, lease or otherwise dispose of all or substantially all of its assets (whether now owned
or hereafter acquired), except that, if at the time thereof and immediately after giving effect
thereto no Default shall have occurred and be continuing (i) any Borrower may merge into any other
Borrower in a transaction in which a Borrower is the surviving corporation (including the merger of
MIM Funding with and into Pharmacy Services as required under clause (z) below), (ii) any
wholly-owned domestic Subsidiary of any Borrower may merge into a Borrower in a transaction in
which a Borrower is the surviving corporation, (iii) any wholly-owned domestic Subsidiary of any
Borrower may merge into any wholly-owned domestic Subsidiary of any Borrower in a transaction in
which the surviving entity is a wholly-owned domestic Subsidiary of any Borrower, and (iv) any
wholly-owned domestic Subsidiary of any Borrower may sell, transfer, lease or otherwise dispose of
its assets to a Borrower or to another wholly-owned domestic Subsidiary of any Borrower.

     (w) Preservation of Corporate Existence. It shall preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify
and remain qualified in good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises, privileges and qualification
would materially adversely affect the interests of the Lender or the Program Manager or their
ability to perform their respective obligations hereunder.

     (x) Acquisitions. It shall provide in a timely manner such information to the Lender
with respect to any proposed Acquisition as the Lender may reasonably request. Further, it shall,
in connection with any such proposed Acquisition, provide a representation to the Lender as to
whether any such Acquisition constitutes a Permitted Acquisition.

IV-7 

 

     (y) Liquidity. The Consolidated Liquidity of the Borrowers at all times shall be
greater than $10,000,000; provided, that for purposes of this clause (v), the remedy period for the
failure to comply with this clause (v) referred to in clause (c) of Exhibit V hereto shall be “one
Business Day.”

     (z) Within forty-five (45) days of the Initial Funding Date, MIM Funding shall merge with and
into Pharmacy Services with Pharmacy Services as the surviving entity of such merger.

IV-8 

 

EXHIBIT V

EVENTS OF DEFAULT

          Each of the following shall be an “Event of Default”:

     (a) The Borrower shall default in the due and punctual payment of the principal of the
Revolving Loan, when and as the same shall become due and payable (except that the Borrowers shall
have up five (5) Business Days to cure such a default with respect to a Borrowing Base Deficiency)
whether pursuant to Article III of this Agreement, at maturity, by acceleration or otherwise.

     (b) The Borrower shall default in the due and punctual payment of any installment of interest
on the Revolving Loan or any other Lender Debt, including, without limitation, any fee or expense
owing to the Lender pursuant to any of the Documents, when and as such amount of interest, fee or
expense shall become due and payable and such default shall continue unremedied for three (3)
Business Days.

     (c) The Borrower shall default in the performance or observance of any covenant, agreement or
provision (other than as described in clause (a) or (b) above) contained in this Agreement or any
other Document or in any instrument or document evidencing or creating any obligation, guaranty or
Lien in favor of the Lender in connection with or pursuant to this Agreement or any Lender Debt,
including the Servicing Responsibilities, and, except in the case of the agreements and covenants
contained in any Document as to each of which no notice or grace period shall apply, such default
continues for a period of 10 Business Days (or, in the case where agreements and covenants
contained in any Document provide for a grace period that is less than 10 Business Days days,
continuance of a default for such shorter period) after the earlier of (i) there has been given
Written Notice of such default to either of the Borrowers or the Borrower Representative on behalf
of the Borrowers by the Lender or (ii) discovery thereof by the Borrower; or if this Agreement or
any other Document or any such other instrument or document shall terminate, be terminated or
become void or unenforceable for any reason whatsoever without the written consent of the Lender.

     (d) Any representation or warranty made or deemed made by the Borrowers (other than with
respect to the eligibility of Receivables as Eligible Receivables hereunder) under or in connection
with the Agreement or any information or report delivered by any Borrower pursuant to the Agreement
shall prove to have been incorrect or untrue in any material respect when made or deemed made or
delivered.

     (e) This Agreement shall for any reason (other than pursuant to the terms hereof) fail or
cease to create, or the security interest created by this Agreement fails or ceases to be, a valid
and perfected security interest in the Receivables and the Collections with respect thereto or the
other Collateral free and clear of all Liens (other than Permitted Liens).

     (f) Any Borrower or Parent shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or against any

V-1 

 

Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking
the entry of an order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its Property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such proceeding shall remain
undismissed or unstayed for a period of 45 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any substantial part of its
Property) shall occur; or any Borrower shall take any action to authorize any of the actions set
forth above in this paragraph (i).

     (g) There shall have occurred any Material Adverse Effect since December 31, 2006.

     (h) The Borrower shall fail to discharge within a period of 30 days after the commencement
thereof any attachment, sequestration, forfeiture, or similar proceeding or proceedings involving
an aggregate amount in excess of $500,000 against any of its Properties.

     (i) The Borrower sells, leases, assigns, transfers, or otherwise disposes of any of its
Receivables or other Collateral, except as permitted or contemplated under the Agreement.

     (j) Any Borrower shall fail to perform or observe in any material respect any term, covenant
or agreement included in the Servicing Responsibilities and such failure shall remain unremedied
for 15 days or any Borrower shall fail to make when due any payment or deposit to be made by it
under the Agreement.

     (k) Any Borrower (i) fails to transfer in a timely manner any servicing rights and obligations
with respect to the Receivables to any successor designated pursuant to Section 3.04(b) of the
Agreement, (ii) fails to make any payment required under the Agreement (unless such payment
obligation has been fulfilled in full pursuant to the Lender’s set-off rights under Section 4.02 of
the Agreement) or (iii) sends a “Revocation Order” (as defined in the Depositary Agreement) or
makes any change or replacement in the “Standing Revocable Instruction” (as defined in the
Depositary Agreement).

     (l) Any Borrower shall fail to pay any principal of or premium or interest on any of its Debt
which individually or in the aggregate exceeds $500,000 when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of such event or condition
is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt
shall be declared to be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof.

V-2 

 

     (m) A Change of Control shall occur without Lender consent.

     (n) Judgments or orders for payment of money (other than judgments or orders in respect of
which adequate insurance is maintained for the payment thereof) against the Borrowers in excess of
$500,000 in the aggregate remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed
for a period of 45 days or more.

     (o) Any governmental authority (including, without limitation, the Internal Revenue Service or
the PBGC) files a notice of a Lien against the assets of a Borrower other than a Lien (i) that is
limited by its terms to assets other than Receivables and all proceeds thereof, and (ii) that does
not result in a Material Adverse Effect.

     (p) Any Borrower does not keep insured by financially sound and reputable insurers all
Property of a character usually insured by corporations engaged in the same or similar business
similarly situated against loss or damage of the kinds and in the amounts customarily insured
against by such corporations and carry such other insurance as is usually carried by such
corporations. Each policy referred to in this clause (x) shall provide that the interests of the
Lender shall not be invalidated by any act or negligence of the Borrower. Any Borrower does not
advise the Lender promptly of any policy cancellation, reduction, or amendment. Any insurance
policy for property, casualty, liability and business interruption coverage for a Borrower does not
name the Lender as assignee of the Borrowers and as loss payee (as the Lender’s interests may
appear) or an additional insured, as appropriate.

     (q) Any Borrower does not maintain proper books of record and account in which full, true and
correct entries in conformity with GAAP are made of all dealings and transactions in relation to
its business and activities and such failure remains unremedied for 10 days.

     (r) Any Borrower does not comply with all minimum funding requirements and all other material
requirements of ERISA, if applicable, so as not to give rise to any liability thereunder.

     (s) Any Borrower engages in any line or lines of business activity that is materially
different from the businesses in which it is engaged on the date hereof.

     (t) Consolidated Net Worth. The Consolidated Net Worth, calculated as at the end of
each fiscal quarter of the Parent, is less (i) $177,500,000, plus (ii) 50% of the positive Net
Income (if any and excluding from such positive Net Income the positive effects to Net Income as a
result of the items described in (iii) and (iv) of this clause (cc)) for such quarter, plus (iii)
any increase to Consolidated Net Worth resulting from any reversals in such fiscal quarter of (x)
bad debt reserves or other reserves or asset write offs (other than those contained in clause (y)
below) previously taken prior to the quarter ended September 30, 2006 by Parent (on a consolidated
basis) and (y) deferred tax asset write-offs taken at any time by Parent (on a consolidated basis),
plus (iv) any increase to Consolidated Net Worth resulting from any extraordinary item for such
quarter, minus (v) any decrease in Consolidated Net Worth resulting from any and all write offs of
goodwill, deferred tax assets and intangible assets as reflected in the Parent’s financial
statements for such quarter

V-3 

 

     (u) Current Ratio. The ratio of (i) Current Assets plus Availability to (ii) Current
Liabilities for each Fiscal Quarter during which the principal amount of the Revolving Loan
exceeded 50% of the Borrowing Limit at any time, is less 1.625:1.00 (without consideration, in
making such calculation, of balance sheet accruals for restructuring charges).

     (v) Debt/EBITDA Ratio. The Debt/EBITDA Ratio exceeds 3.00:1.00 as at the end of any
fiscal quarter of the Parent.

     (w) Negative Pledge. The Parent or any Borrower pledges or grants a Lien in the stock
or other equity interests in any Borrower or any other subsidiary for the benefit of any Person,
except in connection with the Documents and with the consent of the Program Manager and Lender.

     (x) Accounts Receivable Turnover. The Accounts Receivable Turnover, calculated as of
the end of each fiscal quarter of the Parent for the four fiscal quarters of the Borrowers then
most recently ended, is more than 75 days.

     (y) Fixed Charge Coverage Ratio. Commencing with the first fiscal quarter after the
fiscal quarter ended September 30, 2007 in which the average Revolving Loan for any single Month in
such fiscal quarter exceeds 65% of the Expected Net Value of Eligible Receivables, the Consolidated
Fixed Charge Coverage Ratio in any fiscal quarter of the Parent is less than 1.00:1.00.

     (z) Any Borrower is unable to maintain the Transmission interface described in Exhibit XII to
the satisfaction of the Program Manager, or the electronic information servicing capabilities of
any Borrower are not functioning for a period of more than three consecutive Business Days for any
reason other than force majeure.

     (aa) Any Borrower has sent multiple Transmissions to the Program Manager in a manner that is
not in compliance with the specifications set forth in Exhibit XII hereof

V-4 

 

EXHIBIT VI

ELIGIBILITY CRITERIA

          The following shall constitute the eligibility criteria for acceptance of Receivables for
financing and inclusion in the Borrowing Base under the Agreement (the “Eligibility Criteria”):

     (a) The information provided by the Borrowers with respect to each such Receivable is complete
and correct and all documents, attestations and agreements relating thereto that have been
delivered to the Lender are true and correct, and, other than with respect to Unbilled Receivables,
the applicable Borrower has billed the applicable Obligor and has delivered to such Obligor all
requested supporting claim documents with respect to such Receivable and no amounts with respect to
such Receivable have been paid as of the date and time of the inclusion of such Receivable in the
Borrowing Base. All information set forth in the bill and supporting claim documents with respect
to such Receivable is true, complete and correct; if additional information is requested by the
Obligor, the Borrowers (or the applicable Borrower) has or will promptly provide the same, and if
any error has been made with respect to such information, the Borrowers will promptly correct the
same and, if necessary, rebill such Receivable.

     (b) Each such Receivable (i) is payable, in an amount not less than its Expected Net Value, by
the Obligor identified by the applicable Borrower as being obligated to do so, (ii) is based on an
actual and bona fide rendition of services to the Obligor or sale of goods to an Obligor or a plan
participant of the Obligor in the ordinary course of business, (iii) is denominated and payable
only in U.S. dollars in the United States, and (iv) is an account receivable or general intangible
within the meaning of the UCC of the state in which the applicable Borrower has its principal place
of business, or is a right to payment under a policy of insurance or proceeds thereof, and is not
evidenced by any instrument or chattel paper. There is no payor other than the Obligor identified
by the Borrowers as the payor primarily liable on such Receivable.

     (c) Each such Receivable (i) is not the subject of any action, suit, proceeding or
dispute (pending or threatened), setoff, counterclaim, defense, abatement, suspension, deferment,
deductible, reduction or termination by the Obligor (except for statutory rights of Governmental
Entities that are not pending or threatened), (ii) is not past, or within 60 days of, the
statutory limit for collection applicable to the Obligor or is not aged more than 180 days
from its Invoice Date, (iii) in the case of a Receivable that is not a Rebate Receivable, was
not billed to the Obligor on a date more than 30 days after the Last Service Date, and (iv)
in the case of a Rebate Receivable, was not billed to the Obligor on a date more than 60
days after the end of the fiscal quarter in which such Rebate Receivable became due and payable.

     (d) Each such Receivable is not due from any Governmental Entity other than Medicare,
Medicaid, TRICARE/CHAMPUS, Ryan White programs, 340B drug pricing programs, the State Children’s
Health Insurance Program (Title XXI of the Social Security Act) or any similar state or federally
funded program.

VI-1 

 

     (e) No Borrower has any guaranty of, letter of credit providing credit support for, or
collateral security for, such Receivable, other than any such guaranty, letter of credit or
collateral security as has been assigned to the Lender, and any such guaranty, letter of credit or
collateral security is not subject to any Lien in favor of any other Person.

     (f) The Obligor with respect to each such Receivable is (i) not currently the subject of any
bankruptcy, insolvency or receivership proceeding, nor is it unable to make payments on its
obligations when due, (ii) located in the United States of America, (iii) one of the following:
(x) a Person which in the ordinary course of its business or activities agrees to pay for
healthcare services received by individuals, including, without limitation, commercial insurance
companies and non-profit insurance companies (such as Blue Cross and Blue Shield) issuing health,
personal injury, worker’s compensation or other types of insurance, employers or unions which
self-insure for employee or member health insurance, prepaid healthcare organizations, preferred
provider organizations, health maintenance organizations, commercial hospitals, physician’s groups
or any other similar person or (y) an individual, (iv) not a Subsidiary, parent or other Person
that is an Affiliate of any Borrower and (v) not the Obligor of any Receivable that was a Defaulted
Receivable in the past 12 months.

     (g) The financing of such Receivables hereunder is made in good faith and without actual
intent to hinder, delay or defraud present or future creditors of the Borrower.

     (h) The insurance policy, contract or other instrument obligating an Obligor to make payment
with respect to such Receivable (i) does not contain any provision prohibiting the grant of a
security interest in such payment obligation from the applicable Borrower to the Lender, (ii) has
been duly authorized and, together with such Receivable, constitutes the legal, valid and binding
obligation of the Obligor in accordance with its terms, (iii) together with such Receivable, does
not contravene in any material respect any requirement of law applicable thereto, and (iv) was in
full force and effect and applicable to the Obligor at the time the goods or services constituting
the basis for such Receivable were sold or performed.

     (i) No consents by any third party to the assignment of such Receivable are required other
than consents previously obtained in writing by the Borrower, a copy of each such consent having
been provided to the Lender.

     (j) The inclusion of each such Receivable in the Borrowing Base would not increase the
fraction expressed as a percentage where (i) the numerator is the sum of the then outstanding
principal amount of Eligible Receivables for any obligor (or group of obligors) listed below
included in the Borrowing Base, and (ii) the denominator is the Borrowing Base for all Eligible
Receivables, above the corresponding maximum percentage listed below:

VI-2 

 

	 	 	 
	Obligor
	 	Maximum
	 	 	 
	 
	 	Percentage
	 	 	 
	Health Maintenance Organizations
	 	100%
	 	 	 
	Managed Care Organizations
	 	100%
	 	 	 
	Long-Term Care Facilities
	 	20%
	 	 	 
	Employer Plans
	 	50%
	 	 	 
	any single AAA rated Obligor
	 	10%
	 	 	 
	any single AA rated Obligor
	 	6%
	 	 	 
	any single A rated Obligor
	 	4%
	 	 	 
	any single BBB rated Obligor
	 	3%
	 	 	 
	any single unrated Obligor
	 	3%

     With respect to any Receivables that fail to satisfy the Eligibility Criteria set forth in
this clause (j), such Receivables shall be deemed Eligible Receivables (provided they otherwise
satisfy the Eligibility Criteria set forth in this Exhibit VI) until shall time that the Lender, in
its sole discretion, determines that such Receivables (or any portion thereof) shall not be
Eligible Receivables as a result of their failure to satisfy the Eligibility Criteria set forth in
this clause (j).

          (l) Unless specifically verified and accepted by the Program Manager or Program Manager, no
single Eligible Receivable that is not a Rebate Receivable has an Expected Net Value greater than
$800,000.

          (m) No prior sale or assignment of security interest which is still in effect on the
applicable Funding Date has been made with respect to or granted in any such Receivable.

VI-3 

 

EXHIBIT VII-A

FORM OF BORROWING BASE CERTIFICATE

HFG Healthco-4 LLC

Borrowing Base Report

VII-A-1 

 

EXHIBIT VII-B

FORM OF BORROWER’S CERTIFICATE

VII-B-1 

 

EXHIBIT VIII

RECEIVABLE INFORMATION

          The following information shall, as appropriate, be provided by each Borrower to the Program
Manager with respect to each Receivable, together with such other information and in such form as
may reasonably be requested from time to time by the Program Manager and as, in accordance with
applicable law, may be disclosed or released to the Program Manager (the “Receivable Information”):

	(i)	 	Cash Receipts Report – Cash receipt transaction data containing:

	 	 	–	 Transaction date
	 
	 	 	–	 Transaction number
	 
	 	 	–	 Customer number
	 
	 	 	–	 Cash receipt amount

	 	(ii)	 	Invoices Report – Invoice transaction data containing:

	 	 	–	 Transaction date
	 
	 	 	–	 Transaction number
	 
	 	 	–	 Customer number
	 
	 	 	–	 Invoice amount

	 	(iii)	 	Adjustments Report – Adjustment transaction data containing:

	 	 	–	 Transaction date
	 
	 	 	–	 Transaction number
	 
	 	 	–	 Customer number
	 
	 	 	–	 Amount of adjustment

VIII-1 

 

EXHIBIT IX-A

FORM OF NOTICE TO GOVERNMENTAL ENTITIES

[Letterhead of the applicable Borrower]

	 	 	 
	[Name and Address

	 	[Date]
	of Governmental Entity]
	 	 

	 	 	 	 	 	 	 
	 

	  Re:	Change of Account and Address [for Medicare Supplier No.]
 

	 	 

To Whom it May Concern:

          Please be advised that we have opened a new bank account at [Bank of America, N.A.] [UMB Bank]
and a post-office box with respect to such bank account. Accordingly, effective immediately and
until further notice, we hereby request that:

          (1) All wire transfers be made directly into our account at:

                [                    ]

               (2) All remittance advices and other forms of payment, including checks, be
made to our post office box located at:

                     [                    ]

          As provided in the Medicare Carriers Manual § 3060.11, the undersigned hereby
certifies that this payment arrangement will continue in effect only so long as the following
requirements are met:

a) [Bank of America, N.A.] [UMB Bank] does not provide financing to the
undersigned nor acts on behalf of another party in connection with the
provision of such financing; and

b) The undersigned has sole control of the account, and [Bank of America,
N.A.] [UMB Bank] is subject only to the instructions of the undersigned (or
its agents) regarding the account.

Thank you for your cooperation in this matter.      Title:

IX-1 

 

EXHIBIT IX-B

FORM OF NOTICE TO NON-GOVERNMENTAL ENTITIES

[Letterhead of the Applicable Borrower]

	 	 	 
	[Name and Address

	 	[Date]
	of Obligor]
	 	 

	 	 	 	 	 	 	 
	 

	  Re:	Change of Account and Address
 

	 	 

To Whom it May Concern:

          We are pleased to announce that we have entered into a new long-term financing arrangement
with the Healthcare Finance Group, Inc. This financing arrangement will allow us to continue to
provide you with new and innovative services and products. As part of this arrangement, we will be
assigning all of our existing and future receivables payable by you to us as collateral to our
lender — HFG Healthco-4 LLC (“Healthco-4”). Accordingly, you are hereby directed to make:

          (1) All wire transfers directly to the following account:

               [                    ]

               (2) All remittance advices and other forms of payment, including checks, to the
following address:

               [                    ]

          Please
note that this is the same remittance name, address and account to
which you. currently send payment.

          The foregoing directions shall apply to all existing receivables payable to us and (until
further written notice) to all receivables arising in the future and may not be revoked except by a
writing executed by us and Healthco-4.

          Please acknowledge your receipt of this notice by signing the enclosed copy of this letter and
returning it in the enclosed envelope.

          Thank you for your cooperation in this matter.

IX-2 

 

EXHIBIT X

SERVICING RESPONSIBILITIES

              Each Borrower shall be responsible for the following administration and servicing obligations
(the “Servicing Responsibilities”) which shall be performed by each Borrower until such time as a
successor servicer shall be designated and shall accept appointment pursuant to Section 3.04(b) of
the Agreement:

          (a) Servicing Standards and Activities. Each Borrower agrees to administer and
service its Receivables (i) within the parameters of services set forth in paragraph (b) of this
Exhibit X, as such parameters may be modified by mutual written agreement of the Lender and the
Borrowers, (ii) in compliance at all times with applicable law and with the agreements, covenants,
objectives, policies and procedures set forth in the Agreement, and (iii) in accordance with
industry standards for servicing healthcare receivables unless such standards conflict with the
procedures set forth in paragraph (b) of this Exhibit X in which case the provisions of
paragraph (b) shall control. The Borrowers shall establish and maintain electronic data processing
services for monitoring, administering and collecting the Receivables in accordance with the
foregoing standards and shall, within three Business Days of the deposit of any checks, other forms
of cash deposits, or other written matter into a Lockbox, post such information to its electronic
data processing services.

          (b) Parameters of Primary Servicing. The Servicing Responsibilities shall be
performed within the following parameters:

               (i) Subject to the review and authority of the Lender and the Program Manager and
except as otherwise provided herein, each Borrower shall have full power and authority to
take all actions that it may deem necessary or desirable, consistent in all material
respects with its existing policies and procedures with respect to the administration and
servicing of accounts receivable, in connection with the administration and servicing of its
Receivables. Without limiting the generality of the foregoing, each Borrower shall, in the
performance of its servicing obligations hereunder, act in accordance with all legal
requirements and subject to the terms and conditions of the Agreement.

               (ii) During the continuance of an Event of Default, at the Lender’s or Program
Manager’s request, all enforcement and collection proceedings with respect to the
Receivables shall, unless prohibited by applicable law, be instituted and prosecuted in the
name of the Lender.

               (iii) No Borrower shall change in any material respect its existing policies and
procedures with respect to the administration and servicing of accounts receivable
(including, without limitation, the amount and timing of write-offs) without the prior
written consent of the Lender.

               (iv) The Borrowers will be responsible for monitoring and collecting the Receivables,
including, without limitation, contacting Obligors that have not made

X-1 

 

payment on their respective Receivables within the customary time period for such
Obligor, and resubmitting any claim rejected by an Obligor due to incomplete information.

          (v) If any Borrower determines that a payment with respect to a Receivable has been
received directly by a pharmacy or any other Person, the Borrowers shall promptly advise the
Lender, and the Lender shall be entitled to presume that the reason such payment was made to
such pharmacy or other Person was because of a breach of representation or warranty in the
Agreement with respect to such Receivable (such as, by way of example, the forms related to
such Receivable not being properly completed so as to provide for direct payment by the
Obligor to the applicable Borrower), unless such Borrower shall demonstrate that such is not
the case. In the case of any such Receivable which is determined not to be a Denied
Receivable, the Borrowers shall promptly demand that such pharmacy or other Person remit and
return such funds. If such funds are not promptly received by the applicable Borrower, the
Borrowers shall take all reasonable steps to obtain such funds.

          (vi) Notwithstanding anything to the contrary contained herein, no Borrower may amend,
waive or otherwise permit or agree to any deviation from the terms or conditions of any
Receivable in any material respect without the prior consent of the Lender.

          (c) Termination of Servicing Responsibilities; Cooperation. Upon the occurrence of an
Event of Default the Lender may, by written notice, terminate the performance of the Servicing
Responsibilities by any Borrower, in which event such Borrower shall immediately transfer to a
successor servicer designated by the Lender all records, computer access and other information as
shall be necessary or desirable, in the reasonable judgment of such successor servicer, to perform
such responsibilities. The Borrowers shall otherwise cooperate fully with such successor servicer.

X-2 

 

EXHIBIT XI

XI-1 

 

EXHIBIT XII

INTERFACE WITH PROGRAM MANAGER

          1. The Program Manager will convey appropriate data requirements and instructions to the
Borrower Representative to establish a computer interface between the Borrowers’ systems and the
Program Manager’s receivables monitoring system. The interface will permit the Program Manager to
receive electronically each Borrower’s accounts receivable data, including the Receivable
Information, billing data and collection and other transaction data relating to the Receivables.

          2. Each Borrower shall give the Program Manager and the Lender at least ten Business Days’
notice of any coding changes or electronic data processing system modifications made by such
Borrower which could affect the Program Manager’s processing or interpretation of data received
through the interface.

          3. The Program Manager shall have no responsibility to return to any Borrower any information
which the Program Manager receives pursuant to the computer interface.

          4. Each Borrower will prepare weekly accounts receivable data files of all transaction types
for such Borrower’s sites that are included in the program. The weekly cutoff will occur at a
predetermined time each week, and the weekly cutoff date for all of the sites must occur at exactly
the same time. The cutoff date that will be selected will be at the end of business for a specific
day of the week, or in other words, at the end of such Borrower’s transaction posting process for
that day. Each Borrower will temporarily maintain a copy of the accounts data files in the event
that the data is degraded or corrupted during transmission, and needs to be re-transmitted.

          5. The Program Manager will be responsible for the management of the hardware, communications
and software used in the program.

          6. The Program Manager’s data center will receive the Receivable files, and immediately
confirm that the files have been passed without degradation or corruption of data by balancing the
detailed items to the control totals that accompany the files. Any problems in this process will
be immediately reported to the Borrower Representative so that the Receivable file can be
re-transmitted, if necessary.

          7. Once the receipt of the Receivable data has been confirmed, the Program Manager will
perform certain tests and edits to ensure that each Receivable meets the specified eligibility
criteria. Compliance with concentration limits will be verified and the Program Manager will
notify the Program Manager that the Eligible Receivables have been determined.

          8. Each Borrower’s sites will continue to post daily transactions to their respective
Receivable files. Each Borrower’s Receivable files for each of the eligible sites will include all
transactions posted through that day. Each Borrower will create a transaction report and a
Receivable file for each of the eligible sites. The transaction report will contain all

XI-1 

 

transactions posted to the respective site Receivable file for the specified period (and will
indicate the respective site and the number of items and total dollars on each transaction report
for control purposes). The Receivable file will contain balances that reflect the transactions
posted on the Borrowers’ systems through the end of business of the specified period.

          9. Each Borrower will transmit the billing, transaction, and the most current Receivable data
files to the Program Manager’s data center according to the established schedule. The Borrowers
should, again, maintain the backup of each of these files in the event that a re-transmission is
necessary.

          10. The Program Manager’s data center will confirm that the files have been received intact,
and will immediately communicate any problems to the Borrower Representative in order to initiate a
re-transmission. The Program Manager will then post the transaction files to the accounts
receivable for accounts that the Program Manager is maintaining, and consequently update the
affected balances. Upon completion of the posting process, the Program Manager will generate
summary reports of the posting process that the Program Manager will use to complete various
funding activities. The Program Manager summary reports will reference the Borrowers’ transaction
codes and activity to codes that are common to the funding program.

          11. The Program Manager will then compare the updated accounts balances on the Program
Manager’s system to the corresponding account balances reflected on the Receivable file. The
Program Manager expects that the balances for the funded Receivables will be congruent, and any
discrepancies will be immediately examined and resolved through the cooperative effort of the
Program Manager and the Borrowers. The Program Manager shall produce discrepancy reports (e.g.,
“Funding Only” or “Out of Balance” reports) and the Borrowers shall respond promptly to such
reports.

          12. Once the reconciliation process has been completed and any discrepancies between the
Program Manager and the Borrowers’ Receivable files resolved through the discrepancy report process
described in paragraph 9 above, the Program Manager will then process the Receivable file and
advise the Lender. The Program Manager will then proceed through exactly the same process
described in paragraph 6 above.

XI-2 

 

EXHIBIT XII

FORM OF DEPOSITARY AGREEMENT

XV-1 

 

EXHIBIT XIV

FORM OF GUARANTY

XV-2 

 

EXHIBIT XV

FORM OF SUBSCRIPTION AGREEMENT

XVI-1 

 

SCHEDULE I

ADDRESSES FOR NOTICE

	 	 	 
	If to the

	 	 
	Revolving Agent:

	 	HFG Healthco-4 LLC 

48 Wall Street
	 

	 	New York, New York 10005
	 
	 	 
	If to the

	 	 
	Revolving Lender:

	 	HFG Healthco-4 LLC

48 Wall Street
	 

	 	New York, New York 10005
	 
	 	 
	If to the

	 	 
	Program Manager or 
Program Manager

	 	Healthcare Finance Group Inc.

199 Water Street, 20th Floor
	 

	 	New York, New York 10038
	 

	 	Attention: Chief Credit Officer
	 

	 	Tel: (212) 785-9212
	 

	 	Fax: (212) 785 8501
	 

	 	e-mail:
	 
	 	 
	If to the Borrowers:

	 	10050 Crosstown Circle Suite 300
	 

	 	Eden Prairie, MN 55344
	 

	 	Attention: Barry A. Posner
	 

	 	Tel: (952) 979-3750
	 

	 	Fax: (952) 674-5783
	 

	 	e-mail: bposner@bioscrip.com
	 
	 	 
	 

	 	and
	 
	 	 
	 

	 	100 Clearbrook Road
	 

	 	Elmsford, NY 10523
	 

	 	Attention: Barry A. Posner
	 

	 	Tel: 914-460-1638
	 

	 	Fax: [                    ]
	 

	 	e-mail: bposner@bioscrip.com

Sch. I-1 

 

SCHEDULE II

CREDIT AND COLLECTION POLICY

Sch. II-1 

 

SCHEDULE III

DISCLOSURES

Sch. III-1 

 

SCHEDULE IV

LOCKBOX INFORMATION

Sch. IV-1 

 

SCHEDULE V

NET VALUE FACTORS

Rebate Receivables: Initially 99%

Receivables that are not Rebate Receivables:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	   PBM	 	 	 	 	 	 	 	 	 	 	 	 	 	Comm	 	 	 	 	 	 	 	 	 	 	 	 	 	BioScrip
	Services	 	Mail Order	 	New Jersey	 	Roslyn	 	Pharm	 	Bronx	 	SF Mail	 	Burbank	 	Consolidated
	   95%

	 	 	95	%	 	 	95	%	 	 	90	%	 	 	92	%	 	 	92	%	 	 	95	%	 	 	95	%	 	 	94	%

Sch. V-1 

 

SCHEDULE VI

MONTHLY FINANCIAL REPORTING

Sch. V-2

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