Document:

Exhibit 10.1

 

ESCROW
AGREEMENT

 

This ESCROW
AGREEMENT (this “Escrow Agreement”)
is made as of April 23, 2004, among Curative Health Services, Inc., a Minnesota
corporation (“Buyer”),
Christopher J. York, an individual resident of
             ,
in his capacity as representative of Sellers (“Sellers’
Representative”), and The Bank of New York, a New York banking
corporation, as escrow agent (“Escrow Agent”).

 

Recitals

 

WHEREAS, Buyer and
Sellers have entered into a Stock Purchase Agreement dated as of February 24,
2004 (the “Stock Purchase Agreement”)
pursuant to which Buyer is acquiring over 90% of the issued and outstanding
capital stock of Critical Care Systems, Inc., a Delaware corporation, from
Sellers.  Capitalized terms used herein
without definition will have the meanings assigned to such terms in the Stock
Purchase Agreement.

 

WHEREAS, in order
to provide a source of payment for the Price Adjustment Escrow Amount and the
Indemnification Escrow Amount pursuant to the Stock Purchase Agreement, Buyer
and Sellers have agreed, pursuant to Sections 2.3(b)(iii) and 2.3(b)(iv)
of the Stock Purchase Agreement, that Buyer will deliver to the Escrow Agent
the sum of $15,000,000 (the “Escrow Amount”),
which amount is part of the Seller Estimated Common Share Purchase Price, to be
held and disposed of by the Escrow Agent as provided in this Escrow Agreement.

 

NOW, THEREFORE, in
consideration of the mutual representations, warranties and agreements
contained in this Escrow Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

 

1.             Appointment of the
Escrow Agent.  Buyer and Sellers’
Representative, on behalf of all of Sellers, appoint the Escrow Agent to serve
as, and the Escrow Agent agrees to act as, escrow agent upon the terms and
conditions of this Escrow Agreement.

 

2.             Deposit of the
Escrow Amount.  At the Closing, in
accordance with the terms of Section 2.3 of the Stock Purchase Agreement,
Buyer will deposit the Escrow Amount in immediately available funds with the
Escrow Agent to be held and disposed of as provided in this Escrow
Agreement.  The funds and property held
by the Escrow Agent hereunder, including any interest, dividends or gains
earned thereon and any other earnings in respect thereof, are hereinafter
called the “Escrow Fund.”  The Escrow Fund will be held in trust and
will be used solely for the purposes and subject to the conditions set forth
herein.  The Escrow Agent will hold the
Escrow Fund in two separate accounts, the first to hold $2,500,000 of the
amount deposited, together with any investment earnings thereon, representing a
source of payment of Sellers’ obligations under Section 2.5 of the Stock
Purchase Agreement (“Adjustment Escrow
Account”), and the second to hold the remaining balance of the
Escrow Fund, representing a source of payment of Sellers’ obligations under
Section 11.2 of the Stock Purchase Agreement and, to the extent funds in
the Adjustment Escrow Account are insufficient for its purpose, Sellers’
obligations under Section 2.5 of the Stock Purchase Agreement (“Indemnification Escrow Account” and,
together with the Adjustment Escrow Account, the “Escrow Accounts”).

 

 

3.             Payments to Buyer
from the Escrow Accounts.

 

(a)           Adjustment
Escrow Account.  In the event that
Buyer is owed any amount required to be paid by Sellers pursuant to
Section 2.5 of the Stock Purchase Agreement (the “Price Adjustment”), Buyer will have the
right to deliver a written notice (an “Adjustment
Notice”) to the Escrow Agent (with a copy to Sellers’
Representative) which will set forth (i) the Price Adjustment, certifying that
payment of such amount is due and that such amount (or any portion thereof) is
to be paid from the Adjustment Escrow Account (to the extent of the funds
available therein, and, if such funds are insufficient, from the
Indemnification Escrow Account), and (ii) payment instructions.  On the tenth business day after receipt by
the Escrow Agent of such Adjustment Notice, the Escrow Agent will pay the
requested Price Adjustment (to the extent of funds available in the Adjustment
Escrow Account, and, in the event funds therein are insufficient, from the
Indemnification Escrow Account) to Buyer in immediately available funds
according to Buyer’s instructions; provided, however, that if the Escrow Agent
receives notice of a Contested Claim (as defined below) from Sellers’
Representative prior to the tenth business day following the date the Escrow
Agent receives an Adjustment Notice, the Escrow Agent shall disburse all or
portions of the amounts in accordance with Section 3(c).  To the extent Escrow Funds remain in the
Adjustment Escrow Account following payment of such Price Adjustment or if no
Price Adjustment is payable to Buyer, the Escrow Agent will pay the remaining
funds in the Adjustment Escrow Account to the Sellers in accordance with
instructions received from Sellers’ Representative pursuant to a Disbursement
Notice to be given pursuant to Section 3(d) below.

 

(b)           Indemnification
Escrow Account.  In the event that
Buyer is owed any Damages required to be paid by Sellers pursuant to
Section 11.2 of the Stock Purchase Agreement (the “Indemnification Amount”), Buyer will have
the right (but not the obligation, except as otherwise stated in Sections 6.7,
11.2 and 11.5 of the Stock Purchase Agreement) to deliver a written notice (an
“Indemnification Notice”) to the
Escrow Agent (with a copy to Sellers’ Representative) which will set forth (i)
the Indemnification Amount, certifying that payment of such amount is due and
that such amount (or any portion thereof) is to be paid from the
Indemnification Escrow Account, and (ii) payment instructions.  On the twenty-first business day  after
receipt by the Escrow Agent of such Indemnification Notice, the Escrow Agent
shall pay to Buyer the Indemnification Amount in immediately available funds
from the Indemnification Escrow Account in accordance with the payment
instructions, provided, however, that if the Escrow Agent receives notice of a
Contested Claim (as defined below) from Sellers’ Representative prior to the
twenty-first business day  following the date the Escrow Agent
receives an Indemnification Notice, the Escrow Agent shall disburse all or
portions of the amounts in accordance with Section 3(c).

 

(c)           Contested
Claims.  Sellers’ Representative may
contest a claim made under Section 3(a), 3(b) or 6 hereof, and Buyer may
contest a claim under Section 3(d) hereof, if it reasonably believes there
is a basis for disputing such claim, by giving prompt written notice (a “Contest Notice”) to the Escrow Agent and
the Buyer or Sellers’ Representative, as the case may be, but in any event
prior to the respective dates for payment by the Escrow Agent pursuant to an
Adjustment Notice, Indemnification Notice, Disbursement Notice or Tax
Distribution Notice, as the case may be (a “Contested
Claim”).  Such Contest Notice
shall set forth, in reasonable detail, each disputed item or amount and the
basis of the disagreement.  Buyer and
Sellers’

 

 

Representative first shall attempt in good faith to
resolve all of the issues set forth in the Contest Notice prior to the
twentieth day following the date of receipt by the Escrow Agent of a Contest
Notice.  After such negotiation period, Buyer
and Sellers’ Representative shall deliver joint written instructions to the
Escrow Agent directing the Escrow Agent to disburse any portion of the Escrow
Funds with respect to which all disputes have been resolved, and the Escrow
Agent shall make such disbursements in accordance with such instructions.  In the event that Buyer and Sellers’
Representative cannot reach an agreement during such negotiation period, then
the Escrow Agent shall not make any payment out of the applicable Escrow
Account until such dispute is resolved. 
If such dispute is resolved pursuant to judicial process, then upon
receipt of a certificate from an officer of the Buyer or a certificate from
Sellers’ Representative stating that such dispute has been finally resolved and
attaching thereto a final and non-appealable judgment of a court of competent
jurisdiction resolving such dispute and stating the amount of such judgment
which remains unsatisfied, the Escrow Agent shall make such payment in
accordance with such judgment and the provisions of Section 3 hereof.

 

(d)           Release
of Adjustment Escrow Account.  In
the event that Buyer is not owed any Price Adjustment or if there are Escrow
Funds remaining in the Adjustment Escrow Account after the payment of any Price
Adjustment to Buyer, Sellers’ Representative shall give a written notice (a “Disbursement Notice”) to the Escrow Agent
(with a copy to Buyer) (i) instructing the Escrow Agent to disburse the balance
of the Adjustment Escrow Account to the Sellers, and (ii) providing payment
instructions with respect to amounts payable to the Sellers.  On the tenth business day  following
receipt of a Disbursement Notice, the Escrow Agent shall pay the remaining
balance in the Adjustment Escrow Account in immediately available funds
according to the instructions received from Sellers’ Representative, provided,
however, that if the Escrow Agent receives notice of a Contested Claim (as
defined above) from Buyer prior to the tenth business day  following the date the
Escrow Agent receives a Disbursement Notice, the Escrow Agent shall disburse
all or portions of the amounts in accordance with Section 3(c) above.  Notwithstanding anything herein, on the day
following the last day of the 18th calendar month after the date of
this Escrow Agreement, the Escrow Agent will pay to either the Seller’s
Representative or to Sellers, in accordance with written instructions received
from the Sellers’ Representative, all of the remaining funds in the Adjustment
Escrow Account less the amounts set forth in any pending Adjustment Notice
which is the subject of an unresolved Contested Claim.

 

(e)           Release
of Indemnification Escrow Account. 
On the day following the last day of the 18th calendar month
after the date of this Escrow Agreement, the Escrow Agent will pay to either
the Sellers’ Representative or to Sellers, in accordance with written
instructions received from the Sellers’ Representative, all of the remaining
funds in the Indemnification Escrow Account less the amounts set forth in all
pending Indemnification Notices, Adjustment Notices for Price Adjustments that
exceed the Adjustment Escrow Account or Tax Distribution Notices, submitted on
or prior to such date or Contested Claims (the “Reserved Amounts”).

 

(f)            Payment
of Reserved Amounts.  In the event
any payment made to Sellers under Section 3(e) is reduced by a Reserved
Amount, then promptly following either (i) the final resolution of each
Contested Claim under any such pending Indemnification Notice, (ii) the payment
of the amounts set forth in such pending Indemnification Notice or (iii) the payment
of the aggregate amounts set forth in any outstanding Adjustment Notices or Tax
Distribution

 

 

Notices, the Escrow Agent will pay to Sellers’
Representative the amount, if any, by which the remaining balance of the Escrow
Fund exceeds the aggregate remaining Reserved Amounts in respect of all
outstanding Indemnification Notices, Adjustment Notices or Tax Distribution
Notices.

 

4.             Termination.  This Escrow Agreement will terminate when
the entire Escrow Fund has been distributed by the Escrow Agent pursuant to
Section 0.  Sections 7(a),
7(b), 7(d), 7(e) and 8 shall survive the termination of this Escrow Agreement
or the resignation or removal of the Escrow Agent.

 

5.             Qualified
Investments.  At the written
direction of Buyer acting after consultation with Seller’s Representative
delivered to the Escrow Agent, all or any part of the Escrow Account will be
invested by the Escrow Agent in any one or more Qualified Investments.  As used herein, “Qualified Investment” will mean (i) cash,
(ii) obligations of, or obligations fully guaranteed as to timely payment
of principal and interest by, the United States of America with a maturity date
of one year or less from the date of investment, (iii) money market funds
registered under the Investment Company Act of 1940, as amended, which value
their assets in accordance with Rule 2a-7 (or any successor rule) under
such Act that invest solely in instruments that would be Qualified Investments
hereunder, it being understood that limited maturity date of the underlying
investment would not apply in this case, (iv) certificates of deposit with
an investment term of six months or less from the date of investment with any
bank or trust company organized under the laws of the United States of America
or the laws of any state thereof which has a long term debt rating from Moody’s
Investor’s Service, Inc. (“Moody’s”)
of at least Aaa or from Standard & Poor’s Corporation (“S&P”) of at least AAA,
(v) municipal or corporate bonds with a maturity date of six months or
less from the date of investment and rated at least Aaa by Moody’s or AAA by
S&P, and (vi) commercial paper with a maturity of not more than thirty days
and rated at least P-1 by Moody’s or A-1 by S&P.  The Escrow Agent is authorized to sell on a commercially reasonable
basis, any Qualified Investment purchased by it pursuant to this paragraph in
order to provide cash to make any payment required or permitted to be made
hereunder by the Escrow Agent.  The
Escrow Agent will not be liable for any loss due to fluctuations in market
rates resulting from a sale of Qualified Investments in accordance with the
previous sentence or penalties incurred because of early redemption.  The Escrow Agent will hold any Qualified
Investments purchased by it hereunder without any responsibility other than for
the safe keeping thereof.

 

6.             Taxes.  Buyer will provide the Escrow Agent with a
properly completed and executed IRS Form W-9. 
The Sellers’ Representative or any Seller receiving a direct payment out
of the Escrow Funds will provide any required W-8 or W-9 certifications to the
Escrow Agent.  All interest or other
income earned under the Escrow Agreement will be treated for U.S. federal,
state and local income tax purposes as taxable to Buyer and will be reported as
such by the Escrow Agent.  On or before
each March 5th, Buyer will deliver to the Escrow Agent (with a copy to
Sellers’ Representative) a written notice (each, a “Tax Distribution Notice”) that will set forth (i) the amount
required to discharge Buyer’s United States federal, state and local income tax
liabilities with respect to interest or other income earned during the
preceding calendar year under this Escrow Agreement, taking into account all
applicable deductions and credits (the “Net
Tax Cost”) and (ii) payment instructions.  On the tenth business day following the date of receipt of such
notice by the Escrow Agent, the Escrow Agent will pay to Buyer the Net Tax Cost
in

 

 

immediately available funds
from the Escrow Fund, to the extent of the funds then available in the Escrow
Fund; provided, however, that if the Escrow Agent receives
notice of a Contested Claim (as defined above) from Sellers’ Representative
prior to the tenth business day  following the date the Escrow Agent
receives a Tax Distribution Notice, the Escrow Agent shall disburse all or
portions of the amounts in accordance with Section 3(c).  Ten business days prior to the final
disbursement of funds from the Escrow Accounts and the termination of this
Escrow Agreement under Section 4 hereof, Buyer will provide the Escrow
Agent (with a copy to Sellers’ Representative) a Tax Distribution Notice
setting forth an estimate of the Net Tax Cost from the end of the prior
calendar year under this Escrow Agreement through the date of termination
hereof and payment instructions.  The
Escrow Agent will pay to Buyer such Net Tax Cost in immediately available funds
from the Escrow Fund, to the extent of the funds then available therefor on the
day of the final distribution hereunder; provided,
however, that if the Escrow Agent
receives notice of a Contested Claim (as defined above) from Sellers’
Representative prior to the tenth
business day  following the date the Escrow Agent
receives a Tax Distribution Notice for such final Net Tax Cost, the Escrow
Agent shall disburse all or portions of the amounts in accordance with
Section 3(c).  All earnings of the
Escrow Fund not distributed pursuant to a Tax Distribution Notice will remain
part of the Escrow Fund to be applied and disbursed as provided herein.

 

7.             Concerning the
Escrow Agent.  Buyer, on the one
hand, and Sellers, on the other, will pay or have an affiliate pay the Escrow
Agent upon execution of the Escrow Agreement a $1,500 Acceptance Fee and annual
fees of $2,000 if all investments are in money market funds (or $6,000 if
otherwise invested in Qualified Investments) for the services to be rendered
hereunder and to pay or reimburse the Escrow Agent upon request for all
reasonable expenses, disbursements and advances incurred or made by it in
connection with carrying out its duties hereunder, including, without
limitation, trading commissions and fees and reasonable attorney’s fees and
expenses.  The Escrow Agent’s annual fee
will not be pro-rated for any portion of a year the Escrow Agreement
exists.  Buyer and Seller will each be
responsible for 50% of amounts payable to the Escrow Agent pursuant to this
Section 7(a) unless otherwise agreed by Buyer and Seller’s Representative.

 

(a)           Other
than as provided in paragraph 7(a), Sellers’ Representative, on behalf of
Sellers, and Buyer will jointly and severally indemnify and hold harmless the
Escrow Agent and each director, employee, attorney, agent and affiliate of the
Escrow Agent for, and hold it harmless against, any loss, liability or expense
incurred without gross negligence or willful misconduct or bad faith on the
part of the Escrow Agent or breach by the Escrow Agent of the terms of this
Escrow Agreement, arising out of or in connection with its entering into this
Escrow Agreement and carrying out its duties hereunder, including the costs and
expenses of defending itself against any claim of liability.  Notwithstanding the foregoing, as between
Sellers’ Representative, on behalf of Sellers, and Buyer, any indemnity to be
paid to the Escrow Agent pursuant to the preceding sentence will be borne 50%
by Buyer and 50% by Sellers’ Representative, on behalf of Sellers severally and
not jointly.  Escrow Agent may deduct
from the Escrow Fund any such expenses, costs, disbursements or advances
described in Section 7(a) or 7(b).

 

(b)           The
Escrow Agent will prepare and deliver to Buyer and Sellers’ Representative
within ten business days after the end of each calendar month prior to
termination of this Escrow

 

 

Agreement a written account describing all
transactions with respect to the Escrow Accounts during such calendar month.

 

(c)           The
duties and responsibilities of the Escrow Agent under this Agreement will be
determined solely by the express provisions of this Escrow Agreement, and no
other or further duties or responsibilities will be implied.

 

(d)           The
Escrow Agent may act upon any instrument or other writing provided by a duly
authorized officer of any of the parties hereto, believed by it in good faith
to be genuine, and to be signed or presented by the proper person, and will not
be liable in connection with the performance by it of its duties pursuant to
the provisions of this Escrow Agreement, except for its own willful misconduct,
gross negligence or breach by it of the express terms of this Escrow Agreement.

 

8.             Resignation of
Escrow Agent; Appointment of Successor. 
The Escrow Agent may at any time resign by giving 60 days’ prior written
notice of resignation to Buyer and to Sellers’ Representative.  Buyer and Sellers’ Representative may at any
time, with or without cause, jointly remove the Escrow Agent by giving 15 days’
prior written notice signed by Buyer and Sellers’ Representative to the Escrow
Agent.  If the Escrow Agent will resign
or be removed, a successor escrow agent, which will be a bank or trust company having
offices in New York and assets in excess of $2 billion, will be appointed
jointly by Buyer and Sellers’ Representative. 
Buyer and Sellers’ Representative shall notify the Escrow Agent by
written instrument executed by Buyer and Sellers’ Representative and delivered
to the Escrow Agent and to such successor escrow agent of the appointment of
such successor escrow agent and, thereupon, the resignation or removal of the
predecessor Escrow Agent will become effective and such successor escrow agent,
without any further act, deed or conveyance, will become vested with all right,
title and interest to all cash and property held hereunder of such predecessor
Escrow Agent.  The predecessor Escrow
Agent will be discharged from its obligations under this Escrow Agreement but
will not be discharged from any liability for actions taken as Escrow Agent
hereunder prior to such succession.  The
predecessor Escrow Agent will transmit all records pertaining to the Escrow
Fund held by it and will pay all of the Escrow Fund held by it to the successor
Escrow Agent.  If no successor escrow
agent will have been appointed within 60 days of a notice of resignation by the
Escrow Agent, the Escrow Agent’s sole responsibility will thereafter be to hold
the Escrow Fund until the earlier of (i) its receipt of designation of a
successor escrow agent or a joint written instruction by Buyer and Sellers’
Representative regarding the disposition of the Escrow Fund, (ii) its receipt
of a final non-appealable order of a court of competent jurisdiction, (iii) its
application to a court of competent jurisdiction for the appointment of a
successor Escrow Agent, or (iv) the termination of this Escrow Agreement in
accordance with its terms.

 

9.             General Amendment
and Waiver.  This Escrow Agreement
may not be amended, nor may any provision of this Escrow Agreement or any
default, misrepresentation, or breach of warranty or agreement under this
Escrow Agreement be waived, except in a writing executed by all parties to this
Escrow Agreement.  Neither the failure
nor any delay by any Person in exercising any right, power or privilege under
this Escrow Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the

 

 

exercise of any other right,
power or privilege.  In addition, no
course of dealing between or among any persons having any interest in this
Escrow Agreement will be deemed effective to modify or amend any part of this
Escrow Agreement or any rights or obligations of any person under or by reason
of this Escrow Agreement.  The rights
and remedies of the parties to this Escrow Agreement are cumulative and not
alternative.

 

(a)           Notices.  All notices, demands and other
communications to be given or delivered under or by reason of the provisions of
this Escrow Agreement will be in writing and will be deemed to have been given
(i) when delivered if personally delivered by hand (with written confirmation
of receipt), (ii) the next business day if sent by a nationally recognized
overnight courier service, (iii) five business days after being mailed, if sent
by first class mail, return receipt requested, or (iv) when receipt is acknowledged
by an affirmative act of the party receiving notice, if sent by facsimile,
telecopy or other electronic transmission device (provided that such an
acknowledgement does not include an acknowledgment generated automatically by a
facsimile or telecopy machine or other electronic transmission device).  Notices, demands and communications to Buyer
and Sellers’ Representative will, unless another address is specified in
writing, be sent to the address indicated below:

 

If to Buyer:

 

Curative Health Services, Inc.

150 Motor Parkway

Hauppauge, New York 11788

Phone:  (631) 232-7016 

Fax:  (631) 233-8107

Attention:  Nancy Lanis, General Counsel

 

With a copy to:

 

Dorsey & Whitney LLP

50 South Sixth Street

Minneapolis, MN 55402

Phone:  (612) 340-2600

Fax:  (612) 340-2868

Attention:  Timothy S. Hearn, Esq.

 

If to Sellers or Sellers’ Representative:

 

Christopher J. York

726 North Brookstone Road

Grayslake, IL 60030

Phone:  (847) 223-4154

Fax:  (847) 223-0399

 

With a copy to:

 

Bryan Cave LLP

211 N. Broadway

 

 

Suite 3600

St. Louis, MO 63102

Fax:  (314) 259-2020

Attention:  Mark H. Goran, Esq. 

 

If to Escrow Agent:

 

The Bank of New York

101 Barclay Street, Floor 8W

New York, NY  10286

Attn:  Insurance Trust and escrow Unit

Fax:  (212) 815-5877

 

(b)           Assignment.  Neither this Escrow Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any party to this
Escrow Agreement without the prior written consent of the other parties to this
Escrow Agreement.  This Escrow Agreement
and all of the provisions of this Escrow Agreement will be binding upon and
inure to the benefit of the parties to this Escrow Agreement and their
respective successors and permitted assigns.

 

(c)           No
Third Party Beneficiaries.  Nothing
expressed or referred to in this Escrow Agreement confers any rights or
remedies upon any Person that is not a party or permitted assign of a party to
this Escrow Agreement.

 

(d)           Severability.  Whenever possible, each provision of this
Escrow Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Escrow Agreement is
held to be prohibited by or invalid under applicable law, such provision will
be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Escrow Agreement.

 

(e)           Complete
Agreement.  This Escrow Agreement
and the Stock Purchase Agreement contain the complete agreement between the
parties with respect to the subject matter and supersede any prior
understandings, agreements or representations by or between the parties,
written or oral.  Escrow Agent shall not
be subject to any agreement to which it is not a party, even though reference
thereto may be made herein.

 

(f)            Signatures;
Counterparts.  This Escrow Agreement
may be executed in one or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same instrument. 
A facsimile signature will be considered an original signature.

 

(g)           GOVERNING
LAW.  THE DOMESTIC LAW, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES, OF THE STATE OF NEW YORK WILL GOVERN
ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
ESCROW AGREEMENT AND THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS ESCROW
AGREEMENT.

 

 

(h)           WAIVER
OF JURY TRIAL.  EACH PARTY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS ESCROW
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS ESCROW AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
ESCROW AGREEMENT.  EACH PARTY CERTIFIES
AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES
SUCH WAIVER VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS ESCROW
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS
SECTION 9(i).

 

(i)            Construction.  The Buyer and Sellers’ Representative and
their respective counsel have participated jointly in the negotiation and
drafting of this Escrow Agreement.  In
addition, each of the Buyer and Sellers’ Representative acknowledges that it is
sophisticated and has been advised by experienced counsel and, to the extent it
deemed necessary, other advisors in connection with the negotiation and
drafting of this Escrow Agreement.  In
the event an ambiguity or question of intent or interpretation arises, this
Escrow Agreement will be construed as if drafted jointly by the Buyer and
Sellers’ Representative and no presumption or burden of proof will arise
favoring or disfavoring Buyer and Sellers’ Representative, by virtue of the authorship
of any of the provisions of this Escrow Agreement.  The parties intend that each representation, warranty and
agreement contained in this Escrow Agreement will have independent
significance.  If any party has breached
any representation, warranty or agreement in any respect, the fact that there
exists another representation, warranty or agreement relating to the same
subject matter (regardless of the relative levels of specificity) that the
party has not breached will not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or agreement.  Any reference to any law will be deemed to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.  The headings
preceding the text of articles and sections included in this Escrow Agreement
are for convenience only and are not deemed part of this Escrow Agreement or
given effect in interpreting this Escrow Agreement.  References to sections or articles are to the sections or articles
contained in, referred to or attached to this Escrow Agreement, unless
otherwise specified.  The word
“including” means “including without limitation.”  The use of the masculine, feminine or neuter gender or the
singular or plural form of words will not limit any provisions of this Escrow
Agreement.  A statement that an item is
listed, disclosed or described means that it is correctly listed, disclosed or
described, and a statement that a copy of an item has been delivered means a
true and correct copy of the writing has been delivered.

 

(j)            Time
of Essence.  With regard to all
dates and time periods set forth or referred to in this Escrow Agreement, time
is of the essence.

 

 

IN WITNESS WHEREOF,
Buyer, Sellers’ Representative and the Escrow Agent execute this Escrow
Agreement as of the date first above written.

 

 

	
   

  	
  CURATIVE HEALTH SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas
  W. Axmacher

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SELLER’S REPRESENTATIVE

  CHRISTOPHER J. YORK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Christopher J. York

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Authorized Signatory

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:Exhibit
10.2

 

 

AMENDED AND RESTATED

CREDIT AGREEMENT

 

DATED AS OF APRIL 23, 2004

 

AMONG

 

CURATIVE HEALTH SERVICES, INC.,

AS BORROWER REPRESENTATIVE,

 

THE BORROWERS SIGNATORY HERETO,

 

THE LENDERS REFERRED TO HEREIN,

 

GECC CAPITAL MARKETS GROUP, INC.,

AS LEAD ARRANGER

 

AND

 

GENERAL ELECTRIC CAPITAL
CORPORATION,

AS AGENT

 

 

 

 

TABLE
OF CONTENTS

 

 

	
  ARTICLE
  I.  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  1.1.  Certain Defined Terms

  	
   

  
	
   

  	
  Section
  1.2.  Accounting Terms and
  Determinations

  	
   

  
	
   

  	
  Section
  1.3.  Other Definitional Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II.  THE FACILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  2.1.  The Facilities

  	
   

  
	
   

  	
  Section
  2.2.  Notes

  	
   

  
	
   

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

  	
   

  
	
   

  	
  Section
  2.4.  Interest on Loans

  	
   

  
	
   

  	
  Section
  2.5.  Letters of Credit

  	
   

  
	
   

  	
  Section
  2.6.  Swingline Loans

  	
   

  
	
   

  	
  Section
  2.7.  Certain Fees

  	
   

  
	
   

  	
  Section 2.8.  Mandatory Prepayments

  	
   

  
	
   

  	
  Section 2.9.  Optional Prepayments

  	
   

  
	
   

  	
  Section 2.10.  Application of Payments

  	
   

  
	
   

  	
  Section 2.11.  Reduction of Commitments

  	
   

  
	
   

  	
  Section 2.12.  Loan Account and Accounting

  	
   

  
	
   

  	
  Section
  2.13.  Computation of Interest and
  Fees

  	
   

  
	
   

  	
  Section
  2.14.  General Provisions Regarding
  Payments

  	
   

  
	
   

  	
  Section
  2.15.  Maximum Interest

  	
   

  
	
   

  	
  Section
  2.16.  Additional Borrowers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.  CONDITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  3.1.  Conditions to Closing

  	
   

  
	
   

  	
  Section
  3.2.  Conditions to Each Extension of
  Credit

  	
  68

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV.  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  	
   

  
	
   

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

  	
   

  
	
   

  	
  Section
  4.3. Organizational and Governmental Approvals; No Contravention

  	
   

  
	
   

  	
  Section
  4.4.  Binding Effect; Liens of
  Collateral Documents

  	
   

  
	
   

  	
  Section 4.5.  Financial Statements

  	
   

  
	
   

  	
  Section 4.6.  Material Adverse Effect

  	
   

  
	
   

  	
  Section 4.7.  Litigation

  	
   

  
	
   

  	
  Section 4.8.  Due Diligence Questionnaire; Full
  Disclosure

  	
   

  
	
   

  	
  Section 4.9.  No Adverse Fact

  	
   

  
	
   

  	
  Section 4.10.  Ownership of Property, Liens

  	
   

  
	
   

  	
  Section 4.11.  Environmental Laws

  	
   

  
	
   

  	
  Section 4.12.  ERISA

  	
   

  
	
   

  	
  Section 4.13.  Subsidiaries Capitalization

  	
   

  
	
   

  	
  Section 4.14.  Government Regulations

  	
   

  
	
   

  	
  Section 4.15.  Margin Regulations

  	
   

  

 

i

 

	
   

  	
  Section 4.16.  Taxes

  	
   

  
	
   

  	
  Section 4.17.  Intellectual Property

  	
   

  
	
   

  	
  Section 4.18.  Solvency

  	
   

  
	
   

  	
  Section 4.19.  Insurance

  	
   

  
	
   

  	
  Section 4.20.  Brokers

  	
   

  
	
   

  	
  Section
  4.21.  Compliance with HIPAA

  	
   

  
	
   

  	
  Section
  4.22.  Matters Concerning Prior
  Acquisitions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V.  REPORTING COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  5.1.  Financial Statements and Other
  Reports

  	
   

  
	
   

  	
  Section
  5.2.  Collateral Reports

  	
   

  
	
   

  	
  Section
  5.3.  Financial Statements and Other
  Reports

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  6.1.  Payment of Obligations

  	
   

  
	
   

  	
  Section
  6.2.  Conduct of Business and
  Maintenance of Existence

  	
   

  
	
   

  	
  Section
  6.3.  Maintenance of Assets and
  Properties

  	
   

  
	
   

  	
  Section
  6.4.  Insurance; Damage to or
  Destruction of Collateral

  	
   

  
	
   

  	
  Section
  6.5.  Compliance with Laws

  	
   

  
	
   

  	
  Section
  6.6.  Inspection of Property, Books
  and Records

  	
   

  
	
   

  	
  Section
  6.7.  Supplemental Disclosure

  	
   

  
	
   

  	
  Section
  6.8.  Use of Proceeds

  	
   

  
	
   

  	
  Section
  6.9.  Further Assurances

  	
   

  
	
   

  	
  Section
  6.10.  Hedging Facilities.

  	
   

  
	
   

  	
  Section
  6.11.  Environmental Matters

  	
   

  
	
   

  	
  Section
  6.12.  Landlord and Warehouseman
  Waivers

  	
   

  
	
   

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

  	
   

  
	
   

  	
  Section
  6.14.  Additional Subsidiaries

  	
   

  
	
   

  	
  Section
  6.15. Compliance Program

  	
   

  
	
   

  	
  Section
  6.16.  Cash Management Systems

  	
   

  
	
   

  	
  Section
  6.17.  Accreditation and Licensing.

  	
   

  
	
   

  	
  Section
  6.18. Minimum Liquidity.

  	
   

  
	
   

  	
  Section
  6.19.  Additional Covenants.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII.  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  7.1.  Indebtedness

  	
   

  
	
   

  	
  Section
  7.2.  Liens; Negative Pledges

  	
   

  
	
   

  	
  Section
  7.3.  Guaranteed Obligations

  	
   

  
	
   

  	
  Section
  7.4.  Capital Stock; Nature of Business

  	
   

  
	
   

  	
  Section
  7.5.  Restricted Payments

  	
   

  
	
   

  	
  Section
  7.6.  No Restrictions on Subsidiary
  Distributions to Borrowers

  	
   

  
	
   

  	
  Section
  7.7.  ERISA

  	
   

  
	
   

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

  	
   

  
	
   

  	
  Section
  7.9.  Purchase of Assets; Investments

  	
   

  
	
   

  	
  Section
  7.10.  Transactions with Affiliates

  	
   

  
	
   

  	
  Section
  7.11.  Amendments or Waivers

  	
   

  
	
   

  	
  Section
  7.12.  Fiscal Year

  	
   

  
	
   

  	
  Section
  7.13.  Capital Expenditures

  	
   

  
	
   

  	
  Section
  7.14.  Lease Limits

  	
   

  

 

ii

 

	
   

  	
  Section
  7.15. Total Leverage Ratio

  	
   

  
	
   

  	
  Section
  7.16. Senior Secured Leverage Ratio

  	
   

  
	
   

  	
  Section
  7.17.  Fixed Charge Coverage Ratio

  	
   

  
	
   

  	
  Section 7.18.  Pro Forma
  Adjustments.

  	
   

  
	
   

  	
  Section
  7.19.  Accounts Receivable DSO

  	
   

  
	
   

  	
  Section
  7.20.  Sale-Leasebacks

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  8.1.  Events of Default

  	
   

  
	
   

  	
  Section
  8.2.  Remedies

  	
   

  
	
   

  	
  Section
  8.3.  Waivers by Credit Parties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX.  EXPENSES AND INDEMNITIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  9.1.  Expenses

  	
   

  
	
   

  	
  Section
  9.2.  Indemnity

  	
   

  
	
   

  	
  Section
  9.3.  Taxes

  	
   

  
	
   

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

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X.  THE AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  10.1.  Appointment and Authorization

  	
   

  
	
   

  	
  Section
  10.2.  Delegation of Duties.

  	
   

  
	
   

  	
  Section
  10.3.  Agent and Affiliates.

  	
   

  
	
   

  	
  Section
  10.4.  Action by Agent

  	
   

  
	
   

  	
  Section
  10.5.  Consultation with Experts

  	
   

  
	
   

  	
  Section
  10.6.  Liability of Agent

  	
   

  
	
   

  	
  Section
  10.7.  Indemnification

  	
   

  
	
   

  	
  Section
  10.8.  Credit Decision

  	
   

  
	
   

  	
  Section
  10.9.  Successor Agent

  	
   

  
	
   

  	
  Section 10.10.  Reliance by Agent

  	
   

  
	
   

  	
  Section 10.11.  Notice of Default

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI.  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  11.1.  Survival

  	
   

  
	
   

  	
  Section
  11.2.  No Waivers; Remedies
  Cumulative.

  	
   

  
	
   

  	
  Section
  11.3.  Notices

  	
   

  
	
   

  	
  Section
  11.4.  Severability

  	
   

  
	
   

  	
  Section
  11.5.  Amendments and Waivers

  	
   

  
	
   

  	
  Section
  11.6.  Successors and Assigns;
  Registration

  	
   

  
	
   

  	
  Section
  11.7.  Setoffs and Sharing of Payments

  	
   

  
	
   

  	
  Section
  11.8.  Collateral

  	
   

  
	
   

  	
  Section
  11.9.  Headings

  	
   

  
	
   

  	
  Section 11.10.  Governing Law; Submission To Jurisdiction

  	
   

  
	
   

  	
  Section 11.11.  Notice of Breach by Agent or Lender

  	
   

  
	
   

  	
  Section 11.12.  Waiver Of Jury Trial

  	
   

  
	
   

  	
  Section 11.13.  Counterparts; Entire Agreement

  	
   

  
	
   

  	
  Section 11.14.  Confidentiality; Press Release

  	
   

  
	
   

  	
  Section 11.15.  Reinstatement

  	
   

  
	
   

  	
  Section 11.16.  Advice of Counsel

  	
   

  
	
   

  	
  Section 11.17.  No Strict Construction

  	
   

  
	
   

  	
  Section 11.18.  Conflict of Terms

  	
   

  

 

iii

 

	
   

  	
  Section 11.19.  Effect of Amendment and Restatement of the Existing Credit
  Agreement

  	
   

  
	
   

  	
  Section 11.20.  New Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII.  CROSS-GUARANTY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section
  12.1.  Cross-Guaranty

  	
   

  
	
   

  	
  Section
  12.2.  Waivers by Borrowers

  	
   

  
	
   

  	
  Section
  12.3.  Benefit of Guaranty

  	
   

  
	
   

  	
  Section
  12.4.  Subordination of Subrogation,
  Etc.

  	
   

  
	
   

  	
  Section
  12.5.  Election of Remedies

  	
   

  
	
   

  	
  Section
  12.6.  Limitation

  	
   

  
	
   

  	
  Section
  12.7.  Contribution with Respect to
  Guaranty Obligations

  	
   

  
	
   

  	
  Section
  12.8.  Liability Cumulative

  	
   

  

 

iv

 

	
  EXHIBIT A

  	
  -

  	
  Revolving Note

  
	
  EXHIBIT B

  	
  -

  	
  [RESERVED]

  
	
  EXHIBIT C

  	
  -

  	
  Swingline Note

  
	
  EXHIBIT D-1

  	
  -

  	
  Notice of Borrowing

  
	
  EXHIBIT D-2

  	
  -

  	
  Notice of Swingline
  Borrowing

  
	
  EXHIBIT E

  	
  -

  	
  Borrower Security
  Agreement

  
	
  EXHIBIT F

  	
  -

  	
  Borrower Pledge Agreement

  
	
  EXHIBIT G

  	
  -

  	
  Subsidiary Guaranty
  Agreement

  
	
  EXHIBIT H

  	
  -

  	
  Guarantor Security
  Agreement

  
	
  EXHIBIT I

  	
  -

  	
  Opinion of Counsel to the
  Credit Parties

  
	
  EXHIBIT J

  	
  -

  	
  Authorized Signatory
  Letter

  
	
  EXHIBIT K

  	
  -

  	
  Closing Checklist

  
	
  EXHIBIT L

  	
  -

  	
  Assignment Agreement

  
	
  EXHIBIT M

  	
  -

  	
  HIPAA Business Associate
  Agreement

  
	
  EXHIBIT N

  	
  -

  	
  Form of Seller
  Subordination Agreement

  
	
  EXHIBIT O

  	
  -

  	
  Form of Borrowing Base
  Certificate

  
	
   

  	
   

  	
   

  
	
  EXHIBIT 5.1(a)

  	
   

  	
  Compliance Certificate
  (Quarterly)

  
	
  EXHIBIT 5.1(b)

  	
   

  	
  Compliance Certificate
  (Annual)

  

 

The following schedules to the Credit
Agreement have been omitted. Curative Health Services, Inc. will furnish any
such schedules to the Commission as supplemental information upon request:

 

	
  DISCLOSURE SCHEDULE 1.1

  	
  -

  	
  Permitted Restructuring

  
	
  DISCLOSURE SCHEDULE
  4.5(a)

  	
  -

  	
  Financial Statements

  
	
  DISCLOSURE SCHEDULE
  4.5(b)

  	
  -

  	
  Borrowers’ Financial
  Budget

  
	
  DISCLOSURE SCHEDULE 4.7

  	
  -

  	
  Litigation

  
	
  DISCLOSURE SCHEDULE 4.13

  	
  -

  	
  Subsidiaries, Other
  Equity Investments

  
	
  DISCLOSURE SCHEDULE 4.19

  	
  -

  	
  Insurance Policies

  
	
  DISCLOSURE SCHEDULE
  6.16(a)

  	
  -

  	
  Government Receivables
  Deposit Accounts and Concentration Account

  
	
  DISCLOSURE SCHEDULE
  6.16(c)

  	
  -

  	
  Blocked Accounts

  
	
  DISCLOSURE SCHEDULE 7.1

  	
  -

  	
  Indebtedness

  
	
  DISCLOSURE SCHEDULE 7.2

  	
  -

  	
  Restatement Effective
  Date Liens

  
	
  DISCLOSURE SCHEDULE 7.4

  	
  -

  	
  Capital Structure

  
	
  DISCLOSURE SCHEDULE 7.9

  	
  -

  	
  Existing Investments

  
	
  DISCLOSURE SCHEDULE
  7.10(b)

  	
  -

  	
  Existing Loans to
  Employees

  

 

v

 

AMENDED AND RESTATED

CREDIT AGREEMENT

 

This AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of April 23, 2004 (the “Agreement”),
among CURATIVE HEALTH SERVICES, INC.,
a Minnesota corporation formerly known as Curative Holding Co. (“Holdings”), EBIOCARE.COM, INC., a Delaware corporation (“Ebiocare”), HEMOPHILIA ACCESS, INC., a Tennessee corporation (“Hemophilia Access”), APEX THERAPEUTIC CARE, INC., a California
corporation (“Apex”), CHS SERVICES, INC., a Delaware corporation
(“CHS”), CURATIVE HEALTH SERVICES CO., a Minnesota
corporation formerly known as Curative Health Services, Inc. (“CHSC”),
CURATIVE HEALTH SERVICES OF NEW YORK, INC., New York corporation (“CHSNY”), OPTIMAL
CARE PLUS, INC., a Delaware corporation (“Optimal Care”),  INFINITY INFUSION, LLC, a Delaware limited
liability company (“Infinity”), INFINITY INFUSION II, LLC, a Delaware
limited liability company (“Infinity II”),
INFINITY INFUSION CARE, LTD., a
Texas limited partnership (“Infinity Infusion”),
MEDCARE, INC., a Delaware
corporation (“Medcare”), CURATIVE PHARMACY SERVICES, INC., a
Delaware corporation (“CPS”), CRITICAL CARE SYSTEMS, INC., a Delaware
corporation (“CCS”), any
Additional Borrowers that hereafter may from time to time become a party hereto
pursuant to Section 2.16 hereof
(Holdings, Ebiocare, Hemophilia Access, Apex, CHS, CHSNY, CHSC, Optimal Care,
Infinity, Infinity II, Infinity Infusion, Medcare, CPS, CCS and such Additional
Borrowers are sometimes collectively referred to herein as the “Borrowers” and individually as a “Borrower”), the Lenders listed on the signature pages hereof, and GENERAL ELECTRIC CAPITAL CORPORATION, as
Agent.

 

INTRODUCTORY
STATEMENT

 

A.            The Borrowers are a party to that
certain Credit Agreement dated as of June 9, 2003 (as amended, supplemented or
otherwise modified from time to time prior to the date hereof, the “Existing Credit Agreement”), among the
Borrowers (other than CCS), the lenders party thereto, General Electric Capital
Corporation, individually as a lender and in its capacity as agent, pursuant to
which such lenders have agreed to extend, and have extended, credit and other
financial accommodations to the Borrowers (other than CCS).

 

B.            The Borrowers have requested that
the Existing Credit Agreement be amended and restated as set forth below to,
among other things, (a) to refinance certain existing indebtedness and
obligations of the Borrowers owing to the Agent and the Lenders under the
Existing Credit Agreement, (b) to provide funds for certain fees and
transaction costs relating to the negotiation and documentation of the
Agreement, the Subject Acquisition (as defined below) and the Senior Unsecured
Debt (as defined below), (c) to provide working capital financing for the
Borrowers and (d) to provide funds for other general corporate purposes of the
Borrowers, including funding fees and expenses associated with the transactions
contemplated hereunder.

 

 

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

 

D.            It is the intent of the parties
hereto that this Agreement not constitute a novation of the obligations and
liabilities existing under the Existing Credit Agreement and which remain
outstanding or evidence repayment of any such obligations and liabilities and
that this Agreement amend and restate in its entirety the Existing Credit
Agreement and re-evidence the obligations of the Borrowers outstanding
thereunder.

 

NOW, THEREFORE, in
consideration of the premises and the agreements hereinafter set forth, the
parties hereto hereby agree that on the Restatement Effective Date (as defined
below), the Existing Credit Agreement shall be amended and restated in its
entirety as follows:

 

ARTICLE I.

 

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

“Acquisition
Agreement” means a stock purchase agreement, asset purchase agreement or
similar agreement by and among one or more Credit Parties and a Target Seller,
among others, if applicable, relating to the acquisition by one or more Credit
Parties from a Target Seller.

 

2

 

“Acquisition
Documents” means an Acquisition Agreement and all material agreements,
documents and instruments executed in connection therewith.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Applicable
Margin” means: (a) from the Restatement Effective Date to and including the
fifth day following the receipt of financial statements for the Fiscal Quarter
ended June 30, 2004 delivered pursuant to Section
5.1(a) (the “Initial
Adjustment Date”), (i) 3.50% per annum for LIBOR Loan Advances and 2.25%
per annum for Base Rate Advances, (ii) 2.25% per annum for Swingline Loans, and
(iii) 3.50% per annum for the Letter of Credit Fee Applicable

 

3

 

Margin;
and (b) commencing on the Initial Adjustment Date and on the first day of each
Fiscal Quarter thereafter that follows by at least five (5) days the receipt of
financial statements delivered pursuant to Section
5.1(a), the
Applicable Margin for each Class of Extension of Credit shall be that
determined from the chart below based on such financial statements:

 

	
  If Total Leverage Ratio is:

  	
   

  	
  Level of

  Applicable Margins:

  
	
  <3.50x

  	
   

  	
  Level I

  
	
  >3.50x but <4.25x

  	
   

  	
  Level II

  
	
  >4.25x

  	
   

  	
  Level III

  

 

	
   

  	
   

  	
  Applicable
  Margins

  	
   

  
	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  
	
  Applicable
  Margin for Base Rate Advances

  	
   

  	
  1.75

  	
  %

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  
	
  Applicable
  Margin for LIBOR Loan Advances

  	
   

  	
  3.00

  	
  %

  	
  3.25

  	
  %

  	
  3.50

  	
  %

  
	
  Applicable
  Margin for Letter of Credit Fee

  	
   

  	
  3.00

  	
  %

  	
  3.25

  	
  %

  	
  3.50

  	
  %

  

 

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

 

“Applicable
Percentage” means (a) three percent (3%), in the case of a prepayment or
reduction on or prior to the first anniversary of the Restatement Effective
Date, (b) two percent (2%), in the case of a prepayment or reduction after the
first anniversary of the Restatement Effective Date but on or prior to the
second anniversary thereof, and (c) one percent (1%), in the case of a
prepayment or reduction after the second anniversary of the Restatement
Effective Date, but on or prior to the third anniversary thereof.

 

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

 

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

 

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

 

4

 

“Assignment of
Representations” means that certain Assignment of Representations, Warranties,
Covenants and Indemnities, made by certain Credit Parties in favor of the Agent
in connection any Acquisition occurring on or after the Original Closing Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Borrower
Representative” means Holdings.

 

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

 

“Borrower Pledge
Agreement” means the Borrower Pledge Agreement dated as of the date hereof
between the Borrowers (other than CCS) and the Agent, substantially in the form
of Exhibit
F.

 

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

 

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

 

5

 

(subject
to Article II) and, except in the case
of Base Rate Advances, have the same initial LIBOR Period.  Borrowings are also classified for purposes
hereof by reference to the pricing of Advances comprising such Borrowing (for
example, a “LIBOR Borrowing” is a Borrowing comprised of LIBOR Loan Advances).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

“CCS Purchase
Agreement” means that certain Stock Purchase Agreement, dated as of February
24, 2004, by and among Holdings, CCS and the shareholders party thereto, as
amended, restated, supplemented or otherwise modified from time to time.

 

“CCS Security
Agreement” means the Security Agreement dated as of the Restatement Effective
Date between CCS and Agent.

 

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

 

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

 

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

 

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

 

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

 

“Charges” means
any and all federal, state, county, city, municipal, local, foreign or other
governmental taxes (including taxes owed to the PBGC at the time due and
payable), levies, assessments, charges, liens, claims or encumbrances upon or
relating to (a) the Collateral,

 

7

 

(b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (d) any Credit Party’s ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party’s business including,
without limitation, charges for necessary business permits and governmental
authorizations.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Deutsche
Bank/Banker’s Trust

New York, NY

ABA No.:  021-001-033

Account No.:  50-271-079

Account Name:  GE-HFS Cash Flow Collections

Re:  Curative Health Services, Inc.

 

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

 

“Commitment
Letter” means that certain Commitment Letter, dated February 23, 2004, by and
between GE Capital and certain of the Credit Parties party thereto.

 

8

 

“Commitment
Termination Date” means the earliest of (a) April 23, 2009 (b) the date of
termination of Lenders’ obligations to make Advances and to incur L/C
Obligations or the date of acceleration of the maturity date of all or any
portion of the Obligations pursuant to Section
8.2(b), and (c) the date of indefeasible payment in full by the
Borrowers of the Loans and the cancellation and return of (or issuance of a
stand-by guarantee or letter of credit with respect to) all Letters of Credit
or the cash collateralization of all L/C Obligations pursuant to Section 2.5(k), and the permanent reduction
of all Commitments to Zero Dollars ($0).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Credit Document
Obligations” has the meaning ascribed to such term in clause (a) of the
definition of Obligations.

 

“Credit Parties”
means the Borrowers and each Guarantor.

 

9

 

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

 

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

 

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

 

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

 

“Department of
Justice Obligations” means that certain indebtedness outstanding to the
Department of Justice in accordance with that certain Stipulation and Order of
Settlement and Dismissal effected upon the date it was entered by the court on
or about December 28, 2001, with an initial outstanding balance of $16,500,000
and an outstanding balance as of the Restatement Effective Date of $3,500,000.

 

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

 

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

 

“EBITDA” means,
with respect to any Person for any fiscal period, without duplication, an amount
equal to (a) consolidated net income (or loss) of such Person for such period
(excluding extraordinary gains and non-cash items), minus (b) the sum
of, without duplication, (i) income tax credits, (ii) interest income, (iii)
any aggregate net gain (but not any aggregate net loss) during such period
arising from the sale, exchange or other disposition of capital assets by such
Person (including any fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets and all
securities), plus, (c) to the extent deducted in determining such
consolidated net income (or loss) for such period, the sum of, without
duplication, (i) income tax expense, (ii) Interest Expense and Fees, (iii) loss
from extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized debt
discount for such period, and (vi) the amount of any deduction to consolidated
net income as the result of any grant to any employees, officers or directors
of such Person of any Stock.  For
purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit) of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person’s Subsidiaries;
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an

 

10

 

ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(4) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (5) any write-up of any asset; (6) any net gain from the collection of
the proceeds of life insurance policies; (7) any net gain arising from the acquisition
of any securities, or the extinguishment, under GAAP, of any Indebtedness, of
such Person; (8) in the case of a successor to such Person by consolidation or
merger or as a transferee of its assets, any earnings of such successor prior
to such consolidation, merger or transfer of assets; and (9) any deferred
credit representing the excess of equity in any Subsidiary of such Person at
the date of acquisition of such Subsidiary over the cost to such Person of the
investment in such Subsidiary.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

Without limiting the foregoing, no Accounts of CCS
shall constitute Eligible Accounts hereunder unless and until CCS becomes a
wholly-owned Subsidiary of Holdings and each of the foregoing criteria in this definition
have been satisfied with respect to the such Account.

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Without limiting the foregoing, no Inventory of CCS
shall constitute Eligible Inventory hereunder unless and until CCS becomes a
wholly-owned Subsidiary of Holdings and each of the foregoing criteria in this
definition have been satisfied with respect to the such Inventory.

 

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

 

“Environmental
Liabilities” means, with respect to any Person, all liabilities, obligations,
responsibilities, response, remedial and removal costs, investigation and
feasibility

 

14

 

study
costs, capital costs, operation and maintenance costs, losses, damages,
punitive damages, property damages, natural resource damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants), fines,
penalties, sanctions and interest incurred as a result of or related to any
claim, suit, action, investigation, proceeding or demand by any Person, whether
based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute or common law, including any arising under or related
to any Environmental Laws or Environmental Permits or in connection with any
Release or threatened Release or the presence of a Hazardous Material whether
on, at, in, under, from or about or in the vicinity of any real or personal
property.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

“Existing Credit
Agreement” has the meaning ascribed to it in paragraph A of the Introductory
Statement to this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

Borrowers,
the Obligations and, without duplication, Guaranteed Obligations in respect of
Funded Debt of other Persons.

 

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

 

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

 

“GE Capital Fee
Letter” means that certain letter, dated as of February 23, 2004, between GE
Capital and certain of the Credit Parties party thereto with respect to certain
fees to be paid from time to time by the Borrowers to GE Capital.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Guaranteed
Obligations” means as to any Person, without duplication, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation (“primary obligation”)
of any other Person (the “primary obligor”) in any manner, including any
obligation or arrangement of such Person to (a) purchase or repurchase any such
primary obligation, (b) advance or supply funds (i) for the purchase or payment
of any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c) purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof; provided that the term Guaranteed
Obligations shall not include endorsements for collection or deposit in the
ordinary course of business.  The amount
of any Guaranteed Obligations at any time shall be

 

17

 

deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such Guaranteed
Obligations is incurred and (y) the maximum amount for which such Person may be
liable pursuant to the terms of the instrument embodying such Guaranteed
Obligations, or, if not stated or determinable, the maximum reasonably
anticipated liability (assuming full performance) in respect thereof.

 

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

 

“Guaranty
Agreements” means, collectively, that certain Subsidiary Guaranty dated as of
August 13, 2003 by and among Curative Health Services Co., Curative Health
Services III Co. and Curative Health Services IV Co., and any other guaranty
agreements now or hereafter executed by any Person in favor of Agent and
Lenders to guarantee the Obligations.

 

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

 

“Harris Bank” has
the meaning ascribed to it in Section 7.2(h).

 

“Harris Bank
Letter of Credit” has the meaning ascribed to it in Section 7.2(h).

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Home Care
Purchase Agreement” means that certain Asset Purchase Agreement dated as of
October 23, 2002 by and among Holdings, CHSNY, Home Care Seller and the shareholders
party thereto, as amended, restated, supplemented or otherwise modified.

 

“Home Care Seller”
means Home Care of New York, Inc., a New York corporation.

 

“Indebtedness” of
a Person means at any date, without duplication, (a) all obligations of such Person
for borrowed money (but excluding obligations to trade creditors incurred in
the ordinary course of business that are unsecured and not overdue by more than
6 months unless being contested in good faith and for which adequate reserves
have been established in accordance with GAAP), (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person to pay the deferred purchase price of property or service incurred in
the ordinary course of business if the purchase price is due more than six (6)
months from the date the obligation is incurred, (d) all Capital Lease Obligations of such
Person, (e) any obligation under any
lease (a “synthetic lease”) treated as an operating lease under GAAP and as a
loan or financing for United States income tax purposes or creditors rights
purposes, (f) all obligations of such Person to purchase securities (or
other property) which arise out of or in connection with the issuance or sale
of the same or substantially similar securities (or property), (g) all
contingent or non-contingent obligations of such Person to reimburse any bank
or other Person in respect of amounts paid under a letter of credit or similar
instrument, (h) all equity securities of such Person subject to repurchase or
redemption otherwise than at the sole option of such Person, (i) all “earnouts”
and similar payment obligations of such Person, (j) all indebtedness secured by
a Lien on any asset of such Person, whether or not such indebtedness is
otherwise an obligation of such Person, (k) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement
designed to alter the risks of that Person arising from

 

19

 

fluctuations in currency values or interest rates, in
each case whether contingent or matured, including, without limitation the
Subject Swap Obligations, and (l) all Guaranteed Obligations of such
Person.  Indebtedness shall, in any
event, include the Department of Justice Obligations.

 

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

 

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

 

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

 

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

 

“Intercreditor
Agreement” has the meaning ascribed to it in the definition of Obligations.

 

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

 

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

 

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

 

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

 

“Investment”
means, with respect to any Person, any investment by such Person in any other
Person, whether by means of acquiring or holding Stock, capital contribution,
loan,

 

20

 

advance, extension of credit, purchase of
Indebtedness, guarantee, deposit or otherwise, but excluding any trade account
receivable arising in the ordinary course of business.

 

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

 

“IRS” means the
Internal Revenue Service.

 

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

 

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

 

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

 

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

 

“L/C Limit” means
$5,000,000.

 

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

 

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

 

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

 

“Lending Party”
means the Agent, Lead Arranger, the Lenders and any Letter of Credit
Issuer.  For the avoidance of doubt, the
term Lending Party shall not include the Subject Swap Counterparty.

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

“LIBOR Period”
means, with respect to any LIBOR Loan, each period commencing on a LIBOR
Business Day and ending one (1), two (2), three (3) or six (6) months
thereafter, in each case as selected by the Borrower Representative’s
irrevocable notice to Agent as set forth in Section
2.3; provided that the foregoing provision relating to LIBOR
Periods is subject to the following:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

“Loan Documents”
means this Agreement, the Notes, the GE Capital Fee Letter, the Collateral
Documents, the Intercreditor Agreement, the master standby agreement relating
to the issuance of standby Letters of Credit, the master documentary agreement
relating to the issuance of documentary Letters of Credit, the HIPAA Business
Associate Agreement, the Joinder to Credit Agreement, dated as of August 19,
2003, executed by Holdings in favor of Lenders and Agent, the Reaffirmation
Agreement, the Post Closing Letter Agreement and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to Agent or any Lender in connection with this Agreement
or the transactions contemplated thereby. 
Any reference in this Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and shall
refer to this Agreement or such Loan Document as the same may be in effect at
any and all times such reference becomes operative.

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Medicaid Provider Agreement” means an agreement entered into between a
state agency or other entity administering Medicaid in such state and a health
care facility or physician

 

24

 

under which the health care
facility or physician agrees to provide services or merchandise for Medicaid
patients.

 

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

 

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

 

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

 

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

 

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

 

“Monthly Swap Statement” means that certain monthly statement prepared
by the Subject Swap Counterparty and delivered to Holdings, which statement
sets forth all Subject Swap Obligations then owing by Holdings to the Subject
Swap Counterparty, and is otherwise in form and substance satisfactory to
Agent.

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

“Obligations”
means (a) all Loans, fees, indebtedness, liabilities, obligations, covenants
and duties of any Credit Party to any Lending Party of every kind, nature and
description, direct or indirect, absolute or contingent, due or not due, in
contract or tort, liquidated or unliquidated, arising under this Agreement, or
under the other Loan Documents, by operation of law or otherwise in connection
with the transactions contemplated hereby, now existing or hereafter arising,
and whether or not for the payment of money or the performance or non-performance
of any act, including, but not limited to, all damages that any Credit Party
may owe to the Agent and/or the Lenders by reason of any breach by any Credit
Party of any representation, warranty, covenant, agreement or other provision
of this Agreement or any of the other Loan Documents and all obligations of the
Borrowers under any interest rate protection agreement entered with any Lender
pursuant to Section 6.10 hereof
(all of the foregoing liabilities and obligations described in this clause (a)
are referred to herein collectively as the “Credit
Document Obligations”), and (b) solely for purposes of Section 2.10(b) hereof relating to the
application of proceeds from the Collateral and the use of the term Obligations
in any of the Security Agreements, Pledge Agreements or Mortgages, the term
Obligations shall include the Subject Swap Obligations to the extent and only
to the extent that an intercreditor agreement in form and substance
satisfactory to GE Capital in its sole and absolute discretion (such
intercreditor agreement is referred to herein as the “Intercreditor Agreement”) has been duly
executed by the Subject Swap Party and the Credit Parties and delivered to GE
Capital following the Restatement Effective Date and such Intercreditor Agreement
is and remains at all times after execution and delivery thereof
effective.  The Credit Parties hereby
acknowledge and agree that neither GE Capital nor any of its Affiliates is
obligated at any time to enter into or to negotiate the terms of the Intercreditor
Agreement and the failure to enter into or negotiate such terms shall not
result in any liability of GE Capital, Agent, any Lender or any Affiliate
thereof.  Without limiting the
generality of the foregoing, this term includes all principal, interest
(including all

 

26

 

interest that accrues after the commencement of any
case or proceeding by or against any Credit Party in bankruptcy, whether or not
allowed in such case or proceeding), Fees, Charges, expenses, attorneys’ fees
and any other sum payable by any Credit Party to a Lending Party under this
Agreement or any of the other Loan Documents.

 

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

 

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

 

“Original Closing
Date” means June 9, 2003.

 

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

 

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

 

“Pay Proceeds
Letter” means a letter of direction from Borrower Representative addressed to
Agent, on behalf of itself and Lenders, with respect to the disbursement on the
Restatement Effective Date of the proceeds of the initial Revolving Credit
Advances.

 

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

 

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

 

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

 

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

 

27

 

for a Class shall have terminated, the term
“Percentage” shall refer to a Lender’s Percentage for that Class immediately
before such termination, adjusted to reflect any subsequent assignments
pursuant to Section 11.6.

 

“Permitted
Acquisition” means an Acquisition occurring after the Restatement Effective
Date which either (a) Agent and Required Lenders have consented to in writing
prior to the date of the consummation thereof, or (b) satisfies each of the
following conditions: (i) from the Restatement Effective Date through and
including December 31, 2004, the aggregate purchase price for such Acquisition
consummated during such period does not exceed $10,000,000 (excluding the
Subject Acquisition) and the aggregate purchase price for all such Acquisitions
during such period does not exceed $15,000,000 (excluding the Subject
Acquisition); (ii) for each Fiscal Year commencing after the Fiscal Year ended
December 31, 2004, the aggregate purchase price for such Acquisition consummated
during such Fiscal Year does not exceed $25,000,000 and the aggregate purchase
price for all such Acquisitions during any such Fiscal Year does not exceed
$40,000,000; (iii) after giving effect to any such Acquisition, the sum of (A)
the amount Borrowing Availability at such time plus (B) unrestricted
cash on hand (which cash shall (x) either be in Borrowers sole possession or in
a deposit account which Agent has received a tri-party account agreement in
form satisfactory to it and (y) shall not be subject to any Lien other than
Liens in favor of Agent) at such time, shall equal or exceed $10,000,000, (iv)
if a Revolving Credit Advance is used to fund a portion of the purchase price
for such Acquisition, Borrowers shall have demonstrated that after giving effect
to such Acquisition and the making of any such Revolving Credit Advances to
fund the purchase price thereof (x) Borrowers are in actual and pro forma
compliance with the financial covenants in Sections
7.15, 7.16 and 7.17 and
(y) Borrowers and the other Credit Parties, taken as a whole, are Solvent; (v)
Borrowers shall have given Agent 15 days’ prior written notice of such
Acquisition; (vi) Borrowers have delivered to Agent prior to the consummation
of such Acquisition a certificate of the chief financial officer of the
Borrowers demonstrating such compliance and solvency, which certificate shall
be in form and substance reasonably satisfactory to Agent; (vii) Borrowers
shall have delivered to Agent prior to the consummation of any such Acquisition
copies of all of the substantially final Acquisition Documents, together with
any other information, agreements or documents that Agent may reasonably
request in connection with such Acquisition; (viii) no Default or Event of
Default has occurred and is continuing immediately prior to and after giving
effect to such Acquisition, (ix) promptly as soon as available and in any event
not later than 30 days after the consummation of such Acquisition, Borrowers
shall have delivered to Agent copies of all of the final executed Acquisition
Documents and such Acquisition Documents shall not differ in any material
respect from the substantially final copies of the Acquisition Documents
delivered to Agent under clause (vii) of this definition; (x) if in connection
with any such Acquisition, any Borrower is granted a Lien as secured party on
any assets of the applicable Target, promptly and in any event not later than
thirty (30) days after the consummation of such Acquisition, Borrowers shall
have delivered to Agent a UCC 3 assignment in appropriate form for filing
naming Agent as secured party’s assignee; (xi) such Acquisition shall not
include any Stock or assets of any Person organized or located outside of the
United States; (xii) the Target must have positive EBITDA for the trailing four
quarters most recently ended; (xiii) such Acquisition must be approved by board
of directors of the Target (and by the shareholders to the extent required
under the Target’s organizational documents or applicable law); and (xiv) the
Target must not be engaged in any business that is

 

28

 

materially different from the businesses engaged in by
the Credit Parties on the Restatement Effective Date, and in the case of an
Acquisition of a business line, such business line must be related to the
business lines of the Credit Parties.

 

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

 

“Permitted
Disposition” means a disposition of the Borrowers’ wound care management
business unit, provided that each of the following conditions are met:
(a) no Default or Event of Default has occurred and is continuing immediately
prior to and after giving effect to such disposition; (b) such disposition is
consummated not later than December 31, 2004; (c) the aggregate sales price for
such disposition is at least $25,000,000, and the entire amount of
consideration for such disposition is paid in cash to Borrowers on the closing
date of such disposition; provided, however that (i) up to 25% of the
purchase price may be held in escrow upon terms satisfactory to Agent in its
sole discretion and (ii) a portion of the consideration may be in the form of a
promissory note issued by buyer to Borrowers in an amount and upon terms
satisfactory to Agent it its sole discretion; and (d) after giving effect to
such disposition, Borrowers are in pro forma compliance with the financial
covenants in Sections 7.15, 7.16 and 7.17 and Holdings has delivered to Agent
prior to the consummation of such disposition a certificate of the chief
financial officer of Holdings demonstrating such compliance, which certificate
shall be in form and substance reasonably satisfactory to Agent.

 

“Permitted
Encumbrances” means the following encumbrances: (a) Liens for taxes or assessments
or other governmental Charges not yet due and payable or which are the subject
of a Permitted Contest; (b) pledges or deposits of money securing statutory
obligations under workmen’s compensation, unemployment insurance, social
security or public liability laws or similar legislation (excluding Liens under
ERISA); (c) pledges or deposits of money made in the ordinary course of
business and securing bids, tenders, contracts (other than contracts for the
payment of money), securing leases to which any Credit Party is a party as
lessee made in the ordinary course of business, or securing indemnity,
performance or other similar bonds incurred in the ordinary course of business
and to the extent required by applicable law for the performance of bids, tenders
or contracts (other than for the repayment of Debt and excluding Liens under
ERISA); (d) inchoate and unperfected workers’, mechanics’ or similar liens
arising

 

29

 

in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Property; (e) carriers’,
warehousemen’s, suppliers’ or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding
aggregate amount not in excess of $25,000 at any time, so long as such Liens
attach only to Inventory; (f) deposits securing, or in lieu of, surety, appeal
or customs bonds in proceedings to which any Credit Party is a party; (g) any
attachment or judgment lien not constituting an Event of Default under Section 8.1(k); (h) zoning restrictions,
easements, licenses, or other restrictions on the use of any Real Property or
other minor irregularities in title (including leasehold title) thereto, so
long as the same do not materially impair the use, value, or marketability of
such Real Property; (i) presently existing or hereafter created Liens in favor
of Agent, on behalf of Lender and the other Secured Creditors; and (j) Liens
expressly permitted under clauses (b), (c), (e) and (f) of Section 7.2 of this Agreement.

 

“Permitted
Restructuring” means the corporate restructuring of certain of the Credit
Parties described on Disclosure Schedule 1.1 (Permitted Restructuring);
provided, however, that Borrowers shall not be permitted to effect the
Permitted Restructuring or take any actions with respect thereto unless each of
the following conditions have been satisfied in a manner satisfactory to Agent
and Required Lenders in their sole and absolute discretion:

 

(a)           the corporate and capital structure
of the Borrowers (or any successor in interest) and all Subsidiaries and
Affiliates thereof after giving effect to such proposed restructuring shall be
as described on Disclosure Schedule 1.1 (Permitted Restructuring);

 

(b)           immediately after giving effect to
such corporate restructuring, (i) all assets (including Stock of Subsidiaries,
except to the extent such Subsidiaries are being merged out of existence as
part of such restructuring) presently owned by Borrowers will be owned by one
or more successor and survivor entities (including any transferee) of Borrowers
or Guarantors, as required by Agent (individually, a “Surviving Entity” and
collectively, the “Surviving Entities”), (ii) there shall be no reduction in
the assets or increase in the liabilities or change in net worth of the
Surviving Entities, determined on a consolidated basis, from the assets,
liabilities and net worth of Holdings and its consolidated Subsidiaries
immediately prior to giving effect to such restructuring, provided, however
that for purposes of determining compliance with this clause (ii) any
disposition of assets constituting the Permitted Disposition shall be
disregarded, and (iii) Agent and Required Lenders shall have received such pro
forma balance sheets and other financial information and certificates of
executive officers of Borrowers and Surviving Entity as it may reasonably
request in order to verify that the conditions in the immediately preceding
clause (ii) have been met;

 

(c)           Agent shall have received one or more
duly executed assignment and assumption agreements from each Surviving Entity
and such other documents, instruments and agreements as Agent may require, in
each case, in form and substance satisfactory to Agent in order to ensure (x)
each such Surviving Entity shall be legally bound as a Borrower, Additional
Borrower and/or Guarantor as required by Agent, and (y) Agent on behalf of
itself and the other Lenders shall have a valid and perfected first priority
security interest in the Collateral and all of the assets of each such
Surviving Entity (subject only to Permitted Encumbrances), except for any
assets that are disposed of in connection with the Permitted Disposition;

 

30

 

(d)           Agent shall have received such other
documents, instruments, agreements, certificates and legal opinions as Agent
shall reasonably request in connection with the proposed restructuring, each in
form and substance satisfactory to Agent, including, without limitation, certified
copies of all plans of merger and merger documents, certificates (including
good standing certificates), any asset transfer documentation, any other
documents or instruments effectuating or evidencing the transactions
contemplated under the Permitted Restructuring and proposed new or amended
Organizational Documents for each Surviving Entity created or acquired in
connection with the proposed restructuring;

 

(e)           Agent shall have received evidence
satisfactory to Agent that Agent (for the benefit of itself and Lenders) has a
valid and perfected first priority security interest in the Collateral and all
of the assets of each Surviving Entity, including (i) such documents,
instruments and certificates (including Stock certificates) duly executed and
authorized by each Credit Party and each Surviving Entity (including financing
statements under the Code and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens) as Agent may request in
order to perfect its security interests in the Collateral and such assets, and
(ii) copies of UCC, tax, lien and judgment search reports in respect of each
Surviving Entity, with results satisfactory to Agent;

 

(f)            after giving effect to such proposed
restructuring, (i) no Default or Event of Default shall exist, (ii) Credit
Parties shall be in actual and pro forma compliance with the financial
covenants in Sections 7.15, 7.16 and 7.17, (iii) Surviving Entities taken as a
whole are Solvent, and (iv) Borrowers have delivered to Agent prior to the
consummation of such restructuring a certificate of the chief financial officer
of the Borrower Representative demonstrating such compliance and solvency,
which certificate shall be in form and substance reasonably satisfactory to
Agent

 

(g)           Agent shall have received (i)
evidence from Borrowers that they have obtained a favorable private letter
ruling from the IRS that no Credit Party or Subsidiary thereof shall suffer any
material adverse tax consequences as a result of such proposed restructuring or
(ii) other evidence (including, without limitation, opinions of Borrowers
accountants and financial advisors) that such proposed restructuring would not
result in any material adverse tax consequences to any Credit Party or
Subsidiary thereof;

 

(h)           all of the mergers, asset transfers
and other transactions consummated as part of the Permitted Restructuring shall
be carried out in full compliance with any Applicable Law and each Credit Party
and Surviving Entity shall have obtained all necessary Governmental Approvals
and consents from third parties; and

 

(i)            no suit, action or proceeding
(including any action seeking injunctive relief) shall have been commenced or
overtly threatened by any Person against any Credit Party or Surviving Entity
in connection with such proposed restructuring or any of the transactions
contemplated in connection therewith including, without limitation, the
transactions described on Disclosure Schedule 1.1 (Permitted Restructuring).

 

31

 

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

 

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

 

“Pledge
Agreements” means, collectively, (i) the Borrower Pledge Agreement, (ii) the
Amended and Restated Pledge Agreement dated as of the date hereof by Holdings
in favor of Agent (the “Holdings Pledge
Agreement”) and (iii) any pledge agreements entered into after the
Restatement Effective Date by any Credit Party (as required by this Agreement
or any other Loan Document).

 

“Post Closing
Letter Agreement” means that certain letter agreement dated as of the date
hereof between the Borrower Representative and Agent in form and substance
satisfactory to Agent.

 

“Primary
Obligations” means (a) in the case of the Credit Document Obligations, all
principal of, premium, fees and interest on, all Loans and L/C Obligations and
all Fees, and (b) in the case of the Subject Swap Obligations, all amounts due
by Holdings to Subject Swap Counterparty under the Subject Swap other than
indemnities, fees (including, without limitation, attorneys’ fees) and similar
obligations and liabilities, provided, however that the term
Primary Obligations shall not as of any date of determination include any
Subject Swap Obligations to the extent that such Subject Swap Obligations,
together with all other outstanding Subject Swap Obligations, would exceed the
Subject Swap Obligation Cap as of such date of determination, provided, further
that in no event shall the term Primary Obligations include any Subject Swap
Obligations unless the Intercreditor Agreement in form and substance
satisfactory to GE Capital in its sole and absolute discretion has been duly
executed by the Subject Swap Party and the Credit Parties and delivered to GE
Capital following the Restatement Effective Date and such Intercreditor
Agreement is and remains at all times after execution and delivery thereof
effective.

 

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

 

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

 

“Pro Forma Data”
has the meaning ascribed to it in Section
3.1(x).

 

“Pro Forma
Financial Statements” has the meaning ascribed to it in Section 3.1(x).

 

32

 

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

 

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

 

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

 

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

 

“Questionnaire”
means that certain due diligence request letter, dated as of March 3, 2003,
drafted by Kilpatrick Stockton LLP and provided to Holdings, as supplemented by
that certain Legal Due Diligence Request drafted by Kilpatrick Stockton LLP and
provided to Holdings and its counsel on March 2, 2004, together with all
written responses of the Borrowers to, and all information provided to
Kilpatrick Stockton LLP in connection with, such due diligence requests.

 

“Reaffirmation
Agreement” means the Reaffirmation Agreement dated as of the date hereof by and
among the Credit Parties and Agent.

 

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

 

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

 

33

 

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

 

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

 

“Related
Transactions” means the initial borrowing under the Revolving Loan on the
Restatement Effective Date, the Subject Acquisition, the issuance of the Senior
Unsecured High Yield Notes and the incurrence of the Indebtedness evidenced
thereby, and the payment of all fees, costs and expenses associated with all of
the foregoing and the execution and delivery of all of the Related Transactions
Documents.

 

“Related
Transaction Documents” means the Loan Documents, the Senior Unsecured High
Yield Note Documents, the Subject Acquisition Documents, any Acquisition
Documents, any Assignment of Representations and all other material agreements
or instruments executed in connection with the Related Transactions.

 

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

 

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

 

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

 

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

 

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

 

“Residual
Obligations” means, as of any date of determination, all Subject Swap
Obligations as of such date of determination other than Primary Obligations and
Secondary Obligations, provided, further that in no event shall
the term Residual Obligations include any Subject Swap Obligations unless the
Intercreditor Agreement in form and substance satisfactory to GE Capital in its
sole and absolute discretion has been duly executed by the Subject Swap Party
and the Credit Parties and delivered to GE Capital following the Restatement
Effective Date and such Intercreditor Agreement is and remains at all times
after execution and delivery thereof effective.

 

34

 

“Restatement
Effective Date” means April 23, 2004.

 

“Restricted
Payment” means, with respect to any Credit Party (a) the declaration or payment
of any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of Stock, (b) any
payment on account of the purchase, redemption, defeasance, sinking fund or
other retirement of such Credit Party’s Stock or any other payment or
distribution made in respect thereof, either directly or indirectly, (c) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to, any Subordinated Debt, (d) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Stock of such Credit Party now or hereafter
outstanding, (e) any payment of a claim for the rescission of the purchase or
sale of, or for material damages arising from the purchase or sale of, any
shares of such Credit Party’s Stock or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission, (f) any payment, loan, contribution, or other transfer
of funds or other property to any holder of stock or equity interests of such
Credit Party other than payment of compensation in the ordinary course of
business to any holders of stock or equity interests who are employees,
officers or directors of such Person, (g) any payment of management fees (or
other fees of a similar nature) by such Credit Party to any holder of Stock of
such Credit Party or its Affiliates, (h) any payment or prepayment of principal
of, premium, if any, or interest, fees or other charges on or with respect to,
and any redemption, purchase, retirement, defeasance, sinking fund or similar
payment and any claim for rescission with respect to, any Senior Unsecured
Debt, (i) any payment or prepayment on or with respect to any of the Subject
Swap Obligations (other than any payments made by Agent to the Subject Swap
Counterparty constituting Collateral and proceeds thereof pursuant to and in
accordance with Section 2.10(b) of
this Agreement).

 

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

 

“Revolving Credit
Commitment” means: (a) as to any Lender, the amount (if any) set forth thereon
opposite the name of such Lender on the signature pages hereof under the
heading “Revolving Credit Commitment”; (b) with respect to any assignee of a
Revolving Credit Commitment, the amount of the transferor Lender’s Revolving
Credit Commitment assigned to such assignee pursuant to Section 11.6; and (c) as to all Lenders
having a Revolving Credit Commitment, the aggregate commitment of all Lenders
to make Revolving Credit Advances, which aggregate commitment shall be
$40,000,000 on the Restatement Effective Date, as such amount may be reduced
from time to time pursuant to Section 2.8
or changed as a result of an assignment pursuant to Section 11.6.  The term
“Revolving Credit Commitment” does not include the Swingline Commitment.

 

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

 

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

 

35

 

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

 

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

 

“Secondary
Obligations” shall mean all Obligations other than Primary Obligations; provided,
however that the term Secondary Obligations shall not as of any date of
determination include any Subject Swap Obligations to the extent that such
Subject Swap Obligations, together with all other outstanding Subject Swap
Obligations, would exceed the Subject Swap Obligation Cap as of such date of
determination, provided, further that in no event shall the term
Secondary Obligations include any Subject Swap Obligations unless the
Intercreditor Agreement in form and substance satisfactory to GE Capital in its
sole and absolute discretion has been duly executed by the Subject Swap Party
and the Credit Parties and delivered to GE Capital following the Restatement
Effective Date and such Intercreditor Agreement is and remains at all times
after execution and delivery thereof effective.

 

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

 

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

 

“Security
Agreements” means collectively, (i) the Borrower Security Agreement, (ii) the
Amended and Restated Security Agreement dated as of the date hereof between
Holdings and Agent (the “Holdings Security
Agreement”), (iii) the CCS Security Agreement, and (iv) any other
security agreements now or hereafter executed by any Person in favor of Agent
and Lenders to secure the Obligations.

 

“Seller Indemnity
Payment” means any payment to any Credit Party or any Subsidiary of any amount
pursuant to any indemnity provision of any Acquisition Agreement.

 

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

 

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

 

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

 

36

 

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

 

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

 

“Senior Unsecured High Yield Notes” means,
collectively, the unsecured senior notes of Holdings issued on or after the
Restatement Effective Date pursuant to a public issuance, or a Rule 144A or
other private placement arranged by UBS Securities LLC with a group of
investors.

 

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

 

“Solvent” means, with
respect to any Person on a particular date, that on such date (a) the assets of
such Person, at a fair valuation (with such assets being measured on a going
concern basis if and only to the extent that such Person’s business could
reasonably be viewed at the time of any such determination as in fact being
conducted as a going concern in light of the business historically conducted by
such Person and such other facts and circumstances existing at such time that
are relevant under Applicable Law to such determination, and otherwise, if such
Person is not conducting its business as a going concern, such assets shall be
measured on a liquidation basis and in any event without attributing any value
to any asset of such Person constituting goodwill), exceed its liabilities,
including contingent liabilities, (b) the remaining capital of such Person is
not unreasonably small to conduct its business and (c) such Person will not
have incurred debts, and does not have the present intent to incur debts,
beyond its ability to pay such debts as they mature.  For purposes of this definition, “debt” means any liability on a
claim, and “claim” means any (i) right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or
(ii) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.  In
computing the amount of contingent liabilities of any Person on any date, such
liabilities shall be computed at the amount that, in the reasonable credit
judgment of the Agent in light of all facts and circumstances existing at such
time, represents the amount of such liabilities that reasonably can be expected
to become actual or matured liabilities.

 

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

 

37

 

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

 

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

 

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

 

“Subject
Acquisition” has the meaning ascribed to it in Section 3.1(m).

 

“Subject
Acquisition Documents” has the meaning ascribed to it in Section 3.1(m).

 

“Subject Swap”
means the Interest Rate Protection Agreement entered into between Holdings and
UBS AG on or about the Restatement Effective Date pursuant to the Subject Swap
Documents in the form attached as Exhibit A to the Intercreditor
Agreement.

 

“Subject Swap
Counterparty” means UBS AG, together with its successors and assigns.

 

“Subject Swap
Documents” means that certain ISDA Master Agreement dated on or about the
Restatement Effective Date between Holdings and the Subject Swap Counterparty
and the related ISDA Schedule to the Master Agreement dated on or about the
Restatement Effective Date, together with and any confirmations relating to the
Subject Swap, entered into between Holdings and the Subject Swap Counterparty,
which documents and agreements, in each case must be in the form attached as Exhibit
A to the Intercreditor Agreement.

 

“Subject Swap
Obligations” means, as of any date of determination, all obligations and
liabilities owing by Holdings to the Subject Swap Counterparty on such date
which arise under and pursuant to the terms of the Subject Swap Documents.

 

“Subject Swap
Obligations Cap” means, as of any date of determination,  $10,000,000.

 

“Subject Swap
Reserve” means, as of any date of determination, a reserve against Eligible
Accounts and Eligible Inventory of the Borrowers in an amount equal to the
Subject Swap Obligations Cap, provided, however, that such
Reserve shall not apply to the extent and only to the extent that as of any
date of determination, (i) Holdings has no obligations (whether contingent or
otherwise) whatsoever under the Subject Swap or any of the Subject Swap
Obligations as of such date, and (ii) all of the Subject Swap Obligations have
been indefeasibly

 

38

 

paid in full as of such date.  If at any time any of the conditions in
clauses (i) and (ii) of this definition are not met, then the Subject Swap
Reserve shall apply.

 

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

 

“Subordinated
Notes” means (a) that certain 4.4% Amended and Restated Promissory Note due
February 28, 2007 issued by Holdings in favor of Jon M. Tamiyasu, in his
capacity as Stockholder Representative, in an aggregate outstanding principal
amount as of the Original Closing Date of $3,600,000 pursuant to the provisions
of that certain Stock Purchase Agreement, dated January 27, 2002, by and among
Holdings and the stockholders of Apex Therapeutic Care, Inc., as amended
through the Original Closing Date and (b) that certain 3% Subordinated
Convertible Note due October 23, 2005 issued by Holdings in an aggregate
original principal amount of $3,000,000 pursuant to the provisions of the Home
Care Purchase Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 1.2.  Accounting Terms and Determinations.  Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required
to be delivered hereunder shall be prepared in accordance with generally
accepted accounting principles as in effect from time to time in the United
States (“GAAP”), applied
on a basis consistent (except for changes concurred in by the Credit Parties’
independent public accountants) with the most recent audited consolidated
financial statements of the Credit Parties delivered to the Lenders; provided

 

41

 

that, if:  (a)
the Borrower Representative notifies the Lenders that the Borrowers wish to
amend any provision of any Loan Document to eliminate the effect of any change
in GAAP on the operation of such provision, or (b) the Agent notifies the
Borrower Representative that the Required Lenders wish to amend any provision
of any Loan Document for such purpose, then compliance with such provision
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such provision is amended in a manner satisfactory to the Borrower
Representative and the Required Lenders.

 

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

 

ARTICLE II.

 

THE FACILITIES

 

Section 2.1.  The Facilities.

 

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

 

42

 

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

 

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

 

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

 

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

 

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

 

Section 2.2.  Notes.

 

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

 

43

 

Revolving Note and to attach to and make a part of its
Revolving Note a continuation of any such schedule as and when required.

 

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

 

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

 

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

 

(b)           Funding of Loans.  Promptly after receiving a Notice of
Borrowing, the Agent shall notify each Lender of the contents of such Notice of
Borrowing, of such Lender’s Percentage of the Advances or Borrowings requested
by such Notice of Borrowing and, in the case of a LIBOR Borrowing, the
applicable LIBOR Period.  In the case of
an Advance, each Lender shall make available to the Agent at the Agent’s Office
its Lender’s Percentage of such requested Advance, in lawful money of the
United States of America in immediately available funds, prior to 1:00 p.m.
(New York City time) on the specified date. 
The Agent shall, unless it

 

44

 

shall have determined that one of the conditions set
forth in Article III
has not been satisfied, by 3:00 p.m. (or in the case of a LIBOR Borrowing, 12
p.m.) (New York City time) on such day, credit the amounts received by it in
like funds to the Borrowers Account, to repay Swingline Loans, to repay
Reimbursement Obligations, to pay expenses incurred by the Agent for the
Borrowers’ account or in such other manner as the Agent shall reasonably
determine.

 

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

 

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

 

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

 

45

 

covenant, agreement and undertaking made on its behalf
by Borrower Representative shall be deemed for all purposes to have been made
by such Borrower and shall be binding upon and enforceable against such Borrower
to the same extent as if the same had been made directly by such Borrower.

 

Section 2.4.  Interest on Loans.

 

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

 

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

 

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

 

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

 

46

 

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

 

Section 2.5.  Letters of Credit.

 

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

 

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

 

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

 

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

 

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

 

47

 

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

 

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

 

(d)           Notice of Proposed Extensions of
Expiration Dates.  The L/C Issuer or
the Borrower Representative shall give the Agent at least three (3) Business
Days’ notice before such L/C Issuer extends (or allows an automatic extension
of) the expiration date of any Letter of Credit issued by it (whether such
extension results from a request therefor by the Borrower Representative or, in
the case of an evergreen Letter of Credit, from the absence of a request by the
Borrower Representative for the termination thereof).  Such notice shall (i) identify such Letter of Credit, (ii)
specify the date on which such extension is to be made (or the last day on
which such L/C Issuer can give notice to prevent such extension from occurring)
and (iii) specify the date to which such expiration date is to be so
extended.  Upon receipt of such notice,
the Agent shall promptly notify each Lender of the contents thereof.  No L/C Issuer shall extend (or allow the
extension of) the expiration date of any Letter of Credit if (x) the extended
expiration date would be after (A) the date that is one (1) year after the date
on which such Letter of Credit is to be extended or (B) the date that is the
thirty (30) Business Days before the Commitment Termination Date or (y) such
L/C Issuer shall have been notified by the Agent or the Required Lenders
expressly to the effect that any condition specified in Section 3.2  is not satisfied at the
time such Letter of Credit is to be extended; provided that, in the case
of such notice from the Agent or Required Lenders, such L/C Issuer receives
such notice prior to the date notice of non-renewal is required to be given by
such L/C Issuer and such L/C Issuer has had a reasonable period of time to act
on such notice.

 

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

 

48

 

such Revolving Lender’s participation in the relevant
Letter of Credit.  Promptly upon issuing
any Letter of Credit, the relevant L/C Issuer will send a copy of such Letter
of Credit to the Agent.

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)            such L/C Issuer may notify the Agent
of such unpaid Reimbursement Obligation and request that the Revolving Lenders
reimburse such L/C Issuer for their respective Percentages thereof.  Upon receiving any such

 

49

 

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

 

(ii)           if any Revolving Lender fails to pay
any amount required to be paid by it pursuant to this Section 2.5(h) on the date on which such
payment is due, interest shall accrue on such Revolving Lender’s obligation to
make such payment, for each day from and including the date such payment became
due to but excluding the date such Lender makes such payment, at a rate per
annum equal to (x) for each day from the day such payment is due through the
third succeeding Business Day, inclusive, the Federal Funds Rate for such day
as determined by the relevant L/C Issuer and (y) for each day thereafter, the
Base Rate for such day.  Any payment
made by any Revolving Lender after 3:00 p.m. (New York City time) on any
Business Day shall be deemed for purposes of the preceding sentence to have
been made on the next succeeding Business Day.

 

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

 

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

 

50

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(j)            Indemnification; Nature of
Lenders’ Duties.

 

(i)            In addition to amounts payable as
elsewhere provided in this Agreement, each Borrower hereby agrees to pay and to
protect, indemnify and save harmless Agent and each Lender from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys’ fees and allocated costs of internal
counsel) that Agent or any Lender may incur or be subject to as a consequence,
direct or indirect, of (A) the issuance of any Letter of Credit or the incurrence
of any L/C Obligation in

 

51

 

respect
thereof, or (B) the failure of Agent or any Lender seeking indemnification or
of any L/C Issuer to honor a demand for payment under any Letter of Credit or
of the Agent to make any payment under any L/C Obligation as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or Governmental Authority, in each case other than to
the extent solely as a result of the gross negligence or willful misconduct of
Agent or such Lender (as finally determined by a court of competent
jurisdiction).

 

(ii)           As between Agent and any Lender, on
the one hand, and any Borrower, on the other hand, such Borrower assumes all risks
of the acts and omissions of, or misuse of any Letter of Credit by,
beneficiaries of any Letter of Credit. 
In furtherance and not in limitation of the foregoing, to the fullest
extent permitted by law, neither Agent nor any Lender shall be responsible for
(A) the form, validity, sufficiency, accuracy, genuineness or legal effect of
any document issued by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged, (B)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason, (C) the failure of the beneficiary of
any Letter of Credit to comply fully with conditions required to demand payment
under such Letter of Credit; provided that in the case of any payment by
Agent under any Letter of Credit or L/C Obligation, Agent shall be liable only
to the extent such payment was made solely as a result of its gross negligence
or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of
Credit or L/C Obligation complies on its face with any applicable requirements
for a demand for payment under such Letter of Credit or any guaranty thereof,
(D) errors, omissions, interruptions or delays in transmission or delivery of
any messages by mail, cable, telegraph, telex or otherwise, whether or not they
may be in cipher, (E) errors in interpretation of technical terms, (F) any loss
or delay in the transmission or otherwise of any document required to make a
payment under any Letter of Credit or L/C Obligation, (G) the credit of the
proceeds of any drawing under any Letter of Credit or L/C Obligation and (H)
any consequences arising from causes beyond the control of Agent or any Lender.
None of the above shall affect, impair or prevent the vesting of any of Agent’s
or any Lender’s rights or powers hereunder or under this Agreement.

 

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

 

52

 

(k)           Cash Collateral.

 

(i)            If the Borrowers are required to
provide cash collateral for any L/C Obligations pursuant to this Agreement
prior to the Commitment Termination Date, the Borrowers will pay to Agent for
the ratable benefit of itself and the Revolving Lenders cash in an amount equal
to one hundred five percent (105%) of the maximum amount then available to be
drawn under each applicable Letter of Credit. 
Such cash shall be held by Agent in a cash collateral account (the “Cash Collateral Account”) maintained at a
bank or financial institution acceptable to Agent in its sole discretion.  The Cash Collateral Account shall be in the
name of the Borrowers and shall be pledged to, and subject to the control of,
Agent, for the benefit of Agent and the Revolving Lenders, in a manner
satisfactory to Agent.  Each Borrower
hereby pledges and grants to Agent, on behalf of itself and the Revolving
Lenders, a security interest in all such funds and Cash Equivalents held in the
Cash Collateral Account from time to time and all proceeds thereof, as security
for the payment of all amounts due in respect of the L/C Obligations and other
Obligations, whether or not then due. 
This Agreement, including the provisions of this Section 2.5(k), Obligations
shall constitute a security agreement under applicable law.

 

(ii)           If any L/C Obligations, whether or
not then due and payable, shall for any reason be outstanding on the Commitment
Termination Date, the Borrowers shall either (A) provide cash collateral
therefor in the manner described above, (B) cause all such Letters of Credit
and L/C Obligations, if any, to be canceled and returned, or (C) deliver a
stand-by letter (or letters) of credit in guaranty of such L/C Obligations,
which stand-by letter (or letters) of credit shall be of like tenor and
duration (plus thirty (30) additional days) as, and in an amount equal to one
hundred five percent (105%) of the aggregate maximum amount then available to
be drawn under, the Letters of Credit to which such outstanding L/C Obligations
relate and shall be issued by a Person, and shall be subject to such terms and
conditions, as are satisfactory to Agent in its sole discretion.

 

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

 

(iv)          Neither the Borrowers nor any Person
claiming on behalf of or through any Borrower shall have any right to withdraw
any of the funds or Cash Equivalents held in the Cash Collateral Account,
except that upon the termination of all L/C Obligations and the payment of all
amounts payable by the

 

53

 

Borrowers
to Agent and Lenders in respect thereof, any funds remaining in the Cash
Collateral Account shall be applied to other Obligations then due and owing and
upon payment in full of such Obligations, any remaining amount shall be paid to
the Borrower or as otherwise required by law. 
Interest earned on deposits in the Cash Collateral Account shall be for
the account of Agent.

 

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

 

Section 2.6.  Swingline Loans.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ii)           the amount of such Advance.

 

(c)           Funding of Swingline Loans.  As promptly as practicable following receipt
of a Notice of Swingline Borrowing, the Swingline Lender shall, unless the
Swingline Lender determines that any applicable condition specified in Article III
has not been satisfied,

 

54

 

make
available the amount of such Swingline Advance in federal or other funds
immediately available as provided in Section 2.3(b).

 

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

 

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

 

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

 

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

 

(h)           Refunding Unpaid Swingline Loans.  If (x) the Swingline Loans are not paid in
full on the Swingline Maturity Date or (y) the Swingline Loans become
immediately due and payable pursuant to Article
VIII, the
Swingline Lender (or the Agent on its behalf) may, by notice to the Lenders
(including the Swingline Lender, in its capacity as a Lender), require each
Lender to pay to the Swingline Lender an amount equal to such Lender’s
Percentage of the aggregate unpaid principal amount of the Swingline Loans then
outstanding.  Such notice shall specify
the date on which such payments are to be made, which shall be the first
Business Day after such notice is given. 
Not later than 12:00 Noon (New York City time) on the date so specified,
each Lender shall pay the amount so notified to it to the Swingline Lender at
its address specified in or pursuant to Section
11.3, in federal or other funds immediately available in New
York, New York.  The amount so paid by
each Lender shall constitute a Base Rate Advance to the Borrowers and each
Lender hereby irrevocably agrees (absent gross negligence of the Swingline
Lender as determined by a court of competent jurisdiction) to the making of
such Base Rate Advance notwithstanding (i) the amount of such Advance
may not comply with the minimum amount for borrowings of Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in Section 3.1 or 3.2 as applicable, are then satisfied, (iii) whether a Default
or an Event of Default then exists, (iv) the failure of any such request or
deemed request for Revolving Loans to be made by the time otherwise required in
Section 2.1, (v) the date of such
mandatory Advance or (vi) any reduction in the Revolving Credit Commitments or
termination of the Revolving Credit Commitments immediately prior to such
mandatory Advance contemporaneously therewith; provided that, if the
Lenders are prevented

 

55

 

from
making such Base Rate Revolving Credit Advances to the Borrowers by the
provisions of the United States Bankruptcy Code or otherwise, the amount so
paid by each Lender shall constitute a purchase by it of a participation in the
unpaid principal amount of the Swingline Loan and interest accruing thereon
after the date of such payment; provided that (x) all interest payable
on the Swingline Loans shall be for the account of the Swingline Lender until
the date as of which the respective participation is purchased and (y) at the
time any purchase of participations pursuant to this sentence is actually made,
the purchasing Lender shall be required to pay to the Swingline Lender, to the
extent not paid to the Swingline Lender by the Borrowers in accordance with the
terms of subsection (d) hereof, interest on the principal amount of participation
purchased for each day from and including the day upon which such borrowing
would otherwise have occurred to, but excluding, the date of payment for such
participation.  Each Lender’s obligation
to make such payment or to purchase such participation under this subsection
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (1) any set-off, counterclaim,
recoupment, defense or other right which such Lender or any other Person may
have against the Swingline Lender or the Borrowers, (2) the occurrence or
continuance of a Default or an Event of Default or the termination of the
Commitments, (3) any adverse change in the condition (financial or otherwise)
of the Borrowers or any other Person, (4) any breach of this Agreement by any
party hereto or (5) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.

 

(i)            Termination of Swingline
Commitment.  The Borrowers may, upon
at least three (3) Business Days’ notice to the Swingline Lender and the Agent,
terminate the Swingline Commitment at any time, if no Swingline Loans are
outstanding at such time.  Unless
previously terminated, the Swingline Commitment shall terminate at the close of
business on the Swingline Maturity Date.

 

Section 2.7.  Certain Fees.

 

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

 

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

 

	
  Facility Usage

  	
   

  	
  Unused
  Line Fee

  Applicable Margin

  	
   

  
	
  Less than or
  equal to 1/2

  	
   

  	
  0.75

  	
  %

  

 

56

 

	
  Facility Usage

  	
   

  	
  Unused
  Line Fee

  Applicable Margin

  	
   

  
	
  Greater than 1/2

  	
   

  	
  0.50

  	
  %

  

 

“Facility Usage”
means, during any period for which the Unused Line Fee is due, a fraction, the
numerator of which is (x) the average for the period of the daily closing
balances of the aggregate Revolving Loans and the Swingline Loans outstanding
during the period for which such Fee is due, and the denominator of which is
(y) the Maximum Commitment Amount (as it may be reduced from time to time).

 

(c)           Prepayment Fee.  If the Borrowers shall pay after
acceleration or prepay all or any portion of the Revolving Loans and reduce or
terminate the Revolving Credit Commitments, whether voluntarily or
involuntarily and whether before or after acceleration of the Obligations, or
if any of the Commitments are otherwise terminated, the Borrowers shall pay to
Agent, for the ratable benefit of Lenders as liquidated damages and
compensation for the costs of being prepared to make funds available hereunder
an amount equal to (i) the Applicable Percentage multiplied by (ii) in
the case of any partial reduction of the Revolving Credit Commitment, the amount
of the reduction of the Revolving Credit Commitment and, in the case of any
termination of the Revolving Credit Commitment, by the amount of the entire
Revolving Credit Commitment immediately prior to giving effect to such
termination.  The Credit Parties agree
that the Applicable Percentages are a reasonable calculation of Lenders’ lost
profits in view of the difficulties and impracticality of determining actual
damages resulting from an early termination of the Commitments.  Notwithstanding the foregoing, no prepayment
fee shall be payable by the Borrowers upon a mandatory prepayment made pursuant
to Sections 2.8 and 2.15; provided that the Borrowers do not
permanently reduce or terminate the Revolving Credit Commitment upon any such
prepayment and, in the case of prepayments and corresponding Commitment
reductions made pursuant to Section 2.8(b) or Section 2.8(c), the transaction giving
rise to the applicable prepayment and reduction is not prohibited under Article VII.

 

(d)           Letter of
Credit Fee.  (i) The Borrowers agree
to pay to the Agent for the ratable benefit of Revolving Lenders, with respect
to the L/C Obligations incurred hereunder, (A) for the benefit of the Agent and
the L/C Issuer, all customary costs and expenses incurred by the Agent and the
L/C Issuer on account of such L/C Obligations, (B) for the ratable benefit of
the Revolving Lenders, for each day during any month in which any L/C
Obligation shall remain outstanding, a fee (the “Letter of Credit Fee”) in an amount equal to (x) the Applicable
Margin (calculated on the basis of a 360 day year for actual days elapsed) multiplied
by (y) the maximum amount available for drawing (whether or not such day is a
Business Day and whether or not the conditions for drawing thereunder have been
satisfied) under all Letters of Credit at the close of business on such day,
and (C) for the sole benefit of the L/C Issuer, a fronting fee (the “Fronting Fee”) in an amount equal to .125%
of the face amount of each Letter of Credit. 
The Letter of Credit Fee shall be paid to Agent for the ratable benefit
of the Revolving Lenders monthly in arrears, on the first day of each month and
on the Commitment Termination Date.  The
Fronting Fee shall be paid to the Administrative Agent, for the benefit of the
L/C Issuer on the date of issuance of the applicable Letter of Credit.  In addition, the Borrowers shall pay to

 

57

 

any L/C
Issuer, on demand, such fees (including all per annum fees), customary charges
and expenses of such L/C Issuer in respect of the issuance, negotiation,
acceptance, amendment, transfer and payment of any Letter of Credit or
otherwise payable pursuant to the application and related documentation under
which any Letter of Credit is issued. 
During any period during which the Default Rate shall have been imposed
pursuant Section 2.4(c), or, in
the absence of such imposition, during any period during which the Required
Lenders could have imposed the Default Rate pursuant to such Section and
instead elect to impose the provisions of this paragraph, the Letter of Credit
Fee otherwise in effect pursuant to the preceding paragraph shall be increased
by two percent (2%) per annum.

 

Section 2.8.  Mandatory Repayments and Prepayments.

 

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

 

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

 

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

 

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

 

Notwithstanding
the foregoing, so long as no Default or Event of Default shall have occurred
and be continuing, Borrowers shall be permitted to use an amount up to (i) the
entire proceeds of any Permitted Disposition to consummate a Permitted
Acquisition(s) within 90 days after the date of consummation of such Permitted
Disposition (such 90-day period referred to herein as the “Reinvestment Period”); provided that
at all times during the Reinvestment Period and prior to the use the proceeds
of the Permitted Disposition to consummate Permitted Acquisitions, Borrowers
shall cause such proceeds to be deposited in a depository account at a
financial institution satisfactory to Agent, which account shall be subject to
a tri-party control agreement, in form and substance satisfactory to Agent,
(ii) $3,500,000 individually or in the aggregate in proceeds of any Permitted
Disposition to satisfy in full the

 

58

 

Department
of Justice Obligations; (iii) the entire amount of the proceeds of any
dispositions of obsolete or worn-out property to the extent permitted under
clause (b)(iii) of Section 7.8 to
purchase assets that are used or useful in the business of Borrowers the Credit
Parties within 180 days after receipt of such proceeds by any Credit Party, and
(iv) the entire amount of the proceeds of any sales or settlement of disputed
or delinquent Accounts to the extent permitted under clause (b)(v) of Section 7.8.  If Borrowers fail to use any portion of (x) the proceeds of the
Permitted Disposition to consummate Permitted Acquisitions or to satisfy the
Department of Justice Obligations within the Reinvestment Period, or (y) fail
to timely reinvest the proceeds of any asset disposition permitted under clause
(b)(iii) of Section 7.8 in
accordance with clause (iii) above of this Section
2.8(b), Borrowers shall immediately apply such proceeds against
principal in accordance with Section 2.10.  Any prepayment under this Section 2.8(b) shall be applied in
accordance with Section 2.10
without any permanent reduction of the Revolving Credit Commitments.

 

(c)           Stock Issuances and Debt Security
Issuances.  If any Credit Party
issues Stock or debt securities, immediately upon receipt of the Net Cash
Proceeds thereof (other than (i) proceeds of the issuance of Stock by any
Borrower received on or before the Restatement Effective Date, (ii) proceeds
from the issuance of Stock to officers, directors and employees of any
Borrower, (iii) proceeds of the issuance of Stock to any Borrower or any
Subsidiary of any Borrower and (iv) Stock of Holdings issued in connection with
Permitted Acquisitions and (v) any Indebtedness permitted pursuant to Section 7.1) provided, in the case
of the immediately preceding clauses (i) through (iv), inclusive, that (x) no
cash is received by any Credit Party in connection with the issuance of such
Stock (other than payment of nominal par value for the shares issued) and (y)
no Change of Control would result therefrom), Borrowers shall prepay an
aggregate principal amount of Loans (and to the extent of any Net Cash Proceeds
in excess of the outstanding principal amount of Loans, cash collateralize L/C
Obligations in accordance with Section 2.5(k))
in an amount equal to one hundred percent (100%) of all such Net Cash Proceeds;
provided, further that notwithstanding the foregoing, the Credit Parties
shall be permitted to apply the proceeds from any sale or issuance of common
stock of Holdings after the Restatement Effective Date to the repayment of up
to but not exceeding 35% of the aggregate outstanding principal amount of the
Senior Unsecured High Yield Notes outstanding as of the Restatement Effective
Date less the amount of any principal repayments thereof made after the
Restatement Effective Date so long as each of the following conditions are met
at the time of such proposed repayment: (1) immediately upon receipt thereof,
the proceeds of such Stock are applied as follows: first, to repay the
principal amount of any Loans (other than the Revolving Loans) that may be
outstanding, second, the remaining balance of such proceeds, if any, to
repay the principal amount of such Senior Unsecured High Yield Notes, subject
to the 35% limit set forth above in this Section
2.8(c), and third, the remaining balance of such proceeds, if
any, to the mandatory prepayment of outstanding Revolving Credit Advances in
accordance with this Section 2.8;
(2) Agent shall have received a certificate from the Chief Financial Officer of
Holdings, in form reasonably satisfactory to Agent, demonstrating compliance on
a pro forma basis with the financial covenants in Sections 7.15, 7.16 and 7.17
after giving effect to such repayment; (3) no Default or Event of Default
exists or would result therefrom; and (4) the Indebtedness evidenced by such
Senior Unsecured High Yield Notes that is to be repaid with such proceeds is
expressly permitted to be incurred under Section
7.1(k).   Any prepayment

 

59

 

under this Section
2.8(c) shall be applied in accordance with Section 2.10 without any permanent
reduction of the Revolving Credit Commitments.

 

(d)           [Reserved].

 

(e)           Seller Indemnity Payments.  Promptly upon receipt by any Credit Party or
any Subsidiary of any Seller Indemnity Payment, an amount equal to 100% of the
Net Cash Proceeds of such payment; provided that: (i) if such Seller Indemnity
Payment is being made to such Credit Party to reimburse the Credit Parties for
the cost of any claim or expense paid by such Credit Party to a Person not an
Affiliate of any Credit Party or any judgment, settlement or award in
connection therewith (or are to be used to pay the same within thirty days
following the receipt of such Net Cash Proceeds; provided that to the extent
any such amounts are not so applied, they shall be applied to prepay the Loans
or L/C Obligations on or before such thirtieth day), then the Net Cash Proceeds
of all such Seller Indemnity Payments may be retained by the applicable Credit
Party rather than being paid to the Agent under this Section 2.8(e); and (ii) any other Seller Indemnity Payments
not covered by the immediately proceeding clause (i) in an aggregate amount up
to $250,000 may be retained by the applicable Credit Party rather than being
paid to the Agent under this Section 2.8(e).

 

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

 

Section 2.10.  Application of Payments.

 

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

 

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

 

(i)            first, to the payment of all amounts
owing to the Agent or any Lender of the following type: (x) any and all sums
advanced by the Agent or any Lender

 

60

 

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

 

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

 

(iii)          third, to the extent proceeds remain
after the application pursuant to the preceding clauses (i) and (ii), to the
payment of an amount equal to the outstanding Primary Obligations to the
Secured Creditors, with each Secured Creditor receiving an amount equal to its
outstanding Primary Obligations or, if the proceeds are insufficient to pay in
full all such Primary Obligations, its Pro Rata Share of such amount;

 

(iv)          fourth, to the extent proceeds remain
after the application pursuant to the preceding clauses (i) through (iii),
inclusive, to the payment of an amount equal to the outstanding Secondary
Obligations to the Secured Creditors, with each Secured Creditor receiving an
amount equal to its outstanding Secondary Obligations or, if the proceeds are
insufficient to pay in full all such Secondary Obligations, its Pro Rata Share
of such amount;

 

(v)           fifth, to the extent proceeds remain
after the application pursuant to the preceding clauses (i) through (iv),
inclusive, and following the Termination Date, to the payment of an amount
equal to the outstanding Residual Obligations owing to the Subject Swap Counterparty;

 

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

 

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

 

(b)           The Borrowers shall have the right to
terminate in whole the Revolving Credit Commitments and this Agreement or, from
time to time, irrevocably to reduce in part the amount of the Revolving Credit
Commitments upon at least fifteen (15) days’ prior written notice from Borrower
Representative to the Agent.  Such
notice shall be irrevocable on the part of the Borrowers and shall specify the
effective date of such termination or reduction, whether a

 

61

 

termination
or reduction is being made, and, in the case of any reduction, the amount
thereof (which shall be in an amount of $100,000 or an integral multiple
$10,000 in excess thereof).  Upon any
such reduction, the Borrowers shall simultaneously prepay any outstanding
Revolving Loans (without premium except for the prepayment fee as required by Section 2.7(c) and except for the payment
of any charges incurred pursuant to Section
9.4(d))  to the extent
necessary so that the aggregate outstanding principal amount of the Revolving
Loans does not exceed the amount of the Revolving Credit Commitment after
giving effect to any partial reduction thereof.  The aforesaid prior notice requirement shall not apply to the
Agent’s exercise of remedies under Section 8.2.  The amount of the Revolving Credit
Commitment may not be reinstated if it is reduced or if this Agreement is
terminated by the Borrowers.

 

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

 

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

 

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

 

Section
2.14.  General
Provisions Regarding Payments. 
All payments (including prepayments) to be made by the Credit Parties
under any Loan Document, including

 

62

 

payments
of principal of and interest on the Notes, fees, expenses and indemnities,
shall be made without set-off or counterclaim and in immediately available
funds to each Lender’s Payment Account before 1:00 p.m. (New York City time) on
the date when due.  If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest thereon, shall be payable at the then
applicable rate during such extension. 
For purposes of computing interest and Fees and determining Borrowing
Availability as of any date, all payments shall be deemed received on the first
Business Day following the Business Day on which immediately available funds therefor
are received in the Collection Account prior to 1:00 p.m. (New York City
time).  Payments received after 1:00
p.m. (New York City time) on any Business Day or on a day that is not a
Business Day shall be deemed to have been received on the following Business
Day.

 

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

 

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

 

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

 

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

 

(e)           If any Lender has received interest
hereunder in excess of the Maximum Lawful Rate with respect to such Lender,
such excess amount shall be applied to the reduction of the outstanding
principal balance of its Loans or to other amounts (other than interest)
payable

 

63

 

hereunder,
and if no such principal or other amounts are then outstanding, such excess or
part thereof remaining shall be paid to the Borrowers.

 

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

 

ARTICLE III.

 

CONDITIONS

 

Section 3.1.  Conditions to Effectiveness of Amendment and
Restatement and to the initial Extensions of Credit on the Restatement
Effective Date.  The
occurrence of the Original Closing Date, and the agreement of each Lender to
make the initial extensions of credit requested to be made by it on the
Original Closing Date under the Existing Credit Agreement, were subject to the
satisfaction, prior to or concurrently with the making of such extensions of
credit on the Original Closing Date, of the conditions precedent set forth in
Section 3.1 of the Existing Credit Agreement. 
The effectiveness of this Agreement and the obligation of each Lender to
make any Extension of Credit on the Restatement Effective Date or for the Agent
or any Lender to take, fulfill or perform any other action hereunder, shall be
subject to satisfaction of all of the following conditions in a manner
satisfactory to Agent:

 

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

 

64

 

The
Agent shall have received and approved revised Schedules to this Agreement and,
if appropriate, the other Credit Documents, dated as of the Restatement
Effective Date;

 

(b)           On the Restatement Effective Date,
each Credit Party shall have duly authorized, executed and delivered to the
Agent the Reaffirmation Agreement;

 

(c)           Agent shall have received (i)
evidence satisfactory to it in its sole discretion that the Credit Parties have
obtained all required consents (including landlords’ and other consents) and
approvals, including regulatory and other third party approvals necessary or,
in the discretion of the Agent, advisable in connection with the Subject
Acquisition, of all Persons including all requisite Governmental Authorities,
to the execution, delivery and performance of this Agreement and the other Loan
Documents, the issuance of the Senior Unsecured Debt, the consummation of the
Related Transactions and the continuing operations of the Credit Parties
(including CCS), and the same shall be in full force and effect, and all
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority that would restrain, prevent or otherwise
impose adverse conditions on the Related Transactions or (ii) an Officer’s
Certificate in form and substance satisfactory to Agent affirming that no such
consents or approvals are required;

 

(d)           Agent shall have received the Fees
required to be paid by the Borrowers on the Restatement Effective Date in the
respective amounts specified in Section 2.7
or in the GE Capital Fee Letter and shall have reimbursed the Agent for all
fees, costs and expenses of closing presented as of the Restatement Effective
Date;

 

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

 

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

 

(g)           As of the Restatement Effective Date,
there shall have been (i) since September 30, 2003 (in the case of Holdings and
its Subsidiaries other than CCS), and since December 31, 2002 (in the case of
CCS) (it being understood that the preceding reference to “December 31, 2002”
in this Section 3.1(g) shall be
deemed to refer to “December 31, 2003” after Agent (A) has received and
reviewed to its satisfaction the audited financial statements of CCS for the
Fiscal Year ended December 31, 2003 and (B) confirmed to Holdings in writing
its satisfaction with such audited financial statements), no material adverse
change in the business, financial or other condition of the Credit Parties
(including CCS) taken as a whole, the Collateral which would be subject to the
security interest granted to the Agent, or in the projections of the Credit
Parties (including CCS), (ii) no litigation commenced that has a reasonable
likelihood of being determined adversely to any Credit Party (including CCS)
and that, if so determined, could reasonably be expected to have a Material
Adverse Effect, and (iii) since their last audited financial statements, no
material increase in the liabilities, liquidated or contingent, of the Credit
Parties (including CCS) taken as a whole, or a material decrease in the assets
of the Credit

 

65

 

Parties
(including CCS) taken as a whole, except for any increase in liabilities due to
the incurrence of the Senior Unsecured Debt;

 

(h)           Agent shall have received copies of
all Acquisition-related diligence materials for Acquisitions completed by any
Credit Party within the past two Fiscal Years, which shall, among other things,
include information in sufficient detail to allow Agent to perform
pre-acquisition and post-acquisition analysis of the financial performance of
each acquired entity;

 

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

 

(j)            After giving effect to any
Extensions of Credit to be made on the Restatement Effective Date, the
incurrence of the Senior Unsecured Debt and the consummation of the Related Transactions,
Borrowers shall have Borrowing Availability (calculated on a pro forma basis
with trade payables being paid currently, expenses and liabilities being paid
in the ordinary course of business and without acceleration of sales and
without deterioration of working capital) of at least $10,000,000 in the
aggregate;

 

(k)           Agent shall have received the
following, in each case, in form and substance satisfactory to Agent: (i) the
CCS Security Agreement, duly executed and delivered by CCS; (ii) the Holdings
Pledge Agreement, duly executed and delivered by Holdings; and (iii) the
Holdings Security Agreement, duly executed and delivered by Holdings;

 

(l)            After giving effect to the Related
Transactions, there shall not exist (i) any Default or Event of Default under
the Loan Documents or (ii) any default or event of default under any other
Indebtedness or agreement of any Credit Party (including CCS), which could
reasonably be expected to have a Material Adverse Effect;

 

(m)          The board of directors of CCS shall
have approved the Subject Acquisition, and shareholders holding at least 90% of
each class of outstanding stock of CCS shall have tendered such shares to
Holdings.  Holdings shall have
consummated the acquisition (the “Subject
Acquisition”) of not less than 90% of the stock and other ownership
interests of CCS, free and clear of any Liens other than the Liens in favor of
Agent and Lenders securing the Obligations. 
The aggregate purchase price consideration paid by the Credit Parties
for CCS (including any assumed indebtedness) shall not exceed $150,000,000,
subject to adjustment as provided in the stock purchase agreement (“Stock Purchase Agreement”) relating to the
Subject Acquisition.  The Stock Purchase
Agreement (including all schedules and exhibits thereto) (collectively, the “Subject Acquisition Documents”) shall not
have been amended or modified in any material respect, except for any such
amendments or modifications that have been approved in writing by the
Agent.  Agent shall be satisfied that the
disclosure schedules to the Stock Purchase Agreement are complete and that any
supplements to such disclosure schedules do not raise any material legal or
business concerns;

 

66

 

(n)           Holdings shall have received not less
than $185,000,000 in gross proceeds from the incurrence of Senior Unsecured
Debt, which proceeds shall be used by Holdings on the Restatement Effective
Date to pay the entire purchase price for the Subject Acquisition, pay fees and
expenses related to the Related Transactions, and repay the Term Loan (as such
term is defined in the Existing Credit Agreement), all as described in detail
in the Statement of Sources and Uses;

 

(o)           The Senior Unsecured Note Documents
shall be in form and substance satisfactory to Agent and Lenders;

 

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

 

(q)           The Credit Parties (including CCS)
shall be in pro forma compliance with all financial covenants set forth in Sections 7.15, 7.16, 7.17 and 7.19 as of the Restatement Effective Date
after giving effect to the Loans to be made on the Restatement Effective Date,
the incurrence of the Senior Unsecured Debt and the consummation of the Related
Transactions, and Agent shall have received evidence in form and substance
satisfactory to it in its sole discretion of such pro form compliance;

 

(r)            Holdings and its consolidated
Subsidiaries (including CCS) shall have pro forma trailing twelve month EBITDA
of at least $42,000,000, with any adjustments to such pro forma EBITDA to be
satisfactory to Agent in its sole discretion;

 

(s)           The Senior Secured Leverage Ratio
shall not exceed 1.30 to 1.00, determined on a pro forma basis after giving
effect to the Loans to be made on the Restatement Effective Date, the
incurrence of the Senior Unsecured Debt and the consummation of the Related
Transactions;

 

(t)            The Total Leverage Ratio shall not
exceed 4.90 to 1.00, determined on a pro forma basis after giving effect to the
Loans to be made on the Restatement Effective Date, the incurrence of the
Senior Unsecured Debt and the consummation of the Related Transactions;

 

(u)           The Agent shall not have become aware
after the date hereof of any information or other matter affecting any Credit
Party or the transactions contemplated hereby that is inconsistent in a
material and adverse manner with any such information or other matter disclosed
to the Agent prior to February 23, 2004;

 

(v)           The Agent shall have received a duly
executed Borrowing Base Certificate, dated as of the Restatement Effective
Date, in form and substance satisfactory to Agent;

 

(w)          Agent shall have received and reviewed
(i) the audited consolidated balance sheets and related statements of income,
stockholders’ equity and cash flows of each of Holdings and its consolidated
Subsidiaries and CCS prepared in accordance with GAAP for the Fiscal Year ended
December 31, 2003, (ii) pro forma consolidated balance sheets and related
statements of income and cash flows for Holdings (the “Pro Forma Financial Statements”), as

 

67

 

well as
pro forma levels of EBITDA and other operating data (the “Pro Forma Data”), for the Fiscal Year ended
December 31, 2003, after giving effect to the Related Transactions and (iii)
any changes to the forecasts of the financial performance of Holdings and its
Subsidiaries through 2009.  The Pro
Forma Financial Statements and the Pro Forma Data shall be consistent in all
material respects with the forecasts previously provided to Agent.  Agent shall be satisfied with the items
specified in clauses (i) and (ii) (it being understood that Agent is satisfied
with the amounts set forth in the draft consolidated balance sheets and related
statements of income, stockholders’ equity and cash flows of Holdings for the
Fiscal Year ended December 31, 2003 delivered to Agent prior to February 23,
2004).  Any changes specified in clause
(iii) shall not be materially worse than the forecasts previously provided to
Agent.

 

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

 

(a)           receipt by the Agent of a Notice of
Borrowing in accordance with Section
2.3(a)(i);

 

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

 

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

 

(d)           immediately before and after giving
effect to such Extension of Credit, the sum of (i) the amount of Borrowing
Availability at such time, plus (ii) unrestricted cash on hand (which
cash shall (A) either be in Borrowers sole possession or in a deposit account
which Agent has received a tri-party account agreement in form satisfactory to
it and (B) shall not be subject to any Lien other than Liens in favor of Agent)
at such time, shall equal or exceed an amount equal to ten percent (10%) of the
aggregate Commitments then in effect at such time.

 

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

 

68

 

ARTICLE IV.

 

REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

69

 

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

 

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

 

Section 4.5.  Financial Statements.

 

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

 

(b)           The Budget delivered on the date
hereof and attached hereto as Disclosure Schedule 4.5(b) was prepared by
the Borrowers in light of the past operations of its businesses, but including
future payments of known contingent liabilities, and reflect projections for
the five year period beginning on April 1, 2004 on a month-by-month basis for
the first year and on a year-by-year basis thereafter.  The Budget is based upon estimates and
assumptions stated therein, all of which the Borrowers believe to be reasonable
and fair in light of current conditions and current facts known to the
Borrowers and, as of the Restatement Effective Date, reflect the Borrowers’
good faith and reasonable estimates of the future financial performance of the
Borrowers and its Subsidiaries and of the other information projected therein
for the period set forth therein.

 

Section 4.6.  Material Adverse Effect.  Between December 31, 2003 and the
Restatement Effective Date: (a) no Credit Party has incurred any obligations,
contingent or noncontingent liabilities, liabilities for Charges, long-term
leases or unusual forward or long-term commitments that, alone or in the
aggregate, could reasonably be expected to have a Material Adverse Effect; (b)
no contract, lease or other agreement or instrument has been entered into by
any Credit Party or has become binding upon any Credit Party’s assets and no
law or regulation applicable to any Credit Party has been adopted that has had
or could reasonably be expected to have a Material Adverse Effect; (c) no
Credit Party is in default and, to the best of each Credit Party’s knowledge,
no third party is in default under any material contract, lease or

 

70

 

other
agreement or instrument; and (d) no event has occurred, that alone or together
with other events, could reasonably be expected to have a Material Adverse
Effect.

 

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

 

Section 4.8.  Due Diligence Questionnaire; Full
Disclosure.  The Questionnaire is complete and correct in
all respects. 
None of the Information (financial or otherwise) contained in the
Questionnaire or otherwise furnished by or on behalf of any Credit Party to the
Agent or any other Lending Party hereunder or in connection with the Loan
Documents or the Related Transaction Documents or any of the transactions
contemplated here by or thereby contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in the light of the circumstances
under which such statements were made.

 

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

 

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

 

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

 

71

 

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

 

Section 4.13.  Subsidiaries; Capitalization.   Borrowers have no Subsidiaries
on the Restatement Effective Date other than as set forth on Disclosure
Schedule 4.13.  Disclosure
Schedule 4.13 sets forth the correct legal name and jurisdiction of
organization of each of the Borrowers and their Subsidiaries.  The authorized Stock of each of the Credit
Parties are as set forth on Disclosure Schedule 4.13.  All issued and outstanding Stock of each of
the Credit Parties are duly authorized and validly issued, fully paid, nonassessable,
free and clear of all Liens other than those in favor of Agent for the benefit
of the Lending Parties, and such Stock was issued in compliance with all
Applicable Laws.  The identity of the
holders of the Stock of each of the Credit Parties and the percentage of their
fully diluted ownership of the Stock of each of the Credit Parties is set forth
on Disclosure Schedule 4.13.  No
Stock of any Credit Party, other than that described above, is issued and
outstanding.  Except as provided in Disclosure
Schedule 4.13, there are no preemptive or other outstanding rights,
options, warrants, conversion rights or similar agreements or understandings
for the purchase or acquisition from any Credit Party of any Stock of any such
entity.  All outstanding Indebtedness
and Guaranteed Obligations of each Credit Party as of the Restatement Effective
Date (except for the Obligations) is described in Disclosure Schedule 4.13.

 

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

 

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

 

72

 

Federal
Reserve Board.  No Credit Party will
take or permit to be taken any action that might cause any Loan Document to
violate any regulation of the Federal Reserve Board.

 

Section 4.16.  Taxes.  All tax returns, reports and statements, including information
returns, required by any Governmental Authority to be filed by any Credit Party
have been filed with the appropriate Governmental Authority and all Charges
have been paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof (or any such fine, penalty,
interest, late charge or loss has been paid), excluding Charges or other
amounts which are the subject of a Permitted Contest or charges related to
certain state and/or local taxes (other than income, gross receipts, sales,
franchise or use taxes) in an aggregate amount not to exceed $50,000 at any
time.  Proper and accurate amounts have been
withheld by each Credit Party from its respective employees for all periods in
compliance with Applicable Laws and such withholdings have been timely paid to
the respective Governmental Authorities.

 

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

 

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

 

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

 

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

 

Section 4.21.  Compliance with HIPAA.  To the extent that and for so long as (i) any
Credit Party is a “covered entity” as defined in 45 C.F.R. § 160.103, (ii) any
Credit Party and/or its business and operations are subject to or covered by
the HIPAA Administrative Requirements codified at 45 C.F.R. Parts 160 & 162
(the “Transactions Rule”) and/or
the HIPAA Security and Privacy Requirements codified at 45 C.F.R. Parts 160
& 164 (the “Privacy and Security Rules”),
or (iii) any Credit Party sponsors any “group health plans” as defined in 45
C.F.R. § 160.103, such Credit Party has: 
(x) completed, or will complete on or before any applicable compliance
date, surveys, audits, inventories, reviews, analyses and/or assessments,
including risk assessments, (collectively “Assessments”)
of all areas of its business and

 

73

 

operations subject to HIPAA and/or that could reasonably be expected to
be adversely affected by the failure of such Credit Party to be HIPAA Compliant
(as defined below) to the extent that such Credit Party reasonably believes
that these Assessments are appropriate or required for such Credit Party to be
HIPAA Compliant; (y) developed, or will develop on or before any applicable
compliance date, a detailed plan and time line for becoming HIPAA Compliant (a
“HIPAA Compliance Plan”); and (z)
implemented, or will implement on or before any applicable compliance date,
those provisions of its HIPAA Compliance Plan necessary to ensure that such
Credit Party is HIPAA Compliant; provided, however, that
subsections (x), (y) and (z) of this Section 4.21 as they relate to the
Transactions Rule shall not apply to Medcare for the period beginning on the
date of this Agreement and continuing until the later to occur (and including
such date) of (1) October 15, 2003 and (2) such other date as may be adopt by
the U.S. Department of Health and Human Services (“HHS”) as the compliance deadline for the Transactions Rule
(including any extensions of such deadline adopted by HHS).  For purposes of this Agreement, “HIPAA
Compliant” shall mean that such Credit Party (1) is, or on or before any
applicable compliance date, including any extensions of such date adopted by
HHS, will be, in full compliance with any and all of the applicable
requirements of HIPAA, including all requirements of the Transactions Rule and
the Privacy and Security Rules and (2) is not subject to, and could not
reasonably be expected to become subject to, any civil or criminal penalty or
any investigation, claim or process that could reasonably be expected to have a
Material Adverse Effect.

 

Section 4.22.  Matters Concerning Prior Acquisitions.  Each of the Borrowers hereby represents and
warrants that if the “Second Closing” (as such term is defined in the Home Care
Purchase Agreement) has not occurred by the “Second Closing Deadline” (as such
term is defined in the Home Care Purchase Agreement) and the Home Care Seller
terminates the Home Care Purchase Agreement in accordance with Section 6.1(d)
thereof, after giving effect to any such termination, Holdings and CHSNY, as
buyers under the Home Care Purchase Agreement (a) will be entitled to retain
all rights, titles and interests in and to the ownership of the assets of and
operation of the pharmacy services business purchased under the Home Care
Purchase Agreement, and (b) will be entitled to retain all rights, titles and
interests in and to all profits, proceeds and distributions of any kind
generated in connection with the home health business purchased under the Home
Care Purchase Agreement to the extent that such profits, proceeds and
distributions were generated from services performed by Holdings, CHSNY or any
Affiliate thereof after the Effective Date (as such term is defined in the Home
Care Purchase Agreement) and prior to the effective date of such termination.

 

ARTICLE V.

 

REPORTING COVENANTS

 

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

 

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

 

74

 

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

 

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

 

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

 

(iii)                               a Compliance Certificate
by Borrower Representative in the form of Exhibit 5.1(a).

 

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

 

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

 

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

 

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

 

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

 

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

 

75

 

and
Borrowing Availability projections, all prepared on the same basis and in
similar detail as that on which operating results are reported (and in the case
of cash flow projections, representing management’s good faith estimates of
future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities.

 

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

 

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

 

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

 

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

 

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

 

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

 

76

 

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

 

(k)           Litigation Update.  To Agent, at the time of delivery of each of
the quarterly financial statements delivered pursuant to Section 5.1(a) (and in any event promptly
upon request by Agent), a written update as to the status of the E2M litigation
described on Disclosure Schedule 4.7, including a description of the
procedural status, any settlement discussions and any motions, orders,
pleadings or judgments filed or entered.

 

(l)            Monthly Swap Statement; Etc.  To Agent, at the time of delivery of each
Borrowing Base Certificate, a Monthly Swap Statement, which shall be in form
and substance reasonably satisfactory to Agent.  Holdings hereby agrees to immediately upon receipt thereof notify
Agent (telephonically and in writing by facsimile transmission) of any
communication (whether oral or written) and to provide Agent with a copy of any
notice or communication that it receives from the Subject Swap Counterparty in
connection with the Subject Swap or any of the Subject Swap Documents that (i)
the Subject Swap Exposure (as such term is defined in the Subject Swap) exceeds
$8.5 million, (ii) Holdings is required to make a payment of any Buydown Amount
(as such term is defined in the Subject Swap) as defined in the Subject Swap, or
(iii) that any event of default or any termination event has occurred under the
Subject Swap Documents.  In addition to
the notice required to be delivered by Holdings to Agent pursuant to the
immediately preceding sentence, Holdings shall deliver to Agent for its receipt
at least one Business Day in advance of any required payment of any Buydown
Amount (as such term is defined in the Subject Swap) by Holdings, a certificate
of the chief financial officer of Holdings, in form and substance reasonably satisfactory
to Agent, demonstrating on a pro forma basis after giving effect to any such
payment compliance with the minimum liquidity covenant in Section 6.18 and  actual and pro forma compliance with the financial covenants
in Sections 7.15, 7.16 and 7.17.

 

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

 

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

 

(a)           To the Agent, on a monthly basis on
the date that is 15 Business Days (or, in the case of any fiscal month ending
prior to the first anniversary of the Restatement Effective Date, 30 days)
after the end of each fiscal month or at such more frequent intervals as Agent
may request from time to time (together with a copy of all or any part of the
following reports requested by Agent or any Lender in writing after the
Restatement Effective Date), each of the

 

77

 

following
reports, each of which shall be prepared by the Borrowers as of the last day of
the immediately preceding fiscal month:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

78

 

(e)           To Agent, at the time of delivery of
each of the quarterly financial statements delivered pursuant to Section 5.1(a), a reconciliation of the
outstanding Loans as set forth in the quarterly Loan Account statement provided
by Agent to the general ledger and quarterly financial statements delivered
pursuant to Section 5.1(a), in
each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable credit judgment;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 5.3.  Accuracy of Financial Statements and Information

 

(a)           Future Financial Statements.  All
financial statements delivered pursuant to Section 5.1(a)
or (b), shall
(i) in the case of the financial information set forth therein, present

 

79

 

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

 

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

 

ARTICLE VI.

 

AFFIRMATIVE
COVENANTS

 

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

 

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

 

80

 

Section 6.2.  Conduct of Business and Maintenance of
Existence.  Each Credit Party
will continue to conduct its business substantially as now conducted by the
Credit Parties or as otherwise permitted hereunder, and will preserve, renew
and keep in full force and effect its corporate, company or partnership, as
applicable, existence, rights, privileges and franchises necessary or desirable
in the normal conduct of business except to the extent that such failure (a) results
from any merger or consolidation of any Credit Party to the extent such merger
or consolidation is expressly permitted under Section
7.8 of this Agreement or (b) is a part of the Permitted
Restructuring and is expressly described on Disclosure Schedule 1.1
(Permitted Restructuring) hereof, provided that each condition to Disclosure
Schedule 1.1 (Permitted Restructuring) is satisfied in connection
therewith, and further provided that Holdings shall at all times be and
remain a holding company and shall not conduct any business (other than
business activities directly related to the provision of administrative
services to the Borrowers, including, but not limited to, accounting, legal,
human resources, information systems, business development and certain marketing
services) and shall not at any time own or hold any material assets (other than
the Stock of its Subsidiaries).

 

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

 

Section 6.4.  Insurance;
Damage to or Destruction of Collateral.    (a) 
The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described on Disclosure Schedule 4.19 as in
effect on the date hereof or otherwise in form with such deductibles as is
customary for similarly situated businesses, and amounts and with insurers
reasonably acceptable to Agent.  Such
policies of insurance (or the loss payable and additional insured endorsements
delivered to Agent) shall contain provisions pursuant to which the insurer
agrees to provide thirty (30) days prior written notice to Agent in the event
of any non-renewal, cancellation or amendment of any such insurance
policy.  If any Credit Party at any time
or times hereafter shall fail to obtain or maintain any of the policies of
insurance required above, or to pay all premiums relating thereto, Agent may at
any time or times thereafter obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto that Agent
deems advisable; provided that Agent shall have no obligation to obtain
insurance for any Credit Party or pay any premiums therefor, but to the extent
it does obtain such insurance or pay such premiums, Agent shall not be deemed
to have waived any Default arising from any Credit Party’s failure to maintain such
insurance or pay any premiums therefor. 
All sums so disbursed by Agent hereunder, including reasonable
attorneys’ fees, court costs and other charges related thereto, shall be
payable by Borrowers on demand by the Agent and shall constitute additional
Obligations hereunder secured by the Collateral.

 

(b)           Agent reserves the right at any time
upon any change in any Credit Party’s risk profile (including any change in the
product mix maintained by any Credit Party or any laws affecting the potential
liability of such Credit Party) to require additional forms and limits of
insurance to, in Agent’s opinion, adequately protect both Agent’s and Lender’s
interests in all or any portion of the Collateral and to ensure that each
Credit Party

 

81

 

is
protected by insurance in amounts and with coverage customary for its
industry.  If requested by Agent, each
Credit Party shall deliver to Agent from time to time a report of a reputable
insurance broker, satisfactory to Agent, with respect to its insurance
policies.

 

(c)           Each Credit Party shall deliver to
Agent, in form and substance satisfactory to Agent, endorsements to (i) all
“All Risk” and business interruption insurance naming Agent, on behalf of
itself and Lenders, as loss payee, and (ii) all general liability and other
liability policies naming Agent, on behalf of itself and Lenders, as additional
insured.  Each Credit Party irrevocably
makes, constitutes and appoints Agent (and all officers, employees or agents designated
by Agent), so long as any Event of Default has occurred and is continuing or
the anticipated insurance proceeds exceed $250,000,  as such Credit Party’s true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such “All Risk” policies of insurance, endorsing the name of such Credit Party
on any check or other item of payment for the proceeds of such “All Risk”
policies of insurance and for making all determinations and decisions with
respect to such “All Risk” policies of insurance; provided that  Agent shall have no duty to exercise any
rights or powers granted to it pursuant to the foregoing
power-of-attorney.  After deducting from
such proceeds the expenses, if any, incurred by Agent in the collection or
handling thereof, Agent may, at its option, (i) apply such proceeds to the
reduction of the Obligations in accordance with Section 2.8(b) or (ii) permit or require the applicable Credit
Party to use such money, or any part thereof, to replace, repair, restore or
rebuild the Collateral within 180 days of such casualty with materials and
workmanship of substantially the same quality as existed before the loss,
damage or destruction; provided that if such Credit Party shall not have
completed or entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 180 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section 2.8(b). 
Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $250,000 in the aggregate,
Agent shall permit the applicable Credit Party to replace, restore, repair or
rebuild the property; provided that if such Credit Party shall not have
completed or entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 180 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section 2.8(b).  All
insurance proceeds that are to be made available to any Credit Party to
replace, repair, restore or rebuild the Collateral shall be applied by Agent to
reduce the outstanding principal balance of the Revolving Loan (which
application shall not result in a permanent reduction of the Revolving Credit
Commitment) and upon such application, Agent shall establish a Reserve against
the Borrowing Availability in an amount equal to the amount of such proceeds so
applied.  Thereafter, such funds shall
be made available to that Credit Party to provide funds to replace, repair,
restore or rebuild the Collateral as follows: (x) the Borrower Representative
shall request a Revolving Credit Advance be made to such Credit Party in the
amount requested to be released; (y) so long as the conditions set forth in Section 3.4, as applicable,  have
been met, Revolving Lenders shall make such Revolving Credit Advance and (z) in
the case of insurance proceeds applied against the Revolving Loan, the Reserve
established with respect to such insurance proceeds shall be reduced by the
amount of such Revolving Credit Advance. 
To the extent not used to replace, repair, restore or rebuild the
Collateral, such insurance proceeds shall be applied in accordance with Section 2.8(b).

 

82

 

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

 

Section 6.6.  Inspection of Property, Books and Records.  Each Credit Party will keep proper books of
record and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities and will
permit the Agent, who may be accompanied by the representatives of any Lender
upon such Lender’s written request, to visit and inspect any of its properties,
to examine and make abstracts or copies from any of its books and records
subject to applicable confidentiality laws relating to patient medical care
records (to the extent not waived by the patient), to conduct a collateral
audit and analysis of its inventories and accounts receivable and to discuss
its affairs, finances and accounts with its officers, employees and independent
public accountants, all at such reasonable times during regular business hours
and as often as may reasonably be desired; provided that, so long as no
Default or Event of Default shall have occurred and be continuing, the Agent
shall have provided the appropriate Credit Party with reasonable prior notice
and shall conduct such visit in a manner that does not unreasonably interfere with
the conduct of such Credit Party’s business; and provided further that
Agent agrees that except (a) during the occurrence and continuance of a Default
or Event of Default, (b) in connection with any Acquisition (other than a
Permitted Acquisition) and (c) for audits of Additional Subsidiaries pursuant
to Section 6.14, no Credit Party
shall be responsible for any audit fess with respect to more than two (2)
audits during any Fiscal Year. 
Representatives of each Lender will be permitted to accompany representatives
of Agent during each visit, inspection and discussion referred to in the
immediately preceding sentence.  Agent
and Lenders agree that to the extent that (x) any documents or records
requested for inspection pursuant to this Section
6.6 are, at the time of such request, subject to a legitimate
attorney-client privilege in favor of a Credit Party as a result of threatened
or potential litigation

 

83

 

or
adverse action involving such Credit Party and another Person (other than a
Lender or Agent) and (y) such disclosure would destroy such attorney-client
privilege, such Agent or Lender, as applicable, shall afford Borrower
Representative an opportunity to consult with such Agent or Lender, as applicable,
prior to disclosure of such documents or records.  Without in any way limiting the foregoing, Borrowers will
participate and will cause the chief executive officer and the chief financial
officer of the Borrowers and such other officers of the Credit Parties as the
Agent shall designate to participate in a meeting with Agent and Lenders to
discuss the financial results and condition of the Credit Parties at least once
during each year, which meeting shall be held at such time during regular
business hours and such place as may be reasonably requested by Agent.

 

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

 

Section 6.8.  Use of Proceeds.  The proceeds of Revolving Loans made on the
Restatement Effective Date shall be used by the Borrowers solely to (a) repay
on the Restatement Effective Date the principal amount of all of the
outstanding “Term Loans” under and as defined in the Existing Credit Agreement
owing to GE Capital and any other lenders under the Existing Credit Agreement
on the Restatement Effective Date, (b) to pay on the Restatement Effective Date
all accrued and unpaid interest and fees owing to GE Capital and the other
lenders under the Existing Credit Agreement, whether or not then due and
payable, and (c) pay certain fees and expenses relating to the Related
Transactions, in each case as specified in the Statement of Sources and Uses
delivered by Holdings to Agent on or prior to the Restatement Effective Date.  The proceeds of Revolving Loans and
Swingline Loans made on and after the Restatement Effective Date shall be used
by the Borrowers solely for the purpose of funding working capital and other
general corporate purposes of the Borrowers and any of their Subsidiaries that
are Credit Parties and financing all or a portion of the purchase price of
Permitted Acquisitions (other than the Subject Acquisition).  Letters of Credit shall be used solely for
general corporate purposes of the Borrowers and any of their Subsidiaries that
are Credit Parties.  No Extension of
Credit and none of the proceeds of any Extension of Credit will be used (i) in
violation of any Applicable Law or (ii) to repay all or any portion of the
principal amount of any Senior Unsecured Debt or Subordinated Debt.  GE Capital hereby acknowledges

 

84

 

and
agrees that any prepayment fee that would otherwise apply pursuant to the
Existing Credit Agreement in connection with the repayment of the outstanding
“Term Loans” under and as defined in the Existing Credit Agreement on the
Restatement Effective Date is hereby waived.

 

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

 

Section 6.10.  Hedging Facilities.  Upon request of the Agent, within 60 days after request by Agent, the
Borrowers, at their sole cost and expense, shall enter into, and cause to be
maintained in effect one or more Interest Rate Protection Agreements having
terms, conditions and tenures, and being otherwise in form and substance
reasonably satisfactory to Agent, to the extent necessary so that, until the
Senior Unsecured Debt maturity date thereof, interest on Indebtedness in a
principal amount equal to at least 50% of the total outstanding principal
amount of the Senior Unsecured Debt is effectively fixed or capped at rates
which are reasonably acceptable to the Agent. 
It being understood that the entering into by Holdings of the Subject
Swap on or about the Restatement Effective Date shall count against the 50%
hedge requirement referred to in the immediately preceding sentence.

 

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

 

85

 

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

 

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

 

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

 

86

 

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

 

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

 

87

 

by each
such parent company shall be pledged to the Collateral Agent (for the benefit
of itself and the Lenders) on a first priority and perfected basis to secure
the Obligations, and (vi) by the applicable Credit Parties, such other related
documents (including closing certificates, legal opinions and other documents
of the types described in Exhibit I)
as the Agent may reasonably request, all in form and substance reasonably
satisfactory to the Agent; provided, however, that clause (i) above shall not
apply to any newly-formed Subsidiary that becomes an Additional Borrower in
accordance with Section 2.16.

 

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

 

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

 

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

 

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

 

(c)           On or before the Restatement
Effective Date (or such later date as Agent shall consent to in writing), each
Credit Party (including CCS) shall deliver to Agent (i) for each Government
Receivables Deposit Account, a tri-party deposit account agreement between
Agent,

 

88

 

the bank at which each
Government Receivables Deposit Account is maintained and each Credit Party, in
form and substance satisfactory to Agent (each a “Government Receivables Deposit Account
Agreement”), which
Government Receivables Deposit Account Agreement shall become operative on or
prior to the Restatement Effective Date, and (ii) for the accounts of Credit
Parties designated as a Blocked Account on Disclosure Schedule 6.16(c)
and for the Concentration Account and any Disbursement Accounts, a tri-party
blocked account agreement or lockbox account agreement between Agent, the bank
at which such Blocked Accounts or Disbursement Account is maintained and Credit
Parties, in form and substance satisfactory to Agent (each a “Blocked
Account Agreement”), which
Blocked Account Agreement shall become operative on or prior to the Restatement
Effective Date.  Each such Blocked
Account Agreement shall provide, among other things, that from and after the
Restatement Effective Date (A) with respect to banks at which any Blocked
Accounts or Disbursement Account is maintained, such bank agrees to forward
immediately all amounts in each Blocked Account to the Concentration Account
and to commence the process of daily sweeps from each of the Concentration
Accounts and Disbursement Accounts into the Collection Account.

 

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

 

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

 

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

 

89

 

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

 

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

 

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

 

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

 

Section
6.18  Minimum Liquidity.   Borrowers shall at all times on and after the Restatement
Effective Date maintain a minimum amount of Borrowing Availability and
unrestricted cash on hand such that at no time shall the sum of
(a) the amount Borrowing Availability at such time plus (B) unrestricted
cash on hand (which cash shall (x) either be in Borrowers sole possession or in
a deposit account which Agent has received a tri-party account agreement in
form satisfactory to it and (y) shall not be subject to any Lien other than
Liens in favor of Agent) at such time, be less than an amount equal to 10% of the aggregate
Commitments then in effect at such time.

 

Section 6.19  Additional Covenants.   If on the Restatement
Effective Date Holdings has not acquired 100% of the outstanding
voting Stock of CCS, Holdings shall within 2 Business Days after the
Restatement Effective Date consummate a short form statutory merger (the “Statutory Merger”) of CCS pursuant to
Delaware law such that CCS shall become a

 

90

 

wholly owned Subsidiary of Holdings not later than 2 Business Days
after the Restatement Effective Date. 
Upon the consummation of the Statutory Merger, CCS shall become and
remain at all times thereafter a wholly-owned Subsidiary of Holdings.  The aggregate purchase price consideration
paid by the Credit Parties for CCS (including any assumed indebtedness) shall
not exceed $150,000,000, subject to adjustment as provided in the CCS Purchase
Agreement as in effect on the Restatement Effective Date.

 

ARTICLE VII.

 

NEGATIVE COVENANTS

 

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

 

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

 

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

 

(b)           Indebtedness under the Loan
Documents;

 

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

 

(d)           Indebtedness of a Credit Party to
another Credit Party, provided that: (i) upon request of Agent, each
Credit Party shall have executed and delivered to each other Credit Party, on
the Restatement Effective Date, a demand note (collectively, the “Intercompany Notes”) to evidence any such

 

91

 

intercompany
Indebtedness owing at any time by such Credit Party to such other Credit
Parties which Intercompany Notes shall be in form and substance reasonably
satisfactory to Agent and shall be pledged and delivered to Agent pursuant to
the applicable Pledge Agreement or Security Agreement as additional collateral
security for the Obligations; (ii) each Credit Party shall record all
intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (iii) the obligations of each Credit Party under any
such Intercompany Notes shall be subordinated to the Obligations of such Credit
Party hereunder in a manner reasonably satisfactory to Agent; and (iv) no
Default would occur and be continuing after giving effect to any such proposed
intercompany loan;

 

(e)           Indebtedness consisting of Guaranteed
Obligations to the extent that such Guaranteed Obligations are permitted
pursuant to Section 7.3 or to the
extent that the underlying Indebtedness being guaranteed is expressly permitted
pursuant to this Section 7.1;

 

(f)            Indebtedness under (i) any Interest
Rate Protection Agreement entered into pursuant to Section 6.10 and (ii) the Subject Swap provided that the
Intercreditor Agreement in form and substance satisfactory to GE Capital in its
sole and absolute discretion has been duly executed by the Subject Swap Party
and the Credit Parties and delivered to GE Capital following the Restatement
Effective Date and such Intercreditor Agreement is and remains at all times
after execution and delivery thereof effective;

 

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

 

(h)           Indebtedness of the Borrowers
incurred in connection with any Permitted Acquisition, provided that (i) such
Indebtedness (including, without limitation, any “earnouts” or similar payment
obligations) is subordinated to the Obligations pursuant to (x) a Subordination
Agreement substantially in the form of Exhibit N duly executed by the
holders of such Indebtedness or (y) a subordination agreement in form and
substance satisfactory to Agent and the Lenders in the exercise of their good
faith discretion, (ii) such Indebtedness (including, without limitation, any
“earnouts” or similar payment obligations) is in such amounts satisfactory to
Agent and the Lenders in the exercise of their good faith discretion, and (iii)
the instrument evidencing such Indebtedness (including, without limitation, any
“earnouts” or similar payment obligations) does not contain any covenants or
events of default that are more restrictive than

 

92

 

the
covenants and events of default of the type contained in the Subordinated Notes
as in effect on the Original Closing Date or otherwise materially adverse to
Agent and Lenders;

 

(i)            Indebtedness of Holdings under the
Senior Unsecured High Yield Notes issued on the Closing Date, provided
that: (i) the maximum aggregate principal amount of such Indebtedness at any
time outstanding shall not exceed $185,000,000 less any principal repayments
thereof; (ii) such Indebtedness shall be and at all times remain unsecured; and
(iii) the Senior Unsecured High Yield Notes shall not mature prior to the date that
is one year after the Commitment Termination Date and shall not be subject to
mandatory defeasance or mandatory retirement, or be subject to any mandatory
right of redemption, repurchase or put right prior to the date that is one year
after the Commitment Termination Date, except that (x) a portion of the
principal amount of the Senior Unsecured Notes may be prepaid from the proceeds
of sales of Stock of Holdings to the extent and only to the extent such
prepayment is expressly permitted under Section 2.8(c), (y) the existence (but
not the performance) of Section 4.09 of the Senior Unsecured High Yield Note
Indenture as in effect on the Restatement Effective Date shall not violate this
Section 7.1(i), but the giving of any Change in Control Offer Notice and the
occurrence of any Change of Control (in each case as such terms are defined in
the Senior Unsecured High Yield Note Indenture) shall constitute an immediate
Event of Default hereunder pursuant to Section 8.1(1) of this Agreement, (z) a
portion of the principal amount of the Senior Unsecured Notes, together with
accrued interest thereon, may be repaid in connection with any Excess Cash Flow
Offer or Net Proceeds Offer made in accordance with the terms of the Senior
Unsecured High Yield Note Indenture  as
in effect on the Restatement Effective Date to the extent expressly permitted
under Section 7.5(h); and

 

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

 

Section 7.2.  Liens; Negative Pledges.  No Credit Party shall create, incur, assume
or permit to exist any Lien on or with respect to its Accounts or any of its
other properties or assets (whether now owned or hereafter acquired), including
but not limited to the Collateral, except for (a) Permitted Encumbrances, (b)
Liens in existence on the date hereof and summarized on Disclosure Schedule
7.2 securing the Indebtedness described on Disclosure Schedule 7.1
and permitted refinancings, extensions and renewals thereof, including
extensions or renewals of any such Liens; provided that the principal
amount of the Indebtedness so secured is not increased and the Lien does not
attach to any other property or assets of any Credit Party, (c) Liens created
after the date hereof by conditional sale or other title retention agreements
(including Capital Leases) or in connection with Indebtedness permitted by Section 7.1(c); provided that such Liens attach only to the
assets subject to such purchase money debt, (d) any Lien on any asset securing
Indebtedness permitted under Section 7.1(h)
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring such asset, provided that such

 

93

 

Lien
attaches to such asset concurrently with or within 90 days after the
acquisition thereof, (e) encumbrances in the nature of non-exclusive licenses
of granted by Credit Parties to customers in the ordinary course of business, provided
that such licenses do not impair in any respect the presently existing or
hereafter created Liens in favor of Agent on any of the Collateral; (f)
banker’s liens on Deposit Accounts of Credit Parties to the extent and only to
the extent that (i) such Deposit Accounts are not required pursuant to the
express terms of this Agreement or any of the other Loan Documents to be
subject to a Control Agreement in favor of Agent, or (ii) Agent shall have
entered into a Control Agreement which subordinates, waives or otherwise imposes
limits upon such Liens on terms satisfactory to Agent in its sole discretion,
(g) other Liens securing Indebtedness not exceeding $500,000 in the aggregate
at any time outstanding, so long as such Liens do not attach to any Accounts or
Inventory, and (h) the Lien existing on the Restatement Effective Date in the
nature of a pledge of cash collateral in an aggregate amount not exceeding
$50,000 in favor of Harris Trust and Savings Bank (“Harris Bank”) to secure the reimbursement obligations of CCS
under that certain outstanding letter of credit dated as of September 9, 2002
issued by Harris Trust and Savings Bank in favor of Riggs & Company (the “Harris Bank Letter of Credit”), provided
that not later than May 24, 2004, Agent shall have received evidence reasonably
satisfactory to it that (x) the Harris Bank Letter of Credit has been cancelled
and was not drawn by the holder thereof, and (y) such Lien has been fully
terminated and released and the balance of such pledged cash collateral (after
deducting any amounts then due and owing to Harris Bank by the applicable
Borrower in respect of the Harris Bank Letter of Credit) has been returned by
Harris Bank to the applicable Borrower. 
In addition, no Credit Party shall become a party to any agreement,
note, indenture or instrument, or take any other action, that would prohibit
the creation of a Lien on any of its properties or other assets in favor of
Agent, on behalf of itself and Lenders, in each case entered into in the
ordinary course of business, except operating leases, Capital Leases or
Licenses which prohibit Liens upon the assets or properties that are subject to
such operating lease, Capital Lease or License.

 

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

 

Section 7.4.  Capital Stock; Nature of Business.  No Credit Party shall (a) except in the
connection with and as part of the Permitted Restructuring, make any change in
its capital structure as described in Disclosure Schedule 7.4, including
the issuance or sale of any shares of Stock, warrants or other securities
convertible into Stock or any revision of the terms of its outstanding Stock;
provided that so long as no Change of Control occurs as a result of such action
(i) Holdings may issue or sell shares of its common Stock for cash so long as
the proceeds thereof are applied in prepayment of the Obligations as required
by Section 2.8(c), (ii) Holdings
may issue shares of its Stock in connection with the exercise of options by
employees, officers and directors under any employee stock option plan existing
on the Original Closing Date or in connection with the exercise of any options
not granted pursuant to a stock option plan but in connection with any
Acquisition or granted to new hires; provided that (x) such options and
plans shall not provide in the aggregate for the issuance of options to acquire
more than 40% of

 

94

 

the
common Stock of Holdings, on a fully-diluted basis, and (y) Holdings will not
in connection with either the exercise of any such options or the reservation
of shares of Stock for issuance in connection with the exercise of any such
options repurchase any of its Stock unless such repurchase is expressly
permitted under Section 7.5 of this Agreement, (iii) Holdings may issue
shares of its Stock upon the exercise of any warrants, and (iv) Holdings may
issue shares of its Stock in connection with a Permitted Acquisition, where
such Stock constitutes a portion of the purchase consideration for such
Permitted Acquisition, or (b) amend its Organizational Documents in a manner
that would adversely affect Agent or Lenders or such Credit Party’s duty or
ability to repay the Obligations.  No
Credit Party shall engage in any business materially different than the
businesses currently engaged in by it on the Original Closing Date; provided,
however, that the Credit Parties shall not be deemed in violation of
this covenant as a result of any change in Credit Parties business due solely
to the consummation of the Permitted Disposition.

 

Section 7.5.  Restricted Payments.  No Credit Party shall make any Restricted
Payment, except (a) intercompany loans between Credit Parties to the extent
permitted by Section 7.1,
(b) dividends and distributions by Subsidiaries of any Credit Party paid to
such Credit Party, (c) employee loans permitted under Section 7.10(b), (d) payments of principal and interest of
Intercompany Notes issued in accordance with Section
7.1, (e)
Holdings or any Subsidiary thereof may redeem or repurchase for cash, at fair
value, the equity interests of Holdings or a Subsidiary (or options to purchase
equity interests) from any director, officer or employee of Holdings or a
Subsidiary upon the death, disability, retirement or other termination of such
director, officer or employee; provided that all such repurchases under
this clause (e) shall not exceed $750,000 in any Fiscal Year, (f) Holdings may
engage in cashless exercises of stock options with its officers, employees and
directors provided that no cash or property is paid to or given by any Credit
Party to such officer, employee, director or any other Person in connection
with such exercise and no Credit Party incurs any Indebtedness in connection
with such transaction, (g) scheduled payments of interest with respect to
Subordinated Debt, (h) scheduled payments of interest with respect to the
Senior Unsecured Debt, (i) prepayments of a portion of principal of Senior
Unsecured Debt from the proceeds of sales Stock of Holdings to the extent and
only to the extent such prepayment is expressly permitted under Section 2.8(c), and prepayments of principal
of Senior Unsecured Debt and accrued interest thereon pursuant to any Excess
Cash Flow Offer or any Net Proceeds Offer and (j) payments of any Buydown
Amount (as such term is defined in the Subject Swap Documents) from time to
time owing by Holdings to the Subject Swap Counterparty under the Subject Swap
Documents to the extent and only to the extent that the Intercreditor Agreement
in form and substance satisfactory to GE Capital in its sole and absolute
discretion has been duly executed by the Subject Swap Party and the Credit
Parties and delivered to GE Capital following the Restatement Effective Date
and such Intercreditor Agreement is and remains at all times after execution
and delivery thereof effective; provided that, in each case with respect
to clauses (d), (e), (f), (g), (i) and (j) above (and both before and after
giving effect to any such Restricted Payment) (i) no Default or Event of
Default has occurred and is continuing at the time of such proposed Restricted
Payment, (ii) the chief financial officer of Holdings shall have delivered to
Agent a certificate, in form and substance reasonably satisfactory to Agent,
demonstrating on a pro forma basis after giving effect to any such Restricted
Payment compliance with the minimum liquidity covenant in Section 6.18 and  actual and pro forma compliance with the financial covenants
in Sections 7.15, 7.16 and 7.17,

 

95

 

and
(iii) the Restricted Payments shall be made at such times as will permit the delivery
of financial statements necessary to determine current compliance with the
financial covenants set forth herein prior to each such Restricted Payment.

 

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

 

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

 

Section 7.8.  Consolidations; Mergers; Sales of Assets;
Creation of Subsidiaries.  No
Credit Party will (a) consolidate or merge with or into any other Person other
than the merger of a wholly owned Subsidiary of a Borrower with and into a
Borrower (provided that such Borrower is the surviving corporation) or another
wholly owned Subsidiary of a Borrower, (b) sell, lease or otherwise transfer,
or grant any Person an option to acquire, directly or indirectly, any of its
properties or assets or consummate any Asset Disposition, other than (i) sales
of Inventory and data collection and management services for fair value in the
ordinary course of businesses, (ii) dispositions of Temporary Cash Investments,
(iii) dispositions of obsolete or worn-out property in the ordinary course of
business provided that the aggregate fair market value of all such assets
disposed of pursuant to this clause (b)(iii) after the date hereof does not
exceed $250,000 in any Fiscal Year, (iv) dispositions for cash and fair value
of Equipment, Fixtures, and other assets that the Borrowers determine in good
faith are no longer used or useful in the business of the Credit Parties; provided
that (x) immediately after any such disposition the aggregate fair market value
of all such assets disposed of pursuant to this clause (b)(iv) after the
Original Closing Date does not exceed $1,000,000 and the aggregate fair market
value of all such assets disposed of during the Fiscal Year in which such
disposition is made does not exceed $500,000, and (y) the net proceeds of all
such Asset Dispositions under this clause (b)(iv) are applied to prepay the
Loan pursuant to Section 2.8(b),
(v) sale or settlement of disputed or delinquent Accounts at a discount in the
ordinary course of Borrowers’ business and consistent with past practice as of
the Original Closing Date; provided that the aggregate face amount of
all such Accounts does not exceed $100,000 in any Fiscal Year, (vi) the sale or
issuance of any Subsidiary’s capital stock to a Borrower or the merger of one
of more Subsidiaries of a Borrower into another Credit Party, (vii)
dispositions of property from any Subsidiary of a Borrower to a Credit Party,
including, without limitation, Restricted Payments permitted under Section 7.5 or transfers of stock of Subsidiaries
in connection with any merger or consolidation permitted under Section 7.8(a), (viii) the Permitted
Disposition and transfers of assets from Guarantor to a Borrower or from any
Borrower to another Borrower in connection

 

96

 

with
and as part of the Permitted Restructuring; and (ix) dispositions for cash and
fair value of hyperbaric oxygen chambers, provided that the aggregate
fair market value of all such assets disposed of pursuant to this clause (b)(xii)
after the Original Closing Date does not exceed $750,000, or (c) shall form a
Subsidiary unless all applicable requirements of Sections 6.13 and 6.14
are met with respect to such Subsidiary.

 

Section 7.9.  Purchase of Assets; Investments.  No Credit Party will acquire all or
substantially all of the assets of, engage in any joint venture or Partnership
with any Person, or make, acquire or own any Investment other than (a) Cash
Equivalents or Temporary Cash Investments; (b) Investments in another Credit
Party; (c) Investments existing on the Restatement Effective Date and described
on Disclosure Schedule 7.9, (d) Permitted Acquisitions; and (e)
other Investments not exceeding $500,000  in
the aggregate at any time outstanding. 
Without limiting the generality of the foregoing, no Credit Party will
(i) except in connection with Permitted Acquisitions and subject to compliance
with Section 6.14, acquire or
create any Subsidiary without the consent of the Required Lenders or (ii)
engage in any joint venture or partnership with any other Person.

 

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

 

(b)           No Credit Party shall enter into any
lending or borrowing transaction with any employees of any Credit Party, except
with respect to loans existing on the Restatement Effective Date and disclosed
on Disclosure Schedule 7.10(b), and except loans to its respective
employees (other than officers except to the extent permitted by law) in the
ordinary course of business consistent with past practices for travel and
entertainment expenses, relocation costs and similar purposes up to a maximum
of $250,000  in the aggregate at
any one time outstanding.

 

Section 7.11.  Amendments or Waivers.  Without the prior written consent of the
Agent and the Required Lenders, no Credit Party will agree to (a) any amendment
to or waiver of or in respect of any Loan Documents, or (b) any other material
amendment to or waiver of any material contract constituting a part of the
Collateral which could reasonably be expected to have a Material Adverse Effect
on the Credit Parties, (c) any amendment or waiver of any document governing
any Subordinated Debt or any Senior Unsecured Debt, or (d) any amendment,
waiver or other modification of any of the Subject Swap Documents from the form
of such documents attached as Exhibit A to the Intercreditor Agreement.

 

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

 

Section 7.13.  Capital Expenditures.  The Credit Parties will not make or commit
to make any Capital Expenditures in excess of (a) $5,500,000 in the aggregate
during the

 

97

 

Fiscal
Year 2004, (b) $7,000,000 in the aggregate during the Fiscal Year 2005, (c)
$8,500,000 in the aggregate during the Fiscal Year 2006 and (d) $9,500,000 in
the aggregate during any Fiscal Year on and after Fiscal Year 2007.

 

Section 7.14.  Lease
Limits.   No Credit
Party will become or remain liable in any way, whether by assignment, as a
guarantor or other surety or otherwise, for the obligations of any lessee under
any operating lease, synthetic lease or similar off-balance sheet financing, if
the aggregate amount of all rents (or substantially equivalent payments) paid
by the Credit Parties under all such leases would exceed $4,000,000  in any Fiscal Year.

 

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

 

	
  Quarterly Period

  	
   

  	
  Maximum Total Leverage Ratio

  
	
  Fiscal Quarter Ended June
  30, 2004

  	
   

  	
  4.75:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2004

  	
   

  	
  4.75:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2004

  	
   

  	
  4.75:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2005

  	
   

  	
  4.50:1.00

  
	
  Fiscal Quarter Ended June
  30, 2005

  	
   

  	
  4.50:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2005

  	
   

  	
  4.25:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2005

  	
   

  	
  4.25:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2006

  	
   

  	
  3.75:1.00

  
	
  Fiscal Quarter Ended June
  30, 2006

  	
   

  	
  3.75:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2006

  	
   

  	
  3.25:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2006

  	
   

  	
  3.25:1.00

  
	
  Fiscal Quarter Ended March
  31, 2007

  	
   

  	
  3.00:1.00

  
	
  Fiscal Quarter Ended June
  30, 2007

  	
   

  	
  3.00:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2007

  	
   

  	
  2.75:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2007

  	
   

  	
  2.75:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2008

  	
   

  	
  2.50:1.00

  
	
  Fiscal Quarter Ended June
  30, 2008

  	
   

  	
  2.50:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2008 and each Fiscal Quarter thereafter

  	
   

  	
  2.25:1.00

  

 

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

 

	
  Quarterly Period

  	
   

  	
  Maximum Senior Secured

  Leverage Ratio

  
	
  Fiscal Quarter Ended June
  30, 2004

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended September
  30, 2004

  	
   

  	
  1.50:1.00

  

 

98

 

	
  Fiscal Quarter Ended
  December 31, 2004

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2005

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended June
  30, 2005

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2005

  	
   

  	
  1.25:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2005

  	
   

  	
  1.25:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2006

  	
   

  	
  1.25:1.00

  
	
  Fiscal Quarter Ended June
  30, 2006

  	
   

  	
  1.25:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2006

  	
   

  	
  1.25:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2006

  	
   

  	
  1.25:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2007 and each Fiscal Quarter thereafter

  	
   

  	
  1.00:1.00

  

 

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

 

	
  Quarterly Period

  	
   

  	
  Minimum Fixed Charge

  Coverage Ratio

  
	
  Fiscal Quarter Ended June
  30, 2004

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2004

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2004

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2005

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended June
  30, 2005

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2005

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2005

  	
   

  	
  1.50:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2006

  	
   

  	
  2.00:1.00

  
	
  Fiscal Quarter Ended June
  30, 2006

  	
   

  	
  2.00:1.00

  
	
  Fiscal Quarter Ended September
  30, 2006

  	
   

  	
  2.25:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2006

  	
   

  	
  2.25:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2007

  	
   

  	
  2.75:1.00

  
	
  Fiscal Quarter Ended June
  30, 2007

  	
   

  	
  2.75:1.00

  
	
  Fiscal Quarter Ended
  September 30, 2007

  	
   

  	
  2.75:1.00

  
	
  Fiscal Quarter Ended
  December 31, 2007

  	
   

  	
  2.75:1.00

  
	
  Fiscal Quarter Ended
  March 31, 2008 and each Fiscal Quarter thereafter

  	
   

  	
  3.25:1.00

  

 

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

 

99

 

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

 

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

 

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

 

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

 

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

 

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

 

100

 

Section 7.19.  Accounts
Receivable Days Sales Outstanding.  Accounts Receivable Days Sales Outstanding shall not at any time
exceed 105 days during any three month period commencing with the Fiscal Quarter
ended March 31, 2004.

 

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

 

ARTICLE VIII.

 

EVENTS OF DEFAULT

 

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

 

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

 

(b)           any Credit Party shall fail to
observe or perform any covenant applicable to it contained in Section 5.1, Section 5.2, Section 6.1,
Section 6.2 (so far as it requires
each Credit Party to maintain its existence), Section
6.5, Section 6.8, Section 6.9,
Section 6.10, Section 6.16, Section 6.17, Section 6.18 or
Article VII hereof;

 

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

 

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

 

(e)           any Credit Party shall fail to make
any payment when due in respect of any Indebtedness (other than the Obligations)
the aggregate outstanding principal amount of which Indebtedness, either
individually or in the

 

101

 

aggregate
with all other Indebtedness with respect to which the Credit Parties have
failed to make a payment, equals or exceeds $1,000,000;

 

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

 

(g)           any Credit Party shall (i) commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its properties or assets, (ii) consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, (iii) cease to be
solvent (as represented in Section 4.18)
or make a general assignment for the benefit of creditors or (iv) fail
generally, not be able or admit in writing its inability to pay its debts as
they become due, or take any action in furtherance of, or indicating its
consent to, or approval of or acquiescence in any of the foregoing;

 

(h)           an involuntary case or other
proceeding shall be commenced against any Credit Party seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for
a period of sixty (60) days, or an order for relief shall be entered against
any Credit Party under any bankruptcy laws as now or hereafter in effect, or
any Credit Party shall take any action in furtherance of, or indicating its consent
to, or approval of or acquiescence in any of the foregoing;

 

(i)            (i) institution of any steps by any
Borrower or any member of the Controlled Group or any other Person to terminate
a Pension Plan if, as a result of such termination, such Borrower or any member
of the Controlled Group could reasonably be expected to be required to make a
contribution to such Pension Plan, or could incur a liability or obligation to
such Pension Plan, in excess of $1,000,000, (ii) a contribution failure occurs
with respect to any Pension Plan sufficient to give rise to a Lien under
Section 302 of ERISA, (iii) there shall

 

102

 

occur
any withdrawal or partial withdrawal from a Multiemployer Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Plans as a
result of such withdrawal (including any outstanding withdrawal liability that
any Borrower and the members of the Controlled Group have incurred on the date
of such withdrawal) exceeds $1,000,000, (iv) with respect to any Plan, any
Borrower or any member of the Controlled Group shall incur an accumulated
funding deficiency or request a funding waiver from the IRS, or (v) there shall
occur an ERISA Event or a non-exempt prohibited transaction within the meaning
of Section 406 of ERISA or IRC Section 4975; provided, that the events
listed in clauses (iv) and (v) hereof shall constitute Events of Default only
if the liability, deficiency or waiver request, whether or not assessed, could
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect;

 

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

 

(k)           a judgment or order for the payment
of money which, individually or when aggregated with other such judgments or
orders, equals or exceeds $1,000,000, shall be rendered against any Credit
Party and such judgment or order shall continue unsatisfied and unstayed for a
period of ten (10) days or any judgment shall be rendered against any Credit
Party that exceeds by more than $1,000,000 any insurance coverage applicable
thereto as to which the insurance company has acknowledged coverage and such
judgment or order shall continue unsatisfied and unstayed for a period of ten
(10) days;

 

(l)            (i) a Change of Control shall occur;
or (ii) any “Change in Control” under and as defined in the Senior Unsecured
High Yield Note Indenture

 

103

 

or
other event (including, without limitation, the giving by Holdings of any
“Change of Control Offer” notice (as defined in Senior Unsecured High Yield
Note Indenture) to any holder of Senior Unsecured High Yield Notes, but
excluding any Excess Cash Flow Offer or Net Proceeds Offer, in each case to the
extent expressly permitted in Section 7.5(h))
shall occur under any of the Senior Unsecured High Yield Note Documents which
requires Holdings or any other Credit Party to make an offer to one or more of
the holders of such Indebtedness to repurchase, redeem or retire all or any
portion of such Indebtedness, or otherwise entitles the  holder or holders of all or any portion of
such Indebtedness, or any Person acting on such holder’s behalf to accelerate
the maturity of such Indebtedness, or results in the acceleration of the
maturity of all or any portion of such Indebtedness;

 

(m)          the auditor’s report or reports on the
audited statements delivered pursuant to Section
5.1(b) shall include any material qualification (including with
respect to the scope of audit) or exception or any adverse statement as to the
ability of any Credit Party to continue as a going concern;

 

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

 

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

 

(p)           any of the Related Transactions
Documents (other than the Loan Documents) shall for any reason fail to
constitute the valid and binding agreement of any party thereto, or any such
party shall so assert in writing, or refuse or fail to perform in any respect
its obligations thereunder and, in each case such failure or refusal could
reasonably be expected to result in any Credit Party incurring  a liability, individually or in the
aggregate, in excess of $1,000,000 in connection therewith or could reasonably
be expected to result in a Material Adverse Effect;

 

104

 

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

 

(r)            any material damage to, or loss,
theft or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of any Credit Party, if any such event or circumstance, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect;

 

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

 

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

 

(u)           any event of default shall occur
under any of the Senior Unsecured High Yield Note Documents, or any other event
or condition shall occur which enables (or, with the giving of notice or lapse
of time or both, would enable) the holder or holders of all or any portion of
the Senior Unsecured High Yield Notes, or any Person acting on such holder’s
behalf to accelerate the maturity of all or any portion of the Indebtedness
evidenced by the Senior Unsecured High Yield Notes, or results in the
acceleration of the maturity of all or any portion of such Indebtedness.

 

Section 8.2.  Remedies.

 

(a)           If any Default or Event of Default
has occurred and is continuing, Agent may, and at the written request of the
Required Lenders shall, without notice or demand, suspend the Revolving Credit
Commitment with respect to additional Advances or the incurrence of additional
L/C Obligations, whereupon any additional Advances and additional L/C
Obligations shall be made or incurred in Agent’s sole discretion (or in the
sole discretion of the Required Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default

 

105

 

 is
continuing.  If any Default or Event of
Default has occurred and is continuing, Agent may (and at the written request
of Required Lenders shall), without notice except as otherwise expressly
provided herein, increase the rate of interest applicable to the Loans in
accordance with Section 2.4(c) and
other outstanding Obligations.

 

(b)           If any Event of Default has occurred
and is continuing, Agent may, and at the written request of the Required
Lenders shall, without notice or demand (i) terminate the Revolving Credit
Commitment with respect to further Advances or the incurrence of further L/C
Obligations (ii) declare all or any portion of the Obligations, including all
or any portion of any Loan, to be forthwith due and payable, and require that
the L/C Obligations be either cash collateralized as provided in Section 2.5(k) or fully supported by a back-up letter of credit
(other than a Letter of Credit issued under this Agreement) issued for the
benefit of Agent, in form and substance satisfactory to Agent, from an issuer
satisfactory to Agent, all without presentment, demand, protest or further
notice of any kind, all of which are expressly waived by the Borrowers and each
other Credit Party, or (iii) exercise any rights and remedies provided to Agent
under the Loan Documents, the other Related Transactions Documents or at law or
equity, including all remedies provided under the Code; provided that
upon the occurrence of an Event of Default specified in Sections 8.1(g) or 8.1(h),
the Revolving Credit Commitment shall be immediately terminated and all of the
Obligations, including the outstanding Loans, shall become immediately due and
payable without declaration, notice or demand by any Person.

 

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

 

ARTICLE IX.

 

EXPENSES AND INDEMNITIES

 

Section 9.1.  Expenses.  Whether or not the transactions contemplated
hereby are consummated, the Credit Parties, jointly and severally, agree (a) to
pay on demand all fees, costs and expenses (including reasonable attorneys’
fees and expenses and the allocated cost of internal legal staff) incurred by
Agent, Lead Arranger and any appraisers, auditors and consultants retained by
the Agent or Lead Arranger in connection with (i) the examination, review, due
diligence investigation, documentation, negotiation, closing and syndication of
the transactions contemplated herein and in the Related Transactions Documents
and in connection

 

106

 

with
the continued administration of the Loan Documents including any amendments,
modifications, consents and waivers, (ii) creating, perfecting and maintaining
Liens pursuant to the Loan Documents, including filing and recording fees and
expenses, the costs of any bonds required to be posted in respect of future
filing and recording fees and expenses, and title investigations and (iii) any
matters contemplated by or arising out of the Loan Documents, including Agent’s
customary field audit charges and the reasonable fees, expenses and
disbursements of the Agent, Lead Arranger or any accountants or other experts
retained by the Agent or Lead Arranger (including any affiliate of Agent or
Lead Arranger as shall be engaged for such purpose) in connection with
accounting and collateral audits or reviews of the Credit Parties and their
affairs, (b) to promptly pay reasonable documentation charges assessed by Agent
for amendments, waivers, consents and any of the documentation prepared by
Agent’s internal legal staff, and (c) to promptly pay all fees, costs and
expenses (including attorneys’ fees and expenses and the allocated cost of
internal legal staff) incurred by Agent and Lenders in connection with any
action to enforce any Loan Document or to collect any payments due from Borrowers
or any other Credit Party.  All fees,
costs and expenses for which any Credit Party is responsible under this Section 9.1 shall be deemed part of the
Obligations when incurred, and shall be payable on demand in accordance with Section 2.14.

 

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

 

107

 

 immediately preceding sentence may be
unenforceable, each Credit Party shall contribute the maximum portion which it
is permitted to pay and satisfy under Applicable Law to the payment and
satisfaction of all such indemnified liabilities incurred by the Indemnitees or
any of them.  Without limiting the
generality of any provision of this Section, to the fullest extent permitted by
law, each Credit Party hereby waives all rights for contribution or any other
rights of recovery with respect to liabilities, losses, damages, costs and
expenses arising under or relating to Environmental Laws that it might have by
statute or otherwise against any Indemnitee, except to the extent that such
items are finally determined by a court of competent jurisdiction to have
resulted solely from the gross negligence or willful misconduct of such
Indemnitee.  An Indemnitee under this Section 9.2 shall endeavor to notify the
Borrower Representative of any event requiring indemnification within ten (10)
Business Days following such Indemnitee’s receipt of notice of commencement of
any action or proceeding, or such Indemnitee’s obtaining knowledge of the
occurrence of any event, giving rise to a claim for indemnification hereunder,
provided that the failure to give such notice shall not invalidate or otherwise
impair the rights of the Indemnitee to indemnification under this Section 9.2 or result in any liability of
such Indemnitee, the Agent or any Lender to any Credit Party or any other
Person.

 

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

 

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

 

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

 

(b)           If, as a result of either
(i) the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) or (ii) the compliance with any
guideline

 

108

 

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

 

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

 

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

 

109

 

ARTICLE X.

 

THE AGENT

 

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

 

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

 

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

 

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

 

Section 10.5.  Consultation with Experts.  The Agent may consult with legal counsel
(who may be counsel for any Borrower), accountants and other experts selected
by it and

 

110

 

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

 

Section 10.6.  Liability of Agent.  Neither the Agent nor any of its directors,
officers, agents, representatives, employees or Affiliates shall be liable for
any action taken or not taken by it in connection with the Loan Documents (a)
with the consent or at the request or direction of the Required Lenders, or (b)
in the absence of its own gross negligence or willful misconduct.  Neither the Agent nor any of its directors,
officers, agents, representatives, employees or Affiliates shall be responsible
for or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made under or in connection with any Loan Document
or any Extension of Credit hereunder, (ii) the performance or observance of any
of the covenants or agreements of any Credit Party, (iii) the satisfaction of
any condition specified in Article III,
except to confirm receipt of items required to be delivered to the Agent, (iv)
the validity, effectiveness, sufficiency or genuineness of any Loan Document or
any other instrument or writing furnished in connection therewith, or (v) the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
any of the Loan Documents or for any failure of any Borrower or any other
Credit Party to perform its obligations under this Agreement or any other Loan
Document.  The Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, other writing (which may be a bank wire, telex, facsimile transmission
or similar writing) or conversation believed by it to be genuine or to be
signed by the proper party or parties.

 

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

 

Section 10.8.  Credit Decision.  L/C Issuer and each Lender acknowledges that
neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representation or warranty to it
and that no act by the Agent hereinafter taken, including any review of the
affairs of any Borrower or any other Credit Party, shall be deemed to
constitute any representation or warranty by the Agent to L/C Issuer or any
Lender.  L/C Issuer and each Lender
acknowledges that it has, independently and without reliance upon the Agent,
L/C Issuer or any other Lender, and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and to make the Extensions of Credit hereunder.  L/C Issuer and each Lender also acknowledges
that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
connection with its taking or not taking any action under the Loan

 

111

 

Documents.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide L/C
Issuer or any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects
or creditworthiness of any Borrower or any other Credit Party which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.

 

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

 

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

 

112

 

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

 

ARTICLE XI.

 

MISCELLANEOUS

 

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

 

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

 

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

 

Notices shall be
addressed as follows:

 

113

 

	
  If to any Borrower or

  	
   

  	
   

  
	
  Borrower Representative:

  	
   

  	
  c/o  Curative Health Services, Inc.

  
	
   

  	
   

  	
  150 Motor Parkway

  
	
   

  	
   

  	
  Hauppauge, New York 11788

  
	
   

  	
   

  	
  Attention:  Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile No: (631)
  232-9323

  
	
   

  	
   

  	
  Telephone No.: (631)
  232-7015

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Curative Health Services,
  Inc.

  
	
   

  	
   

  	
  150 Motor Parkway

  
	
   

  	
   

  	
  Hauppauge, New York 11788

  
	
   

  	
   

  	
  Attention: General
  Counsel

  
	
   

  	
   

  	
  Facsimile No.: (631)
  233-8106

  
	
   

  	
   

  	
  Telephone No.: (631)
  232-7016

  
	
   

  	
   

  	
   

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

  	
   

  	
  General Electric Capital
  Corporation

  
	
   

  	
   

  	
  2 Bethesda Metro Center

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Bethesda, MD 20814

  
	
   

  	
   

  	
  Attention:

  	
  Curative Health Services,
  Inc.

  Account Manager

  
	
   

  	
   

  	
  Facsimile No: (301)
  347-3175

  
	
   

  	
   

  	
  Telephone No.: (301)
  664-9816

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  General Electric Capital
  Corporation

  
	
   

  	
   

  	
  2 Bethesda Metro Center

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Bethesda, MD 20814

  
	
   

  	
   

  	
  Attention:  Legal Department

  
	
   

  	
   

  	
  Facsimile No: (301)
  664-9849

  
	
   

  	
   

  	
  Telephone No.: (301)
  664-9866

  

 

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

 

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

 

Section 11.5.        Amendments
and Waivers.  Any provision
of this Agreement or any other Loan Document may be amended or waived only if
such amendment or waiver is in writing and is signed by the Borrowers and the
Agent (if authorized by the Required Lenders) or the Required Lenders (and, if
the rights or duties of the Agent, the Swingline Lender or the L/C Issuer are
affected thereby, by the Agent, Swingline Lender or L/C Issuer as applicable);

 

114

 

provided,
that no such amendment or waiver shall, unless signed by all the Lenders (i)
increase or decrease any Commitment of any Lender (except for a ratable
decrease in the Commitments of all Lenders) or subject any Lender to any
additional obligation, (ii) reduce the principal of or rate of interest on any
Obligation or the amount of any Fees payable hereunder, (iii) postpone the date
fixed for any (A) payment of (1) principal of any Loan or Reimbursement
Obligation pursuant to Section 2.8,
(2) of interest on any Loan or Reimbursement Obligation or (3) any fees hereunder,
or (B) termination of any Commitment, (iv) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans and
Reimbursement Obligations which shall be required for the Lenders or any of
them to take any action under this Section or any other provision of this
Agreement, (e) release all or substantially all of the Collateral, (f) release
all or substantially all of the Guarantors or (g) amend this Section 11.5 or the definition of “Required
Lenders”.

 

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

 

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

 

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

 

(d)           Each Lender may sell participations
in all or any part of the Loans, its Notes, its Commitments or its L/C
Exposure.  Any participation by a Lender
shall be made with

 

115

 

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

 

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

 

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

 

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

 

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

 

THIS SECURITY IS NOT BEING
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE

 

116

 

BENEFIT OF THE ISSUER THAT
THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO A
BORROWER, (2) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER THAT IS AWARE THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT.

 

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

 

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

 

117

 

Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.  Each Credit Party agrees that any Lender so purchasing a
participation from any other Lender pursuant to this Section 11.7 may, to the fullest extent permitted by law, and
notwithstanding the provisions of Section
11.6(d), exercise all of its rights of payment (including the right
of set-off) with respect to such participation as fully as if such purchasing
Lender were the direct creditor of such Credit Party in the amount of such
participation.

 

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

 

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

 

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

 

Section 11.11.  Notice of Breach by Agent or Lender.  The Credit Parties party hereto
agree to give the Agent and the Lenders notice of any action or inaction by the
Agent or any Lender or any agent or attorney of the Agent or any Lender in
connection with this Agreement or any other Loan Document or the Obligations of
the Credit Parties under this Agreement or any other Loan Document that may be
actionable against the Agent or any Lender or any agent or attorney of the
Agent or any Lender or a defense to payment of any Obligations of the Credit
Parties under this Agreement or any other Loan Document for any reason,
including commission of a tort or violation of any contractual duty or duty
implied by law.  The Credit

 

118

 

Parties
party hereto agree, to the fullest extent that they may lawfully do so, that
unless such notice is given promptly (and in any event within ten (10) days
after any Credit Party has knowledge, or with the exercise of reasonable
diligence could have had knowledge, of any such action or inaction), no Credit
Party shall assert, and each Credit Party shall be deemed to have waived, any
claim or defense arising therefrom to the extent that the Agent or any Lender
could have mitigated such claim or defense after receipt of such notice.

 

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

 

Section 11.13.  Counterparts; Entire Agreement.  This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.  This Agreement and the other Loan Documents
(including any fee letters between Agent and one or more of the Credit Parties)
constitute the entire agreement and understanding among the parties hereto and
supersede any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof; provided, however, that
the provisions of the Commitment Letter set forth in the “Syndication” section
of the Commitment Letter, together with any indemnification provisions made by
Holdings in favor of GE Capital, GECC Capital Markets Group, Inc. and their
respective affiliates, directors, officers, employees, agents, attorneys and
representatives in connection with such syndication shall survive execution and
delivery of this Agreement; provided  further that the immediately
preceding proviso is not intended to limit, nor shall it be construed as
limiting, the indemnification provisions provided for in Section 9.2 and elsewhere in the Loan
Documents in favor of Lender Parties.

 

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

 

119

 

directly
or indirectly identify any Credit Party, (vii) which has heretofore been
publicly disclosed or is otherwise available to such Agent or Lender on a
non-confidential basis from a source that is not, to its knowledge, subject to
a confidentiality agreement with any Credit Party, (viii) in connection with
any litigation against any Credit Party or otherwise arising out of or relating
to the transactions contemplated under the Loan Documents to which Agent or any
Lender or its Affiliates is a party, or (ix) subject to a written agreement
containing provisions substantially the same as those set forth in this Section 11.14, to any assignee of or
participant in, or prospective assignee of or participant in, any of the
Obligations; provided, however, that in the event any assignee of
a Lender has an Affiliate which is a Competitor, such assignee may not disclose
to such Affiliate any information concerning any Credit Party or its
Subsidiaries or business operations or assets which is identified as
confidential and which is not in the public domain.

 

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

 

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

 

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

 

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

 

120

 

Loan
Documents shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

 

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

 

Section 11.19.  Effect
of Amendment and Restatement of the Existing Credit Agreement..

 

(a)           On the Restatement Effective Date
upon the satisfaction of the conditions precedent in Section 3.1, the Existing
Credit Agreement shall be amended and restated in its entirety.  The Borrowers will use the proceeds of the
initial Advances made on the Restatement Effective Date together with a portion
of the Senior Unsecured Debt to repay the principal amount of all of the
outstanding “Term Loans” (under and as defined in the Existing Credit
Agreement), and to pay all accrued and unpaid interest and fees owing to GE
Capital and the other lenders under the Existing Credit Agreement, whether or
not then due and payable, in accordance with Section
6.8 of the Credit Agreement all as described in the Statement of
Sources and Uses.  Any “Revolving Credit
Advances” (under and as defined in the Existing Credit Agreement) outstanding
on the Restatement Effective Date and not repaid with the proceeds of the
initial Advances made hereunder on the Restatement Effective Date shall be
deemed to be Revolving Credit Advances under this Agreement.

 

(b)           The parties hereto acknowledge and
agree that (i) this Agreement and the other Loan Documents, whether executed
and delivered in connection herewith or otherwise, do not constitute a novation
or termination of the “Obligations” (as defined in the Existing Credit
Agreement) under the Existing Credit Agreement as in effect prior to the
Restatement Effective Date and which remain outstanding and are in all respects
continuing (as amended and restated hereby), except to the extent that any such
obligations have been repaid by Borrowers on the Restatement Effective Date
pursuant to the terms of this Agreement; (ii) the Liens and security interests
as granted under the Collateral Documents securing payment of such
“Obligations” are in all respects continuing and in full force and effect after
giving effect to this Agreement and the transactions contemplated hereby; (iii)
references in the Loan Documents and Collateral Documents to the “Credit
Agreement” shall be deemed to be references to this Agreement, and to the
extent necessary to effect the foregoing, each such Loan Document and
Collateral Document is hereby deemed amended accordingly, (iv) all of the terms
and provisions of the Existing Credit Agreement shall continue to apply for the
period prior to the Restatement Effective Date, including any determinations of
payment dates, interest rates, Events of Default or any amount that may be
payable to the Agent or the Lenders (or their assignees or replacements
hereunder), (v) the obligations under the Existing Credit Agreement shall
continue to be paid or prepaid on or prior to the Restatement Effective Date,
and shall from and after the Restatement Effective Date continue to be owing
and be subject to the terms of this Agreement, except to the extent that any
such obligations have been repaid by Borrowers on the Restatement

 

121

 

Effective
Date pursuant to the terms of this Agreement, (vi) all references in the Loan
Documents and Collateral Documents to the “Lenders” or a “Lender” or to the
“Agent” shall be deemed to refer to such terms as defined in this Agreement,
and to the extent necessary to effect the foregoing, each such Loan Document
and Collateral Document is hereby deemed amended accordingly, and (vii) all
references in the Loan Documents and Collateral Documents to the “Credit
Agreement” shall be deemed to refer to this Agreement, and to the extent
necessary to effect the foregoing, each such Loan Document and Collateral
Document is hereby deemed amended accordingly.

 

(c)           The Borrowers, the Agent and the
Lenders acknowledge and agree that all principal, interest, fees, costs,
reimbursable expenses and indemnification obligations accruing or arising under
or in connection with the Existing Credit Agreement which remain unpaid and
outstanding as of the Restatement Effective Date shall be and remain
outstanding and payable as an obligation under this Agreement and the other
Loan Documents.

 

Section 11.20.  New
Lenders.  The parties
hereto agree that as of the Restatement Effective Date, (i) the Lenders
signatory hereto shall become “Lenders” under this Agreement and the other Loan
Documents and (ii) each Lender shall have the Commitments as set forth on
signature page attached hereto opposite the name of such Lender on the
signature pages hereof.  Borrowers
hereby direct Agent to apply the proceeds of the Loans made on the Restatement
Effective Date to the repayment of certain outstanding loans and obligations of
the Borrowers owing to the “Agent” and “Lenders” under and as defined in the
Existing Credit Agreement on the Restatement Effective Date and to the payment
certain fees and expenses relating to the Related Transactions in accordance
with Section 11.19(a) and the Pay
Proceeds Letter.

 

ARTICLE
XII

 

CROSS-GUARANTY

 

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

 

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

 

122

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 12.5.  Election of
Remedies.  If Agent or any
Lender may, under applicable law, proceed to realize its benefits under any of
the Loan Documents giving Agent or

 

123

 

such
Lender a Lien upon any Collateral, whether owned by any Borrower or by any
other Person, either by judicial foreclosure or by non-judicial sale or
enforcement, Agent or any Lender may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 12.  If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to “election of
remedies” or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation that each Borrower might otherwise have had but for such action by
Agent or such Lender.  Any election of
remedies that results in the denial or impairment of the right of Agent or any Lender
to seek a deficiency judgment against any Borrower shall not impair any other
Borrower’s obligation to pay the full amount of the Obligations.  In the event Agent or any Lender shall bid
at any foreclosure or trustee’s sale or at any private sale permitted by law or
the Loan Documents, Agent or such Lender may bid all or less than the amount of
the Obligations and the amount of such bid need not be paid by Agent or such
Lender but shall be credited against the Obligations.  The amount of the successful bid at any such sale, whether Agent,
Lender or any other party is the successful bidder, shall be conclusively
deemed to be the fair market value of the Collateral and the difference between
such bid amount and the remaining balance of the Obligations shall be
conclusively deemed to be the amount of the 
Obligations guaranteed under this Section
12, notwithstanding that any present or future law or court decision
or ruling may have the effect of reducing the amount of any deficiency claim to
which Agent or any Lender might otherwise be entitled but for such bidding at
any such sale.

 

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

 

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

 

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

 

Section 12.7.  Contribution
with Respect to Guaranty Obligations.

 

(a)           To the extent that any Borrower shall
make a payment under this Section 12
of all or any of the Obligations (other than Loans made to that Borrower for
which it is primarily liable) (a “Guarantor Payment”) that, taking into account
all other Guarantor Payments then previously or concurrently made by any other
Borrower, exceeds the amount that such

 

124

 

Borrower
would otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payment in the same proportion that such Borrower’s
“Allocable Amount” (as defined below) (as determined immediately prior to such
Guarantor Payment) bore to the aggregate Allocable Amounts of each of the
Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the
Obligations and termination of the Commitments, such Borrower shall be entitled
to receive contribution and indemnification payments from, and be reimbursed
by, each other Borrower for the amount of such excess, pro rata based upon
their respective Allocable Amounts in effect immediately prior to such
Guarantor Payment.

 

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

 

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

 

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

 

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

 

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

 

[Remainder
of page intentionally left blank]

 

125

 

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

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES, INC.,

  a Minnesota corporation formerly known as

  Curative Holding Co.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA ACCESS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William Tella

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  APEX THERAPEUTIC CARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES OF NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL CARE PLUS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services Co., its Sole

  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  INFINITY INFUSION II, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services Co., its Sole Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Infinity Infusion  II, LLC, its Sole General

  Partner

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services Co., the Sole

  Member of Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE PHARMACY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRITICAL CARE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

	
   

  	
  CURATIVE HEALTH SERVICES CO.,
a Minnesota corporation
  formerly known as

  Curative Health Services, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Thomas W. Axmacher

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

AGENT AND LENDERS:

 

	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION, as Lender
  and as Agent

  
	
   

  	
   

  
	
  Revolving Credit

  	
  By:/s/ Authorized
  Signatory

  
	
  Commitment:  $40,000,000

  	
  Name:

  
	
   

  	
  Its Duly Authorized
  Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Payment Account:

  	
  Deutsche Bank/Banker’s
  Trust

  New York, NY

  ABA No.:  021-001-033

  Account No.:  50-271-079

  Account Name:  GE-HFS Cash Flow
  Collections

  Re:  Curative Health Services, Inc.

  

 

EXHIBIT
A

to

CREDIT
AGREEMENT

 

AMENDED
AND RESTATED REVOLVING NOTE

 

	
                       
         , 20   

  	
   

  	
  New York, New
  York

  
	
   

  	
   

  	
  $                             

  

 

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

 

This Amended and Restated
Revolving Note is one of the Revolving Notes issued pursuant to that certain
Amended and Restated Credit Agreement dated as of April 23, 2004 by and among
Borrowers, the other Persons named therein as Credit Parties, Agent, Lender and
the other Persons signatory thereto from time to time as Lenders (including all
annexes, exhibits and schedules thereto, and as from time to time amended,
restated, supplemented or otherwise modified, the “Credit Agreement”), and is entitled to the benefit and
security of the Credit Agreement, the Security Agreements and all of the other
Loan Documents referred to therein.

 

 

Reference is hereby made
to the Credit Agreement for a statement of all of the terms and conditions
under which the Loans evidenced hereby are made and are to be repaid.

 

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

 

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

 

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

 

This Amended and Restated
Revolving Note constitutes the amendment and restatement of that certain
Revolving Note dated June 9, 2003,
issued by Borrowers (other than Holdings) in favor of Lender in the stated
principal amount of $15,000,000 (the “Prior Note”), and this Amended and Restated Revolving
Note, among other things, evidences the joint and several obligations of all of
the Borrowers (including Holdings) to repay the Loans, accrued interest thereon
and other amounts to the Lender in accordance with the terms hereof.  The execution and delivery of this
Amended and Restated Revolving Note shall not in any circumstances be deemed to
have terminated, extinguished, released, constituted a novation of, or
discharged the indebtedness of any of the Borrowers under the Prior Note, which
indebtedness shall continue under and be governed by this Amended and Restated Revolving Note.

 

THIS AMENDED AND RESTATED REVOLVING NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.  Whenever possible each provision of this Amended and Restated Revolving Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provisions
of this Amended and Restated Revolving
Note shall be prohibited by or invalid under applicable law, such provisions
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Amended and Restated Revolving
Note.  Whenever in this Amended
and Restated Revolving Note reference
is made to Agent, Lender or Borrowers, such reference shall be deemed to
include, as applicable, a reference to their respective permitted successors
and assigns and in the case of Lender, any financial institution to which it
has sold or

 

 

assigned
all or any part of its interest in the Amended and Restated Revolving Loan or in its commitment to make
the Revolving Credit Advances as permitted by the Amended and Restated Credit Agreement.  The provisions of this Amended and Restated Revolving Note shall be binding upon and
inure to the benefit of such successors and assigns, except that no Borrower
may assign their rights or obligations. 
Borrowers’ successors and assigns shall include, without limitation, a
receiver, trustee or debtor in possession of or for any of the Borrowers.

 

[Remainder of page left intentionally blank; signature page follows]

 

 

	
   

  	
  CURATIVE HEALTH SERVICES, INC.,

  
	
   

  	
  a Minnesota corporation formerly known as
  Curative Holding Co.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA ACCESS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APEX THERAPEUTIC CARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
						

 

[Signature Page to
Revolving Note]

 

 

	
   

  	
  CURATIVE HEALTH SERVICES OF NEW
  YORK, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL CARE PLUS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services
  Co., its Sole Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION II, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services
  Co., its Sole Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  INFINITY INFUSION CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Infinity Infusion II, LLC,
  its Sole General Partner

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services
  Co., the Sole Member of Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE PHARMACY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRITICAL CARE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES CO.,

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
						

 

 

EXHIBIT
C

to

CREDIT
AGREEMENT

 

 

SWINGLINE
NOTE

 

	
                       
         , 20   

  	
   

  	
  New York, New
  York

  
	
   

  	
   

  	
  $                             

  

 

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

 

This Amended and Restated
Swingline Note is issued pursuant to that certain Amended and Restated Credit
Agreement dated as of April 23, 2004 by and among Borrowers, the other Persons
named therein as Credit Parties, Agent, Swingline Lender and the other Persons
signatory thereto from time to time as Lenders (including all annexes, exhibits
and schedules thereto, and as from time to time amended, restated, supplemented
or otherwise modified, the “Credit Agreement”),
and is entitled to the benefit and security of the Credit Agreement, the
Security Agreements, and all of the other Loan Documents referred to
therein.  Reference is hereby made to
the Credit Agreement for a statement of all of the terms and conditions under
which the Loans evidenced hereby are made and are to be repaid.

 

 

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

 

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

 

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

 

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

 

This Amended and Restated
Swingline Note constitutes the amendment and restatement of that certain
Swingline Note dated June 9, 2003,
issued by Borrowers (other than Holdings) in favor of Lender in the stated
principal amount of $5,000,000 (the “Prior Note”), and this Amended and Restated Swingline
Note, among other things, evidences the joint and several obligations of all of
the Borrowers (including Holdings) to repay the Swingline Advances, accrued
interest thereon and other amounts to the Lender in accordance with the terms
hereof.  The execution and
delivery of this Amended and Restated Swingline Note shall not in any
circumstances be deemed to have terminated, extinguished, released, constituted
a novation of, or discharged the indebtedness of any of the Borrowers under the
Prior Note, which indebtedness shall continue under and be governed by this
Amended and Restated Swingline Note.

 

THIS AMENDED AND RESTATED SWINGLINE NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.  Whenever possible each provision of this Amended and Restated Swingline Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provisions
of this Amended and Restated Swingline
Note shall be prohibited by or invalid under applicable law, such provisions
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Amended and Restated Swingline
Note.  Whenever in this Amended
and Restated Swingline Note reference
is made to Agent, Swingline Lender or Borrowers, such reference shall be deemed
to include, as applicable, a reference to their respective permitted successors
and assigns and in the case of Swingline Lender, any financial

 

2

 

institution
to which it has sold or assigned all or any part of its interest in the
Swingline Loan or in its commitment to make the Swingline Advances as permitted
by the Credit Agreement.  The provisions
of this Swingline Note shall be binding upon and inure to the benefit of such
successors and assigns, except that no Borrower may assign its rights or
obligations.  Borrowers’ successors and
assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for any Borrower.

 

[Remainder of page intentionally blank; next pages are signature pages]

 

3

 

	
   

  	
  CURATIVE HEALTH SERVICES, INC.,

  
	
   

  	
  a Minnesota corporation formerly known as
  Curative Holding Co.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA ACCESS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APEX THERAPEUTIC CARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

[Signature Page to
Swingline Note]

 

 

	
   

  	
  CURATIVE HEALTH SERVICES OF NEW
  YORK, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL CARE PLUS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services
  Co., its Sole Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION II, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services
  Co., its Sole Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  INFINITY INFUSION CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Infinity Infusion II, LLC,
  its Sole General Partner

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services
  Co., the Sole Member of Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE PHARMACY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRITICAL CARE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES CO.,

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

4

 

EXHIBIT
D-1

to

CREDIT
AGREEMENT

 

NOTICE
OF BORROWING

 

Reference is made to that
certain Amended and Restated Credit Agreement, dated as of April
       , 2004, by and among the undersigned
(“Borrower
Representative”), the other Persons signatory thereto from time to
time as Borrowers, General Electric Capital Corporation, a Delaware
corporation, as agent (“Agent”), the other Persons signatory
thereto from time to time as Lenders (including all annexes, exhibits and
schedules thereto, and as from time to time amended, restated, supplemented or
otherwise modified, the “Credit Agreement”).  All capitalized terms used but not otherwise
defined herein have the meanings given to them in Section 1.1 of the Credit Agreement.

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

 

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

 

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

 

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

 

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

 

(iv) immediately before
and after giving effect to the Advance requested hereby, Borrowers have
Borrowing Availability in an amount equal to not less than ten percent (10%) of
the aggregate Commitments in effect as of the date of such requested Advance.

 

 

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

 

Dated:

 

	
   

  	
  CURATIVE HEALTH SERVICES, INC., 

  a Minnesota corporation formerly known as Curative Health Services Co.,
  individually and as Borrower Representative

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

2

 

EXHIBIT
D-2

to

CREDIT
AGREEMENT

 

NOTICE
OF SWINGLINE BORROWING

 

Reference is made to that
certain Amended and Restated Credit Agreement, dated as of April
       , 2004, by and among the undersigned
(“Borrower
Representative”), the other Persons signatory thereto from time to
time as Borrowers, General Electric Capital Corporation, a Delaware
corporation, as agent (“Agent”), the other Persons signatory
thereto from time to time as Lenders (including all annexes, exhibits and
schedules thereto, and as from time to time amended, restated, supplemented or
otherwise modified, the “Credit Agreement”).  All capitalized terms used but not otherwise
defined herein have the meanings given to them in Section 1.1 of the Credit Agreement.

 

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

 

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

 

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

 

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

 

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

 

(iv) immediately before
and after giving effect to the Swingline Advance requested hereby, Borrowers
have Borrowing Availability in an amount equal to not less than ten percent
(10%) of the aggregate Commitments in effect as of the date of such requested
Swingline Advance.

 

 

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

 

Dated:

 

	
   

  	
  CURATIVE HEALTH SERVICES, INC.,

  A Minnesota corporation formerly known as Curative Holding Co., individually
  and as Borrower Representative

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
						

 

2

 

EXHIBIT
E

to

CREDIT
AGREEMENT

 

BORROWER
SECURITY AGREEMENT

 

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

 

W
I  T  N  E  S  S  T  H:

 

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

 

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

 

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

 

I.                                         DEFINED
TERMS.

 

Capitalized terms used in this Security Agreement
shall have the meanings ascribed to them in this Section 1 unless the context indicates otherwise.  All capitalized terms used but not otherwise
defined herein have the meanings given to them in Section 1.1 of the Credit Agreement.  Any other terms contained in this Security Agreement not

 

 

defined
in this Security Agreement or the Credit Agreement have the meanings provided
for by the Code to the extent the same are used or defined therein.

 

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

 

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

 

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

 

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

 

(e)                                  “Control
Letter” means a letter agreement between Agent and (i) the issuer of
uncertificated securities with respect to uncertificated securities in the name
of

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

2.                                       GRANT
OF LIEN.

 

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

 

i.                                          all
Accounts;

 

ii.                                       all
Chattel Paper;

 

iii.                                    all
Documents;

 

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

 

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

 

vi.                                   all
Instruments;

 

vii.                                all
Investment Property;

 

viii.                             all
Deposit Accounts, of Grantor, including all Blocked Accounts, Government
Receivables Deposit Accounts, Concentration Accounts, Disbursement Accounts,
and all other bank accounts and all deposits therein;

 

ix.                                     all
money, cash or cash equivalents of Grantor;

 

x.                                        all
Supporting Obligations and Letter-of-Credit Rights of Grantor;

 

xi.                                     the
following commercial tort claim:

 

Curative Health Services,
Inc. has filed a counterclaim alleging fraud and fraudulent inducement, breach
of license agreement, misuse and misappropriation of proprietary information,
and intentional interference with current business relations in E@M Health
Services, Inc. v. Curative Health Services, Inc. and Presbyterian Hospital of
Winnsboro, 116th District Court of Dallas County, Texas, Case No.
02-5415, and removed to the United States District Court for the Northern
District of Texas, Dallas Division, Civil Action No. 3-02CV-1562D.

 

7

 

xii.                                  all
books, records, ledger cards, files, correspondence, computer programs, tapes,
disks and related data processing software that at any time evidence or contain
information relating to any of the Collateral described in clauses (i) through
(xi) above or are otherwise necessary or helpful in the collection thereof or
realization thereon; and

 

xiii.                               to
the extent not otherwise included, all Proceeds, tort claims, insurance claims
and other rights to payments not otherwise included in the foregoing and
products of the foregoing and all accessions to, substitutions and replacements
for, and rents and profits of, each of the foregoing.

 

Notwithstanding the
foregoing, “Collateral” shall not include any Equipment that is (i) leased by
Grantor or any rights of Grantor under such lease (other than such Grantor’s
rights to payment under such lease constituting Accounts or General Intangibles
for money due or to become due), or (ii) is subject to a purchase money lien to
the extent and only to the extent that such lien is expressly permitted under
the Credit Agreement, in each case if and only for so long as the grant of a
security interest by such Grantor in such Equipment or lease violates the terms
of such lease or, in the case of any purchase money lien on Equipment violates
the terms of the financing documents evidencing or securing such purchase money
indebtedness; provided that the Grantor shall be deemed to have granted
a security interest in such Equipment, and such Equipment shall be included in
the Collateral, at such time that such grant no longer violates such lease or,
in the case of any purchase money lien on Equipment, the terms of the financing
documents evidencing or securing such purchase money indebtedness.

 

(b)                                 In
addition, to secure the prompt and complete payment, performance and observance
of the Obligations and in order to induce Agent and Lenders as aforesaid,
Grantors hereby grant to Agent, for itself and the benefit of Lenders, a right
of setoff against the property of Grantors held by Agent or any Lender,
consisting of property described above in Section
2(a) now or hereafter in the possession or custody of or in transit
to Agent or any Lender, for any purpose, including safekeeping, collection or
pledge, for the account of Grantors, or as to which Grantors may have any right
or power.

 

3.                                       AGENT’S
AND LENDERS’ RIGHTS: LIMITATIONS ON AGENT’S AND LENDERS’ OBLIGATIONS.

 

(a)                                  It
is expressly agreed by Grantor that, anything herein to the contrary
notwithstanding, Grantor shall remain liable under each of its Contracts and
each of its Licenses to observe and perform all the conditions and obligations
to be observed and performed by it thereunder except where such failure could
not reasonably be expected to have a Material Adverse Effect.  Neither Agent nor any Lender shall have any
obligation or liability under any Contract or License by reason of or arising
out of this Security Agreement or the granting herein of a Lien thereon or the
receipt by Agent or any Lender of any payment relating to any Contract or
License pursuant hereto.  Neither Agent
nor any Lender shall be required or obligated in any manner to perform or
fulfill any of the obligations of Grantor under or pursuant to any Contract or
License, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment

 

8

 

received
by it or the sufficiency of any performance by any party under any Contract or
License, or to present or file any claims, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

 

(b)                                 Agent
may at any time after an Event of Default has occurred and be continuing (or if
any rights of set-off (other than set-offs against an Account arising under the
Contract giving rise to the same Account) or contra accounts may be asserted
with respect to the following), without prior notice to Grantor, notify Account
Debtors and other Persons obligated on the Collateral that Agent has a security
interest therein, and that payments shall be made directly to Agent.  Upon the request of Agent, Grantor shall so
notify Account Debtors and other Persons obligated on Collateral.  Once any such notice has been given to any
Account Debtor or other Person obligated on the Collateral, Grantor shall not give
any contrary instructions to such Account Debtor or other Person without
Agent’s prior written consent.

 

(c)                                  Agent
may at any time in Agent’s own name, in the name of a nominee of Agent or in
the name of Grantor communicate (by mail, telephone, facsimile or otherwise)
with Account Debtors, parties to Contracts and obligors in respect of
Instruments to verify with such Persons, to Agent’s satisfaction, the
existence, amount terms of, and any other matter relating to, Accounts, payment
intangibles, Instruments or Chattel Paper. 
If a Default or Event of Default shall have occurred and be continuing,
Grantor, at its own expense, shall cause the independent certified public
accountants then engaged by Grantor to prepare and deliver to Agent and each
Lender at any time and from time to time promptly upon Agent’s request the
following reports with respect to Grantor: (i) a reconciliation of all
Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a test
verification of such Accounts as Agent may request.  Grantor, at its own expense, shall deliver to Agent the results
of each physical verification, if any, which Grantor may in its discretion have
made, or caused any other Person to have made on its behalf, of all or any
portion of its Inventory.

 

4.                                       REPRESENTATIONS
AND WARRANTIES.  Grantor represents
and warrants that:

 

(a)                                  Grantor
has rights in and the power to transfer each item of the Collateral upon which
it purports to grant a Lien hereunder free and clear of any and all Liens other
than Permitted Encumbrances;

 

(b)                                 No
effective security agreement, financing statement, equivalent security or Lien
instrument or continuation statement covering all or any part of the Collateral
is on file or of record in any public office, except such as may have been
filed (i) by Grantor in favor of Agent pursuant to this Security Agreement or
the other Loan Documents, and (ii) in connection with any other Permitted
Encumbrances;

 

(c)                                  This
Security Agreement is effective to create a valid and continuing Lien on and,
upon the filing of the appropriate financing statements listed on Schedule I
hereto, a perfected Lien in favor of Agent, for itself and the benefit of
Lenders, on the

 

9

 

Collateral
with respect to which a Lien may be perfected by filing pursuant to the
Code.  Such Lien is prior to all other
Liens, except Permitted Encumbrances that would be prior to Liens in favor of
Agent for the benefit of Agent and Lenders as a matter of law, and is
enforceable as such as against any and all creditors of and purchasers from
Grantor (other than purchasers and lessees of Inventory in the ordinary course
of business and non-exclusive licensees of General Intangibles in the ordinary
course of business).  All action by Grantor
necessary or desirable to protect and perfect such Lien on each item of the
Collateral has been duly taken;

 

(d)                                 Schedule
II hereto lists all Instruments, Letter of Credit Rights and Chattel Paper
of Grantor.  All action by Grantor
necessary or desirable to protect and perfect the Lien of Agent on each item
set forth on Schedule II (including the delivery of all originals
thereof to Agent and the legending of all Chattel Paper as required by Section 5(b) hereof) has been duly
taken.  The Lien of Agent, for the
benefit of Agent and Lenders, on the Collateral listed on Schedule II
hereto is prior to all other Liens, except Permitted Encumbrances that would be
prior to the Liens in favor of Agent as a matter of law, and is enforceable as
such against any and all creditors of and purchasers from Grantor;

 

(e)                                  Grantors’
name as each appears in official filings in each Grantor’s state of
incorporation or other organization, the type of entity of each Grantor
(including corporation, partnership, limited partnership or limited liability
company), organizational identification number issued by each Grantor’s state
of incorporation or organization or a statement that no such number has been
issued, each Grantor’s state of organization or incorporation, the location of
each Grantor’s chief executive office, principal place of business, offices,
all warehouses and premises where Collateral is stored or located, and the
locations of its books and records concerning the Collateral are set forth on Schedule
III-A, Schedule III-B, Schedule III-C, Schedule III-D,
Schedule III-E, Schedule III-F, Schedule III-G, Schedule
III-H, Schedule III-I, Schedule III-J, Schedule III-K
and Schedule III-L hereto. 
Grantors each have only one state of incorporation or organization;

 

(f)                                    With
respect to the Accounts, except as specifically disclosed in the most recent
Collateral Report delivered to Agent (i) they represent bona fide sales of
Inventory or rendering of services to Account Debtors in the ordinary course of
Grantor’s business and are not evidenced by a judgment, Instrument or Chattel
Paper; (ii) there are no setoffs, claims or disputes existing or asserted with
respect thereto and Grantor has not made any agreement with any Account Debtor
for any extension of time for the payment thereof, any compromise or settlement
for less than the full amount thereof, any release of any Account Debtor from
liability therefor, or any deduction therefrom except a discount or allowance
allowed by Grantor in the ordinary course of its business for prompt payment
and disclosed to Agent; (iii) to Grantor’s knowledge, there are no facts,
events or occurrences which in any way impair the validity or enforceability
thereof or could reasonably be expected to reduce the amount payable thereunder
as shown on Grantor’s books and records and any invoices, statements and
Collateral Reports delivered to Agent and Lenders with respect thereto; (iv)
Grantor has not received any notice of proceedings or actions which are
threatened or pending against any Account

 

10

 

Debtor
which might result in any adverse change in such Account Debtor’s financial
condition; and (v) Grantor has no knowledge that any Account Debtor is unable
generally to pay its debts as they become due. 
Further with respect to the Accounts (x) the amounts shown on all
invoices, statements and Collateral Reports which may be delivered to the Agent
with respect thereto are actually and absolutely owing to Grantor as indicated
thereon and are not in any way contingent; (y) no payments have been or shall
be made thereon except payments immediately delivered to the applicable Blocked
Accounts or the Agent as required pursuant to the terms of Section 6.16 of the Credit Agreement; and
(z) to Grantor’s knowledge, all Account Debtors have the capacity to contract;

 

(g)                                 With
respect to any Inventory scheduled or listed on the most recent Collateral
Report delivered to Agent pursuant to the terms of this Security Agreement or
the Credit Agreement, (i) such Inventory is located at one of Grantor’s locations
set forth on Schedule III hereto, (ii) no Inventory is now, or shall at
any time or times hereafter be stored at any other location without Agent’s
prior consent, and if Agent gives such consent, Grantor will concurrently
therewith obtain, to the extent required by the Credit Agreement, bailee,
landlord and mortgagee agreements, (iii) Grantor has good, indefeasible and
merchantable title to such Inventory and such Inventory is not subject to any
Lien or security interest or document whatsoever except for the Lien granted to
Agent, for the benefit of Agent and Lenders, and except for Permitted
Encumbrances, (iv) except as specifically disclosed in the most recent
Collateral Report delivered to Agent, such Inventory is Eligible Inventory of
good and merchantable quality, free from any defects, (v) such Inventory is not
subject to any licensing, patent, royalty, trademark, trade name or copyright
agreements with any third parties which would require any consent of any third
party upon sale or disposition of that Inventory or the payment of any monies
to any third party upon such sale or other disposition, and (vi) the
completion of manufacture, sale or other disposition of such Inventory by Agent
following an Event of Default shall not require the consent of any Person and
shall not constitute a breach or default under any contract or agreement to
which Grantor is a party or to which such property is subject; and

 

(h)                                 Grantor
does not have any interest in, or title to, any Patent, Trademark or Copyright
except as set forth in Schedule IV hereto.  This Security Agreement is effective to create a valid and
continuing Lien on and, upon filing of the Copyright Security Agreements with
the United States Copyright Office and filing of the Patent Security Agreements
and the Trademark Security Agreements with the United States Patent and
Trademark Office, perfected Liens in favor of Agent on Grantor’s Patents,
Trademarks and Copyrights and such perfected Liens are enforceable as such as
against any and all creditors of and purchasers from Grantor.  Upon filing of the Copyright Security
Agreements with the United States Copyright Office and filing of the Patent
Security Agreements and the Trademark Security Agreements with the United
States Patent and Trademark Office and the filing of appropriate financing
statements listed on Schedule I hereto, all action necessary or
desirable to protect and perfect Agent’s Lien on Grantor’s Patents, Trademarks
or Copyrights shall have been duly taken.

 

(i)                                     All
motor vehicles owned by Grantor are listed on Schedule V hereto, by model,
model year and vehicle identification number (“VIN”).  Grantor shall deliver to

 

11

 

Agent
motor vehicle title certificates for all motor vehicles from time to time owned
by it and shall cause those title certificates to be filed (with Agent’s lien
noted thereon) in the appropriate state motor vehicle filing office.

 

5.                                       COVENANTS.  Grantor covenants and agrees with Agent, for
the benefit of Agent and Lenders, that from and after the date of this Security
Agreement and until the Termination Date:

 

(a)                                  Further
Assurances: Pledge of Instruments; Chattel Paper.

 

i.                                          At
any time and from time to time, upon the written request of Agent and at the
sole expense of Grantor, Grantor shall promptly and duly execute and deliver
any and all such further instruments and documents and take such further
actions as may be necessary or as Agent may reasonably request to obtain the
full benefits of this Security Agreement and of the rights and powers herein
granted, including (A) using its best efforts to secure all consents and
approvals necessary or appropriate for the assignment to or for the benefit of
Agent of any License or Contract held by Grantor and to enforce the security
interests granted hereunder and (B) filing any financing or continuation
statements under the Code with respect to the Liens granted hereunder or under
any other Loan Document as to those jurisdictions that are not Uniform
Commercial Code jurisdictions.

 

ii.                                       Unless
Agent shall otherwise consent in writing (which consent may be revoked),
Grantor shall deliver to Agent all Collateral consisting of negotiable
Documents, certificated securities, Chattel Paper and Instruments (in each
case, accompanied by stock powers, allonges or other instruments of transfer
executed in blank) promptly after such Grantor receives the same.

 

iii.                                    Grantor
shall, in accordance with the terms of the Credit Agreement, obtain or use its
best efforts to obtain waivers or subordinations of Liens from landlords and
mortgagees, and each Grantor shall in all instances obtain signed
acknowledgements of Agent’s Liens from bailees having possession of Grantor’s
Goods that they hold for the benefit of Agent.

 

iv.                                   If
required by the terms of the Credit Agreement and not waived by Agent in
writing (which waiver may be revoked), Grantor shall obtain authenticated
Control Letters from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial
assets or commodities to or for Grantor.

 

v.                                      In
accordance with Section 6.16 of
the Credit Agreement, Grantor shall obtain a blocked account, lockbox or
similar agreement with each bank or financial institution holding a Deposit
Account for Grantor.

 

vi.                                   Grantor
that is or becomes the beneficiary of a letter of credit shall promptly, and in
any event within two (2) Business Days after becoming a beneficiary, notify
Agent thereof and enter into a tri-party agreement with Agent

 

12

 

and the issuer and/or confirmation bank with respect
to Letter-of-Credit Rights assigning such Letter-of-Credit Rights to Agent and
directing all payments thereunder to the Collection Account, all in form and
substance reasonably satisfactory to Agent.

 

vii.                                Grantor
shall take all steps necessary to grant the Agent control of all electronic
chattel paper in accordance with the Code and all “transferable records” as
defined in each of the Uniform Electronic Transactions Act and the Electronic
Signatures in Global and National Commerce Act.

 

viii.                             Grantor
hereby irrevocably authorizes the Agent at any time and from time to time to
file in any filing office in any Uniform Commercial Code jurisdiction any
initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of Grantor or words of similar effect, regardless
of whether any particular asset comprised in the Collateral falls within the
scope of Article 9 of the Code or such jurisdiction, or (ii) as being of an
equal or lesser scope or with greater detail, and (b) contain any other
information required by part 5 of Article 9 of the Code for the sufficiency or
filing office acceptance of any financing statement or amendment, including (i)
whether Grantor is an organization, the type of organization and any
organization identification number issued to Grantor, and (ii) in the case of a
financing statement filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. 
Grantor agrees to furnish any such information to the Agent promptly
upon request.  Grantor also ratifies its
authorization for the Agent to have filed in any Uniform Commercial Code
jurisdiction any initial financing statements or amendments thereto if filed
prior to the date hereof.

 

ix.                                     Grantor
shall promptly, and in any event within two (2) Business Days after the same is
acquired by it, notify Agent of any commercial tort claim (as defined in the
Code) acquired by it and unless otherwise consented by Agent, Grantor shall
enter into a supplement to this Security Agreement, granting to Agent a Lien in
such commercial tort claim.

 

(b)                                 Maintenance
of Records.  Grantor shall keep and
maintain, at its own cost and expense, satisfactory and complete records of the
Collateral, including a record of any and all payments received and any and all
credits granted with respect to the Collateral and all other dealings with the
Collateral.  Grantor shall mark its
books and records pertaining to the Collateral to evidence this Security
Agreement and the Liens granted hereby. 
If Grantor retains possession of any Chattel Paper or Instruments with
Agent’s consent, such Chattel Paper and Instruments shall be marked with the
following legend: “This writing and the obligations evidenced or secured hereby
are subject to the security interest of General Electric Capital Corporation,
as Agent, for the benefit of Agent and certain Lenders.”

 

(c)                                  Covenants
Regarding Patent, Trademark and Copyright Collateral.

 

13

 

i.                                          Grantor
shall notify Agent within two (2) Business Days if it knows or has reason to
know that any application or registration relating to any Patent, Trademark or
Copyright (now or hereafter existing) may become abandoned or dedicated, or of
any adverse determination or development (including the institution of, or any
such determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court)
regarding Grantor’s ownership of any Patent, Trademark or Copyright, its right
to register the same, or to keep and maintain the same unless the Grantor shall
determine that such Patent, Trademark or Copyright is not material to the
conduct of its business.

 

ii.                                       In
no event shall Grantor, either itself or through any agent, employee, licensee
or designee, file an application for the registration of any Patent, Trademark
or Copyright with the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency without giving Agent
prior written notice thereof, and, upon request of Agent, Grantor shall execute
and deliver any and all Patent Security Agreements, Copyright Security
Agreements or Trademark Security Agreements as Agent may request to evidence
Agent’s Lien on such Patent, Trademark or Copyright, and the General
Intangibles of Grantor relating thereto or represented thereby.

 

iii.                                    Grantor
shall take all actions necessary or reasonably requested by Agent to maintain
and pursue each application, to obtain the relevant registration and to
maintain the registration of each of the Patents, Trademarks and Copyrights
(now or hereafter existing), including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings, unless the Grantor shall determine
that such Patent, Trademark or Copyright is not material to the conduct of its
business.

 

iv.                                   In
the event that any of the Patent, Trademark or Copyright Collateral is
infringed upon, or misappropriated or diluted by a third party, Grantor shall,
unless Grantor shall reasonably determine that such Patent, Trademark or
Copyright Collateral is not material to the conduct of its business or
operations, promptly sue for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and shall take such other actions as Agent shall deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright Collateral.

 

(d)                                 Indemnification.  In any suit, proceeding or action brought by
Agent or any Lender relating to any Collateral for any sum owing with respect
thereto or to enforce any rights or claims with respect thereto, Grantor will
save, indemnify and keep Agent and Lenders harmless from and against all
expense (including reasonable attorneys’ fees and expenses), loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the Account Debtor or other Person
obligated on the Collateral, arising out of a breach by Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors
from Grantor, except in the case of

 

14

 

Agent or
any Lender, to the extent such expense, loss, or damage is attributable solely
to the gross negligence or willful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction.  An indemnitee under this Section 5(d) shall endeavor to notify the
Borrower Representative of any event requiring indemnification within ten (10)
Business Days following such indemnitee’s receipt of notice of commencement of
any action or proceeding, or such indemnitee’s obtaining knowledge of the
occurrence of any event, giving rise to a claim for indemnification hereunder,
provided that the failure to give such notice shall not invalidate or otherwise
impair the rights of the indemnitee to indemnification under this Section 5(d) or result in any liability of
such indemnitee, the Agent or any Lender to any Credit Party or any other
Person.  All such obligations of Grantor
shall be and remain enforceable against and only against Grantor and shall not
be enforceable against Agent or any Lender.

 

(e)                                  Compliance
with Terms of Accounts, etc.  In all
material respects, Grantor will perform and comply with all obligations in
respect of the Collateral and all other agreements to which it is a party or by
which it is bound relating to the Collateral.

 

(f)                                    Limitation
on Liens on Collateral.  Grantor
will not create, permit or suffer to exist, and Grantor will defend the
Collateral against, and take such other action as is necessary to remove, any
Lien on the Collateral except Permitted Encumbrances, and will defend the
right, title and interest of Agent and Lenders in and to any of Grantor’s
rights under the Collateral against the claims and demands of all Persons
whomsoever other than holders of Permitted Encumbrances.

 

(g)                                 Limitations
on Disposition.  Grantor will not
sell, license, lease, transfer or otherwise dispose of any of the Collateral,
or attempt or contract to do so except as permitted by the Credit Agreement.

 

(h)                                 Further
Identification of Collateral. 
Grantor will, if so requested by Agent, furnish to Agent, as often as
Agent reasonably requests, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Agent may reasonably request, all in such detail as Agent may
reasonably specify.

 

(i)                                     Notices.  Grantor will advise Agent promptly, in
reasonable detail, (i) of any Lien (other than Permitted Encumbrances) or claim
made or asserted against any of the Collateral, and (ii) of the occurrence of
any other event which would have a Material Adverse Effect on the aggregate
value of the Collateral or on the Liens created hereunder or under any other
Loan Document.

 

(j)                                     Good
Standing Certificates.  Not less
frequently than once during each calendar quarter, Grantor shall, unless Agent
shall otherwise consent, provide to Agent a certificate of good standing from
its state of incorporation or organization.

 

(k)                                  No
Reincorporation.  Except for the
reorganization expressly described in and permitted under the Credit Agreement
in connection with the Permitted Restructuring, Grantor shall not reincorporate
or reorganize itself under the laws of any jurisdiction

 

15

 

other
than the jurisdiction in which it is incorporated or organized as of the date
hereof without the prior written consent of Agent.

 

(l)                                     Terminations;
Amendments Not Authorized.  Grantor
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
without the prior written consent of Agent and agrees that it will not do so
without the prior written consent of Agent, subject to Grantor’s rights under Section 9-509(d)(2) of the Code.

 

(m)                               Authorized
Terminations.  Upon payment in full
in cash and performance of all of the Obligations (other than indemnification
Obligations), termination of the Commitments and a release of all claims
against Agent and Lenders, and so long as no suits, actions, proceedings or
claims are pending or threatened against any Indemnified Person asserting any damages,
losses or liabilities that are indemnified liabilities under Section 9.2 of the Credit Agreement, Agent
shall, at Grantor’s expense, promptly deliver to Grantor or authorize Grantor
to prepare and file termination statements, mortgage releases and other
documents necessary or appropriate to evidence the termination of the Liens
securing payment of the Obligations.

 

(n)                                 Federal
Claims.  Grantor shall notify Agent
of any Collateral (other than Government Accounts) which constitutes a claim
against the United States government or any instrumentality or agency thereof,
the assignment of which claim is restricted by federal law.  Upon the request of Agent, Grantor shall
take such steps as may be necessary to comply with any applicable federal
assignment of claims laws and other comparable laws.

 

(o)                                 Hot
Goods.  None of the Inventory of
Grantor has been or will be produced in violation of any provision of the Fair
Labor Standards Act of 1938, as amended, or in violation of any other law.

 

6.                                       AGENT’S
APPOINTMENT AS ATTORNEY-IN-FACT.

 

On the Closing Date,
Grantor shall execute and deliver to Agent a power of attorney (the “Power
of Attorney”) substantially in the form attached hereto as Exhibit A. 
The power of attorney granted pursuant to the Power of Attorney is a
power coupled with an interest and shall be irrevocable until the Termination
Date.  The powers conferred on Agent,
for the benefit of Agent and Lenders, under the Power of Attorney are solely to
protect Agent’s interests (for the benefit of Agent and Lenders) in the
Collateral and shall not impose any duty upon Agent or any Lender to exercise
any such powers.  Agent agrees that (a)
except for the powers granted in clause (h) of the Power of Attorney, it shall
not exercise any power or authority granted under the Power of Attorney unless
an Event of Default has occurred and is continuing, and (b) Agent shall account
for any moneys received by Agent in respect of any foreclosure on or
disposition of Collateral pursuant to the Power of Attorney provided that none
of Agent or any Lender shall have any duty as to any Collateral, and Agent and
Lenders shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers. 
NONE OF AGENT, LENDERS OR THEIR RESPECTIVE AFFILIATES,

 

16

 

OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO GRANTOR FOR ANY
ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN
RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR
ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

 

7.                                       REMEDIES:  RIGHTS UPON DEFAULT.

 

(a)                                  In
addition to all other rights and remedies granted to it under this Security
Agreement, the Credit Agreement, the other Loan Documents and under any other
instrument or agreement securing, evidencing or relating to any of the
Obligations, if any Event of Default shall have occurred and be continuing,
Agent may exercise all rights and remedies of a secured party under the
Code.  Without limiting the generality
of the foregoing, Grantor expressly agrees that in any such event Agent, without
demand of performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or private sale)
to or upon Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code and other applicable law), may forthwith enter upon the
premises of Grantor where any Collateral is located through self-help, without
judicial process, without first obtaining a final judgment or giving Grantor or
any other Person notice and opportunity for a hearing on Agent’s claim or
action and may collect, receive, assemble, process, appropriate and realize
upon the Collateral, or any part thereof, and may forthwith sell, lease,
license, assign, give an option or options to purchase, or sell or otherwise
dispose of and deliver said Collateral (or contract to do so), or any part
thereof, in one or more parcels at a public or private sale or sales, at any
exchange at such prices as it may deem acceptable, for cash or on credit or for
future delivery without assumption of any credit risk.  Agent or any Lender shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon
any such private sale or sales, to purchase for the benefit of Agent and
Lenders, the whole or any part of said Collateral so sold, free of any right or
equity of redemption, which equity of redemption Grantor hereby releases.  Such sales may be adjourned and continued
from time to time with or without notice. 
Agent shall have the right to conduct such sales on Grantor’s premises
or elsewhere and shall have the right to use Grantor’s premises without charge
for such time or times as Agent deems necessary or advisable.

 

If any Event of Default shall have occurred and be continuing,
Grantor further agrees, at Agent’s request, to assemble the Collateral and make
it available to Agent at a place or places designated by Agent which are
reasonably convenient to Agent and Grantor, whether at Grantor’s premises or
elsewhere.  Until Agent is able to
effect a sale, lease, or other disposition of Collateral, Agent shall have the
right to hold or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or its value or for
any other purpose deemed appropriate by Agent. 
Agent shall have no obligation to Grantor to maintain or preserve the
rights of Grantor as against third parties with respect to Collateral while
Collateral is in the possession of Agent. 
Agent may, if it so elects, seek the appointment of a receiver or keeper
to take

 

17

 

possession
of Collateral and to enforce any of Agent’s remedies (for the benefit of Agent
and Lenders), with respect to such appointment without prior notice or hearing
as to such appointment.  Agent shall
apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Obligations as provided in the Credit
Agreement, and only after so paying over such net proceeds, and after the
payment by Agent of any other amount required by any provision of law, need
Agent account for the surplus, if any, to Grantor.  To the maximum extent permitted by applicable law, Grantor waives
all claims, damages, and demands against Agent or any Lender arising out of the
repossession, retention or sale of the Collateral except such as arise solely
out of the gross negligence or willful misconduct of Agent or such Lender as
finally determined by a court of competent jurisdiction.  Grantor agrees that ten (10) days prior
notice by Agent of the time and place of any public sale or of the time after
which a private sale may take place is reasonable notification of such matters.  Grantor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Obligations, including any attorneys’ fees and other
expenses incurred by Agent or any Lender to collect such deficiency.

 

(b)                                 Except
as otherwise specifically provided herein or in the Credit Agreement, Grantor
hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.

 

(c)                                  To
the extent that applicable law imposes duties on the Agent to exercise remedies
in a commercially reasonable manner, Grantor acknowledges and agrees that it is
not commercially unreasonable for the Agent (i) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or
third party consents for the collection or disposition of Collateral to be
collected or disposed of, (iii) to fail to exercise collection remedies against
Account Debtors or other Persons obligated on Collateral or to remove Liens on
or any adverse claims against Collateral, (iv) to exercise collection remedies
against Account Debtors and other Persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as Grantor, for expressions
of interest in acquiring all or any portion of such Collateral, (vii) to hire
one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, such as title, possession or quiet enjoyment, (xi) to
purchase insurance or credit enhancements to insure the Agent against risks of
loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by the Agent, to obtain 

 

18

 

the
services of other brokers, investment bankers, consultants and other
professionals to assist the Agent in the collection or disposition of any of
the Collateral.  Grantor acknowledges
that the purpose of this Section 7(c)
is to provide non-exhaustive indications of what actions or omissions by the
Agent would not be commercially unreasonable in the Agent’s exercise of
remedies against the Collateral and that other actions or omissions by the
Agent shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section 7(c).  Without limitation upon the foregoing,
nothing contained in this Section 7(c)
shall be construed to grant any rights to Grantor or to impose any duties on
Agent that would not have been granted or imposed by this Security Agreement or
by applicable law in the absence of this Section
7(c).

 

(d)                                 Neither
the Agent nor the Lenders shall be required to make any demand upon, or pursue
or exhaust any of their rights or remedies against, Grantor, any other obligor,
guarantor, pledgor or any other Person with respect to the payment of the
Obligations or to pursue or exhaust any of their rights or remedies with
respect to any Collateral therefor or any direct or indirect guarantee
thereof.  Neither the Agent nor the
Lenders shall be required to marshal the Collateral or any guarantee of the
Obligations or to resort to the Collateral or any such guarantee in any
particular order, and all of its and their rights hereunder or under any other
Loan Document shall be cumulative.  To
the extent it may lawfully do so, Grantor absolutely and irrevocably waives and
relinquishes the benefit and advantage of, and covenants not to assert against
the Agent or any Lender, any valuation, stay, appraisement, extension,
redemption or similar laws and any and all rights or defenses it may have as a
surety now or hereafter existing which, but for this provision, might be
applicable to the sale of any Collateral made under the judgment, order or
decree of any court, or privately under the power of sale conferred by this
Security Agreement, or otherwise.

 

8.                                       GRANT
OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL.  For the purpose of enabling Agent to
exercise rights and remedies under Section 7
hereof (including, without limiting the terms of Section 7 hereof, in order to take possession of, hold,
preserve, process, assemble, prepare for sale, market for sale, sell or
otherwise dispose of Collateral) at such time as Agent shall be lawfully
entitled to exercise such rights and remedies, Grantor hereby grants to Agent,
for the benefit of Agent and Lenders, an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to Grantor) to
use, license or sublicense any Intellectual Property now owned or hereafter
acquired by Grantor, and wherever the same may be located, and including in
such license access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof.

 

9.                                       LIMITATION
ON AGENT’S AND LENDERS’ DUTY IN RESPECT OF COLLATERAL.  Agent and each Lender shall use reasonable
care with respect to the Collateral in its possession or under its
control.  Neither Agent nor any Lender
shall have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of Agent or such Lender,
or any income thereon or as to the preservation of rights against prior parties
or any other rights pertaining thereto.

 

19

 

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

 

11.                                 NOTICES.  Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect
to this Security Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and shall be
given in the manner, and deemed received, as provided for in the Credit
Agreement.

 

12.                                 SEVERABILITY.  Whenever possible, each provision of this
Security Agreement shall be interpreted in a manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.  This Security
Agreement is to be read, construed and applied together with the Credit
Agreement and the other Loan Documents which, taken together, set forth the
complete understanding and agreement of Agent, Lenders and Grantor with respect
to the matters referred to herein and therein.

 

13.                                 NO
WAIVER; CUMULATIVE REMEDIES. 
Neither Agent nor any Lender shall by any act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies hereunder, and
no waiver shall be valid unless in writing, signed by Agent and then only to
the extent therein set forth.  A waiver
by Agent of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Agent would otherwise have had
on any future occasion.  No failure to
exercise nor any delay in exercising on the part of Agent or any Lender, any
right, power or privilege hereunder, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege.  The rights
and remedies hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by
law.  None of the terms or provisions of
this Security Agreement may be waived, altered, modified or amended except by
an instrument in writing, duly executed by Agent and Grantor.

 

20

 

14.                                 LIMITATION
BY LAW.  All rights, remedies and
powers provided in this Security Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered or filed under the provisions of any applicable law.

 

15.                                 TERMINATION
OF THIS SECURITY AGREEMENT.  Subject
to Section 10 hereof, this
Security Agreement shall terminate upon the Termination Date.

 

16.                                 SUCCESSORS
AND ASSIGNS.  This Security
Agreement and all obligations of Grantor hereunder shall be binding upon the
successors and assigns of Grantor (including any debtor-in-possession on behalf
of Grantor) and shall, together with the rights and remedies of Agent, for the
benefit of Agent and Lenders, hereunder, inure to the benefit of Agent and
Lenders, all future holders of any instrument evidencing any of the Obligations
and their respective successors and assigns. 
No sales of participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing the
Obligations or any portion thereof or interest therein shall in any manner
impair the Lien granted to Agent, for the benefit of Agent and Lenders, hereunder.  Grantor may not assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this Security Agreement
except for such transfers and assignments to other Credit Parties to the extent
expressly permitted in the Credit Agreement in connection with the Permitted
Restructuring.

 

17.                                 COUNTERPARTS.  This Security Agreement may be authenticated
in any number of separate counterparts, each of which shall collectively and
separately constitute one agreement. 
This Security Agreement may be authenticated by manual signature,
facsimile or, if approved in writing by Agent, electronic means, all of which
shall be equally valid.

 

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

 

21

 

AGREEMENT.  NOTHING IN
THIS SECURITY AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS SECURITY
AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

19.                                 WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW WAIVES ANY
RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES IN
CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

20.                                 SECTION
TITLES.  The Section titles contained
in this Security Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.

 

21.                                 NO
STRICT CONSTRUCTION.  The parties
hereto have participated jointly in the negotiation and drafting of this
Security Agreement.  In the event an
ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.

 

22.                                 ADVICE
OF COUNSEL.  Each of the parties
represents to each other party hereto that it has discussed this Security
Agreement and, specifically, the provisions of Section 18 and Section 19,
with its counsel.

 

23.                                 BENEFIT
OF LENDERS.  All Liens granted or
contemplated hereby shall be for the benefit of Agent, individually, and
Lenders, and all proceeds or payments realized from Collateral in accordance
herewith shall be applied to the Obligations in accordance with the terms of
the Credit Agreement.

 

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

 

22

 

IN WITNESS WHEREOF, each
of the parties hereto has caused this Borrower Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA ACCESS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

[Signature Page to
Borrower Security Agreement]

 

 

	
   

  	
  APEX THERAPEUTIC CARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES OF NEW
  YORK, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL CARE PLUS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services,
  Inc., its Sole Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  INFINITY INFUSION II, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services,
  Inc., its Sole Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Infinity Infusion II, LLC,
  its Sole General Partner

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services,
  Inc., the Sole Member of Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE PHARMACY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION, as Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
						

 

 

SCHEDULE I

to

SECURITY AGREEMENT

 

FILING
JURISDICTIONS

 

 

	
  i.

  	
   

  	
  Curative Health Services, Inc.

  	
   

  	
  Minnesota

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ii.

  	
   

  	
  eBioCare.com, Inc.:

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  iii.

  	
   

  	
  Hemophilia Access, Inc.

  	
   

  	
  Tennessee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  iv.

  	
   

  	
  Apex Therapeutic Care, Inc.

  	
   

  	
  California

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  v.

  	
   

  	
  CHS Services, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  vi.

  	
   

  	
  Curative Health Services of New York, Inc.

  	
   

  	
  New York

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  vii.

  	
   

  	
  Infinity Infusion, LLC

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  viii.

  	
   

  	
  Infinity Infusion II, LLC

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ix.

  	
   

  	
  Optimal Care Plus, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  x.

  	
   

  	
  Infinity Infusion care, Ltd.

  	
   

  	
  Texas

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  xi.

  	
   

  	
  MedCare, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  xii.

  	
   

  	
  Curative Pharmacy Services, Inc.

  	
   

  	
  Delaware

  

  

 

 

SCHEDULE II

to

SECURITY AGREEMENT

 

INSTRUMENTS

 

CHATTEL PAPER

 

AND

 

LETTER OF CREDIT
RIGHTS

 

 

None

 

 

SCHEDULE III-A

to

SECURITY AGREEMENT

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

 

AND RECORDS
CONCERNING BORROWER’S COLLATERAL

 

 

I.                                         Grantor’s
official name:                     Curative
Health Services, Inc.

 

II.                                     Type
of entity:                 Corporation

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation:

 

MN4T-750

 

IV.                                 State
or Incorporation of Borrower:    Minnesota

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of Borrower:

 

150 Motor Parkway

Hauppauge, NY 11788

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY 11788

 

2105 Woodside Road

Second Floor

Woodside, CA 
94062

 

VII.                             Locations
of Records Concerning Collateral:     (see
V. above)

 

 

SCHEDULE III-B

to

SECURITY AGREEMENT

 

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING EBIOCARE.COM, INC.’S COLLATERAL

 

I.                                         Grantor’s
official name:                     eBioCare.com,
Inc.

 

II.                                     Type
of entity:                 Corporation

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation:

DE2838307

 

IV.                                 State
of Incorporation of eBioCare.com, Inc.:    Delaware

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of
eBioCare.com, Inc.:

 

1160 Industrial Road

Unit 19

San Carlos, CA 
94070

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

1160 Industrial Road

Unit 19

San Carlos, CA 
94070

 

VII.                             Locations
of Records Concerning Collateral:     (see V. above)

 

 

SCHEDULE III-C

to

SECURITY AGREEMENT

 

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING HEMOPHILIA ACCESS, INC.’S COLLATERAL

 

I.                                         Grantor’s
official name:                     Hemophilia
Access, Inc.

 

II.                                     Type
of entity:                 Corporation

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation:

TN0275344

 

IV.                                 State
of Incorporation of Hemophilia Access, Inc.:                      Tennessee

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of Hemophilia
Access Inc.:

100 Winners Circle

Suite 120

Brentwood, TN 
37027

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

100 Winners Circle

Suite 120

Brentwood, TN 
37027

 

VII.                             Locations
of Records Concerning Collateral:     (see V. above)

 

 

SCHEDULE III-D

to

SECURITY AGREEMENT

 

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING APEX THERAPEUTIC CARE, INC.’S COLLATERAL

 

I.                                         Grantor’s
official name:                     Apex
Therapeutic Care, Inc.

 

II.                                     Type
of entity:                 Corporation

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation:

CAC2026547

 

IV.                                 State
of Incorporation of Apex Therapeutic Care, Inc.:   California

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of Apex
Therapeutic Care, Inc.:

 

31332 Via Colinas

Suite 106

Westlake Village, CA 
91362

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

31332 Via Colinas

Suite 106

Westlake Village, CA 
91362

 

623 N. Main Street

Unit D6-8

Corona, CA 
92880

 

211 South Ryan Street

Lake Charles, LA 
70601

 

VII.                             Locations
of Records Concerning Collateral:      (see V.
above)

 

 

SCHEDULE III-E

to

SECURITY AGREEMENT

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING CHS SERVICES, INC.’S COLLATERAL

 

I.                                         Grantor’s
official name:                     CHS
Services, Inc.

 

II.                                     Type
of entity:                 Corporation

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation:

 

DE2578204

 

IV.                                 State
of Incorporation of CHS Services, Inc.:                                                     Delaware

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of CHS
Services, Inc.:

 

150 Motor Parkway

Hauppauge, NY 
11788

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY 
11788

 

103 Foulk Road

Suite 200

Wilmington, DE 
19803

 

VII.                             Locations
of Records Concerning Collateral:    (see V. above)

 

 

SCHEDULE III-F

to

SECURITY AGREEMENT

 

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING CURATIVE HEALTH SERVICES OF NEW YORK, INC.’S COLLATERAL

 

I.                                         Grantor’s
official name:                     Curative
Health Services of New York, Inc.

 

II.                                     Type
of entity:                 Corporation

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation:

 

Not issued by state of incorporation

 

IV.                                 State
of Incorporation of Curative Health Services of New York, Inc.:                     New York

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of Curative
Health Services of New York, Inc.:

 

144 Freeman’s Bridge Road

Glenville, NY 
13202

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

144 Freeman’s Bridge Road

Glenville, NY 
13202

 

VII.                             Locations
of Records Concerning Collateral:       (see
V. above)

 

 

SCHEDULE III-G

to

SECURITY AGREEMENT

 

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING INFINITY INFUSION, LLC’S COLLATERAL

 

I.                                         Grantor’s
official name:                     Infinity
Infusion, LLC

 

II.                                     Type
of entity:                 Limited Liability
Company

 

III.                                 Organizational
identification number issued by Grantor’s state of organization:

 

DE3529163

 

IV.                                 State
of organization of Infinity Infusion, LLC:                                           Delaware

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of Infinity
Infusion, LLC:

 

150 Motor Parkway

Hauppauge, NY 
11788

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY 
11788

 

VII.                             Locations
of Records Concerning Collateral:     (see V. above)

 

 

SCHEDULE III-H

to

SECURITY AGREEMENT

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING INFINITY INFUSION II, LLC’S COLLATERAL

 

I.                                         Grantor’s
official name:                     Infinity
Infusion II, LLC

 

II.                                     Type
of entity:                 Limited Liability
Company

 

III.                                 Organizational
identification number issued by Grantor’s state of organization:

 

DE3529166

 

IV.                                 State
of organization of Infinity Infusion II, LLC:                                Delaware

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of Infinity
Infusion II, LLC

 

150 Motor Parkway

Hauppauge, NY 
11788

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY 
11788

 

VII.                             Locations
of Records Concerning Collateral:    (see V. above)

 

 

SCHEDULE III-I

to

SECURITY AGREEMENT

 

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING OPTIMAL CARE PLUS, INC. COLLATERAL

 

 

I.                                         Grantor’s
official name:                     Optimal
Care Plus, Inc.

 

II.                                     Type
of entity:                 Corporation

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation:

 

DE3579727

 

IV.                                 State
of Incorporation of Optimal Care Plus, Inc.:                               Delaware

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of Optimal
Care Plus, Inc.:

 

12761 Darby Brooke Court

Woodbridge, VA 
22192

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

12761 Darby Brooke Court

Woodbridge, VA 
22192

 

VII.                             Locations
of Records Concerning Collateral:    (see V. above)

 

 

SCHEDULE III-J

to

SECURITY AGREEMENT

 

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING INFINITY INFUSION CARE, LTD. COLLATERAL

 

I.                                         Grantor’s
official name:                     Infinity
Infusion Care, Ltd.

 

II.                                     Type
of entity:                 Limited
Partnership

 

III.                                 Organizational
identification number issued by Grantor’s state of organization:

 

TX           [pending]

 

IV.                                 State
of organization of Infinity Infusion Care, Ltd.:                 Texas

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of Infinity
Infusion Care, Ltd.:

 

9701 Richmond Avenue

Houston, TX 
77042

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

9701 Richmond Avenue

Houston, TX 
77042

 

VII.                             Locations
of Records Concerning Collateral:    (see V. above)

 

 

SCHEDULE III-K

to

SECURITY AGREEMENT

 

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING CURATIVE PHARMACY SERVICES, INC. COLLATERAL

 

 

I.                                         Grantor’s
official name:                     Curative
Pharmacy Services, Inc.

 

II.                                     Type
of entity:                                                                 Corporation

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation:

 

DE3646680

 

IV.                                 State
or Incorporation of Curative Pharmacy Services, Inc.:                         Delaware

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of Curative
Pharmacy Services, Inc.:

 

150 Motor Parkway

Hauppauge, NY 
11788

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

150 Motor Parkway

Hauppauge, NY 
11788

 

VII.                             Locations
of Records Concerning Collateral:     (see V. above)

 

 

SCHEDULE III-L

to

SECURITY AGREEMENT

 

 

SCHEDULE OF
OFFICES, LOCATIONS OF COLLATERAL

AND RECORDS
CONCERNING MEDCARE, INC. COLLATERAL

 

 

I.                                         Grantor’s
official name:                     MedCare,
Inc.

 

II.                                     Type
of entity:                 Corporation

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation:

 

DE3613625

 

IV.                                 State
or Incorporation of MedCare, Inc.:                            Delaware

 

V.                                     Chief
Executive Office/Corporate Office and principal place of business of MedCare,
Inc.:

 

107A David Green Road

Birmingham, AL 
35244

 

VI.                                 Warehouses
and Other Premises at which Collateral is Stored or Located:

 

107A David Green Road

Birmingham, AL 
35244

 

402 Wilkins Wise Road

Suite #34

Columbus, MS 
39705

 

3761 Teays Valley Road

Suite A

Hurricane, WV 
25526

 

4854 Woodbine Road

Pace, FL  32571

 

VII.                             Locations
of Records Concerning Collateral:     (see V. above)

 

 

SCHEDULE IV

to

SECURITY AGREEMENT

 

 

PATENTS,
TRADEMARKS AND COPYRIGHTS

 

 

 

Curative Health Services,
Inc.

 

 

	
   

  	
   

  	
  Registration

  Number:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Patents:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Device for
  Evaluating Protective Sensation

  	
   

  	
  6,234,976

  	
   

  
	
  Folding Card
  Device for Evaluating Protective Sensation

  	
   

  	
  6,200,272

  	
   

  
	
  Method for
  Inducing Human Myocardial All Proliferation

  	
   

  	
  N/A

  	
   

  
	
  Monofilament
  Probe

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Trademarks:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Centro de
  Cuidado de Herida ®

  	
   

  	
  35,643

  	
   

  
	
  Footsense ®

  	
   

  	
  2,122,321

  	
   

  
	
  Sensacheck TM

  	
   

  	
  N/A

  	
   

  
	
  Starlink ®

  	
   

  	
  2,381,075

  	
   

  
	
  Wound Care 2000
  TM

  	
   

  	
   

  	
   

  
	
  Wound Care
  Center ® (name and logo)

  	
   

  	
  2,009,399

  	
   

  

 

Copyrights:

 

Copyrights on all forms, documents, and materials
developed by Curative Health                                                  Services,
Inc.

 

Other

 

	
   

  	
   

  	
  Registration

  Number:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Trademarks:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Apex
  Therapeutic Care, Inc.

  	
  Avances ®

  	
   

  	
  2,624,532

  	
   

  
	
  Infinity
  Infusion Care, Ltd.

  	
  Infinity Infusion Care

  	
   

  	
   

  	
   

  
	
   

  	
  (Ultimate Care Beyond
  Compare)

  	
   

  	
   

  	
   

  
	
   

  	
  (name and logo)

  	
   

  	
   

  	
   

  

 

 

Copyrights:

 

Copyrights on all forms, documents, and materials
developed by Apex Therapeutic Care, Inc. and Infinity Infusion Care, Ltd.

 

 

SCHEDULE V

to

SECURITY AGREEMENT

 

	
  Name of
  Grantor

  	
   

  	
  Motor
  Vehicle

  Make/Model

  	
   

  	
  Model Year

  	
   

  	
  VIN

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

NONE

 

 

EXHIBIT A

 

POWER OF ATTORNEY

 

This Power of Attorney is
executed and delivered by
[                    ],
a
                    
                    
(“Grantor”) to General Electric Capital Corporation, a Delaware
corporation (hereinafter referred to as “Attorney”), as Agent for the
benefit of Agent and Lenders, under a Credit Agreement and a Security
Agreement, both dated as of June 9, 2003, and other related documents (the “Loan
Documents”).  No person to whom this
Power of Attorney is presented, as authority for Attorney to take any action or
actions contemplated hereby, shall be required to inquire into or seek
confirmation from Grantor as to the authority of Attorney to take any action
described below, or as to the existence of or fulfillment of any condition to
this Power of Attorney, which is intended to grant to Attorney unconditionally
the authority to take and perform the actions contemplated herein, and Grantor
irrevocably waives any right to commence any suit or action, in law or equity,
against any person or entity which acts in reliance upon or acknowledges the
authority granted under this Power of Attorney.  The power of attorney granted hereby is coupled with an interest
and, prior to the Termination Date, may not be revoked or canceled by Grantor
without Attorney’ s written consent.

 

Grantor hereby
irrevocably constitutes and appoints Attorney (and all officers, employees or
agents designated by Attorney), with full power of substitution, as Grantor’s
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of Grantor and in the name of Grantor or in its own name,
from time to time in Attorney’s discretion after an Event of Default has
occurred and is continuing, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of the Loan Documents and,
without limiting the generality of the foregoing, Grantor hereby grants to
Attorney the power and right, on behalf of Grantor, without notice to or assent
by Grantor, and at any time after an Event of Default has occurred and is
continuing, to do the following: (a) change the mailing address of Grantor,
open a post office box on behalf of Grantor, open mail for Grantor, and ask,
demand, collect, give acquittances and receipts for, take possession of,
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications, and
notices in connection with any property of Grantor; (b) effect any repairs to
any asset of Grantor, or continue or obtain any insurance and pay all or any
part of the premiums therefor and costs thereof, and make, settle and adjust
all claims under such policies of insurance, and make all determinations and
decisions with respect to such policies; (c) pay or discharge any taxes, liens,
security interests, or other encumbrances levied or placed on or threatened
against Grantor or its property; (d) defend any suit, action or proceeding
brought against Grantor if Grantor does not defend such suit, action or
proceeding or if Attorney believes that Grantor is not pursuing such defense in
a manner that will maximize the recovery to Attorney, and settle, compromise or
adjust any suit, action, or proceeding described above and, in connection
therewith, give such discharges or releases as Attorney may deem appropriate;
(e) file or prosecute any claim, litigation, suit or proceeding in any court of
competent jurisdiction or before any arbitrator, or take any other action
otherwise deemed appropriate by Attorney for the purpose of collecting any and
all such moneys due to Grantor whenever payable and to enforce any other right
in respect of Grantor’s property; (f) cause the certified public accountants
then

 

 

engaged by Grantor to prepare and deliver to Attorney at any time and
from time to time, promptly upon Attorney’s request, the following reports: (1)
a reconciliation of all accounts, (2) an aging of all accounts, (3) trial
balances, (4) test verifications of such accounts as Attorney may request, and
(5) the results of each physical verification of inventory; (g) communicate in
its own name with any party to any Contract with regard to the assignment of
the right, title and interest of Grantor in and under the Contracts and other
matters relating thereto; (h) to file such financing statements with respect to
the Security Agreement, with or without Grantor’s signature, or to file a
photocopy of the Security Agreement in substitution for a financing statement,
as the Agent may deem appropriate and to execute in Grantor’s name such
financing statements and amendments thereto and continuation statements which
may require the Grantor’s signature; and (i) execute, in connection with any
sale provided for in any Loan Document, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral and to
otherwise direct such sale or resale, all as though Attorney were the absolute
owner of the property of Grantor for all purposes, and to do, at Attorney’s
option and Grantor’s expense, at any time or from time to time, all acts and
other things that Attorney reasonably deems necessary to perfect, preserve, or
realize upon Grantor’s property or assets and Attorney’s Liens thereon, all as
fully and effectively as Grantor might do. 
Grantor hereby ratifies, to the extent permitted by law, all that said
Attorney shall lawfully do or cause to be done by virtue hereof.

 

IN WITNESS WHEREOF, this Power of Attorney is executed
by Grantor, and Grantor has caused its seal to be affixed pursuant to the
authority of its board of directors this
         day of
        ,
20        .

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

NOTARY PUBLIC CERTIFICATE

 

On this
        day of
       ,
20       ,
                            
who is personally known to me appeared before me in his/her capacity as the
              of
[                            ]
(“Grantor”) and executed on behalf of Grantor the Power of Attorney in favor of
General Electric Capital Corporation to which this Certificate is attached.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

EXHIBIT
F

to

CREDIT
AGREEMENT

 

BORROWER
PLEDGE AGREEMENT

 

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

 

W I T N E S S E T H:

 

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

 

WHEREAS, Pledgors are the record and beneficial owner
of the shares of Stock listed in Part A of Schedule I hereto and the
owner of the promissory notes and instruments listed in Part B of Schedule I
hereto;

 

WHEREAS, Pledgors benefit from the credit facilities
made available to them under the Credit Agreement;

 

WHEREAS, in order to induce Agent and Lenders to make
the Loans and to incur the L/C Obligations as provided for in the Credit
Agreement, Pledgors have agreed to pledge the Pledged Collateral to Agent in
accordance herewith;

 

NOW, THEREFORE, in consideration of the premises and
the covenants hereinafter contained and to induce Lenders to make Loans and to
incur L/C Obligations under the Credit Agreement, it is agreed as follows:

 

 

1.                                       Definitions.  Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined, and the following shall have
(unless otherwise provided elsewhere in this Agreement) the following
respective meanings (such meanings being equally applicable to both the
singular and plural form of the terms defined):

 

“Bankruptcy Code” means title 11, United States
Code, as amended from time to time, and any successor statute thereto.

 

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

 

“Pledged Collateral” has the meaning assigned
to such term in Section 2 hereof.

 

“Pledged Entity” means an issuer of Pledged
Shares or Pledged Indebtedness.

 

“Pledged Indebtedness” means the Indebtedness
evidenced by promissory notes and instruments listed on Part B of Schedule I
hereto;

 

“Pledged Shares” means those shares listed on
Part A of Schedule I hereto.

 

“Secured Obligations” has the meaning assigned
to such term in Section 3 hereof.

 

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

 

“Unmatured Tax Liens” means Liens for taxes or
assessments or other governmental Charges not yet due and payable or which are
the subject of a Permitted Contest.

 

2.                                       Pledge.  Each Pledgor hereby pledges to Agent, and grants to Agent for
itself and the benefit of Lenders, a first priority security interest in all of
the following (collectively, the “Pledged Collateral”):

 

(a)                                  the
Pledged Shares and the certificates representing the Pledged Shares,

 

2

 

and all dividends, distributions, cash, instruments and other property
or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares;

 

(b)                                 such
portion, as determined by Agent as provided in Section 6(d)
below, of any additional shares of stock of a Pledged Entity from time to time
acquired by Pledgors in any manner (which shares shall be deemed to be part of
the Pledged Shares), and the certificates representing such additional shares,
and all dividends, distributions, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Stock;

 

(c)                                  the
Pledged Indebtedness and the promissory notes or instruments evidencing the
Pledged Indebtedness, and all interest, cash, instruments and other property
and assets from time to time received, receivable or otherwise distributed in
respect of the Pledged Indebtedness; and

 

(d)                                 
all additional Indebtedness arising after the date hereof and owing to any
Pledgor and evidenced by promissory notes or other instruments, together with
such promissory notes and instruments, 
and all interest, cash, instruments and other property and assets from
time to time received, receivable or otherwise distributed in respect of that
Pledged Indebtedness.

 

3.                                       Security
for Obligations.  This Agreement
secures, and the Pledged Collateral is security for, the prompt payment in full
when due, whether at stated maturity, by acceleration or otherwise, and
performance of all Obligations of any kind under or in connection with the
Credit Agreement and the other Loan Documents and all obligations of Pledgors
now or hereafter existing under this Agreement including, without limitation,
all fees, costs and expenses whether in connection with collection actions
hereunder or otherwise (collectively, the “Secured Obligations”).

 

4.                                       Delivery
of Pledged Collateral.  All
certificates and all promissory notes and instruments evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of Agent, for itself and
the benefit of Lenders, pursuant hereto. 
All Pledged Shares shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Agent and all promissory notes or other instruments evidencing the Pledged
Indebtedness shall be endorsed by Pledgors.

 

5.                                       Representations
and Warranties.  Each Pledgor
represents and warrants to Agent that:

 

(a)                                  Pledgor
is, and at the time of delivery of the Pledged Shares to Agent will be, the
sole holder of record and the sole beneficial owner of such Pledged Collateral
pledged by such Pledgor free and clear of any Lien thereon or affecting the
title thereto, except for Unmatured Tax Liens and any Lien created by this
Agreement.  Such Pledgor is and at the
time of delivery of the Pledged Indebtedness to Agent will be, the sole owner
of such Pledged Collateral free and clear of any Lien thereon or affecting
title thereto, except for Unmatured Tax

 

3

 

Liens and any Lien created by this Agreement;

 

(b)                                 All
of the Pledged Shares have been duly authorized, validly issued and are fully
paid and non-assessable.  The Pledged
Indebtedness has been duly authorized, authenticated or issued and delivered
by, and is the legal, valid and binding obligations of, the Pledged Entities,
and no such Pledged Entity is in default thereunder;

 

(c)                                  Pledgor
has the right and requisite authority to pledge, assign, transfer, deliver,
deposit and set over the Pledged Collateral pledged by such Pledgor to Agent as
provided herein;

 

(d)                                 None
of the Pledged Shares or Pledged Indebtedness has been issued or transferred in
violation of the securities registration, securities disclosure or similar laws
of any jurisdiction to which such issuance or transfer may be subject;

 

(e)                                  All
of the Pledged Shares are presently owned by Pledgor, and are presently
represented by the certificates listed on Part A of Schedule I
hereto.  As of the date hereof, there
are no existing options, warrants, calls or commitments of any character
whatsoever relating to the Pledged Shares;

 

(f)                                    No
consent, approval, authorization or other order or other action by, and no
notice to or filing with, any Governmental Authority or any other Person is
required (i) for the pledge by any Pledgor of the Pledged Collateral pursuant
to this Agreement or for the execution, delivery or performance of this
Agreement by any Pledgor, or (ii) for the exercise by Agent of the voting or
other rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement, except as may be required in
connection with such disposition by laws affecting the offering and sale of
securities generally;

 

(g)                                 The
pledge, assignment and delivery of the Pledged Collateral pursuant to this
Agreement will create a valid first priority Lien on and a first priority
perfected security interest in favor of the Agent for the benefit of Agent and
Lenders in the Pledged Collateral and the proceeds thereof, securing the
payment of the Secured Obligations, subject to no other Lien other than
Unmatured Tax Liens;

 

(h)                                 This
Agreement has been duly authorized, executed and delivered by each of the
Pledgors and constitutes a legal, valid and binding obligation of Pledgors
enforceable against Pledgors in accordance with its terms;

 

(i)                                     The
Pledged Shares constitute 100% of the issued and outstanding shares of Stock of
each Pledged Entity; and

 

(j)                                     Except
as disclosed on Part B of Schedule I, none of the Pledged Indebtedness
is subordinated in right of payment to other Indebtedness (except for the
Secured Obligations) or subject to the terms of an indenture.

 

4

 

The representations and warranties set forth in this Section 5 shall survive the execution and
delivery of this Agreement.

 

6.                                       Covenants.  Each Pledgor covenants and agrees that until
the Termination Date:

 

(a)                                  Without
the prior written consent of Agent, none of the Pledgors will sell, assign,
transfer, pledge, or otherwise encumber any of its rights in or to the Pledged
Collateral, or any unpaid dividends, interest or other distributions or
payments with respect to the Pledged Collateral or grant a Lien in the Pledged
Collateral, unless otherwise expressly permitted by the Credit Agreement;

 

(b)                                 Each
of the Pledgors will, at its expense, promptly execute, acknowledge and deliver
all such instruments and take all such actions as Agent from time to time may
request in order to ensure to Agent and Lenders the benefits of the Liens in
and to the Pledged Collateral intended to be created by this Agreement,
including the filing of any necessary Code financing statements, which may be
filed by Agent with or (to the extent permitted by law) without the signature
of such Pledgor, and will cooperate with Agent, at such Pledgors’s expense, in
obtaining all necessary approvals and making all necessary filings under
federal, state, local or foreign law in connection with such Liens or any sale
or transfer of the Pledged Collateral;

 

(c)                                  Each
of the Pledgors has and will defend the title to the Pledged Collateral and the
Liens of Agent in the Pledged Collateral against the claim of any Person and
will maintain and preserve such Liens; and

 

(d)                                 Each
of the Pledgors will, upon obtaining ownership of any additional Stock or
promissory notes or instruments of a Pledged Entity or Stock or promissory
notes or instruments otherwise required to be pledged to Agent pursuant to any
of the Loan Documents, which Stock, notes or instruments are not already
Pledged Collateral, promptly (and in any event within three (3) Business Days)
deliver to Agent a Pledge Amendment, duly executed by such Pledgor, in
substantially the form of Schedule II hereto (a “Pledge Amendment”)
in respect of any such additional Stock, notes or instruments, pursuant to
which such Pledgor shall pledge to Agent all of such additional Stock, notes
and instruments.  Each of the Pledgors
hereby authorizes Agent to attach each Pledge Amendment to this Agreement and
agrees that all Pledged Shares and Pledged Indebtedness listed on any Pledge
Amendment delivered to Agent shall for all purposes hereunder be considered
Pledged Collateral.

 

(e)                                  Each
Pledgor consents to each Pledged Entity’s entering into a Control Agreement
with Agent in the form of Schedule III hereto (a “Control Agreement”) and agrees to be bound
by the terms and conditions of each such Control Agreement, except that the
Agent shall not be entitled to give instructions to any Pledged Entity with
respect to the Pledged Stock issued by such Pledged Entity unless an Event of
Default has occurred and is continuing.

 

7.                                       Pledgors’
Rights.  As long as no Default or
Event of Default shall have occurred and be continuing and until written notice
shall be given to Pledgors in accordance with Section 8(a)
hereof:

 

5

 

(a)                                  Pledgors
shall have the right, from time to time, to vote and give consents with respect
to the Pledged Collateral, or any part thereof for all purposes not
inconsistent with the provisions of this Agreement, the Credit Agreement or any
other Loan Document; provided, however, that no vote shall be
cast, and no consent shall be given or action taken, which would have the
effect of impairing the position or interest of Agent in respect of the Pledged
Collateral or which would authorize, effect or consent to (unless and to the
extent expressly permitted by the Credit Agreement or consented to by Agent):

 

(i)                                     the dissolution
or liquidation, in whole or in part, of a Pledged Entity;

 

(ii)                                  the consolidation
or merger of a Pledged Entity with any other Person;

 

(iii)                               the sale,
disposition or encumbrance of all or substantially all of the assets of a
Pledged Entity, except for Liens in favor of Agent;

 

(iv)                              any change in
the authorized number of shares, the stated capital or the authorized share
capital of a Pledged Entity or the issuance of any additional shares of its
Stock; or

 

(v)                                 the alteration
of the voting rights with respect to the Stock of a Pledged Entity;

 

(b)                                 Pledgors
shall be entitled, from time to time, to collect and receive for thiee own use
all cash dividends and interest paid in respect of the Pledged Shares and
Pledged Indebtedness to the extent not in violation of the Credit Agreement other
than any and all: (A) dividends and interest paid or payable other than in
cash in respect of any Pledged Collateral, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange
for, any Pledged Collateral;  (B)
dividends and other distributions paid or payable in cash in respect of any
Pledged Shares in connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in
capital of a Pledged Entity; and (C) cash paid, payable or otherwise
distributed, in respect of principal of, or in redemption of, or in exchange
for, any Pledged Collateral; provided, however, that until
actually paid all rights to such distributions shall remain subject to the Lien
created by this Agreement; and

 

(c)                                  all
dividends and interest (other than such cash dividends and interest as are
permitted to be paid to Pledgors in accordance with clause  (i)
above) and all other distributions in respect of any of the Pledged Shares or
Pledged Indebtedness, whenever paid or made, shall be delivered to Agent to
hold as Pledged Collateral and shall, if received by Pledgors, be received in
trust for the benefit of Agent, be segregated from the other property or funds
of Pledgors, and be forthwith delivered to Agent as Pledged Collateral in the
same form as so

 

6

 

received (with any necessary indorsement).

 

8.                                       Defaults
and Remedies; Proxy.

 

(a)                                  Upon
the occurrence of an Event of Default and during the continuation of such Event
of Default, and concurrently with written notice to Pledgors, Agent (personally
or through an agent) is hereby authorized and empowered to transfer and
register in its name or in the name of its nominee the whole or any part of the
Pledged Collateral, to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations, to exercise the voting and all other rights as a holder
with respect thereto, to collect and receive all cash dividends, interest,
principal and other distributions made thereon, to sell in one or more sales
after ten (10) days’ notice of the time and place of any public sale or of the
time at which a private sale is to take place (which notice Pledgors agree is
commercially reasonable) the whole or any part of the Pledged Collateral and to
otherwise act with respect to the Pledged Collateral as though Agent was the
outright owner thereof.  Any sale shall
be made at a public or private sale at Agent’s place of business, or at any
place to be named in the notice of sale, either for cash or upon credit or for
future delivery at such price as Agent may deem fair, and Agent may be the
purchaser of the whole or any part of the Pledged Collateral so sold and hold
the same thereafter in its own right free from any claim of Pledgors or any
right of redemption.  Each sale shall be
made to the highest bidder, but Agent reserves the right to reject any and all
bids at such sale which, in its discretion, it shall deem inadequate.  Demands of performance, except as otherwise
herein specifically provided for or as specifically provided for in the Credit
Agreement, notices of sale, advertisements and the presence of property at sale
are hereby waived and any sale hereunder may be conducted by an auctioneer or
any officer or agent of Agent.  EACH OF
THE PLEDGORS HEREBY IRREVOCABLY CONSTITUTES UNTIL THE TERMINATION DATE AND
APPOINTS AGENT AS THE PROXY AND ATTORNEY-IN-FACT OF SUCH PLEDGOR WITH RESPECT
TO THE PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE THE PLEDGED SHARES, WITH
FULL POWER OF SUBSTITUTION TO DO SO AS PROVIDED IN SECTION 7(A) AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT.  THE
APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST
AND SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE.  IN ADDITION TO THE RIGHT TO VOTE THE PLEDGED SHARES, THE
APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO
EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF
THE PLEDGED SHARES WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN
CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING
AT SUCH MEETINGS) AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT
OF DEFAULT. SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED SHARES ON THE
RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PESON (INCLUDING THE ISSUER OF THE
PLEDGED SHARES OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT AND DURING THE CONTINUANCE THEREOF.  NOTWITHSTANDING THE FOREGOING, AGENT SHALL NOT HAVE ANY

 

7

 

DUTY TO EXERCISE ANY SUCH RIGHT OR TO
PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY
DELAY IN DOING SO.

 

(b)                                 If,
at the original time or times appointed for the sale of the whole or any part
of the Pledged Collateral, the highest bid, if there be but one sale, shall be
inadequate to discharge in full all the Secured Obligations, or if the Pledged
Collateral be offered for sale in lots, if at any of such sales, the highest
bid for the lot offered for sale would indicate to Agent, in its discretion,
that the proceeds of the sales of the whole of the Pledged Collateral would be
unlikely to be sufficient to discharge all the Secured Obligations, Agent may,
on one or more occasions and in its discretion, postpone any of said sales by
public announcement at the time of sale or the time of previous postponement of
sale, and no other notice of such postponement or postponements of sale need be
given, any other notice being hereby waived; provided, however,
that any sale or sales made after such postponement shall be after ten (10)
days’ notice to Pledgors.

 

(c)                                  If,
at any time when Agent in its sole discretion determines, following the
occurrence and during the continuance of an Event of Default, that, in
connection with any actual or contemplated exercise of its rights (when
permitted under this Section 8) to
sell the whole or any part of the Pledged Shares hereunder, it is necessary or
advisable to effect a public registration of all or part of the Pledged
Collateral pursuant to the Securities Act of 1933, as amended (or any similar
statute then in effect) (the “Act”), Pledgors shall, in an expeditious
manner, cause the Pledged Entities to:

 

(i)                                     Prepare and
file with the Securities and Exchange Commission (the “Commission”) a
registration statement with respect to the Pledged Shares and in good faith use
commercially reasonable efforts to cause such registration statement to become
and remain effective;

 

(ii)                                  Prepare and
file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective and to comply with the provisions
of the Act with respect to the sale or other disposition of the Pledged Shares
covered by such registration statement whenever Agent shall desire to sell or otherwise
dispose of the Pledged Shares;

 

(iii)                               Furnish to
Agent such numbers of copies of a prospectus and a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as Agent
may request in order to facilitate the public sale or other disposition of the
Pledged Shares by Agent;

 

(iv)                              Use
commercially reasonable efforts to register or qualify the Pledged Shares
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States and Puerto Rico as Agent
shall request, and do such other reasonable acts and things as may be required
of it to enable Agent to consummate the public sale or other disposition in
such jurisdictions of the

 

8

 

Pledged Shares by Agent;

 

(v)                                 Furnish, at the
request of Agent, on the date that shares of the Pledged Collateral are
delivered to the underwriters for sale pursuant to such registration or, if the
security is not being sold through underwriters, on the date that the
registration statement with respect to such Pledged Shares becomes effective,
(A) an opinion, dated such date, of the independent counsel representing such
registrant for the purposes of such registration, addressed to the
underwriters, if any, and in the event the Pledged Shares are not being sold
through underwriters, then to Agent, in customary form and covering matters of
the type customarily covered in such legal opinions; and (B) a comfort letter,
dated such date, from the independent certified public accountants of such
registrant, addressed to the underwriters, if any, and in the event the Pledged
Shares are not being sold through underwriters, then to Agent, in a customary
form and covering matters of the type customarily covered by such comfort
letters and as the underwriters or Agent shall reasonably request.  The opinion of counsel referred to above
shall additionally cover such other legal matters with respect to the registration
in respect of which such opinion is being given as Agent may reasonably
request.  The letter referred to above
from the independent certified public accountants shall additionally cover such
other financial matters (including information as to the period ending not more
than five (5) Business Days prior to the date of such letter) with respect to
the registration in respect of which such letter is being given as Agent may
reasonably request; and

 

(vi)                              Otherwise use
commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable but not later than 18 months after the effective
date of the registration statement, an earnings statement covering the period
of at least 12 months beginning with the first full month after the effective
date of such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act.

 

(d)                                 All
expenses incurred in complying with Section 8(c)
hereof, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), printing expenses, fees and disbursements of counsel
for the registrant, the fees and expenses of counsel for Agent, expenses of the
independent certified public accountants (including any special audits incident
to or required by any such registration) and expenses of complying with the
securities or blue sky laws or any jurisdictions, shall be paid by Pledgors.

 

(e)                                  If,
at any time when Agent shall determine to exercise its right to sell the whole
or any part of the Pledged Collateral hereunder, such Pledged Collateral or the
part thereof to be sold shall not, for any reason whatsoever, be effectively registered
under the Securities Act of 1933, as amended (or any similar statute then in
effect) (the “Act”), Agent may, in its discretion (subject only to applicable
requirements of law), sell such Pledged Collateral or part thereof by private
sale in such manner and under such circumstances as Agent may deem necessary or
advisable, but subject to the other requirements of this Section 8,
and shall not be 

 

9

 

required to effect such registration or to
cause the same to be effected.  Without
limiting the generality of the foregoing, in any such event, Agent in its
discretion (x) may, in accordance with applicable securities laws, proceed to
make such private sale notwithstanding that a registration statement for the
purpose of registering such Pledged Collateral or part thereof could be or
shall have been filed under said Act (or similar statute), (y) may approach and
negotiate with a single possible purchaser to effect such sale, and (z) may
restrict such sale to a purchaser who is an accredited investor under the Act
and who will represent and agree that such purchaser is purchasing for its own
account, for investment and not with a view to the distribution or sale of such
Pledged Collateral or any part thereof. 
In addition to a private sale as provided above in this Section 8, if any of the Pledged Collateral shall not be
freely distributable to the public without registration under the Act (or
similar statute) at the time of any proposed sale pursuant to this Section 8, then Agent shall not be required to effect such
registration or cause the same to be effected but, in its discretion (subject
only to applicable requirements of law), may require that any sale hereunder
(including a sale at auction) be conducted subject to restrictions:

 

(i)                                     as to the
financial sophistication and ability of any Person permitted to bid or purchase
at any such sale;

 

(ii)                                  as to the
content of legends to be placed upon any certificates representing the Pledged
Collateral sold in such sale, including restrictions on future transfer
thereof;

 

(iii)                               as to the
representations required to be made by each Person bidding or purchasing at
such sale relating to that Person’s access to financial information about
Pledgors and such Person’s intentions as to the holding of the Pledged
Collateral so sold for investment for its own account and not with a view to
the distribution thereof; and

 

(iv)                              as to such
other matters as Agent may, in its discretion, deem necessary or appropriate in
order that such sale (notwithstanding any failure so to register) may be
effected in compliance with the Bankruptcy Code and other laws affecting the
enforcement of creditors’ rights and the Act and all applicable state
securities laws.

 

(f)                                    Each
of the Pledgors recognizes that Agent may be unable to effect a public sale of
any or all the Pledged Collateral and may be compelled to resort to one or more
private sales thereof in accordance with clause (e) above.  Each of the Pledgors also acknowledges that
any such private sale may result in prices and other terms less favorable to
the seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall not be deemed to have
been made in a commercially unreasonable manner solely by virtue of such sale
being private.  Agent shall be under no
obligation to delay a sale of any of the Pledged Collateral for the period of
time necessary to permit the Pledged Entity to register such securities for
public sale under the Act, or under applicable state securities laws, even if
Pledgors and the Pledged Entity would agree to do so.

 

(g)                                 Each
of the Pledgors agrees to the maximum extent permitted by

 

10

 

applicable law that following the occurrence
and during the continuance of an Event of Default it will not at any time
plead, claim or take the benefit of any appraisal, valuation, stay, extension,
moratorium or redemption law now or hereafter in force in order to prevent or
delay the enforcement of this Agreement, or the absolute sale of the whole or
any part of the Pledged Collateral or the possession thereof by any purchaser
at any sale hereunder, and each of the Pledgors waives the benefit of all such
laws to the extent it lawfully may do so. 
Each of the Pledgors agrees that it will not interfere with any right,
power and remedy of Agent provided for in this Agreement or now or hereafter
existing at law or in equity or by statute or otherwise, or the exercise or
beginning of the exercise by Agent of any one or more of such rights, powers or
remedies.  No failure or delay on the
part of Agent to exercise any such right, power or remedy and no notice or
demand which may be given to or made upon Pledgors by Agent with respect to any
such remedies shall operate as a waiver thereof, or limit or impair Agent’s
right to take any action or to exercise any power or remedy hereunder, without
notice or demand, or prejudice its rights as against Pledgors in any respect.

 

(h)                                 Each
of the Pledgors further agrees that a breach of any of the covenants contained
in this Section 8 will cause irreparable injury
to Agent, that Agent shall have no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained in
this Section 8 shall be specifically
enforceable against each of the Pledgors, and each of the Pledgors hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that the Secured Obligations
are not then due and payable in accordance with the agreements and instruments
governing and evidencing such obligations.

 

9.                                       Waiver.  No delay on Agent’s part in exercising any
power of sale, Lien, option or other right hereunder, and no notice or demand
which may be given to or made upon any of the Pledgors by Agent with respect to
any power of sale, Lien, option or other right hereunder, shall constitute a
waiver thereof, or limit or impair Agent’s right to take any action or to
exercise any power of sale, Lien, option, or any other right hereunder, without
notice or demand, or prejudice Agent’s rights as against any Pledgor in any
respect.

 

10.                                 Assignment.  Agent may assign, indorse or transfer any
instrument evidencing all or any part of the Secured Obligations as provided
in, and in accordance with, the Credit Agreement, and the holder of such
instrument shall be entitled to the benefits of this Agreement.

 

11.                                 Termination.  Immediately following the Termination Date,
Agent shall deliver to Pledgors the Pledged Collateral pledged by Pledgors at
the time subject to this Agreement and all instruments of assignment executed
in connection therewith, free and clear of the Liens hereof and, except as
otherwise provided herein, all of Pledgors’ obligations hereunder shall at such
time terminate.

 

12.                                 Lien
Absolute.  All rights of Agent
hereunder, and all obligations of Pledgors hereunder, shall be absolute and
unconditional irrespective of:

 

(a)                                  any
lack of validity or enforceability of the Credit Agreement, any other

 

11

 

Loan Document or any other agreement or
instrument governing or evidencing any Secured Obligations;

 

(b)                                 any
change in the time, manner or place of payment of, or in any other term of, all
or any part of the Secured Obligations, or any other amendment or waiver of or
any consent to any departure from the Credit Agreement, any other Loan Document
or any other agreement or instrument governing or evidencing any Secured Obligations;

 

(c)                                  any
exchange, release or non-perfection of any other Collateral, or any release or
amendment or waiver of or consent to departure from any guaranty, for all or
any of the Secured Obligations;

 

(d)                                 the
insolvency of any Credit Party; or

 

(e)                                  any
other circumstance which might otherwise constitute a defense available to, or
a discharge of, Pledgors.

 

13.                                 Release.  Each of the Pledgors consents and agrees
that Agent may at any time, or from time to time, in its discretion:

 

(a)                                  renew,
extend or change the time of payment, and/or the manner, place or terms of
payment of all or any part of the Secured Obligations; and

 

(b)                                 exchange,
release and/or surrender all or any of the Collateral (including the Pledged
Collateral), or any part thereof, by whomsoever deposited, which is now or may
hereafter be held by Agent in connection with all or any of the Secured
Obligations; all in such manner and upon such terms as Agent may deem proper,
and without notice to or further assent from any of the Pledgors, it being
hereby agreed that each of the Pledgors shall be and remain bound upon this
Agreement, irrespective of the value or condition of any of the Collateral, and
notwithstanding any such change, exchange, settlement, compromise, surrender,
release, renewal or extension, and notwithstanding also that the Secured
Obligations may, at any time, exceed the aggregate principal amount thereof set
forth in the Credit Agreement, or any other agreement governing any Secured
Obligations.  Each of the Pledgors
hereby waives notice of acceptance of this Agreement, and also presentment,
demand, protest and notice of dishonor of any and all of the Secured
Obligations, and promptness in commencing suit against any party hereto or
liable hereon, and in giving any notice to or of making any claim or demand
hereunder upon any Pledgor.  No act or
omission of any kind on Agent’s part shall in any event affect or impair this
Agreement.

 

14.                                 Reinstatement.  This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against each of the Pledgors or any Pledged Entity for liquidation or
reorganization, should any of the Pledgors or any Pledged Entity become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of such
Pledgor’s or a Pledged Entity’s assets, and shall continue to be effective or
be reinstated, as the case may be, if at any time payment and

 

12

 

performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise
be restored or returned by any obligee of the Secured Obligations, whether as a
“voidable preference”, “fraudulent conveyance”, or otherwise, all as though
such payment or performance had not been made. 
In the event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, the Secured Obligations shall be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.

 

15.                                 Miscellaneous.

 

(a)                                  Agent
may execute any of its duties hereunder by or through agents or employees and
shall be entitled to advice of counsel concerning all matters pertaining to its
duties hereunder.

 

(b)                                 Each
of the Pledgors agrees to promptly reimburse Agent for actual out-of-pocket
expenses, including, without limitation, reasonable counsel fees, incurred by
Agent in connection with the administration and enforcement of this Agreement.

 

(c)                                  Neither
Agent, nor any of its respective officers, directors, employees, agents or
counsel shall be liable for any action lawfully taken or omitted to be taken by
it or them hereunder or in connection herewith, except for its or their own
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.

 

(d)                                 THIS
AGREEMENT SHALL BE BINDING UPON EACH OF THE PLEDGORS AND ITS SUCCESSORS AND
ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF OF ANY PLEDGOR), AND SHALL
INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, AGENT AND ITS SUCCESSORS AND
ASSIGNS, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE, AND NONE OF THE TERMS OR PROVISIONS OF THIS AGREEMENT
MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT IN WRITING DULY SIGNED FOR
AND ON BEHALF OF AGENT AND PLEDGORS.

 

16.                                 Severability.  If for any reason any provision or
provisions hereof are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or effect those
portions of this Agreement which are valid.

 

17.                                 Notices.  Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect
to this Security Agreement, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and shall be
given in the manner, and deemed received, as provided for in the Credit Agreement.

 

13

 

18.                                 Section
Titles.  The Section titles
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.

 

19.                                 Counterparts.  This Agreement may be executed in any number
of counterparts, which shall, collectively and separately, constitute one
agreement.

 

20.                                 Benefit
of Lenders.  All security interests
granted or contemplated hereby shall be for the benefit of Agent and Lenders,
and all proceeds or payments realized from the Pledged Collateral in accordance
herewith shall be applied to the Obligations in accordance with the terms of
the Credit Agreement.

 

 

[Remainder of page
intentionally left blank]

 

14

 

IN WITNESS WHEREOF, the parties hereto have caused
this Borrowers Pledge Agreement to be duly executed as of the date first
written above.

 

 

	
   

  	
  PLEDGORS:

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA ACCESS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

[Signature Page to
Borrower Pledge Agreement]

 

 

	
   

  	
  APEX THERAPEUTIC CARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES OF NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL CARE PLUS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services, Inc., its Sole
  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  INFINITY INFUSION II, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services, Inc., its Sole
  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION CARE, LTD.

  
	
   

  	
   

  
	
   

  	
  By: Infinity Infusion II, LLC, its Sole General
  Partner

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services, Inc., the Sole
  Member of Infinity Infusion II, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE PHARMACY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  GENERAL ELECTRIC CAPITAL
  CORPORATION, as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

SCHEDULE I

 

PART A

 

PLEDGED SHARES

 

1.  Curative Health Services, Inc.

 

 

	
  Pledged
  Entity

  	
   

  	
  Class 

  of Stock

  	
   

  	
  Stock
  Certificate

  Number(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage
  of

  Outstanding Shares

  	
   

  
	
  eBioCare.com,
  Inc.

  	
   

  	
  Common

  	
   

  	
  40

  	
   

  	
  13,086,666

  	
   

  	
  100

  	
  %

  
	
  Hemophilia
  Access, Inc.

  	
   

  	
  Common

  	
   

  	
  2

  	
   

  	
  100

  	
   

  	
  100

  	
  %

  
	
  Apex Therapeutic
  Care, Inc.

  	
   

  	
  Common

  	
   

  	
  13

  	
   

  	
  120,000

  	
   

  	
  100

  	
  %

  
	
  Curative Health
  Services of New York, Inc.

  	
   

  	
  Common

  	
   

  	
  2

  	
   

  	
  200

  	
   

  	
  100

  	
  %

  
	
  CHS Services,
  Inc.

  	
   

  	
  Common

  	
   

  	
  2

  	
   

  	
  100

  	
   

  	
  100

  	
  %

  
	
  Curative
  Pharmacy Services, Inc.

  	
   

  	
  Common

  	
   

  	
  1

  	
   

  	
  200

  	
   

  	
  100

  	
  %

  
	
  Optimal Care
  Plus, Inc.

  	
   

  	
  Common

  	
   

  	
  1

  	
   

  	
  200

  	
   

  	
  100

  	
  %

  
	
  Infinity
  Infusion, LLC

  	
   

  	
  Uncertificated shares
  of limited liability company interests

  	
   

  	
  100

  	
  %

  
	
  Infinity
  Infusion II, LLC

  	
   

  	
  Uncertificated shares
  of limited liability company interests

  	
   

  	
  100

  	
  %

  
	
  MedCare, Inc.

  	
   

  	
  Common

  	
   

  	
  1

  	
   

  	
  200

  	
   

  	
  100

  	
  %

  

 

2.  eBioCare.com, Inc.

 

None.

 

3.  Hemophilia Access, Inc.

 

None.

 

4.  Apex Therapeutic Care, Inc.

 

None.

 

5.  Curative Health Services of New York, Inc.

 

None.

 

6.  CHS Services, Inc.

 

None.

 

 

7.  Optimal Care Plus, Inc.

 

None.

 

8.  Infinity Infusion, LLC

 

	
  Pledged
  Entity

  	
   

  	
  Class 

  of Stock

  	
   

  	
  Stock
  Certificate

  Number(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage
  of

  Outstanding Shares

  	
   

  
	
  Infinity
  Infusion Care, Ltd.

  	
   

  	
  Limited Partnership
  Interest

  	
   

  	
  G-1

  	
   

  	
  Not Applicable

  	
   

  	
  99.00

  	
  %

  

 

9.  Infinity Infusion II, LLC

 

	
  Pledged
  Entity

  	
   

  	
  Class 

  of Stock

  	
   

  	
  Stock
  Certificate

  Number(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage
  of

  Outstanding Shares

  	
   

  
	
  Infinity
  Infusion Care, Ltd.

  	
   

  	
  Limited Partnership
  Interest

  	
   

  	
  L-1

  	
   

  	
  Not Applicable

  	
   

  	
  1.00

  	
  %

  

 

10.  MedCare, Inc.

 

None.

 

 

PART B

 

PLEDGED INDEBTEDNESS

 

1.  Curative Health Services, Inc.

 

	
  Pledged
  Entity

  	
   

  	
  Principal
  Amount

  	
   

  	
  Issue Date

  	
   

  	
  Maturity
  Date

  	
   

  	
  Interest
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2.  eBioCare.com, Inc.

 

None.

 

3.  Hemophilia Access, Inc.

 

None.

 

4.  Apex Therapeutic Care, Inc.

 

None.

 

5.  Curative Health Services of New York, Inc.

 

None.

 

6.  CHS Services, Inc.

 

None.

 

7.  Optimal Care Plus, Inc.

 

None.

 

8.  Infinity Infusion, LLC

 

 

 

None.

 

9.  Infinity Infusion II, LLC

 

None.

 

10.  MedCare, Inc.

 

None.

 

 

SCHEDULE II

 

PLEDGE AMENDMENT

 

 

This Pledge Amendment, dated
                                ,
       is delivered pursuant to Section 6(d) of the Pledge Agreement
referred to below.  All defined terms
herein shall have the meanings ascribed thereto or incorporated by reference in
the Pledge Agreement.  The undersigned
hereby certifies that the representations and warranties in Section 5 of the Pledge Agreement are and
continue to be true and correct, both as to the promissory notes, instruments
and shares pledged prior to this Pledge Amendment and as to the promissory
notes, instruments and shares pledged pursuant to this Pledge Amendment.  The undersigned further agrees that this
Pledge Amendment may be attached to that certain Borrower Pledge Agreement,
dated June 9, 2003, by and among each of the Persons executing the signature
page thereof as a Pledgor and General Electric Capital Corporation, as Agent
(as amended, supplemented, restated or modified from time to time, the “Pledge Agreement”) and that the Pledged
Shares and Pledged Indebtedness listed on this Pledge Amendment shall be and
become a part of the Pledged Collateral referred to in said Pledge Agreement
and shall secure all Secured Obligations referred to in said Pledge
Agreement.  The undersigned acknowledges
that any promissory notes, instruments or shares not included in the Pledged
Collateral at the discretion of Agent may not otherwise be pledged by Pledgor
to any other Person or otherwise used as security for any obligations other
than the Secured Obligations.

 

[NAME OF PLEDGOR]

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

 

	
  Name and

  Address of Pledgor

  	
   

  	
  Pledged
  Entity

  	
   

  	
  Class

  of Stock

  	
   

  	
  Certificate

  Number(s)

  	
   

  	
  Number

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  Entity

  	
   

  	
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  Date

  	
   

  	
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SCHEDULE III

 

CONTROL AGREEMENT

 

The undersigned
                                            ,
a
                                            
(“Pledged
Entity”), hereby acknowledges receipt of a completed and executed
counterpart of the Borrower Pledge Agreement, dated as of June 9, 2003, by and
among Curative Health Services, Inc., eBioCare.com, Inc., Hemophilia Access,
Inc., Apex Therapeutic Care, Inc., CHS Services, Inc., Curative Health Services
of New York, Inc., Optimal Care Plus, Inc., Infinity Infusion, LLC, Infinity
Infusion II, LLC, Infinity Infusion Care, Ltd., MedCare, Inc., Curative
Pharmacy Services, Inc. (collectively, the “Pledgors”) and General
Electric Capital Corporation, as agent (the “Agent”), and agrees to be
bound thereby.  The Pledged Entity
further agrees that it will comply with instructions originated by the Agent
(or its successors or assigns)  with
respect to the Pledged Stock issued by the Pledged Entity without further
consent of the Pledgor.  The Pledged
Entity further agrees to mark its other Stock records to reflect that the
Pledged Stock issued by the Pledged Entity is subject to Agent’s security
interest.

 

IN WITNESS WHEREOF, the Pledged Entity has
executed this Control Agreement as of the date first above written.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

EXHIBIT G

to

CREDIT AGREEMENT

 

FORM OF GUARANTY

 

 

This GUARANTY (this “Guaranty”), dated as of
             
     ,
        , by and among the Guarantors
identified as such on the signature page hereof (each, a “Guarantor” and collectively,
“Guarantors”),
and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation,
individually and as agent (in such capacity, “Agent”) for itself and the
lenders from time to time signatory to the Credit Agreement hereinafter defined
(“Lenders”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Credit Agreement
dated as of the date hereof by and among [Name of Borrower] (the “Borrower”)
the Persons named therein as Credit Parties, Agent and the Persons signatory
thereto from time to time as Lenders (as from time to time amended, restated,
supplemented or otherwise modified, the “Credit Agreement”) Lenders have agreed to
make Loans to, and incur LC Obligations for the benefit of, Borrower.

 

WHEREAS, Guarantors are [Describe Relationships With
Borrower(s)] and as such will derive direct and indirect economic benefits from
the making of the Loans and other financial accommodations provided to the
Borrower pursuant to the Credit Agreement; and

 

WHEREAS, in order to induce Agent and Lenders to enter
into the Credit Agreement and other Loan Documents and to induce Lenders to
make the Loans and to incur LC Obligations as provided for in the Credit
Agreement, Guarantors have agreed to guarantee payment of the Obligations;

 

NOW, THEREFORE, in consideration of the premises and
the covenants hereinafter contained, and to induce Lenders to provide the Loans
and other financial accommodations under the Credit Agreement, it is agreed as
follows:

 

1.                                       DEFINITIONS.

 

(a)                                  Capitalized
terms used herein shall have the meanings assigned to them in the Credit
Agreement, unless otherwise defined herein.

 

(b)                                 References
to this “Guaranty” shall mean this Guaranty, including all amendments,
modifications and supplements and any annexes, exhibits and schedules to any of
the foregoing, and shall refer to this Guaranty as the same may be in effect at
the time such reference becomes operative.

 

(c)                                  References
to the “Termination
Date” shall mean the date on which (a) the Loans have been repaid in
full in cash, (b) all other Obligations under the Credit Agreement and the
other Loan Documents have been completely discharged (c) all LC Obligations
have been

 

 

cash collateralized, canceled or backed by standby letters of credit in
accordance with Section 2.5 of the Credit Agreement, and (d) Borrower
shall not have any further right to borrow any monies under the Credit
Agreement.

 

2.                                       THE GUARANTY.

 

2.1.                              Guaranty
of Guaranteed Obligations of Borrower. 
Each Guarantor hereby jointly and severally unconditionally guarantees
to Agent and Lenders, and their respective successors, endorsees, transferees
and assigns, the prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of the Obligations of Borrower (hereinafter the “Guaranteed Obligations”).  Guarantors agree that this Guaranty is a
guaranty of payment and performance and not of collection, and that their
obligations under this Guaranty shall be primary, absolute and unconditional,
irrespective of, and unaffected by:

 

(a)                                  the genuineness,
validity, regularity, enforceability or any future amendment of, or change in
this Guaranty, any other Loan Document or any other agreement, document or
instrument to which any Credit Party and/or Guarantors are or may become a
party;

 

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

 

(c)                                  the existence,
value or condition of, or failure to perfect its Lien against, any Collateral
for the Guaranteed Obligations or any action, or the absence of any action, by
Agent in respect thereof (including, without limitation, the release of any
such security); or

 

(d)                                 the insolvency
of any Credit Party; or

 

(e)                                  any other
action or circumstances which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor,

 

it being agreed by each Guarantor that its obligations under this
Guaranty shall not be discharged until the Termination Date.  Each Guarantor shall be regarded, and shall
be in the same position, as principal debtor with respect to the Guaranteed
Obligations.  Each Guarantor agrees that
any notice or directive given at any time to Agent which is inconsistent with
the waiver in the immediately preceding sentence shall be null and void and may
be ignored by Agent and Lenders, and, in addition, may not be pleaded or
introduced as evidence in any litigation relating to this Guaranty for the
reason that such pleading or introduction would be at variance with the written
terms of this Guaranty, unless Agent and Lenders have specifically agreed
otherwise in writing.  It is agreed
among each Guarantor, Agent and Lenders that the foregoing waivers are of the
essence of the transaction contemplated by the Loan Documents and that, but for
this Guaranty and such waivers, Agent and Lenders would decline to enter into
the Credit Agreement.

 

2

 

2.2.                              Demand
by Agent or Lenders.  In addition to
the terms of the Guaranty set forth in Section
2.1 hereof, and in no manner imposing any limitation on such terms,
it is expressly understood and agreed that, if, at any time, the outstanding
principal amount of the Guaranteed Obligations under the Credit Agreement
(including all accrued interest thereon) is declared to be immediately due and
payable, then Guarantors shall, without demand, pay to the holders of the
Guaranteed Obligations the entire outstanding Guaranteed Obligations due and
owing to such holders.  Payment by
Guarantors shall be made to Agent in immediately available Federal funds to an
account designated by Agent or at the address set forth herein for the giving
of notice to Agent or at any other address that may be specified in writing
from time to time by Agent, and shall be credited and applied to the Guaranteed
Obligations.

 

2.3.                              Enforcement
of Guaranty.  In no event shall
Agent have any obligation (although it is entitled, at its option) to proceed
against any Borrower or any other Credit Party or any Collateral pledged to
secure Guaranteed Obligations before seeking satisfaction from any or all of
the Guarantors, and Agent may proceed, prior or subsequent to, or
simultaneously with, the enforcement of Agent’s rights hereunder, to exercise
any right or remedy which it may have against any Collateral, as a result of
any Lien it may have as security for all or any portion of the Guaranteed
Obligations.

 

2.4.                              Waiver.  In addition to the waivers contained in Section 2.1 hereof, Guarantors waive, and
agree that they shall not at any time insist upon, plead or in any manner
whatever claim or take the benefit or advantage of, any appraisal, valuation,
stay, extension, marshaling of assets or redemption laws, or exemption, whether
now or at any time hereafter in force, which may delay, prevent or otherwise
affect the performance by Guarantors of their Guaranteed Obligations under, or
the enforcement by Agent or Lenders of, this Guaranty. Guarantors hereby waive
diligence, presentment and demand (whether for non-payment or protest or of
acceptance, maturity, extension of time, change in nature or form of the
Guaranteed Obligations, acceptance of further security, release of further
security, composition or agreement arrived at as to the amount of, or the terms
of, the Guaranteed Obligations, notice of adverse change in any Borrower’s
financial condition or any other fact which might increase the risk to
Guarantors) with respect to any of the Guaranteed Obligations or all other
demands whatsoever and waive the benefit of all provisions of law which are or
might be in conflict with the terms of this Guaranty.  Guarantors represent, warrant and jointly and severally agree
that, as of the date of this Guaranty, their obligations under this Guaranty
are not subject to any offsets or defenses against Agent or Lenders or any
Credit Party of any kind. Guarantors further jointly and severally agree that
their obligations under this Guaranty shall not be subject to any
counterclaims, offsets or defenses against Agent or any Lender or against any
Credit Party of any kind which may arise in the future.

 

2.5.                              Benefit
of Guaranty.  The provisions of this
Guaranty are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any Credit Party and Agent or Lenders, the obligations
of any Credit Party under the Loan Documents. 
In the event all or any part of the Guaranteed Obligations are
transferred, indorsed or assigned by Agent or any Lender to any Person or
Persons, any reference to “Agent” or “Lender” herein shall be deemed to refer
equally to such Person or Persons.

 

3

 

2.6.                              Modification
of Guaranteed Obligations, Etc. 
Each Guarantor hereby acknowledges and agrees that Agent and Lenders may
at any time or from time to time, with or without the consent of, or notice to,
Guarantors or any of them:

 

(a)                                  change or
extend the manner, place or terms of payment of, or renew or alter all or any
portion of, the Guaranteed Obligations;

 

(b)                                 take any action
under or in respect of the Loan Documents in the exercise of any remedy, power
or privilege contained therein or available to it at law, equity or otherwise,
or waive or refrain from exercising any such remedies, powers or privileges;

 

(c)                                  amend or
modify, in any manner whatsoever, the Loan Documents;

 

(d)                                 extend or waive
the time for any Credit Party’s performance of, or compliance with, any term,
covenant or agreement on its part to be performed or observed under the Loan
Documents, or waive such performance or compliance or consent to a failure of,
or departure from, such performance or compliance;

 

(e)                                  take and hold
Collateral for the payment of the Guaranteed Obligations guaranteed hereby or
sell, exchange, release, dispose of, or otherwise deal with, any property
pledged, mortgaged or conveyed, or in which Agent or Lenders have been granted
a Lien, to secure any Obligations;

 

(f)                                    release anyone
who may be liable in any manner for the payment of any amounts owed by
Guarantors or any Credit Party to Agent or any Lender;

 

(g)                                 modify or
terminate the terms of any intercreditor or subordination agreement pursuant to
which claims of other creditors of any Guarantor or any Credit Party are
subordinated to the claims of Agent and Lenders; and/or

 

(h)                                 apply any sums
by whomever paid or however realized to any amounts owing by any Guarantor or
any Credit Party to Agent or any Lender in such manner as Agent or any Lender
shall determine in its discretion;

 

and Agent and Lenders shall not incur any liability to Guarantors as a
result thereof, and no such action shall impair or release the Guaranteed
Obligations of Guarantors or any of them under this Guaranty.

 

2.7.                              Reinstatement.  This Guaranty shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Credit Party or any Guarantor for liquidation or reorganization, should any
Credit Party or any Guarantor become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or
any significant part of such Credit Party’s or such Guarantor’s assets, and
shall continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Guaranteed Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by Agent or any

 

4

 

Lender, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or
performance had not been made.  In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Guaranteed Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.

 

2.8.                              Deferral
of Subrogation, Etc. 
Notwithstanding anything to the contrary in this Guaranty, or in any
other Loan Document, each Guarantor hereby:

 

(a)                                  expressly and
irrevocably waives, on behalf of itself and its successors and assigns
(including any surety) until the Termination Date, any and all rights at law or
in equity to subrogation, to reimbursement, to exoneration, to contribution, to
indemnification, to set off or to any other rights that could accrue to a
surety against a principal, to a guarantor against a principal, to a guarantor
against a maker or obligor, to an accommodation party against the party
accommodated, to a holder or transferee against a maker, or to the holder of
any claim against any Person, and which such Guarantor may have or hereafter
acquire against any Credit Party in connection with or as a result of such
Guarantor’s execution, delivery and/or performance of this Guaranty, or any
other documents to which such Guarantor is a party or otherwise; and

 

(b)                                 acknowledges
and agrees (i) that this waiver is intended to benefit Agent and Lenders and
shall not limit or otherwise effect any Guarantor’s liability hereunder or the
enforceability of this Guaranty, and (ii) that Agent, Lenders and their
respective successors and assigns are intended third party beneficiaries of the
waivers and agreements set forth in this Section
2.8 and their rights under this Section
2.8 shall survive payment in full of the Guaranteed Obligations.

 

2.9.                              Election
of Remedies.   If Agent may, under
applicable law, proceed to realize benefits under any of the Loan Documents
giving Agent and Lenders a Lien upon any Collateral owned by any Credit Party,
either by judicial foreclosure or by non-judicial sale or enforcement, Agent
may, at its sole option, determine which of such remedies or rights it may
pursue without affecting any of such rights and remedies under this
Guaranty.  If, in the exercise of any of
its rights and remedies, Agent shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Credit Party,
whether because of any applicable laws pertaining to “election of remedies” or
the like, Guarantors hereby consent to such action by Agent and waive any claim
based upon such action, even if such action by Agent shall result in a full or
partial loss of any rights of subrogation which Guarantors might otherwise have
had but for such action by Agent.  Any
election of remedies which results in the denial or impairment of the right of
Agent to seek a deficiency judgment against any Credit Party shall not impair
each Guarantor’s obligation to pay the full amount of the Guaranteed
Obligations.  In the event Agent shall
bid at any foreclosure or trustee’s sale or at any private sale permitted by
law or the Loan Documents, Agent may bid all or less than the amount of the
Guaranteed Obligations and the amount of such bid need not be paid by Agent but
shall be credited against the Guaranteed Obligations.  The amount of the successful bid at any such sale shall be
conclusively deemed to be the fair market value of the collateral and the
difference between such bid amount and the remaining balance of the Guaranteed
Obligations shall be conclusively deemed to be the amount

 

5

 

of the Guaranteed Obligations guaranteed
under this Guaranty, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any deficiency
claim to which Agent and Lenders might otherwise be entitled but for such
bidding at any such sale.

 

2.10.                        Funds
Transfers.  If any Guarantor shall
engage in any transaction as a result of which any Borrower is required to make
a mandatory prepayment with respect to the Guaranteed Obligations under the
terms of the Credit Agreement (including any issuance or sale of such
Guarantor’s Stock or any sale of its assets), such Guarantor shall distribute
to, or make a contribution to the capital of, the Borrower an amount equal to
the mandatory prepayment required under the terms of the Credit Agreement.

 

3.                                       DELIVERIES.

 

In a form satisfactory to Agent, Guarantors shall
deliver to Agent (with sufficient copies for each Lender), concurrently with
the execution of this Guaranty and the Credit Agreement, the Loan Documents and
other instruments, certificates and documents as are required to be delivered
by Guarantors to Agent under the Credit Agreement.

 

4.                                       REPRESENTATIONS AND WARRANTIES.

 

To induce Lenders to make the Loans and incur LC
Obligations under the Credit Agreement, Guarantors jointly and severally make
the representations and warranties as to each Guarantor contained in the Credit
Agreement, each of which is incorporated herein by reference, and the following
representations and warranties to Agent and each Lender, each and all of which
shall survive the execution and delivery of this Guaranty:

 

4.1.                              Corporate
Existence; Compliance with Law. 
Each Guarantor (i) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation; (ii) is
duly qualified to do business and is in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification; (iii) has the requisite corporate power
and authority and the legal right to own, pledge, mortgage and operate its
properties, to lease the property it operates under lease, and to conduct its business
as now, heretofore and proposed to be conducted; (iv) has all licenses,
permits, consents or approvals from or by, and has made all material filings
with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(v) is in compliance with its charter and by-laws; and (vi) is in compliance
with all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

4.2.                              Executive
Offices.  Each Guarantor’s executive
office and principal place of business are as set forth in Schedule III
of the Guarantor Security Agreement.

 

6

 

4.3.                              Corporate
Power; Authorization; Enforceable  Guaranteed Obligations.  The execution, delivery and performance of
this Guaranty and all other Loan Documents and all instruments and documents to
be delivered by each Guarantor hereunder and under the Credit Agreement are
within such Guarantor’s corporate power, have been duly authorized by all
necessary or proper corporate action, including the consent of stockholders
where required, are not in contravention of any provision of such Guarantor’s charter
or by-laws, do not violate any law or regulation, or any order or decree of any
Governmental Authority, do not conflict with or result in the breach of, or
constitute a default under, or accelerate or permit the acceleration of any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which any Guarantor is a party or by which any
Guarantor or any of its property is bound, do not result in the creation or
imposition of any Lien upon any of the property of any Guarantor, other than
those in favor of Agent, for itself and the benefit of Lenders, and the same do
not require the consent or approval of any Governmental Authority or any other
Person except those referred to in Section 2.1(c) of the Credit Agreement, all
of which have been duly obtained, made or complied with prior to the Closing
Date.  On or prior to the Closing Date,
this Guaranty and each of the Loan Documents to which any Guarantor is a party
shall have been duly executed and delivered for the benefit of or on behalf of
such Guarantor, and each shall then constitute a legal, valid and binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms.

 

5.                                       FURTHER ASSURANCES.

 

Each Guarantor agrees, upon the written request of
Agent or any Lender, to execute and deliver to Agent or such Lender, from time
to time, any additional instruments or documents reasonably considered
necessary by Agent or such Lender to cause this Guaranty to be, become or
remain valid and effective in accordance with its terms.

 

6.                                       PAYMENTS FREE AND CLEAR OF TAXES.

 

All payments required to be made by each Guarantor
hereunder shall be made to Agent and Lenders free and clear of, and without
deduction for, any and all present and future Taxes.  If any Guarantor shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder, (a) the sum payable shall be
increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section
6) Agent or Lenders, as applicable, receive an amount equal to the
sum they would have received had no such deductions been made, (b) such
Guarantor shall make such deductions, and (c) such Guarantor shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law.  Within thirty (30) days
after the date of any payment of Taxes, each applicable Guarantor shall furnish
to Agent the original or a certified copy of a receipt evidencing payment
thereof. Each Guarantor shall jointly and severally indemnify and, within ten
(10) days of demand therefor, pay Agent and each Lender for the full amount of
Taxes (including any Taxes imposed by any jurisdiction on amounts payable under
this Section
6) paid by Agent or such Lender, as appropriate, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted.

 

7

 

7.                                       OTHER TERMS.

 

7.1.                              Entire
Agreement.  This Guaranty, together
with the other Loan Documents, constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements relating to a guaranty of the loans and advances under the Loan
Documents and/or the Guaranteed Obligations.

 

7.2.                              Headings.  The headings in this Guaranty are for
convenience of reference only and are not part of the substance of this Guaranty.

 

7.3.                              Severability.  Whenever possible, each provision of this
Guaranty shall be interpreted in such a manner to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.

 

7.4.                              Notices.  Whenever it is provided herein that any
notice, demand, request, consent, approval, declaration or other communication
shall or may be given to or served upon any of the parties by any other party,
or whenever any of the parties desires to give or serve upon another any such
communication with respect to this Guaranty, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing and
shall be addressed to the party to be notified as follows:

 

(a)                                  If to Agent,
at:

 

General Electric Capital
Corporation

 

Attention:

Telecopy Number:

 

 

with copies to:

 

 

Attention:

 

Telecopy Number:

 

(b)                                 If to any
Lender, at the address of such Lender specified in the Credit Agreement.

 

(c)                                  If to any
Guarantor, at the address of such Guarantor specified on Schedule I hereto.

 

8

 

or at such other address as may be substituted by notice given as
herein provided.  The giving of any
notice required hereunder may be waived in writing by the party entitled to
receive such notice.  Every notice, demand,
request, consent, approval, declaration or other communication hereunder shall
be deemed to have been validly served, given or delivered (i) upon the earlier
of actual receipt and three (3) Business Days after the same shall have been
deposited with the United States mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (ii) upon transmission, when
sent by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States mail as otherwise provided in this Section 7.4), (iii) one (1)
Business Day after deposit with a reputable overnight carrier with all charges
prepaid, or (iv) when delivered, if hand-delivered by messenger.

 

7.5.                              Successors
and Assigns.  This Guaranty and all
obligations of Guarantors hereunder shall be binding upon the successors and
assigns of each Guarantor (including a debtor-in-possession on behalf of such
Guarantor) and shall, together with the rights and remedies of Agent, for
itself and for the benefit of Lenders, hereunder, inure to the benefit of Agent
and Lenders, all future holders of any instrument evidencing any of the
Obligations and their respective successors and assigns.  No sales of participations, other sales,
assignments, transfers or other dispositions of any agreement governing or
instrument evidencing the Obligations or any portion thereof or interest
therein shall in any manner affect the rights of Agent and Lenders hereunder.  Guarantors may not assign, sell, hypothecate
or otherwise transfer any interest in or obligation under this Guaranty.

 

7.6.                              No
Waiver; Cumulative Remedies; Amendments. 
Neither Agent nor any Lender shall by any act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies hereunder, and
no waiver shall be valid unless in writing, signed by Agent and then only to
the extent therein set forth.  A waiver
by Agent, for itself and the ratable benefit of Lenders, of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Agent would otherwise have had on any future occasion.  No failure to exercise nor any delay in
exercising on the part of Agent or any Lender, any right, power or privilege
hereunder, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
future exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies hereunder provided
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law.  None of the terms or provisions of this Guaranty may be waived, altered,
modified, supplemented or amended except by an instrument in writing, duly
executed by Agent and Guarantors.

 

7.7.                              Termination.  This Guaranty is a continuing guaranty and
shall remain in full force and effect until the Termination Date.  Upon payment and performance in full of the
Guaranteed Obligations, Agent shall deliver to Guarantors such documents as
Guarantors may reasonably request to evidence such termination.

 

7.8.                              Counterparts.  This Guaranty may be executed in any number
of counterparts, each of which shall collectively and separately constitute one
and the same agreement.

 

9

 

7.9.                            GOVERNING
LAW; CONSENT TO JURISDICTION AND VENUE. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN ANY OF THE LOAN DOCUMENTS, THIS GUARANTY AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK. 
AGENT AND EACH GUARANTOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY.  EACH GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.4.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.

 

7.10.                        WAIVER
OF JURY TRIAL.  AGENT AND EACH OF
THE GUARANTORS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW
WAIVES ANY RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL
DAMAGES IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

7.11.                        Limitation
on Guaranteed Obligations. 
Notwithstanding any provision herein contained to the contrary, each
Guarantor’s liability hereunder shall be limited to an amount not to exceed as
of any date of determination the greater of:

 

(a)                                  the
net amount of all Loans and other extensions of credit (including Letters of
Credit) advanced under the Credit Agreement and directly or indirectly
re-loaned or otherwise transferred to, or incurred for the benefit of, such
Guarantor, plus interest thereon at the applicable rate specified in the Credit
Agreement; or

 

(b)                                 the
amount which could be claimed by the Agent and Lenders from such Guarantor
under this Guaranty without rendering such claim voidable or avoidable under
Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law

 

10

 

after taking into account, among other things, such Guarantor’s right
of contribution and indemnification from each other Guarantor under Section 7.12.

 

7.12.                        Contribution
with Respect to Guaranteed Obligations.

 

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

 

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

 

(c)                                  This
Section
7.12 is intended only to define the relative rights of Guarantors
and nothing set forth in this Section 7.12 is intended to or shall impair
the obligations of Guarantors, jointly and severally, to pay any amounts as and
when the same shall become due and payable in accordance with the terms of this
Guaranty.

 

(d)                                 The
rights of the parties under this Section 7.12 shall be exercisable upon the
full and indefeasible payment of the Guaranteed Obligations and the termination
of the Credit Agreement and the other Loan Documents.

 

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

 

8.                                       SECURITY.

 

To secure payment of each Guarantor’s obligations
under this Guaranty, concurrently with the execution of this Guaranty, each
Guarantor has entered into a Guarantor Security Agreement pursuant to which
each Guarantor has granted to Agent for the benefit of Lenders a security
interest in substantially all of its personal property and has entered into a
Pledge Agreement pursuant to which each Guarantor has pledged all of the Stock
of each of its Subsidiaries to Agent for the benefit of Lenders.

 

11

 

9.                                       CREDIT AGREEMENT.

 

Each Guarantor agrees to perform, comply with and be
bound by the covenants contained in Sections 5 and 6 of the Credit Agreement
(which provisions are incorporated herein by reference) as if each Guarantor
were a Credit Party signatory to the Credit Agreement.

 

[Remainder of page
intentionally blank; signature pages follow]

 

12

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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  GENERAL ELECTRIC CAPITAL CORPORATION, as Agent

  
	
   

  	
   

  
	
   

  	
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  Its Duly Authorized Signatory

  
						

 

 

 

 

Schedule I

 

 

 

 

 

EXHIBIT H

to

CREDIT AGREEMENT

 

GUARANTOR SECURITY AGREEMENT

 

GUARANTOR SECURITY AGREEMENT (this “Security
Agreement”), dated as of
             
    , 20    , among the Grantors
signatory hereto (sometimes collectively referred to herein as “Grantors”
and individually as a “Grantor”), and GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation, individually and in its capacity as Agent for Lenders
(“Agent”).

 

W
I  T  N  E  S  S  T  H:

 

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

 

WHEREAS, Grantors are either direct or indirect
subsidiaries of Borrower and as such will derive direct and indirect economic
benefits from the making of the Loans and other financial accommodations provided
to the Borrower pursuant to the Credit Agreement; and

 

WHEREAS, in order to induce Agent and Lenders to enter
into the Credit Agreement and other Loan Documents and to induce Lenders to
make the Loans and to incur L/C Obligations as provided for in the Credit
Agreement, Grantors have entered into that certain Guaranty Agreement dated as
of             
     , 20     (the “Guaranty
Agreement”) in favor of Agent and Lenders, pursuant to which Grantors have
unconditionally guarantied all of the Obligations;

 

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

 

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

 

1.                                       DEFINED
TERMS.

 

Capitalized terms used in this Agreement shall have
the meanings ascribed to them in this Section 1 unless the context indicates
otherwise.  All capitalized terms used
but not otherwise defined herein have the meanings given to them in Section 1.1
of the

 

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(y)                                 “Termination
Date” means the date on which (a) the Loans have been indefeasibly repaid
in full in cash, (b) all other Obligations under the Credit Agreement and the
other Loan Documents have been completely discharged (c) all L/C Obligations

 

5

 

have been cash collateralized, canceled or
backed by standby letters of credit in accordance with Section 2.5 of the Credit Agreement, and
(d) the Borrower shall not have any further right to borrow any monies under
the Credit Agreement.

 

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

 

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

 

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

 

2.                                       GRANT
OF LIEN.

 

(a)                                  To
secure the prompt and complete payment, performance and observance of all of
the Obligations (specifically including, without limitation, each Grantor’s
Obligations arising under the Guaranty Agreement), each Grantor hereby grants,
assigns, conveys, mortgages, pledges, hypothecates and transfers to Agent, for
itself and the benefit of Lenders, a Lien upon all of its right, title and
interest in, to and under all personal property and other assets, whether now
owned by or owing to, or hereafter acquired by or arising in favor of such
Grantor (including under any trade names, styles or derivations thereof), and
whether owned or consigned by or to, or leased from or to, such Grantor, and
regardless of where located (all of which being hereinafter collectively
referred to as the “Collateral”), including:

 

(i)                                     all Accounts;

 

(ii)                                  all Chattel
Paper;

 

(iii)                               all Documents;

 

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

 

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

 

6

 

(vi)                              all
Instruments;

 

(vii)                           all Investment
Property;

 

(viii)                        all Deposit
Accounts, of any Grantor, including all Blocked Accounts, Government
Receivables Deposit Accounts, Concentration Accounts, Disbursement Accounts,
and all other bank accounts and all deposits therein;

 

(ix)                                all money, cash
or cash equivalents of any Grantor;

 

(x)                                   all Supporting
Obligations and Letter-of-Credit Rights of any Grantor;

 

(xi)                                the following
commercial tort claims:_________________;

 

(xii)                             all books,
records, ledger cards, files, correspondence, computer programs, tapes, disks
and related data processing software that at any time evidence or contain
information relating to any of the Collateral described in clauses (i) through
(xi) above or are otherwise necessary or helpful in the collection thereof or
realization thereon; and

 

(xiii)                          to the extent
not otherwise included, all Proceeds, tort claims, insurance claims and other
rights to payments not otherwise included in the foregoing and products of the
foregoing and all accessions to, substitutions and replacements for, and rents
and profits of, each of the foregoing.

 

(b)                                 In
addition, to secure the prompt and complete payment, performance and observance
of the Obligations and in order to induce Agent and Lenders as aforesaid, each
Grantor hereby grants to Agent, for itself and the benefit of Lenders, a right
of setoff against the property of such Grantor held by Agent or any Lender,
consisting of property described above in Section
2(a) now or hereafter in the possession or custody of or in transit
to Agent or any Lender, for any purpose, including safekeeping, collection or
pledge, for the account of such Grantor, or as to which such Grantor may have
any right or power.

 

3.                                       AGENT’S
AND LENDERS’ RIGHTS: LIMITATIONS ON AGENT’S AND LENDERS’ OBLIGATIONS.

 

(a)                                  It
is expressly agreed by Grantors that, anything herein to the contrary
notwithstanding, each Grantor shall remain liable under each of its Contracts
and each of its Licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder.  Neither Agent nor any Lender shall have any
obligation or liability under any Contract or License by reason of or arising
out of this Security Agreement or the granting herein of a Lien thereon or the
receipt by Agent or any Lender of any payment relating to any Contract or
License pursuant hereto.  Neither Agent nor
any Lender shall be required or obligated in any manner to perform or fulfill
any of the obligations of any Grantor under or pursuant to any Contract or
License, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment

 

7

 

received by it or the sufficiency of any
performance by any party under any Contract or License, or to present or file
any claims, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

 

(b)                                 Agent
may at any time after an Event of Default has occurred and be continuing (or if
any rights of set-off (other than set-offs against an Account arising under the
Contract giving rise to the same Account) or contra accounts may be asserted
with respect to the following), without prior notice to any Grantor, notify
Account Debtors and other Persons obligated on the Collateral that Agent has a
security interest therein, and that payments shall be made directly to
Agent.  Upon the request of Agent, each
Grantor shall so notify Account Debtors and other Persons obligated on
Collateral.  Once any such notice has
been given to any Account Debtor or other Person obligated on the Collateral,
the affected Grantor shall not give any contrary instructions to such Account
Debtor or other Person without Agent’s prior written consent.

 

(c)                                  Agent
may at any time in Agent’s own name, in the name of a nominee of Agent or in
the name of any Grantor communicate (by mail, telephone, facsimile or
otherwise) with Account Debtors, parties to Contracts and obligors in respect
of Instruments to verify with such Persons, to Agent’s satisfaction, the
existence, amount terms of, and any other matter relating to, Accounts, payment
intangibles, Instruments or Chattel Paper. 
If a Default or Event of Default shall have occurred and be continuing,
each Grantor, at its own expense, shall cause the independent certified public
accountants then engaged by such Grantor to prepare and deliver to Agent and
each Lender at any time and from time to time promptly upon Agent’s request the
following reports with respect to each Grantor: (i) a reconciliation of all
Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a test
verification of such Accounts as Agent may request.  Each Grantor, at its own expense, shall deliver to Agent the
results of each physical verification, if any, which such Grantor may in its
discretion have made, or caused any other Person to have made on its behalf, of
all or any portion of its Inventory.

 

4.                                       REPRESENTATIONS
AND WARRANTIES.  Each Grantor
represents and warrants that:

 

(a)                                  Each
Grantor has rights in and the power to transfer each item of the Collateral
upon which it purports to grant a Lien hereunder free and clear of any and all
Liens other than Permitted Encumbrances;

 

(b)                                 No
effective security agreement, financing statement, equivalent security or Lien
instrument or continuation statement covering all or any part of the Collateral
is on file or of record in any public office, except such as may have been
filed (i) by any Grantor in favor of Agent pursuant to this Security Agreement
or the other Loan Documents, and (ii) in connection with any other Permitted
Encumbrances;

 

(c)                                  This
Security Agreement is effective to create a valid and continuing Lien on and,
upon the filing of the appropriate financing statements listed on Schedule I
hereto, a perfected Lien in favor of Agent, for itself and the benefit of
Lenders, on the Collateral

 

8

 

with respect to which a Lien may be perfected
by filing pursuant to the Code.  Such
Lien is prior to all other Liens, except Permitted Encumbrances that would be
prior to Liens in favor of Agent for the benefit of Agent and Lenders as a
matter of law, and is enforceable as such as against any and all creditors of
and purchasers from any Grantor (other than purchasers and lessees of Inventory
in the ordinary course of business [and non-exclusive licensees of General
Intangibles in the ordinary course of business]).  All action by any Grantor necessary or desirable to protect and
perfect such Lien on each item of the Collateral has been duly taken;

 

(d)                                 Schedule
II hereto lists all Instruments, Letter of Credit Rights and Chattel Paper
of each Grantor.  All action by any
Grantor necessary or desirable to protect and perfect the Lien of Agent on each
item set forth on Schedule II (including the delivery of all originals
thereof to Agent and the legending of all Chattel Paper as required by Section 5(b) hereof) has been duly
taken.  The Lien of Agent, for the
benefit of Agent and Lenders, on the Collateral listed on Schedule II
hereto is prior to all other Liens, except Permitted Encumbrances that would be
prior to the Liens in favor of Agent as a matter of law, and is enforceable as
such against any and all creditors of and purchasers from any Grantor;

 

(e)                                  Each
Grantor’s name as it appears in official filings in the state of its
incorporation or other organization, the type of entity of each Grantor
(including corporation, partnership, limited partnership or limited liability
company), organizational identification number issued by each Grantor’s state
of incorporation or organization or a statement that no such number has been
issued, each Grantor’s state of organization or incorporation, the location of
each Grantor’s chief executive office, principal place of business, offices,
all warehouses and premises where Collateral is stored or located, and the
locations of its books and records concerning the Collateral are set forth on
Schedule    .  Each
Grantor has only one state of incorporation or organization;

 

(f)                                    With
respect to the Accounts, except as specifically disclosed in the most recent
Collateral Report delivered to Agent (i) they represent bona fide sales of
Inventory or rendering of services to Account Debtors in the ordinary course of
each Grantor’s business and are not evidenced by a judgment, Instrument or
Chattel Paper; (ii) there are no setoffs, claims or disputes existing or
asserted with respect thereto and no Grantor has made any agreement with any
Account Debtor for any extension of time for the payment thereof, any
compromise or settlement for less than the full amount thereof, any release of
any Account Debtor from liability therefor, or any deduction therefrom except a
discount or allowance allowed by such Grantor in the ordinary course of its
business for prompt payment and disclosed to Agent; (iii) to each Grantor’s
knowledge, there are no facts, events or occurrences which in any way impair
the validity or enforceability thereof or could reasonably be expected to
reduce the amount payable thereunder as shown on any Grantor’s books and records
and any invoices, statements and Collateral Reports delivered to Agent and
Lenders with respect thereto; (iv) no Grantor has received any notice of
proceedings or actions which are threatened or pending against any Account
Debtor which might result in any adverse change in such Account Debtor’s
financial condition; and (v) no Grantor has knowledge that any Account Debtor
is unable generally to pay its debts as they become due.  Further with respect to the Accounts (x) the
amounts

 

9

 

shown on all invoices, statements and
Collateral Reports which may be delivered to the Agent with respect thereto are
actually and absolutely owing to such Grantor as indicated thereon and are not
in any way contingent; (y) no payments have been or shall be made thereon
except payments immediately delivered to the applicable Blocked Accounts or the
Agent as required pursuant to the terms of Section
6.16 of the Credit Agreement; and (z) to each Grantor’s knowledge,
all Account Debtors have the capacity to contract;

 

(g)                                 With
respect to any Inventory scheduled or listed on the most recent Collateral
Report delivered to Agent pursuant to the terms of this Security Agreement or
the Credit Agreement, (i) such Inventory is located at one of the applicable
Grantor’s locations set forth on Schedule III-A, Schedule III-B, Schedule
III-C, Schedule III-D, Schedule III-E, Schedule III-F,
Schedule III-G, Schedule III-H, Schedule III-I, [Schedule
III-J] and [Schedule III-K] hereto, as applicable, (ii) no Inventory
is now, or shall at any time or times hereafter be stored at any other location
without Agent’s prior consent, and if Agent gives such consent, each applicable
Grantor will concurrently therewith obtain, to the extent required by the Credit
Agreement, bailee, landlord and mortgagee agreements, (iii) the applicable
Grantor has good, indefeasible and merchantable title to such Inventory and
such Inventory is not subject to any Lien or security interest or document
whatsoever except for the Lien granted to Agent, for the benefit of Agent and
Lenders, and except for Permitted Encumbrances, (iv) except as specifically
disclosed in the most recent Collateral Report delivered to Agent, such
Inventory is Eligible Inventory of good and merchantable quality, free from any
defects, (v) such Inventory is not subject to any licensing, patent, royalty,
trademark, trade name or copyright agreements with any third parties which
would require any consent of any third party upon sale or disposition of that Inventory
or the payment of any monies to any third party upon such sale or other
disposition, and (vi) the completion of manufacture, sale or other
disposition of such Inventory by Agent following an Event of Default shall not
require the consent of any Person and shall not constitute a breach or default
under any contract or agreement to which any Grantor is a party or to which
such property is subject.

 

(h)                                 No
Grantor has any interest in, or title to, any Patent, Trademark or Copyright
except as set forth in Schedule IV hereto.  This Security Agreement is effective to create a valid and
continuing Lien on and, upon filing of the Copyright Security Agreements with
the United States Copyright Office and filing of the Patent Security Agreements
and the Trademark Security Agreements with the United State Patent and
Trademark Office, perfected Liens in favor of Agent on each Grantor’ s Patents,
Trademarks and Copyrights and such perfected Liens are enforceable as such as
against any and all creditors of and purchasers from any Grantor.  Upon filing of the Copyright Security
Agreements with the United States Copyright Office and filing of the Patent
Security Agreements and the Trademark Security Agreements with the United State
Patent and Trademark Office and the filing of appropriate financing statements
listed on Schedule I hereto, all action necessary or desirable to
protect and perfect Agent’s Lien on each Grantor’s Patents, Trademarks or
Copyrights shall have been duly taken.

 

(i)                                     [All
motor vehicles owned by Grantors are listed on Schedule V hereto, by
model, model year and vehicle identification number (“VIN”).  Grantors shall deliver to Agent motor
vehicle title certificates for all motor vehicles from time to time owned by it

 

10

 

and shall cause those title certificates to
be filed (with Agent’s lien noted thereon) in the appropriate state motor
vehicle filing office.]

 

5.                                       COVENANTS.  Each Grantor covenants and agrees with
Agent, for the benefit of Agent and Lenders, that from and after the date of
this Security Agreement and until the Termination Date:

 

(a)                                  Further
Assurances: Pledge of Instruments; Chattel Paper.

 

(i)                                     At any time and
from time to time, upon the written request of Agent and at the sole expense of
Grantors, each Grantor shall promptly and duly execute and deliver any and all
such further instruments and documents and take such further actions as Agent
may deem desirable to obtain the full benefits of this Security Agreement and
of the rights and powers herein granted, including (A) using its best efforts
to secure all consents and approvals necessary or appropriate for the
assignment to or for the benefit of Agent of any License or Contract held by
such Grantor and to enforce the security interests granted hereunder; and (B)
filing any financing or continuation statements under the Code with respect to
the Liens granted hereunder or under any other Loan Document as to those
jurisdictions that are not Uniform Commercial Code jurisdictions.

 

(ii)                                  Unless Agent
shall otherwise consent in writing (which consent may be revoked), each Grantor
shall deliver to Agent all Collateral consisting of negotiable Documents,
certificated securities, Chattel Paper and Instruments (in each case,
accompanied by stock powers, allonges or other instruments of transfer executed
in blank) promptly after such Credit Party receives the same.

 

(iii)                               Each Grantor
shall, in accordance with the terms of the Credit Agreement, obtain or use its
best efforts to obtain waivers or subordinations of Liens from landlords and
mortgagees, and each Credit Party shall in all instances obtain signed
acknowledgements of Agent’s Liens from bailees having possession of any
Grantor’s Goods that they hold for the benefit of Agent.

 

(iv)                              If required by
the terms of the Credit Agreement and not waived by Agent in writing (which
waiver may be revoked), each Grantor shall obtain authenticated Control Letters
from each issuer of uncertificated securities, securities intermediary, or
commodities intermediary issuing or holding any financial assets or commodities
to or for any Grantor.

 

(v)                                 In accordance
with Section 6.16 of the Credit
Agreement, each Grantor shall obtain a blocked account, lockbox or similar
agreement with each bank or financial institution holding a Deposit Account for
such Grantor.

 

(vi)                              Each Grantor
that is or becomes the beneficiary of a letter of credit shall promptly, and in
any event within two (2) Business Days after becoming a beneficiary, notify
Agent thereof and enter into a tri-party agreement with Agent and the issuer
and/or confirmation bank with respect to Letter-of-Credit Rights assigning such
Letter-of-Credit Rights to Agent and directing all payments

 

11

 

thereunder to the Collection
Account, all in form and substance reasonably satisfactory to Agent.

 

(vii)                           Each Grantor
shall take all steps necessary to grant the Agent control of all electronic
chattel paper in accordance with the Code and all “transferable records” as defined
in each of the Uniform Electronic Transactions Act and the Electronic
Signatures in Global and National Commerce Act.

 

(viii)                        Each Grantor
hereby irrevocably authorizes the Agent at any time and from time to time to
file in any filing office in any Uniform Commercial Code jurisdiction any
initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of such Grantor or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the Code or such jurisdiction, or (ii) as
being of an equal or lesser scope or with greater detail, and (b) contain any
other information required by part 5 of Article 9 of the Code for the
sufficiency or filing office acceptance of any financing statement or
amendment, including (i) whether such Grantor is an organization, the type of
organization and any organization identification number issued to such Grantor,
and (ii) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates.  Each Grantor agrees to furnish any such
information to the Agent promptly upon request.  Each Grantor also ratifies its authorization for the Agent to have
filed in any Uniform Commercial Code jurisdiction any initial financing
statements or amendments thereto if filed prior to the date hereof.

 

(ix)                                Each Grantor
shall promptly, and in any event within two (2) Business Days after the same is
acquired by it, notify Agent of any commercial tort claim (as defined in the
Code) acquired by it and unless otherwise consented by Agent, such Grantor
shall enter into a supplement to this Security Agreement, granting to Agent a
Lien in such commercial tort claim.

 

(b)                                 Maintenance
of Records.  Grantors shall keep and
maintain, at their own cost and expense, satisfactory and complete records of
the Collateral, including a record of any and all payments received and any and
all credits granted with respect to the Collateral and all other dealings with
the Collateral.  Grantors shall mark
their books and records pertaining to the Collateral to evidence this Security
Agreement and the Liens granted hereby. 
If any Grantor retains possession of any Chattel Paper or Instruments
with Agent’s consent, such Chattel Paper and Instruments shall be marked with
the following legend: “This writing and the obligations evidenced or secured
hereby are subject to the security interest of General Electric Capital
Corporation, as Agent, for the benefit of Agent and certain Lenders.”

 

(c)                                  Covenants
Regarding Patent, Trademark and Copyright Collateral.

 

(i)                                     Grantors shall
notify Agent immediately if they know or have reason to know that any
application or registration relating to any Patent,

 

12

 

Trademark or Copyright (now
or hereafter existing) may become abandoned or dedicated, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court) regarding
any Grantor’s ownership of any Patent, Trademark or Copyright, its right to
register the same, or to keep and maintain the same.

 

(ii)                                  In no event
shall any Grantor, either itself or through any agent, employee, licensee or
designee, file an application for the registration of any Patent, Trademark or
Copyright with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency without giving Agent prior
written notice thereof, and, upon request of Agent, Grantor shall execute and
deliver any and all Patent Security Agreements, Copyright Security Agreements
or Trademark Security Agreements as Agent may request to evidence Agent’s Lien
on such Patent, Trademark or Copyright, and the General Intangibles of such
Grantor relating thereto or represented thereby.

 

(iii)                               Grantors shall
take all actions necessary or requested by Agent to maintain and pursue each
application, to obtain the relevant registration and to maintain the
registration of each of the Patents, Trademarks and Copyrights (now or
hereafter existing), including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings[, unless the applicable Grantor shall
determine that such Patent, Trademark or Copyright is not material to the
conduct of its business].

 

(iv)                              In the event
that any of the Patent, Trademark or Copyright Collateral is infringed upon, or
misappropriated or diluted by a third party, such Grantor shall comply with Section 5(a)(ix) of this Security
Agreement.  Such Grantor shall, unless
such Grantor shall reasonably determine that such Patent, Trademark or
Copyright Collateral is in no way material to the conduct of its business or
operations, promptly sue for infringement, misappropriation or dilution and to recover
any and all damages for such infringement, misappropriation or dilution, and
shall take such other actions as Agent shall deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright Collateral.

 

(d)                                 Indemnification.  In any suit, proceeding or action brought by
Agent or any Lender relating to any Collateral for any sum owing with respect
thereto or to enforce any rights or claims with respect thereto, each Grantor
will save, indemnify and keep Agent and Lenders harmless from and against all
expense (including reasonable attorneys’ fees and expenses), loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the Account Debtor or other Person
obligated on the Collateral, arising out of a breach by any Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors
from such Grantor, except in the case of Agent or any Lender, to the extent
such expense, loss, or damage is attributable solely to the gross negligence or
willful misconduct of Agent or such Lender

 

13

 

as finally determined by a court of competent
jurisdiction. All such obligations of Grantors shall be and remain enforceable
against and only against Grantors and shall not be enforceable against Agent or
any Lender.

 

(e)                                  Compliance
with Terms of Accounts, etc.  In all
material respects, each Grantor will perform and comply with all obligations in
respect of the Collateral and all other agreements to which it is a party or by
which it is bound relating to the Collateral.

 

(f)                                    Limitation
on Liens on Collateral.  No Grantor
will create, permit or suffer to exist, and each Grantor will defend the
Collateral against, and take such other action as is necessary to remove, any
Lien on the Collateral except Permitted Encumbrances, and will defend the
right, title and interest of Agent and Lenders in and to any of such Grantor’s
rights under the Collateral against the claims and demands of all Persons
whomsoever.

 

(g)                                 Limitations
on Disposition.  No Grantor will
sell, license, lease, transfer or otherwise dispose of any of the Collateral,
or attempt or contract to do so except as permitted by the Credit Agreement.

 

(h)                                 Further
Identification of Collateral. 
Grantors will, if so requested by Agent, furnish to Agent, as often as
Agent requests, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Agent
may reasonably request, all in such detail as Agent may specify.

 

(i)                                     Notices.  Grantors will advise Agent promptly, in
reasonable detail, (i) of any Lien (other than Permitted Encumbrances) or claim
made or asserted against any of the Collateral, and (ii) of the occurrence of
any other event which would have a Material Adverse Effect on the aggregate
value of the Collateral or on the Liens created hereunder or under any other
Loan Document.

 

(j)                                     Good
Standing Certificates.  Not less
frequently than once during each calendar quarter, each Grantor shall, unless
Agent shall otherwise consent, provide to Agent a certificate of good standing
from its state of incorporation or organization.

 

(k)                                  No
Reincorporation.  Without limiting
the prohibitions on mergers involving the Grantors contained in the Credit
Agreement, no Grantor shall reincorporate or reorganize itself under the laws
of any jurisdiction other than the jurisdiction in which it is incorporated or
organized as of the date hereof without the prior written consent of Agent.

 

(l)                                     Terminations;
Amendments Not Authorized.  Each
Grantor acknowledges that it is not authorized to file any financing statement
or amendment or termination statement with respect to any financing statement
without the prior written consent of Agent and agrees that it will not do so
without the prior written consent of Agent, subject to such Grantor’s rights
under Section 9-509(d)(2) of the Code.

 

(m)                               Authorized
Terminations.  Upon payment in full
in cash and performance of all of the Obligations (other than indemnification
Obligations), termination of the Commitments and a release of all claims
against Agent and Lenders, and so long as no

 

14

 

suits, actions, proceedings or claims are
pending or threatened against any Indemnified Person asserting any damages,
losses or liabilities that are indemnified liabilities under Section 9.2 of the Credit Agreement, Agent
shall, at Grantor’s expense, promptly deliver to Grantor or authorize Grantor
to prepare and file termination statements, mortgage releases and other
documents necessary or appropriate to evidence the termination of the Liens
securing payment of the Obligations.

 

(n)                                 Federal
Claims.  Grantor shall notify Agent
of any Collateral which constitutes a claim against the United States
government or any instrumentality or agency thereof, the assignment of which
claim is restricted by federal law. 
Upon the request of Agent, Grantor shall take such steps as may be
necessary to comply with any applicable federal assignment of claims laws and
other comparable laws.

 

(o)                                 Hot
Goods.  None of the Inventory of
Grantor has been or will be produced in violation of any provision of the Fair
Labor Standards Act of 1938, as amended, or in violation of any other law.

 

6.                                       AGENT’S
APPOINTMENT AS ATTORNEY-IN-FACT.

 

On the Closing
Date each Grantor shall execute and deliver to Agent a power of attorney (the “Power
of Attorney”) substantially in the form attached hereto as Exhibit A.  The power of attorney granted pursuant to
the Power of Attorney is a power coupled with an interest and shall be
irrevocable until the Termination Date. 
The powers conferred on Agent, for the benefit of Agent and Lenders,
under the Power of Attorney are solely to protect Agent’s interests (for the
benefit of Agent and Lenders) in the Collateral and shall not impose any duty
upon Agent or any Lender to exercise any such powers.  Agent agrees that (a) except for the powers granted in clause (h)
of the Power of Attorney, it shall not exercise any power or authority granted
under the Power of Attorney unless an Event of Default has occurred and is
continuing, and (b) Agent shall account for any moneys received by Agent in
respect of any foreclosure on or disposition of Collateral pursuant to the
Power of Attorney provided that none of Agent or any Lender shall have any duty
as to any Collateral, and Agent and Lenders shall be accountable only for
amounts that they actually receive as a result of the exercise of such
powers.  NONE OF AGENT, LENDERS OR THEIR
RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO
ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

 

7.                                       REMEDIES:  RIGHTS UPON DEFAULT.

 

(a)                                  In
addition to all other rights and remedies granted to it under this Security
Agreement, the Credit Agreement, the other Loan Documents and under any other

 

15

 

instrument or agreement securing, evidencing
or relating to any of the Obligations, if any Event of Default shall have
occurred and be continuing, Agent may exercise all rights and remedies of a
secured party under the Code.  Without
limiting the generality of the foregoing, each Grantor expressly agrees that in
any such event Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon such Grantor or any other
Person (all and each of which demands, advertisements and notices are hereby
expressly waived to the maximum extent permitted by the Code and other
applicable law), may forthwith enter upon the premises of such Grantor where
any Collateral is located through self-help, without judicial process, without
first obtaining a final judgment or giving such Grantor or any other Person
notice and opportunity for a hearing on Agent’s claim or action and may
collect, receive, assemble, process, appropriate and realize upon the
Collateral, or any part thereof, and may forthwith sell, lease, license,
assign, give an option or options to purchase, or sell or otherwise dispose of
and deliver said Collateral (or contract to do so), or any part thereof, in one
or more parcels at a public or private sale or sales, at any exchange at such
prices as it may deem acceptable, for cash or on credit or for future delivery
without assumption of any credit risk. 
Agent or any Lender shall have the right upon any such public sale or
sales and, to the extent permitted by law, upon any such private sale or sales,
to purchase for the benefit of Agent and Lenders, the whole or any part of said
Collateral so sold, free of any right or equity of redemption, which equity of
redemption each Grantor hereby releases. 
Such sales may be adjourned and continued from time to time with or
without notice.  Agent shall have the
right to conduct such sales on any Grantor’s premises or elsewhere and shall
have the right to use any Grantor’s premises without charge for such time or
times as Agent deems necessary or advisable.

 

If any Event of
Default shall have occurred and be continuing, each Grantor further agrees, at
Agent’s request, to assemble the Collateral and make it available to Agent at a
place or places designated by Agent which are reasonably convenient to Agent
and such Grantor, , whether at such Grantor’s premises or elsewhere.  Until Agent is able to effect a sale, lease,
or other disposition of Collateral, Agent shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for
the purpose of preserving Collateral or its value or for any other purpose
deemed appropriate by Agent.  Agent shall
have no obligation to any Grantor to maintain or preserve the rights of such
Grantor as against third parties with respect to Collateral while Collateral is
in the possession of Agent.  Agent may,
if it so elects, seek the appointment of a receiver or keeper to take
possession of Collateral and to enforce any of Agent’s remedies (for the
benefit of Agent and Lenders), with respect to such appointment without prior
notice or hearing as to such appointment. 
Agent shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale to the Obligations as provided in
the Credit Agreement, and only after so paying over such net proceeds, and
after the payment by Agent of any other amount required by any provision of
law, need Agent account for the surplus, if any, to any Grantor.  To the maximum extent permitted by
applicable law, each Grantor waives all claims, damages, and demands against
Agent or any Lender arising out of the repossession, retention or sale of the
Collateral except such as arise solely out of the gross negligence or willful
misconduct of Agent or such Lender as finally determined by a court of
competent

 

16

 

jurisdiction.  Each Grantor
agrees that ten (10) days prior notice by Agent of the time and place of any
public sale or of the time after which a private sale may take place is
reasonable notification of such matters. 
Grantors shall remain liable for any deficiency if the proceeds of any
sale or disposition of the Collateral are insufficient to pay all Obligations,
including any attorneys’ fees and other expenses incurred by Agent or any
Lender to collect such deficiency.

 

(b)                                 Except
as otherwise specifically provided herein, each Grantor hereby waives
presentment, demand, protest or any notice (to the maximum extent permitted by
applicable law) of any kind in connection with this Security Agreement or any
Collateral.

 

(c)                                  To
the extent that applicable law imposes duties on the Agent to exercise remedies
in a commercially reasonable manner, each Grantor acknowledges and agrees that
it is not commercially unreasonable for the Agent (i) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for
disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or
third party consents for the collection or disposition of Collateral to be
collected or disposed of, (iii) to fail to exercise collection remedies against
Account Debtors or other Persons obligated on Collateral or to remove Liens on
or any adverse claims against Collateral, (iv) to exercise collection remedies
against Account Debtors and other Persons obligated on Collateral directly or
through the use of collection agencies and other collection specialists, (v) to
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as the Grantor, for
expressions of interest in acquiring all or any portion of such Collateral,
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature, (viii)
to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the
reasonable capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Agent against
risks of loss, collection or disposition of Collateral or to provide to the
Agent a guaranteed return from the collection or disposition of Collateral, or
(xii) to the extent deemed appropriate by the Agent, to obtain the services of
other brokers, investment bankers, consultants and other professionals to
assist the Agent in the collection or disposition of any of the Collateral.  Each Grantor acknowledges that the purpose
of this Section 7(c) is to provide
non-exhaustive indications of what actions or omissions by the Agent would not
be commercially unreasonable in the Agent’s exercise of remedies against the
Collateral and that other actions or omissions by the Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this Section 7(c).  Without limitation upon the foregoing, nothing contained in this Section 7(c) shall be construed to grant
any rights to any Grantor or to impose any duties on Agent that would not have
been granted or imposed by this Security Agreement or by applicable law in the
absence of this Section 7(c).

 

17

 

(d)                                 Neither
the Agent nor the Lenders shall be required to make any demand upon, or pursue
or exhaust any of their rights or remedies against, any Grantor, any other
obligor, guarantor, pledgor or any other Person with respect to the payment of
the Obligations or to pursue or exhaust any of their rights or remedies with
respect to any Collateral therefor or any direct or indirect guarantee
thereof.  Neither the Agent nor the
Lenders shall be required to marshal the Collateral or any guarantee of the
Obligations or to resort to the Collateral or any such guarantee in any
particular order, and all of its and their rights hereunder or under any other
Loan Document shall be cumulative.  To
the extent it may lawfully do so, each Grantor absolutely and irrevocably waives
and relinquishes the benefit and advantage of, and covenants not to assert
against the Agent or any Lender, any valuation, stay, appraisement, extension,
redemption or similar laws and any and all rights or defenses it may have as a
surety now or hereafter existing which, but for this provision, might be
applicable to the sale of any Collateral made under the judgment, order or
decree of any court, or privately under the power of sale conferred by this
Security Agreement, or otherwise.

 

18

 

8.                                       GRANT
OF LICENSE TO USE INTELLECTUAL PROPERTY  COLLATERAL.  For the purpose of enabling Agent to
exercise rights and remedies under Section 7
hereof (including, without limiting the terms of Section 7 hereof, in order to take possession of, hold,
preserve, process, assemble, prepare for sale, market for sale, sell or
otherwise dispose of Collateral) at such time as Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to
Agent, for the benefit of Agent and Lenders, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to such
Grantor) to use, license or sublicense any Intellectual Property now owned or
hereafter acquired by such Grantor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed
items may be recorded or stored and to all computer software and programs used
for the compilation or printout thereof.

 

9.                                       LIMITATION
ON AGENT’S AND LENDERS’ DUTY IN RESPECT OF COLLATERAL.  Agent and each Lender shall use reasonable
care with respect to the Collateral in its possession or under its
control.  Neither Agent nor any Lender
shall have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of Agent or such Lender,
or any income thereon or as to the preservation of rights against prior parties
or any other rights pertaining thereto.

 

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

 

11.                                 NOTICES.  Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the parties desires
to give and serve upon any other party any communication with respect to this
Security Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given in
the manner, and deemed received, as provided for in the Credit Agreement.

 

19

 

12.                                 SEVERABILITY.  Whenever possible, each provision of this
Security Agreement shall be interpreted in a manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.  This Security
Agreement is to be read, construed and applied together with the Credit
Agreement and the other Loan Documents which, taken together, set forth the
complete understanding and agreement of Agent, Lenders and Grantors with
respect to the matters referred to herein and therein.

 

13.                                 NO
WAIVER; CUMULATIVE REMEDIES. 
Neither Agent nor any Lender shall by any act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies hereunder, and
no waiver shall be valid unless in writing, signed by Agent and then only to
the extent therein set forth.  A waiver
by Agent of any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which Agent would otherwise have had on any
future occasion.  No failure to exercise
nor any delay in exercising on the part of Agent or any Lender, any right,
power or privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or future exercise thereof or the exercise of any other right, power
or privilege.  The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law.  None of the terms or provisions of this
Security Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Agent and Grantors.

 

14.                                 LIMITATION
BY LAW.  All rights, remedies and
powers provided in this Security Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered or filed under the provisions of any applicable law.

 

15.                                 TERMINATION
OF THIS SECURITY AGREEMENT.  Subject
to Section 10 hereof, this
Security Agreement shall terminate upon the Termination Date.

 

16.                                 SUCCESSORS
AND ASSIGNS.  This Security Agreement
and all obligations of Grantors hereunder shall be binding upon the successors
and assigns of each Grantor (including any debtor-in-possession on behalf of
such Grantor) and shall, together with the rights and remedies of Agent, for
the benefit of Agent and Lenders, hereunder, inure to the benefit of Agent and
Lenders, all future holders of any instrument evidencing any of the Obligations
and their respective successors and assigns. 
No sales of participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing the
Obligations or any portion thereof or interest therein shall in any manner
impair the Lien granted to Agent, for the benefit of Agent and Lenders,
hereunder.  No Grantor may assign, sell,
hypothecate or otherwise transfer any interest in or obligation under this
Security Agreement.

 

20

 

17.                                 COUNTERPARTS.  This Security Agreement may be authenticated
in any number of separate counterparts, each of which shall collectively and
separately constitute one agreement. 
This Security Agreement may be authenticated by manual signature,
facsimile or, if approved in writing by Agent, electronic means, all of which
shall be equally valid.

 

18.                                                                               GOVERNING
LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.  EACH GRANTOR HEREBY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH GRANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.3 OF THE CREDIT
AGREEMENT.  NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.

 

19.                               WAIVER
OF JURY TRIAL.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW WAIVES ANY
RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES IN
CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

 

20.                                 SECTION
TITLES.  The Section titles
contained in this Security Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.

 

21.                                 NO
STRICT CONSTRUCTION.  The parties
hereto have participated jointly in the negotiation and drafting of this
Security Agreement.  In the event an
ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.

 

21

 

22.                                 ADVICE
OF COUNSEL.  Each of the parties
represents to each other party hereto that it has discussed this Security
Agreement and, specifically, the provisions of Section 18 and Section 19,
with its counsel.

 

23.                                 BENEFIT
OF LENDERS.  All Liens granted or
contemplated hereby shall be for the benefit of Agent, individually, and
Lenders, and all proceeds or payments realized from Collateral in accordance
herewith shall be applied to the Obligations in accordance with the terms of
the Credit Agreement.

 

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

 

22

 

IN WITNESS
WHEREOF, each of the parties hereto has caused this Guarantor Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.

 

	
   

  	
  GRANTOR(S):

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

GENERAL
ELECTRIC CAPITAL CORPORATION, as Agent

 

	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Its Duly Authorized Signatory

  	
   

  	
   

  
					

 

 

SCHEDULE I

to

SECURITY AGREEMENT

 

 

FILING JURISDICTIONS

 

 

SCHEDULE II

to

SECURITY AGREEMENT

 

 

INSTRUMENTS

CHATTEL PAPER

AND

LETTER OF CREDIT RIGHTS

 

 

[to be completed by Grantors]

 

 

SCHEDULE   

to

SECURITY AGREEMENT

 

 

SCHEDULE OF OFFICES,
LOCATIONS OF COLLATERAL

AND RECORDS CONCERNING
             ’S
COLLATERAL

 

 

I.                                         Grantor’s
official name:

 

II.                                     Type
of entity:

 

III.                                 Organizational
identification number issued by Grantor’s state of incorporation or
organization or a statement that no such number has been issued:

 

IV.                                 State
or Incorporation or Organization of
              :

 

V.                                     Chief
Executive Office and principal place of business of
                   :

 

VI.                                 Corporate
Offices of
                       :

 

VII.                             Warehouses:

 

VIII.                         Other
Premises at which Collateral is Stored or Located:

 

IX.                                Locations
of Records Concerning Collateral:

 

[to be completed by Grantors]

 

 

SCHEDULE IV

to

SECURITY AGREEMENT

 

 

PATENTS, TRADEMARKS AND
COPYRIGHTS

 

 

	
  [XYZ]

  	
   

  	
  [ABC]

  	
   

  	
  [DEF]

  	
   

  

 

 

[to be completed by Grantors]

 

EXHIBIT A

 

POWER OF ATTORNEY

 

This Power of Attorney is
executed and delivered by the Grantors signatory hereto (“Grantors”) to General Electric Capital
Corporation, a Delaware corporation (hereinafter referred to as “Attorney”), as
Agent for the benefit of Agent and Lenders, under a Credit Agreement, dated as
of
                            ,
20    , and a Guarantor Security Agreement, dated as of
                            ,
20    , and other related documents (the “Loan Documents”).  No person to whom this Power of Attorney is presented, as
authority for Attorney to take any action or actions contemplated hereby, shall
be required to inquire into or seek confirmation from Grantors as to the
authority of Attorney to take any action described below, or as to the
existence of or fulfillment of any condition to this Power of Attorney, which
is intended to grant to Attorney unconditionally the authority to take and
perform the actions contemplated herein, and Grantors irrevocably waive any
right to commence any suit or action, in law or equity, against any person or
entity which acts in reliance upon or acknowledges the authority granted under
this Power of Attorney.  The power of
attorney granted hereby is coupled with an interest, and may not be revoked or
canceled by Grantors without Attorney’s written consent.

 

Grantors hereby
irrevocably constitute and appoint Attorney (and all officers, employees or
agents designated by Attorney), with full power of substitution, as Grantors’
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of Grantors and in the name of Grantors or in its own name,
from time to time in Attorney’s discretion, to take any and all appropriate
action and to execute and deliver any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of the Loan Documents
and, without limiting the generality of the foregoing, Grantors hereby grant to
Attorney the power and right, on behalf of Grantors, without notice to or
assent by Grantors, and at any time, to do the following: (a) change the
mailing address of Grantors, open a post office box on behalf of Grantors, open
mail for Grantors, and ask, demand, collect, give acquittances and receipts
for, take possession of, endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any property of Grantors; (b)
effect any repairs to any asset of Grantors, or continue or obtain any
insurance and pay all or any part of the premiums therefor and costs thereof,
and make, settle and adjust all claims under such policies of insurance, and
make all determinations and decisions with respect to such policies; (c) pay or
discharge any taxes, liens, security interests, or other encumbrances levied or
placed on or threatened against Grantors or its property; (d) defend any suit,
action or proceeding brought against Grantors if Grantors do not defend such
suit, action or proceeding or if Attorney believes that Grantors are not
pursuing such defense in a manner that will maximize the recovery to Attorney,
and settle, compromise or adjust any suit, action, or proceeding described
above and, in connection therewith, give such discharges or releases as
Attorney may deem appropriate; (e) file or prosecute any claim, litigation,
suit or proceeding in any court of competent jurisdiction or before any
arbitrator, or take any other action otherwise deemed appropriate by Attorney
for the purpose of collecting any and all such moneys due to Grantors whenever
payable and to enforce any other right in respect of Grantors’ property; (f)
cause the certified public accountants then

 

 

engaged by Grantors to
prepare and deliver to Attorney at any time and from time to time, promptly
upon Attorney’s request, the following reports: (1) a reconciliation of all
accounts, (2) an aging of all accounts, (3) trial balances, (4) test
verifications of such accounts as Attorney may request, and (5) the results of
each physical verification of inventory; (g) communicate in its own name with
any party to any Contract with regard to the assignment of the right, title and
interest of such Grantors in and under the Contracts and other matters relating
thereto; (h) to file such financing statements with respect to the Security
Agreement, with or without Grantors’ signature, or to file a photocopy of the
Security Agreement in substitution for a financing statement, as the Agent may
deem appropriate and to execute in Grantors’ name such financing statements and
amendments thereto and continuation statements which may require the Grantors’
signature; and (i) execute, in connection with any sale provided for in any
Loan Document, any endorsements, assignments or other instruments of conveyance
or transfer with respect to the Collateral and to otherwise direct such sale or
resale, all as though Attorney were the absolute owner of the property of
Grantors for all purposes, and to do, at Attorney’s option and Grantors’
expense, at any time or from time to time, all acts and other things that
Attorney reasonably deems necessary to perfect, preserve, or realize upon
Grantors’ property or assets and Attorney’s Liens thereon, all as fully and
effectively as Grantors might do. 
Grantors hereby ratify, to the extent permitted by law, all that said
Attorney shall lawfully do or cause to be done by virtue hereof.

 

IN WITNESS WHEREOF, this
Power of Attorney is executed by Grantors, and Grantors have caused its seal to
be affixed pursuant to the authority of each of their board of directors this
         day of
                    ,
20    .

 

 

	
   

  	
  GRANTOR(S):

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                                                      ]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

NOTARY PUBLIC
CERTIFICATE

 

On this
           day of
                      ,
20    , [                          ]
who is personally known to me appeared before me in his/her capacity as the
[                          ]
of Grantors (“Grantors”) and executed on behalf of Grantor the Power of
Attorney in favor of General Electric Capital Corporation to which this
Certificate is attached.

 

	
   

  	
   

  
	
   

  	
  Notary Public

  

 

 

EXHIBIT
I

 

April 23,
2004

 

General
Electric Capital Corporation, as Agent and Lender

and the Persons who are from time to time

Lenders under the Credit Agreement

2 Bethesda Metro Center,
Suite 600

Bethesda, Maryland  20814

 

Ladies and Gentlemen:

 

We have acted as special
counsel to Curative Health Services, Inc., a Minnesota corporation (“Curative”), Curative Health Services Co., a
Minnesota corporation (“CHSC”), eBioCare.com, Inc., a Delaware corporation (“eBioCare”), Hemophilia Access, Inc., a Tennessee
corporation (“Access”), Apex Therapeutic Care, Inc., a California corporation (“Apex”), CHS Services, Inc., a Delaware
corporation (“CHS”),
Curative Health Services of New York, Inc., a New York corporation (“CNY”), Critical Care Systems, Inc., a Delaware
corporation (“CCS”), Infinity Infusion, LLC, a Delaware limited liability company (“Infinity”), Infinity Infusion II, LLC, a Delaware
limited liability company (“Infinity II”), Optimal Care Plus, Inc., a Delaware corporation (“Optimal”), Infinity Infusion Care, Ltd., a Texas
limited partnership (“Infinity Infusion”), MedCare, Inc., a Delaware corporation (“MedCare”), and Curative Pharmacy Services, Inc., a
Delaware corporation (“CPS”;
Curative, CHSC, eBioCare, Access, Apex, CHS, CNY, CCS, Infinity, Infinity II,
Optimal, Infinity Infusion, MedCare and CPS, collectively, the “Borrowers” and individually and without distinction,
a “Borrower”) in connection with
that certain Amended and Restated Credit Agreement, dated as of April 23,
2004 (the “Credit  Agreement”), among the Borrowers, the
Lenders signatory thereto, and General Electric Capital Corporation, a Delaware
corporation (“GE Capital”),
individually and in its capacity as Agent for Lenders (in such capacity, the “Agent”). 
We have also acted as special counsel to Curative Health Services III
Co., a Minnesota corporation (“CHSIII”;
CHSIII, together with the Borrowers may be referred to herein collectively as
the “Credit Parties” and
individually and without distinction as a “Credit
Party”) in connection with the Reaffirmation Agreement.  As such counsel, we have reviewed the
corporate actions necessary to authorize the execution and delivery of, and
have examined, the Credit Agreement as executed by the Borrowers, the UCC
financing statements attached on Exhibit B hereto (which are referred to herein
as the “Financing Statements”),
and the other agreements described on Exhibit A hereto (the Credit Agreement,
the Financing Statements, and the other agreements set

 

 

forth on Exhibit A hereto
are referred to herein collectively as the “Loan
Documents”, and individually and without distinction, as a “Loan Document”).  This opinion is being delivered to the Agent and the Lenders at
the request of the Credit Parties pursuant to Section 3.1(a) of the Credit
Agreement.

 

Capitalized terms defined
in this opinion and in the exhibits hereto are used herein and therein as so defined.

 

In connection with this
opinion, we have examined the Loan Documents and the following documents:

 

(i)                                                             a
copy of the articles of incorporation of Curative, certified as of
April 16, 2004 as a true copy by the Minnesota Secretary of State;

 

(ii)                                                          a
copy of the articles of incorporation of CHSC, certified as of April 16,
2004 as a true copy by the Minnesota Secretary of State;

 

(iii)                                                       a
copy of the certificate of incorporation of eBioCare, certified as of
April 16, 2004 as a true copy by the Delaware Secretary of State;

 

(iv)                                                      a
copy of the charter of Access, certified as of April 16, 2004 as a true
copy by the Tennessee Secretary of State;

 

(v)                                                         a
copy of the amended and restated articles of incorporation of Apex, certified
as of April 19, 2004 as a true copy by the California Secretary of State;

 

(vi)                                                      a
copy of the restated certificate of incorporation of CHS, certified as of
April 16, 2004 as a true copy by the Delaware Secretary of State;

 

(vii)                                                   a
copy of the certificate of incorporation of CNY, certified as of April 19,
2004 as a true copy by the New York Secretary of State;

 

(viii)                                                a
copy of the amended and restated certificate of incorporation of CCS, certified
as of April 16, 2004 as a true copy by the Delaware Secretary of State;

 

(ix)                                                        a
copy of the certificate of incorporation of Optimal, certified as of
April 16, 2004 as a true copy by the Delaware Secretary of State;

 

(x)                                                           a
copy of the certificate of formation of Infinity, certified as of
April 16, 2004 as a true copy by the Delaware Secretary of State;

 

2

 

(xi)                                                        a
copy of the certificate of formation of Infinity II, certified as of
April 16, 2004 as a true copy by the Delaware Secretary of State;

 

(xii)                                                     a
certificate of limited partnership of Infinity Infusion, certified as of
April 16, 2004 as a true copy by the Texas Secretary of State;

 

(xiii)                                                  a
copy of the certificate of incorporation of MedCare, certified as of
April 16, 2004 as a true copy by the Delaware Secretary of State;

 

(xiv)                                                 a
copy of the certificate of incorporation of CPS, certified as of April 16,
2004 as a true copy by the Delaware Secretary of State;

 

(xv)                                                    a
copy of the articles of incorporation of CHSIII, certified as of April 16,
2004 as a true copy by the Minnesota Secretary of State;

 

(xvi)                                                 a
Certificate of Good Standing concerning Curative from the Minnesota Secretary
of State issued April 16, 2004;

 

(xvii)                                              a
Certificate of Good Standing concerning CHSC from the Minnesota Secretary of
State issued April 16, 2004, a certificate qualifying CHSC in the state of
Alabama from the Alabama Secretary of State issued April 20, 2004, a
Certificate of Good Standing concerning CHSC from the Arizona Corporation
Commission Secretary issued April 20, 2004, a Certificate of Good Standing
concerning CHSC from the Arkansas Secretary of State issued April 20,
2004, a Certificate of Good Standing concerning CHSC from the California
Secretary of State issued April 9, 2004, a Certificate of Good Standing
concerning CHSC from the Colorado Secretary of State issued April 15,
2004, a Certificate of Good Standing concerning CHSC from the Connecticut
Secretary of State issued April 21, 2004, a Certificate of Good Standing
concerning CHSC from the Delaware Secretary of State issued April 19,
2004, a Certificate of Authorization concerning CHSC from the Florida
Department of State issued April 20, 2004, a Certificate of Existence
concerning CHSC from the Georgia Secretary of State issued April 20, 2004,
a Certificate of Good Standing concerning CHSC from the Illinois Secretary of
State issued April 20, 2004, a Certificate of Authorization concerning
CHSC from the Indiana Secretary of State issued April 20, 2004, a
Certificate of Authorization concerning CHSC from the Iowa Secretary of State
issued April 20, 2004, a Certificate of Good Standing concerning CHSC from
the Kansas Secretary of State issued April 21, 2004, a Certificate of
Authorization concerning CHSC from the Kentucky Secretary of State issued
April 20, 2004, a Certificate of Good Standing concerning CHSC from the
Louisiana

 

3

 

Secretary of State issued
April 20, 2004, a Certificate of Good Standing concerning CHSC from the
Maryland Department of Assessments and Taxation issued April 20, 2004, a
Certificate of Qualification concerning CHSC from the Massachusetts Secretary
of the Commonwealth issued April 20, 2004, a Certificate of Good Standing
concerning CHSC from the Michigan Department of Consumer and Industry Services
issued April 20, 2004, a Certificate of Authority concerning CHSC from the
Mississippi Secretary of State issued April 20, 2004, a Certificate of
Good Standing concerning CHSC from the Missouri Secretary of State issued
April 21, 2004, a Certificate of Authorization concerning CHSC from the
Montana Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning CHSC from the Nebraska Secretary of State issued
April 21, 2004, a Certificate of Authorization concerning CHSC from the
New Hampshire Department of State issued April 20, 2004, a Certificate of
Good Standing concerning CHSC from the New Jersey Department of Treasury issued
April 20, 2004, a Certificate of Good Standing concerning CHSC from the
New Mexico Office of the Public Regulation Commission issued April 20,
2004, a certificate of Authority to do Business concerning CHSC from the New
York Secretary of State issued April 2, 2004, a Certificate of
Authorization concerning CHSC from the North Carolina Secretary of State issued
April 20, 2004, a Certificate of Good Standing concerning CHSC from the
Ohio Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning CHSC from the Oklahoma Secretary of State issued
April 20, 2004, a certificate of authority to do business concerning CHSC
from the Oregon Secretary of State issued April 20, 2004, a Certificate of
Good Standing concerning CHSC from the Rhode Island Secretary of State issued
April 21, 2004, a Certificate of Authorization concerning CHSC from the
South Carolina Secretary of State issued April 20, 2004, a Certificate of
Authorization concerning CHSC from the Tennessee Secretary of State issued
April 20, 2004, a Certificate of Authority concerning CHSC from the Texas
Secretary of State issued April 20, 2004, a Certificate of Good Standing
concerning CHSC from the Virginia State Corporation Commission issued
April 20, 2004, a Certificate of Existence/Authorization concerning CHSC
from the Washington Secretary of State issued April 20, 2004, a
Certificate of Good Standing concerning CHSC from the West Virginia Secretary
of State issued April 20, 2004, and a Certificate of Good Standing
concerning CHSC from the Wisconsin Department of Financial Institutions issued
April 21, 2004;

 

(xviii)                                           a
Certificate of Status—Domestic Corporation concerning Apex from the California
Secretary of State issued April 9, 2004, a Certificate of Good

 

4

 

Standing concerning Apex
from the Florida Secretary of State issued April 20, 2004, a Certificate
of Good Standing concerning Apex from the Illinois Secretary of State issued
April 20, 2004, a Certificate of Good Standing concerning Apex from the
Indiana Secretary of State issued April 20, 2004,a Certificate of Good
Standing concerning Apex from the Kentucky Secretary of State issued
April 20, 2004,  a Certificate of
Good Standing concerning Apex from the Louisiana Secretary of State issued
April 5, 2004, a Certificate of Good Standing concerning Apex from the
Michigan Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning Apex from the Missouri Secretary of State issued
April 21, 2004, a Certificate of Good Standing concerning Apex from the
Montana Secretary of State issued April 20, 2004, a Certificate of Good
Standing concerning Apex from the Nebraska Secretary of State issued
April 21, 2004, a Certificate of Good Standing concerning Apex from the
New York Secretary of State issued April 19, 2004, a Certificate of Good
Standing concerning Apex from the North Carolina Secretary of State issued
April 11, 2004, a Certificate of Good Standing concerning Apex from the
Oklahoma Secretary of State issued April 20, 2004, a Certificate of
Existence concerning Apex from the Texas Secretary of State issued
April 20, 2004, a Certificate of Account Status concerning Apex from the
Texas Comptroller of Public Accounts issued April 20, 2004, a Certificate
of Existence concerning Apex from the Utah Secretary of State issued
April 20, 2004, a Certificate of Good Standing concerning Apex from the
Virginia State Corporation Commission issued April 20, 2004, and a
Certificate of Existence concerning Apex from the Washington Secretary of State
issued April 20, 2004;

 

(xix)                                                   a
Certificate of Good Standing concerning CHS from the Delaware Secretary of
State issued April 16, 2004;

 

(xx)                                                      a
certificate of Authority to Do Business concerning CNY from the New York
Secretary of State issued April 15, 2004;

 

(xxi)                                                   a
Certificate of Good Standing concerning CPS from the Delaware Secretary of
State issued April 16, 2004;

 

(xxii)                                                a
Certificate of Good Standing concerning CCS from the Delaware Secretary of
State issued April 16, 2004, a Certificate of Good Standing concerning CCS
from the Alabama Secretary of State issued April 13, 2004, a Certificate
of Good Standing concerning CCS from the Arizona Corporation Commission issued
April 13, 2004, a Certificate of Status concerning CCS from the California
Secretary of State issued April 13, 2004, a Certificate of Existence

 

5

 

concerning CCS from the
Idaho Secretary of State issued April 13, 2004, a Certificate of Good
Standing concerning CCS from the Illinois Secretary of State issued
April 13, 2004, a Certificate of Authorization concerning CCS from the
Indiana Secretary of State issued April 13, 2004, a Certificate of Good
Standing concerning CCS from the Iowa Secretary of State issued April 13,
2004, a Certificate of Good Standing concerning CCS from the Maine Secretary of
State issued April 13, 2004, a Certificate of Good Standing concerning CCS
from the Maryland Department of Assessments and Taxation issued April 13,
2004, a Certificate of Good Standing concerning CCS from the Massachusetts
Secretary of the Commonwealth issued April 15, 2004, a Certificate of Good
Standing concerning CCS from the Michigan Department of Consumer and Industry
Services issued April 13, 2004, a Certificate of Good Standing concerning
CCS from the Mississippi Secretary of State issued April 13, 2004, a
Certificate of Good Standing concerning CCS from the Missouri Secretary of
State issued April 16, 2004, a Certificate of Existence with Status in
Good Standing concerning CCS from the Nevada Secretary of State issued
April 13, 2004, a Certificate of Good Standing concerning CCS from the New
Hampshire Department of State issued April 13, 2004, a Certificate of Good
Standing concerning CCS from the Ohio Secretary of State issued April 13,
2004, a Certificate of Good Standing concerning CCS from the Pennsylvania
Department of State issued April 19, 2004, a Certificate of Good Standing
concerning CCS from the Rhode Island Secretary of State issued April 13,
2004, a Certificate of Good Standing concerning CCS from the Texas Secretary of
State issued April 13, 2004, a Certificate of Good Standing concerning CCS
from the Alabama Secretary of State issued April 13, 2004, and a
Certificate of Existence concerning CCS from the Utah Department of Commerce
issued April 13, 2004;

 

(xxiii)                                             a
Certificate of Good Standing concerning eBioCare from the Delaware Secretary of
State issued April 16, 2004, and a Certificate of Status—Foreign
Corporation concerning eBioCare from the California Secretary of State issued
April 9, 2004; a Certificate of Good Standing concerning eBioCare from the
Maryland Department of Assessments and Taxation issued April 20, 2004; a
Certificate of Good Standing concerning eBioCare from the Minnesota Secretary
of State issued April 20, 2004;

 

(xxiv)                                            a
Certificate of Existence concerning Access from the Tennessee Secretary of
State issued April 16, 2004, a Certificate of Authorization concerning
Access from the Florida Department of State issued April 20, 2004, a
Certificate of Authorization concerning Access from the Indiana Secretary of
State issued April 20, 2004, a Certificate of Authority concerning Access
from the

 

6

 

Michigan Department of
Consumer and Industry Services issued April 20, 2004, and a Certificate of
Good Standing concerning Access from the Minnesota Secretary of State issued
April 20, 2004;

 

(xxv)                                               a
Certificate of Good Standing concerning Infinity from the Delaware Secretary of
State issued April 16, 2004 and a Certificate of Authority concerning
Infinity from the Texas Secretary of State issued April 5, 2004;

 

(xxvi)                                            a
Certificate of Good Standing concerning Infinity II from the Delaware Secretary
of State issued April 23, 2004, a Certificate of Authority concerning
Infinity II from the Texas Secretary of State issued April 16, 2004 and a
Certificate of Account Status concerning Infinity II from the Texas Comptroller
of Public Accounts issued April 5, 2004;

 

(xxvii)                                         a
Certificate of Authority concerning Infinity Infusion from the Texas Secretary
of State issued April 5, 2004;

 

(xxviii)                                      a
Certificate of Good Standing concerning MedCare from the Delaware Secretary of
State issued April 16, 2004, a Qualification Disclosure concerning MedCare
from the Alabama Secretary of State issued April 5, 2004, a Certificate of
Authority/Qualification concerning MedCare from the Florida Secretary of State
issued April 5, 2004, a Certificate of Authority/Qualification concerning
MedCare from the Maryland Department of Assessment and Taxation issued
April 20, 2004, a Certificate of Existence/Authority concerning MedCare
from the Mississippi Secretary of State issued April 5, 2004; a
Certificate of Authority/Qualification concerning MedCare from the Washington
Secretary of State issued April 20, 2004, and a Certificate of
Authority/Qualification concerning MedCare from the West Virginia Secretary of
State issued April 5, 2004,

 

(xxix)                                              a
Certificate of Existence concerning Optimal from the Delaware Secretary of
State issued April 16, 2004, a Good Standing Certificate concerning
Optimal from the Virginia Secretary of State issued April 5, 2004; a
Certificate of Authority/Qualification concerning MedCare from the Maryland
Department of Assessment and Taxation issued April 20, 2004,

 

(xxx)                                                 a
Certificate of Good Standing concerning CHSIII from the Minnesota Secretary of
State issued April 16 2004;

 

(xxxi)                                              a
certificate of an officer of Curative certifying as to a copy of resolutions of
the Board of Directors of Curative adopted May 21, 2004, incumbency with

 

7

 

respect to officers of
Curative, a copy of Curative’s articles of incorporation, no changes since May
21, 2004, to Curative’s articles of incorporation, and a copy of the amended
and restated bylaws of Curative;

 

(xxxii)                                           a
certificate of an officer of CHSC certifying as to a copy of resolutions of the
Board of Directors of CHSC adopted April 13, 2004, incumbency with respect
to officers of CHSC, a copy of CHSC’s articles of incorporation, no changes
since April 16, 2004, to CHSC’s articles of incorporation, and a copy of
the amended and restated bylaws of CHSC;

 

(xxxiii)                                        a
certificate of an officer of eBioCare certifying as to a copy of the written
action of eBioCare adopted April 13, 2004, incumbency with respect to
officers of eBioCare, a copy of eBioCare’s certificate of incorporation, no
changes since April 16, 2004, to eBioCare’s certificate of incorporation,
and a copy of the bylaws of eBioCare;

 

(xxxiv)                                       a
certificate of an officer of Access certifying as to a copy of the written
action of Access adopted April 13, 2004, incumbency with respect to
officers of Access, a copy of Access’ charter, no changes since April 16,
2004, to Access’ charter, and a copy of the bylaws of Access;

 

(xxxv)                                          a
certificate of an officer of Apex certifying as to a copy of the written action
of Apex adopted April 13, 2004, incumbency with respect to officers of
Apex, a copy of Apex’s articles of incorporation, no changes since
April 19, 2004, to Apex’s articles of incorporation, and a copy of the
bylaws of Apex;

 

(xxxvi)                                       a
certificate of an officer of CHS certifying as to a copy of the written action
of CHS adopted April 13, 2004, incumbency with respect to officers of CHS,
a copy of CHS’ certificate of incorporation, no changes since April 16,
2004, to CHS’ certificate of incorporation, and a copy of the bylaws of CHS;

 

(xxxvii)                                    a
certificate of an officer of CNY certifying as to a copy of the written action
of CNY adopted April 13, 2004, incumbency with respect to officers of CNY,
a copy of CNY’s certificate of incorporation, no changes since April 19,
2004, to CNY’s certificate of incorporation, and a copy of the bylaws of CNY;

 

(xxxviii)                                 a
certificate of an officer of CCS certifying as to a copy of the written action
of CCS adopted April 13, 2004, incumbency with respect to officers of
CCS,  a copy of CCS’s certificate of
incorporation, no changes since April 16, 2004, to CCS’s certificate of
incorporation, and a copy of the bylaws of CCS;

 

8

 

(xxxix)                                         a
certificate of an officer of Optimal certifying as to a copy of the written
action of Optimal adopted April 13, 2004, incumbency with respect to
officers of Optimal, a copy of Optimal’s certificate of incorporation, no
changes since April 16, 2004, to Optimal’s certificate of incorporation,
and a copy of the bylaws of Optimal;

 

(xl)                                                        a
certificate of a manager of Infinity certifying as to a copy of the resolutions
of Infinity adopted April 13, 2004, incumbency with respect to officers of
Infinity, a copy of Infinity’s certificate of formation, no changes since
April 16, 2004, to Infinity’s certificate of formation, and a copy of the
limited liability company agreement of Infinity;

 

(xli)                                                     a
certificate of a manager of Infinity II certifying as to a copy of the
resolutions of Infinity II adopted April 13, 2004, incumbency with respect
to officers of Infinity II, a copy of Infinity II’s certificate of formation,
no changes since April 16, 2004, to Infinity II’s certificate of
formation, and a copy of the limited liability company agreement of Infinity
II;

 

(xlii)                                                  a
certificate of an officer of Infinity Infusion certifying as to a copy of the
written action of Infinity Infusion adopted April 13, 2004, incumbency
with respect to officers of Infinity Infusion, a copy of Infinity Infusion’s
articles of conversion, no changes since April 16, 2004, to Infinity
Infusion’s articles of conversion, and a copy of the agreement of limited
partnership of Infinity Infusion;

 

(xliii)                                               a
certificate of an officer of MedCare certifying as to a copy of the written
action of MedCare adopted April 13, 2004, incumbency with respect to
officers of MedCare, a copy of MedCare’s certificate of incorporation, no
changes since April 16, 2004, to MedCare’s certificate of incorporation,,
and a copy of the bylaws of MedCare;

 

(xliv)                                              a
certificate of an officer of CPS certifying as to a copy of the written action
of CPS adopted April 13, 2004, incumbency with respect to officers of CPS,
a copy of CPS’ certificate of incorporation, no changes since April 16,
2004, to CPS’ certificate of incorporation,, and a copy of the bylaws of CPS;

 

(xlv)                                                 a
certificate of an officer of CHSIII certifying as to a copy of resolutions of
the Board of Directors of CHSIII adopted April 13, 2004, incumbency with
respect to officers of CHSIII, a copy of CHSIII’s articles of incorporation, no
changes since April 16, 2004, to CHSIII’s articles of incorporation, and a
copy of the amended and restated bylaws of CHSIII; and

 

9

 

(xlvi)                                              an
Officer’s Certificate for Curative of even date with the Credit Agreement, executed
by Thomas Axmacher, the Chief Financial Officer of Curative, CHSC, CHSIII, CCS,
Apex and Infinity Infusion, the Treasurer of eBioCare, CHS, CNY, Infinity,
Infinity II, MedCare, Optimal and CPS, and Nancy F. Lanis, the Secretary and
Treasurer of Access.]

 

In addition, as to
questions of fact material to the opinions hereinafter expressed, we have, when
relevant facts were not independently established by us, relied upon
certificates and opinions of the Credit Parties, their attorneys and their
officers, and of public officials.  We
have not independently examined the records of any court or public office in
any jurisdiction, and our opinion is subject to matters which examination of
such records would reveal.  Without
limiting the generality of the foregoing, we have relied upon certificates of
officers of the Credit Parties referenced in items (xxix) to (xliii), above,
and the representations contained therein with respect to factual matters, and
we have assumed that all such representations are true and correct as of the
date of this opinion.

 

Our opinions expressed
below as to certain factual matters are qualified as being limited “to our
actual knowledge” or by other words to the same or similar effect.  Such words, as used herein, mean that prior
to or during the course of this firm’s representation of the Credit Parties in
connection with the specific transactions contemplated by the Loan Documents,
no contrary information came to the attention of L. Joseph Genereux, Timothy S.
Hearn, or Andrew R. Toftey, the attorneys in our firm who have principally
represented the Credit Parties in connection with the transactions contemplated
by the Loan Documents and the preparation of this opinion.  In rendering such opinions, we have not
conducted any independent investigation of the Credit Parties or consulted with
other attorneys in our firm with respect to the matters covered thereby.  No inference as to our knowledge with
respect to the factual matters upon which we have so qualified our opinions
should be drawn from the fact of our representation of the Credit Parties.

 

In rendering the opinions
expressed below, we have assumed, with the Agent’s and the Lenders’ permission
and without verification:

 

(a)                                  the
authenticity of all documents submitted to us as originals,

 

(b)                                 the
genuineness of all signatures, other than those of officers of the Credit
Parties, which we have determined to be genuine solely on the basis of the
certificates described in paragraphs (xxxi) to (xlvi), above,

 

(c)                                  the
legal capacity of natural persons,

 

10

 

(d)                                 the
conformity to originals of all documents submitted to us as copies and the
authenticity of the originals of such copies,

 

(e)                                  that
all conditions precedent to the effectiveness of the Loan Documents have been
satisfied or waived,

 

(f)                                    that
the Financing Statements contain the current address of the Agent from which
information concerning the Agent’s security interest in the Collateral, as such
term is defined in the Security Agreement (hereinafter, the “Collateral”) can be obtained,

 

(g)                                 that
each Credit Party has rights in the Collateral in which it is granting a
security interest,

 

(h)                                 solely
with respect to our opinion in paragraph 8, below, that Curative is engaged in
the business of being a holding company; that CHSC is engaged in the business
of being a holding company and in the business of providing wound care
services; that eBioCare is engaged in the business of providing specialty
pharmacy services; that Access is engaged in the business of providing
specialty pharmacy services; that Apex is engaged in the business of providing
specialty pharmacy products and services; that Infinity Infusion is engaged in
the business of distributing specialty pharmaceutical products and providing
infusion therapy services; that CNY is engaged in the business of providing
specialty pharmacy and home infusion products and services; that CCS is engaged
in the business of providing infusion therapy services; that Infinity I and
Infinity II are engaged in the business of holding the partnership interests of
Infinity Infusion Care, Ltd., a Texas limited partnership; that Optimal is
engaged in the business of providing specialty pharmacy services; that MedCare
is engaged in the business of providing specialty pharmacy services; that CPS
is engaged in the business of providing specialty pharmacy services; that CHS
is engaged in the business of owning and licensing intellectual property; that
CHSIII is engaged in the permitted business of consummating the Permitted
Restructuring, as such term is defined in the Credit Agreement, and

 

(i)                                     that
the Loan Documents constitute the valid, binding and enforceable obligations of
the parties thereto other than the Credit Parties.

 

Based upon the foregoing
and upon such investigation as we have deemed necessary, and subject to the
qualifications set forth below, we are of the opinion that:

 

11

 

1.               Curative is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Minnesota.  CHSC is
a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Minnesota, and is in good standing as a foreign
corporation under the laws of the States of California and New York.  eBioCare is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and is in good standing as a foreign corporation under the laws of the State of
California.  Access is a corporation
validly existing and in good standing under the laws of the State of
Tennessee.  Apex is a corporation
validly existing and in good standing under the laws of the State of
California, and is in good standing as a foreign corporation under the laws of
the State of Louisiana.  CHS is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.  CNY is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of New York.  CCS is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware.  Optimal
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware, and is in good standing as a foreign
corporation under the laws of the State of Virginia.  Infinity is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware, and is
in good standing as a foreign company under the laws of the State of
Texas.  Infinity II is a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware, and is in good standing as a foreign company
under the laws of the State of Texas. 
Infinity Infusion is a limited partnership validly existing and in good
standing under the laws of the State of Texas. 
MedCare is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and is in good standing as a
foreign corporation under the laws of the States of Alabama, Florida and
Mississippi.  CPS is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware.  CHSIII is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Minnesota.

 

2.               Each of Curative,
eBioCare, CHS, CNY, Optimal, MedCare, CPS and CHSIII has the corporate power to
own its property, to carry on its business as now conducted and to execute,
deliver and perform each of the Loan Documents to which it is a party, and has
taken all requisite corporate action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party.

 

3.               Each of Infinity
and Infinity II has the company power to own its property, to carry on its
business as now conducted and to execute, deliver and perform the Loan
Documents to which it is a party, and has taken all requisite company action to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party.

 

4.               Access has taken
all requisite corporate action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party.

 

12

 

5.               Infinity Infusion
has taken all requisite partnership action to authorize the execution, delivery
and performance of the Loan Documents to which it is a party.

 

6.               Assuming (i) Apex
has the requisite corporate power and authority to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California, (ii) such acts and activities do not include the banking
business, the trust company business or the practice of a profession permitted
to be incorporated by the California Corporations Code, and (iii) the execution
and delivery of each of the Loan Documents to which Apex is a party have been
duly authorized by all necessary corporate action on the part of Apex, Apex has
the requisite corporate power to perform, and has authorized the performance
of, its obligations under the Loan Documents to which it is a party.

 

7.               CCS has the
requisite corporate power to perform, and has authorized the performance of,
its obligations under the Loan Documents to which it is a party.

 

8.               The execution and
delivery of the Loan Documents executed by the Credit Parties and the borrowing
and repayment of debt and providing of security for such borrowing pursuant to
the Loan Documents (i) will not violate or cause a breach of any statute of the
United States, the State of New York, the State of Minnesota, the Delaware
General Corporation Law or the Delaware Limited Liability Company Act, or any
rule or regulation of any governmental authority or regulatory body of the
United States, the State of New York or the State of Minnesota, or any
judgment, order or decree known to us and applicable to the Credit Parties of
any court, governmental authority or arbitrator, (ii) will not violate or cause
a breach of any provision of the respective certificates or articles of
incorporation, bylaws, limited liability company agreements or partnership
agreements of the Credit Parties, or (iii) will not violate or cause a breach
of the agreements and instruments of the Credit Parties set forth on Exhibit C
hereto (other than violations of any financial test or covenant contained in
the agreements and instruments of the Credit Parties set forth on Exhibit C
hereto as to which we render no opinion) except that the execution, delivery,
and performance of the CCS Security Agreement may violate provisions of the
Agreements identified in Items 2, 4, 9, 10, 11, 14, and 16 set forth on Exhibit
C hereto.

 

9.               No consent,
approval, authorization of, or registration or filing with, any New York,
Minnesota or federal governmental authority, or under the Delaware General
Corporation Law or the Delaware Limited Liability Company Act, is required to
be obtained or made by any Credit Party in connection with the due execution,
delivery and performance of any Loan Document, except such as have been
obtained or made, and except for each filing and recordation required to
perfect the Agent’s security interest in the Collateral and other property of
the Credit Parties securing the Credit Parties’ obligations to the Agent and
the Lenders.

 

13

 

10.         To our actual knowledge,
except as disclosed in Disclosure Schedule 4.7 to the Credit Agreement,
there are no judgments outstanding against any Credit Party.  We have not been retained to represent any
Credit Party with respect to any pending or threatened litigation, other than
certain of the matters disclosed in Disclosure Schedule 4.7 to the Credit
Agreement.

 

11.         Each of the Loan
Documents to which a Credit Party is a party constitutes the valid and binding
obligations of such Credit Party, enforceable against it in accordance with its
terms.

 

12.         The Curative Security
Agreement creates a valid security interest in the Collateral granted by
Curative in favor of the Agent to secure the Obligations, as such term is
defined in the Credit Agreement (the “Obligations”).  Under Article 9 of the Uniform
Commercial Code as enacted in the State of New York, N.Y. U.C.C. Law
§ 9-101 et seq. (2001) (the “New York UCC”), the State of Minnesota
is the proper jurisdiction in which to file a financing statement to perfect
the Agent’s security interest in the Collateral in which a security interest is
granted by Curative to the Agent.  The  Financing Statement which designates
Curative as debtor is sufficient in form for filing with the Minnesota
Secretary of State and, upon such filing, will perfect the Agent’s security
interest in the Collateral in which a security interest is granted by Curative
to the Agent to the extent a security interest in such Collateral may be
perfected under Article 9 of the Uniform Commercial Code as enacted in the
State of Minnesota, Minn. Stat. §§ 336.9-101, et seq. (2001) (the
“Minnesota UCC”) by filing financing statements in the State of Minnesota.

 

13.         The CCS Security
Agreement creates a valid security interest in the Collateral granted by CCS in
favor of the Agent to secure the Obligations. 
Under Article 9 of the New York UCC, the State of Delaware is the proper
jurisdiction in which to file a financing statement to perfect the Agent’s
security interest in the Collateral in which a security interest is granted by
CCS to the Agent. .  The  Financing Statement which designates CCS
as debtor is sufficient in form for filing with the Delaware Secretary of State
and, upon such filing, will perfect the Agent’s security interest in the
Collateral in which CCS has granted a security interest to the Agent to the
extent a security interest in such Collateral may be perfected under the
Uniform Commercial Code as enacted in the State of Delaware, Del. Code Ann.
tit. 6, § 9-101 et  seq. (2001), as set forth in 2 Secured
Transactions Guide (CCH) the (“2 CCH Secured Transactions Guide”) at ¶ 13,579 et
seq. (2001) (the “Delaware UCC”) by filing financing statements in the
State of Delaware.  The CCS Intellectual
Property Security Agreement is sufficient to grant to the Agent a security
interest in those registered trademarks, patents and registered copyrights of
CCS covered thereby.

 

14.         Under Article 9 of
the New York UCC, the State of Delaware is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which eBioCare has granted a security interest to the Agent.  The  Financing
Statement which designates  eBioCare as
debtor is sufficient in form for filing with the Delaware

 

14

 

Secretary of State and,
upon such filing, will perfect the Agent’s security interest in the Collateral
in which eBioCare has granted a security interest to the Agent to the extent a
security interest in such Collateral may be perfected under the Delaware UCC by
filing financing statements in the State of Delaware.

 

15.         Under Article 9 of
the New York UCC, the State of Tennessee is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which Access has granted a security interest to the Agent.  The  Financing
Statement which designates Access as debtor is sufficient in form for filing
with the Tennessee Secretary of State and, upon such filing, will perfect the
Agent’s security interest in the Collateral in which Access has granted a
security interest to the Agent to the extent a security interest in such
Collateral may be perfected under the Uniform Commercial Code as enacted in the
State of Tennessee, Tenn. Code Ann., § 47-9-101 et seq. (2001), as
set forth in 6 Secured Transactions Guide (CCH) (the “6 CCH Secured
Transactions Guide”) at ¶ 49,591 et seq. (2001) (the “Tennessee
UCC”) by filing financing statements in the State of Tennessee.

 

16.         Under Article 9 of
the New York UCC, the State of California is the proper jurisdiction in which
to file a financing statement to perfect the Agent’s security interest in the
Collateral in which Apex has granted a security interest to the Agent.  The  Financing
Statement which designates Apex as debtor is sufficient in form for filing with
the California Secretary of State and, upon such filing, will perfect the Agent’s
security interest in the Collateral in which Apex has granted a security
interest to the Agent to the extent a security interest in such Collateral may
be perfected under the Uniform Commercial Code as enacted in the State of
California, Cal. Com. Code Ann., § 9101 et seq. (2001), as set
forth in 2 Secured Transactions Guide (CCH) (the “2 CCH Secured Transactions
Guide”) at ¶ 10,591 et seq. (2001) (the “California UCC”) by filing
financing statements in the State of California.

 

17.         Under Article 9 of
the New York UCC, the State of Delaware is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which CHS has granted a security interest to the Agent.  The  Financing
Statement which designates CHS as debtor is sufficient in form for filing with
the Delaware Secretary of State and, upon such filing, will perfect the Agent’s
security interest in the Collateral in which CHS has granted a security
interest to the Agent to the extent a security interest in such Collateral may
be perfected under the Delaware UCC by filing financing statements in the State
of Delaware.

 

18.         Under Article 9 of
the New York UCC, the State of New York is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which CNY has granted a security interest to the Agent.  The  Financing
Statement which designates CNY as debtor is sufficient in form for filing with
the New York Secretary of State and, upon such filing, will perfect the Agent’s
security interest in the Collateral in which

 

15

 

CNY has granted a
security interest to the Agent to the extent a security interest in such
Collateral may be perfected under the New York UCC.

 

19.         Under Article 9 of
the New York UCC, the State of Delaware is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral of Optimal.  The  Financing Statement which designates
Optimal as debtor is sufficient in form for filing with the Delaware Secretary
of State and, upon such filing, will perfect the Agent’s security interest in
the Collateral in which Optimal has granted a security interest to the Agent to
the extent a security interest in such Collateral may be perfected under the
Delaware UCC by filing financing statements in the State of Delaware.

 

20.         Under Article 9 of
the New York UCC, the State of Delaware is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which Infinity has granted a security interest to the Agent.  The  Financing
Statement which designates Infinity as debtor is sufficient in form for filing
with the Delaware Secretary of State and, upon such filing, will perfect the
Agent’s security interest in the Collateral in which Infinity has granted a
security interest to the Agent to the extent a security interest in such
Collateral may be perfected under  the
Delaware UCC by filing financing statements in the State of Delaware.

 

21.         Under Article 9 of
the New York UCC, the State of Delaware is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which Infinity II has granted a security interest to the
Agent.  The  Financing Statement which designates Infinity II as debtor is
sufficient in form for filing with the Delaware Secretary of State and, upon
such filing, will perfect the Agent’s security interest in the Collateral in
which Infinity II has granted a security interest to the Agent to the extent a
security interest in such Collateral may be perfected under the Delaware UCC by
filing financing statements in the State of Delaware.

 

22.         Under Article 9 of
the New York UCC, the State of Texas is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which Infinity Infusion has granted a security interest to the
Agent .  The  Financing Statement which designates Infinity Infusion as
debtor is sufficient in form for filing with the Texas Secretary of State and,
upon such filing, will perfect the Agent’s security interest in the Collateral
in which Infinity Infusion has granted a security interest to the Agent to the
extent a security interest in such Collateral may be perfected under the
Uniform Commercial Code as enacted in the State of Texas, Tex. Bus. & Comm.
Code Ann. § 9.101 et seq. (2001), as set forth in 6 Secured
Transactions Guide (CCH) (the “6 CCH Secured Transactions Guide”) at
¶ 50,531 et seq. (2001) (the “Texas UCC”) by filing financing
statements in the State of Texas.

 

16

 

23.         Under Article 9 of
the New York UCC, the State of Delaware is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which MedCare has granted a security interest to the Agent.  The  Financing
Statement which designates MedCare as debtor is sufficient in form for filing
with the Delaware Secretary of State and, upon such filing, will perfect the
Agent’s security interest in the Collateral in which MedCare has granted a
security interest to the Agent to the extent a security interest in such Collateral
may be perfected under the Delaware UCC by filing financing statements in the
State of Delaware.

 

24.         Under Article 9 of
the New York UCC, the State of Delaware is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which CPS has granted a security interest to the Agent.  The  Financing
Statement which designates CPS as debtor is sufficient in form for filing with
the Delaware Secretary of State and, upon such filing, will perfect the Agent’s
security interest in the Collateral in which CPS has granted a security
interest to the Agent to the extent a security interest in such Collateral may
be perfected under the Delaware UCC by filing financing statements in the State
of Delaware.

 

25.         Under Article 9 of
the New York UCC, the State of Minnesota is the proper jurisdiction in which to
file a financing statement to perfect the Agent’s security interest in the
Collateral in which a security interest is granted by CHSIII to the Agent.  The  Financing
Statement which designates CHSIII as debtor is sufficient in form for filing
with the Minnesota Secretary of State and, upon such filing, will perfect the
Agent’s security interest in the Collateral in which a security interest is
granted by CHSIII to the Agent to the extent a security interest in such
Collateral may be perfected under the “Minnesota UCC” by filing financing
statements in the State of Minnesota.

 

26.         The Curative Pledge
Agreement creates a valid security interest in the shares of stock of CNY, CCS,
and CHSC described in the Pledge Agreement (the “Curative Pledged Assets”) in favor of the Agent to secure the
Obligations.  Under Article 9 of
the New York UCC, assuming the Agent is not acting as an agent for any Credit
Party, the Agent has taken and is retaining possession of the certificates
evidencing the Curative Pledged Assets, together with properly completed powers
endorsing or transferring the Pledged Assets and executed by the Credit Party
which owns such certificates and respective Curative Pledged Assets, and that
the Agent has taken the Curative Pledged Assets in good faith without notice of
any adverse claim within the meaning of the New York UCC, there has been
created under the Curative Pledge Agreement, and there has been granted to the
Agent a valid and perfected security interest in the Curative Pledged Assets,
with the consequence of perfection by control accorded by the New York UCC.

 

17

 

27.         None of the Credit Parties
is a “holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of a “holding company” within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

 

28.         None of the Credit
Parties is an “investment company” or a company controlled by an “investment
company” within the meaning of the Investment Company Act of 1940.

 

29.         The payment by the Credit
Parties and receipt by the Agent for the account of the Lenders entitled
thereto of all principal and interest required to be paid pursuant to the terms
of the Notes and the other Loan Documents (including without limitation the
provisions for interest after default and late charges) will not violate the
usury laws of the State of New York.

 

SCOPE OF OPINION

 

Our opinions set forth
above are further subject to the following additional qualifications:

 

(a)                                  Our
opinions expressed above are limited to the law of the States of Minnesota and
New York, the Delaware General Corporation Law, the Delaware Limited Liability
Company Act and the federal laws of the United States of America.  Solely with respect to certain of the
opinions set forth in paragraphs 13, 14, 17, 19, 20, 21, 23 and 24 above, our
opinion is also based on the Delaware UCC, as compiled in the 2 CCH Secured
Transactions Guide as updated in our records through April 22, 2004.  No opinion set forth in paragraphs 13, 14,
17, 19, 20, 21, 23 and 24, above, is given with respect to the constitution or
statutes of Delaware, other than the Delaware UCC, with respect to cases
decided under the Delaware UCC or other laws of the State of Delaware, or with
respect to any provision of the Delaware UCC that has been amended subsequent
to, or differs from, the compilations thereof in the 2 CCH Secured Transactions
Guide as updated in our records through April 22, 2004.  Solely with respect to certain of the
opinions set forth in paragraph 15, above, our opinion is also based on the
Tennessee UCC, as compiled in the 6 CCH Secured Transactions Guide as updated
in our records through April 22, 2004. 
No opinion set forth in paragraph 15, above, is given with respect to
the constitution or statutes of Tennessee, other than the Tennessee UCC, with
respect to cases decided under the Tennessee UCC or other laws of the State of
Tennessee, or with respect to any provision of the Tennessee UCC that has been
amended subsequent to, or differs from, the compilations thereof in the 6 CCH
Secured Transactions Guide as updated in our records through April 22,
2004.  Solely with respect to certain of
the opinions set forth in paragraph 16, above, our opinion is also based on the
California UCC, as compiled in the 2 CCH Secured Transactions Guide as updated
in our records through April 22, 2004. 
No opinion set forth in paragraph 16, above, is given with respect to
the constitution or statutes of California, other than the California UCC, with
respect to cases decided under the California UCC or other laws of the State of
California, or with respect to any provision of the California UCC that has
been amended subsequent to, or differs from, the compilations thereof in the 2
CCH Secured

 

18

 

Transactions Guide as
updated in our records through April 22, 2004.  Solely with respect to certain of the opinions set forth in
paragraph 22, above, our opinion is also based on the Texas UCC, as compiled in
the 6 CCH Secured Transactions Guide as updated in our records through
April 22, 2004.  No opinion set
forth in paragraph 22 , above, is
given with respect to the constitution or statutes of Texas, other than the
Texas UCC, with respect to cases decided under the Texas UCC or other laws of
the State of Texas, or with respect to any provision of the Texas UCC that has
been amended subsequent to, or differs from, the compilations thereof in the 6
CCH Secured Transactions Guide as updated in our records through April 22,
2004.

 

(b)                                 Our
opinions are subject to the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, fraudulent transfer, statutes of limitation, or other
similar laws and judicial decisions affecting or relating to the rights of
creditors generally, and are further subject to the effect of general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, estoppel, election of remedies and
other similar doctrines affecting the enforcement of agreements generally
(regardless of whether enforcement is considered in a proceeding at law or in
equity).  In addition, the availability
of specific performance, injunctive relief, the appointment of a receiver or
other equitable remedies is subject to the discretion of the tribunal before
which any proceeding therefor may be brought.

 

(c)                                  Our
opinions expressed above assume that all of the Loan Documents are dated
April 23, 2004, unless otherwise stated on Exhibit A hereto.

 

(d)                                 Our
opinions are further subject to other laws and judicial decisions affecting the
rights of creditors and secured creditors generally, including, without
limitation, the following:

 

(i)                                     We
express no opinion as to the enforceability of provisions of the Loan Documents
to the extent they contain:

 

(A)                              forum
selection provisions,

 

(B)                                grants
to the Agent or any Lender of powers of attorney,

 

(C)                                cumulative
remedies to the extent such cumulative remedies purport to compensate, or would
have the effect of compensating, the party entitled to the benefits thereof in
an amount in excess of the actual loss suffered by such party,

 

(D)                               obligations
of a Credit Party to pay any prepayment premium, default interest rate, early
termination fee or other form of liquidated damages, if the payment of such
premium, interest rate, fee or damages may be construed as unreasonable in
relation to actual damages

 

19

 

or disproportionate to
actual damages suffered by the Agent or any Lender as a result of such
prepayment, default or termination,

 

(E)                                 terms
which excuse any person or entity from liability for, or require a Credit Party
to indemnify such person or entity against such person’s or entity’s gross
negligence or willful misconduct,

 

(F)                                 terms
purporting to establish evidentiary standards, or

 

(G)                                terms
to the effect that provisions in the Loan Documents may not be waived or
modified except in writing may be limited under certain circumstances.

 

(ii)                                  Certain
waivers of notices and other rights and remedial provisions contained in the
Loan Documents, including waivers by a Credit Party of any statutory or
constitutional rights or remedies, may be unenforceable under applicable law,
but the Loan Documents contain adequate other provisions for enforcing payment
of the obligations evidenced, guaranteed or secured thereby and for the
practical realization of the security and other rights and remedies afforded
thereby, and the inclusion of such waivers, rights and remedial provisions in
the Loan Documents does not affect the legality, validity or binding effect of
such Loan Documents or affect the enforceability of the other provisions of the
Loan Documents.

 

(iii)                               The
enforceability of the remedies, covenants or other provisions of the Loan
Documents and the availability of equitable remedies may be limited where:

 

(A)                              the
enforcement of such remedies, covenants or provisions under the circumstances,
or the manner of such enforcement, would violate the implied covenant of good
faith and fair dealing of the Lender under the Financing Documents or would be
commercially unreasonable;

 

(B)                                a
court having competent personal and subject matter jurisdiction finds that such
remedies, covenants or provisions were at the time made, or are in application,
unconscionable as a matter of law or public policy;  or

 

(C)                                the
enforcement of specific rights under the Loan Documents may require a judgment
or decree of a court of competent jurisdiction after prior notice to the Credit
Parties, and an opportunity for the Credit Parties to be heard by an
appropriate tribunal.

 

(iv)                              The
grant of a security interest in collateral under the Loan Documents, or the
transfer of rights in such security interest or collateral may, in some
instances, require

 

20

 

or be conditioned upon
receipt of consent of third parties, but such requirements or conditions may
not be effective as to assignments or grants of security interests in certain
types of collateral, including accounts, chattel paper, certain general
intangibles, health-care insurance receivables, payment intangibles, promissory
notes, leasehold or landlord’s residual interests and letter of credit rights,
as provided in Sections 9-404 through 9-409 of the New York UCC;

 

(v)                                 Restrictions
in the Loan Documents on the voluntary or involuntary transfer of a person’s
rights in such person’s assets may be limited as provided in Section 9-401
of the New York UCC;

 

(vi)                              The
rights of debtors, guarantors and other secured parties to receive notices
under Section 9-611 of the New York UCC and certain other rights of the
debtor as specified in Section 9-602 of the New York UCC may not be varied
or waived, subject to Section 9-624 of the New York UCC; and

 

(vii)                           We
express no opinion as to whether the choice of law provisions of the Loan
Documents would be enforced by any court other than a court of the State of New
York; and

 

(viii)                        Notwithstanding
any language of the Loan Documents to the contrary, the Agent and Lenders may
be limited to recovery of only reasonable expenses, including, without
limitation, reasonable attorneys’ fees and legal expenses, with respect to the
retaking, holding, preparing for sale, selling, pledging, hypothecating or
otherwise transferring collateral.

 

(e)                                  Our
opinions in paragraph 10, above, insofar as they relate to the enforceability
of indemnification provisions set forth in the Loan Documents, are subject to
the effect of federal and state securities laws and public policy relating
thereto.  In addition, certain cases in
the Federal District Courts have called into question the enforceability of
private contractual agreements allocating financial responsibility under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(“CERCLA”) as between parties who are potentially responsible parties under
CERCLA, and the reasoning in such cases could be utilized by parties attempting
to avoid indemnity liability under both CERCLA and state environmental statutes
which may contain similar language respecting indemnity agreements.

 

(f)                                    Our
opinions in paragraphs 12-26, above, as to perfection of the security interest
of the Agent in the Collateral and the Curative Pledged Assets (collectively,
the “Pledged Collateral”) are
further subject to the following additional qualifications:

 

21

 

(i)                                     we
express no opinion as to Pledged Collateral which consists of or will consist
of consumer goods or accounts resulting from the sale thereof, beneficial
interests in a trust or decedent’s estate, deposit accounts, commercial tort
claims, letters of credit or letter of credit rights, goods subject to
certificates of title (including, without limitation, motor vehicles),
fixtures, equipment to be used in farming operations, farm products,
agricultural or farm property, accounts or general intangibles arising from or
relating to the sale of farm products, crops, timber, minerals, oil, gas or the
like, or items which are subject to a statute or treaty of the United States
which provides for a national or international certificate of title for the
perfection of a security interest therein or which specifies a place of filing
different from that specified in the New York UCC, the Minnesota UCC, the
Delaware UCC, the Tennessee UCC, the California UCC or the Texas UCC for filing
to perfect such security interest, or in the case of the sale of any of the
foregoing, accounts, promissory notes or general intangibles arising with
respect thereto;

 

(ii)                                  we
express no opinion as to matters excluded from Article 9 of the New York
UCC by Section 9-109 of the New York UCC, Article 9 of the Minnesota
UCC by Section 336.9-109 of the Minnesota UCC, Article 9 of the
Delaware UCC by Section 9-109 of the Delaware UCC, Article 9 of the
Tennessee UCC by Section 47-9-109 of the Tennessee UCC, Division 9 of the
California UCC by Section 9109 of the California UCC or Article 9 of
the Texas UCC by Section 9.109 of the Texas UCC;

 

(iii)                               the
effect of Section 9-315 of the New York UCC, Section 336.9-315 of the
Minnesota UCC, Section 9-315 of the Delaware UCC, Section 47-9-315 of
the Tennessee UCC, Section 9315 of the California UCC or Section 9.315
of the Texas UCC as to proceeds of Pledged Collateral, and Sections 9-320 and
9-330 of the New York UCC, Sections 336.9-320 and 336.9-330 of the Minnesota
UCC, Sections 9-320 and 9-330 of the Delaware UCC, Sections 47-9-320 and
47-9-330 of the Tennessee UCC, Sections 9320 and 9330 of the California UCC, or
Sections 9.320 and 9.330 of the Texas UCC as to buyers and purchasers of
Pledged Collateral in certain circumstances;

 

(iv)                              the
requirement that continuation statements with respect to the Financing
Statements be filed within six months prior to the fifth, tenth, fifteenth,
etc. anniversaries of the original filing of the Financing Statements;

 

(v)                                 the
security interest of the Agent and the Lenders in the Pledged Collateral in
which a Credit Party has granted a security interest to the Agent may become
unperfected if such Credit Party changes its name, jurisdiction of formation or
its status therein, or identity or entity structure;

 

22

 

(vi)                              we
express no opinion as to the validity or perfection of any security interest
purported to be assumed or granted in that portion of Pledged Collateral that
constitutes an interest or claim in or under a policy of insurance (except with
respect to health-care-insurance receivables and with respect to proceeds
thereof as provided in Section 9-315 of the New York UCC,
Section 336.9-315 of the Minnesota UCC, Section 9-315 of the Delaware
UCC, Section 47-9-315 of the Tennessee UCC, Section 9315 of the
California UCC or Section 9.315 of the Texas UCC), a right represented by
a judgment, a right of setoff, a claim arising out of tort or an interest in
any deposit account (except with respect to proceeds thereof as provided in
Section 9-315 of the New York UCC, Section 336.9-315 of the Minnesota
UCC, Section 9-315 of the Delaware UCC, Section 47-9-315 of the
Tennessee UCC, Section 9315 of the California UCC or Section 9.315 of
the Texas UCC);

 

(vii)                           in the
case of Pledged Collateral consisting of money (as such term is defined in the
New York UCC) not constituting part of a chattel paper (as such term is defined
in the New York UCC), the security interest granted pursuant to the Security
Agreement cannot be perfected by filing the Financing Statements but can only be
perfected if possession thereof is obtained;

 

(viii)                        we express
no opinion with respect to the perfection of the Agent’s security interest in
any patents, patent applications, patents pending, copyrights, trademarks,
trade names, trademark registrations or other interests subject to federal
patent, trademark or copyright laws; and

 

(ix)                                except
for the opinions expressed in paragraph 26, above, as to perfection by control
of the Curative Pledged Assets, we express no opinion with respect to the
perfection of the Agent’s security interest in any Pledged Collateral which may
only be perfected by “control” within the meaning given to such term in the
Minnesota UCC, Delaware UCC, Tennessee UCC, New York UCC, California UCC or
Texas UCC.

 

(g)                                 We
express no opinion concerning any Credit Party’s rights in or title to, or the
priority of any security interest, pledge, lien, or other similar interest in,
any personal property, or the creation, perfection or priority of any lien,
mortgage or other similar interest in any real property.

 

(h)                                 We
express no opinion as to compliance or the effect of noncompliance by the Agent
or any Lender with any state or federal laws or regulations applicable to the
Agent or any Lender in connection with the transactions described in the Loan
Documents.

 

23

 

(i)                                     Our
opinions in paragraph 11, above, are subject to the defenses available to a
co-borrower or guarantor under applicable law, but the waivers of such defenses
set forth in the Loan Documents are enforceable, subject to the other
exceptions set forth herein.

 

(j)                                     Our
opinions with respect to Access’ valid existence as a corporation and its good
standing in paragraph 1, above, are based solely on the certificate of good
standing and the certificate of existence referenced in items (iv) and (xxiv)
at pages 2-4, above.  Our opinions with
respect to Apex’s valid existence as a corporation and its good standing in
paragraph 1, above, are based solely on the certificates of good standing and
the certificate of incorporation referenced in items (v) and (xvii) at pages
2-4, above.  Our opinions with respect
to CCS’s valid existence as a corporation and its good standing in paragraph 1,
above, are based solely on the certificates of good standing and the
certificate of incorporation referenced in items (viii) and (xxii) at pages
2-4, above.  Our opinions with respect
to Infinity Infusion’s valid existence as a limited partnership and its good
standing in paragraph 1, above, are based solely on the certificate of
authority and the articles of conversion referenced in items (xii) and (xxvii)
at pages 3-4, above.

 

(k)                                  Our
opinions assume that each of Access, Apex, CCS and Infinity Infusion is duly
incorporated or organized under the laws of the state of its organization and
has sufficient corporate or partnership power to conduct any lawful business
activity, including entering into the Loan Documents to which it is a party.

 

This opinion is in
addition to our opinions to the Agent dated June 9, 2003 and July 30,
2003 (collectively, the “Existing Opinions”) which remain in full force and
effect, subject to the assumptions, qualifications, and limitations set forth
therein, provided that we advise you that our opinion as to the enforceability
of the “Loan Documents”, as such term is defined in each of the Existing
Opinions, shall be deemed to include the enforceability of such Loan Documents
as modified as of the date of this opinion by the applicable terms of the
Reaffirmation Agreement, subject to the assumptions, qualifications, and
limitations with respect to enforceability set forth in the Existing Opinions.

 

The opinions expressed
herein are based on an analysis of existing laws and court decisions and cover
certain matters not directly addressed by such authorities.  This opinion is solely for the benefit of
the addressees hereof in connection with the transaction described in the first
paragraph of this letter, may not be relied upon by the addressee hereof for
any other purpose, and may not be relied upon or used by, circulated, quoted,
or referred to, nor may copies hereof be delivered to, another person, other
than the Agent and Lenders’ participants and assigns permitted under the Credit
Agreement, for any purpose without our prior written approval.  We disclaim any obligation to update this
opinion letter for events occurring or coming to our attention, or any changes
in the law taking effect, after the date hereof.

 

24

 

Very truly yours,

 

 

LJG/TSH

 

25

 

EXHIBIT A

Opinion of Dorsey & Whitney LLP

April 23, 2004

 

LOAN DOCUMENTS

 

Unless otherwise stated,
the following instruments and agreements are dated April 23, 2004:

 

1.                                       Reaffirmation
Agreement by and between Curative, eBioCare, Access, Apex, CHS, CNY, Optimal,
Infinity, Infinity II, Infinity Infusion, MedCare, CPS, CHSC, CHSIII and the
Agent (the “Reaffirmation Agreement”)

 

2.                                       $40,000,000
Revolving Note by the Credit Parties payable to the Agent.

 

3.                                       $5,000,000
Swingline Note by Credit Parties payable to the Agent.

 

4.                                       Amended
and Restated Security Agreement by and between Curative and Agent (the
“Security Agreement”).

 

5.                                       Security
Agreement by and between CCS and Agent (the “CCS Security Agreement”).

 

6.                                       Intellectual
Property Security Agreement by CCS in favor of the Agent (the “CCS Intellectual
Property Security Agreement”).

 

7.                                       Amended
and Restated Pledge Agreement by Curative in favor of Agent. (the “Pledge
Agreement”)

 

8.                                       Master
Agreement for Standby Letters of Credit, by and between Curative and the Agent.

 

9.                                       Master
Agreement for Documentary Letters of Credit, by and between Curative and the
Agent.

 

10.                                 Post
Closing Letter Agreement by and between the Curative and the Agent.

 

11.                                 Assignment
of Representations, Warranties, Covenants and Indemnities by and between
Curative and the Agent.

 

12.                                 Business
Associate Agreement by and between CCS and the Agent.

 

The documents described
in items 2 and 3, above, are referred to herein collectively as the “Notes.”

 

 

EXHIBIT B

Opinion of Dorsey & Whitney LLP

April 23, 2004

 

UCC FINANCING
STATEMENTS

 

 

EXHIBIT C

Opinion of Dorsey & Whitney LLP

April 23, 2004

 

SPECIFIC
AGREEMENTS AND INSTRUMENTS

 

1.               The Agreements and
Instruments listed as exhibits to, or incorporated by reference in, the Form
10-K filed by Curative for the year ended December 31, 2003, and any
filing by Curative under the Securities Exchange Act after such Form 10-K was
so filed, which additional filing was made prior to April 23, 2004.

 

2.               Lease Agreement,
dated August 4, 1996, First Amendment to Lease Agreement dated
June 4, 2001, Second Amendment to Lease Agreement (undated), and Third
Amendment to Lease Agreement dated November 7, 2003, between K/B
Opportunity Fund L.L.P. and Critical Care Systems, Inc.

 

3.               Lease Agreement,
dated October 1, 2003, between Hampstead Associates, LLC and Critical Care
Services, Inc.

 

4.               Lease Agreement,
dated May 5, 1992, between Ticonderoga Company and Critical Care Services, Inc.

 

5.               Lease Agreement,
dated November 1, 1991, between CSL Birmingham Associates and CCS, First
Amendment to Lease Agreement dated June 9, 1997 between CSL Colonnade
Associates as successor to CSL Birmingham Associates, and Critical Care
Systems, Inc., and Second Amendment to Lease Agreement dated November 21,
2002 between The Stewart Organization, Inc., as successor to CSL Colonnade
Associates, and Critical Care Systems, Inc.

 

6.               Lease Agreement,
with start date of July 10, 2000, between Apparel Realty Trust and
Critical Care Systems, Inc.

 

7.               Lease Agreement,
dated January 8, 2004, between MIE Properties, Inc. and Critical Care
Systems, Inc.

 

8.               Lease Agreement,
dated April 24, 2002, between Johnny Ribeiro and Critical Care Systems,
Inc.

 

9.               Lease Agreement,
dated May 10, 2002, First Amendment to Lease Agreement dated June 20,
2002, and Second Amendment to Lease Agreement dated February 12, 2003,
between Carleton Investors, L.L.C. and Critical Care Systems, Inc.

 

10.         Lease Agreement, dated
July 31, 2000, between Riggs & Company as Trustee of the
Multi-Employer Property Trust and Critical Care Systems, Inc.

 

11.         Lease Agreement, dated
June 1, 2003, between Lemar Crossing Limited and Critical Care Systems,
Inc.

 

 

12.         Lease Agreement, dated
November 30, 2000, between Slough Estates USA Inc., and Infusion Care
Systems, Inc.

 

13.         Lease Agreement, dated
October 31, 2000, between Columbia Properties LLC, and Infusion Care
Systems, Inc.

 

14.         Lease Agreement, dated
November 2000, between G.R.O. Management L.L.C., and Infusion Care
Systems, Inc.

 

15.         Lease Agreement, dated
November 8, 2000, between Westwood Business Park, Ltd., and Infusion Care
Systems, Inc.

 

16.         Lease Agreement, dated
October 23, 2000, between AMB Property II, L.P., and Infusion Care
Systems, Inc.

 

 

 

Schedule 3

 

List of Required
UCC-3 Terminations, Partial Releases and other Lien Releases*

 

*Authorization to
release Harris Bank UCC financing statements will be contained in the payoff
letter from Harris Bank.

 

	
  Debtor Name

  	
   

  	
  Secured
  Party

  	
   

  	
  Jurisdiction

  	
   

  	
  Collateral

  	
   

  	
  File #

  	
   

  	
  File Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT
J

to

CREDIT
AGREEMENT

 

AUTHORIZED SIGNATORY LETTER

                 ,
20  

General Electric Capital
Corporation, as Agent 

2 Bethesda Metro Center

Suite 600

Bethesda, MD 20814

Ladies and Gentlemen:

Reference is made to that
certain Amended and Restated Credit Agreement, dated as of April 23, 2004
(the “Credit Agreement”), among Curative Health Services, Inc., a
Minnesota corporation formerly known as Curative Holding Co. (“Borrower Representative”),
eBioCare.com, Inc., Hemophilia Access, Inc., Apex Therapeutic Care, Inc., CHS
Services, Inc., Curative Health Services of New York, Inc., Optimal Care Plus,
Inc., Infinity Infusion, LLC, Infinity Infusion II, LLC, Infinity Infusion
Care, Ltd., MedCare, Inc., Curative Pharmacy Services, Inc., Curative Health
Services Co., a Minnesota corporation formerly known as Curative Health
Services, Inc., Critical Care Systems, Inc. (each a “Borrower”, and
collectively with Borrower Representative, the “Borrowers”), the other
Credit Parties signatory thereto, General Electric Capital Corporation (“GE
Capital”), individually and in its capacity as Agent for Lenders (in such
capacity, the “Agent”), and the Persons designated as Lenders in the
Credit Agreement.  Capitalized terms
used herein, but not otherwise defined herein, shall have the meanings ascribed
to such terms in the Credit Agreement.  

 

Each of the undersigned
hereby designate the following individuals as “Authorized Signatories” of
Borrower Representative for the purpose of giving Notices of Borrowing and
Notices of Swingline Borrowing under the Credit Agreement:

 

	
  Name:

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

Without limiting its
rights and protections afforded to Agent under the Credit Agreement, Agent
shall be entitled to rely on such designation until it receives written notice
from Borrower Representative of any change in such designation.  

 

(Remainder of page
left intentionally blank; signature pages follow)

 

 

IN WITNESS WHEREOF, each
of the undersigned has executed and delivered this Authorized Signatory Letter
by its duly authorized officer as of the date first set forth above.

 

	
   

  	
  CURATIVE HEALTH SERVICES, INC.,

  
	
   

  	
  a Minnesota corporation formerly known as Curative Holding Co.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EBIOCARE.COM, INC. 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEMOPHILIA ACCESS, INC. 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APEX THERAPEUTIC CARE, INC.  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHS SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

[Signature page to
Authorized Signatory Letter]

 

 

	
   

  	
  CURATIVE HEALTH SERVICES OF NEW
  YORK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIMAL CARE PLUS, INC.  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION, LLC

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services
  Co., its Sole Member 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INFINITY INFUSION II, LLC 

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services
  Co., its Sole Member 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

[Signature page to
Authorized Signatory Letter]

 

 

	
   

  	
  INFINITY INFUSION CARE, LTD. 

  
	
   

  	
   

  
	
   

  	
  By: Infinity Infusion  II, LLC, its Sole General Partner 

  
	
   

  	
   

  
	
   

  	
  By: Curative Health Services
  Co., the Sole Member of Infinity Infusion II, LLC 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDCARE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE PHARMACY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE
  HEALTH SERVICES CO.,

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CRITICAL CARE SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

[Signature page to
Authorized Signatory Letter]

 

 

EXHIBIT
K

to

CREDIT
AGREEMENT

 

CLOSING
CHECKLIST

 

GENERAL
ELECTRIC CAPITAL CORPORATION 

 

AMENDED
AND RESTATED CREDIT AGREEMENT FOR

CURATIVE
HEALTH SERVICES, INC. 

AND
CERTAIN OF ITS SUBSIDIARIES AS CO-BORROWERS

 

Expected
Closing Date:  April 23, 2004

Location
of Closing:  New York, New York

 

Parties and
Counsel

 

	
  Agent:

  	
   

  	
  -

  	
   

  	
  General Electric
  Capital Corporation (“GE Capital”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lead Arranger:

  	
   

  	
  -

  	
   

  	
  GE Capital Markets
  Group, Inc. (“GECMG”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Holdings:

  	
   

  	
  -

  	
   

  	
  Curative Health
  Services, Inc., a Minnesota corporation formerly named Curative Holding Co.

  
	
  Co-Borrowers:

  	
   

  	
  -

  	
   

  	
  Certain direct and
  indirect subsidiaries of Holdings as follows (collectively, with Holdings, “Borrowers”):

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.

  	
  eBioCare.com, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  2.

  	
  Hemophilia Access, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  3.

  	
  Apex Therapeutic Care,
  Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  4.

  	
  Curative Health
  Services of New York, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  5.

  	
  CHS Services, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  6.

  	
  Curative Pharmacy
  Services, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  7.

  	
  Infinity Infusion, LLC

  
	
   

  	
   

  	
   

  	
   

  	
  8.

  	
  Infinity Infusion II,
  LLC

  
	
   

  	
   

  	
   

  	
   

  	
  9.

  	
  Optimal Care Plus, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  10.

  	
  Infinity Infusion Care,
  Ltd.

  
	
   

  	
   

  	
   

  	
   

  	
  11.

  	
  MedCare, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  12.

  	
  Curative Health
  Services Co., a Minnesota corporation formerly named Curative Health Services,
  Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  13.

  	
  Target

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Target:

  	
   

  	
  -

  	
   

  	
  Critical Care Systems,
  Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Guarantors:

  	
   

  	
  -

  	
   

  	
  Curative Health
  Services III Co.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit Parties

  	
   

  	
  -

  	
   

  	
  Borrowers and
  Guarantors

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Agent’s Counsel:

  	
   

  	
  -

  	
   

  	
  Kilpatrick Stockton
  LLP  (“KS”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrowers’ Counsel

  	
   

  	
  -

  	
   

  	
  Dorsey & Whitney
  LLP (“D&W”)

  

 

 

	
  Action/Document

  	
   

  	
  Responsible Party

  	
   

  	
  Status

  
	
  1.               Amended
  and Restated Credit Agreement (“Credit
  Agreement”), executed by Borrowers, Agent and Lenders

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.               Exhibits
  to Credit Agreement

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A                   -                             Revolving
  Note 

  	
   

  	
   

  	
   

  	
   

  
	
  B                     -                             [RESERVED]
  

  	
   

  	
   

  	
   

  	
   

  
	
  C                     -                             Swingline
  Note 

  	
   

  	
   

  	
   

  	
   

  
	
  D-1          -                             Notice
  of Borrowing 

  	
   

  	
   

  	
   

  	
   

  
	
  D-2          -                             Notice
  of Swingline Borrowing 

  	
   

  	
   

  	
   

  	
   

  
	
  E                      -                             Borrower
  Security Agreement 

  	
   

  	
   

  	
   

  	
   

  
	
  F                      -                             Borrower
  Pledge Agreement 

  	
   

  	
   

  	
   

  	
   

  
	
  G                     -                             Subsidiary
  Guaranty Agreement 

  	
   

  	
   

  	
   

  	
   

  
	
  H                    -                             Guarantor
  Security Agreement 

  	
   

  	
   

  	
   

  	
   

  
	
  I                         -                            Opinion
  of Counsel to the Borrowers 

  	
   

  	
   

  	
   

  	
   

  
	
  J                        -                             Authorized
  Signatory Letter 

  	
   

  	
   

  	
   

  	
   

  
	
  K                    -                             Closing
  Checklist 

  	
   

  	
   

  	
   

  	
   

  
	
  L                      -                             Assignment
  Agreement 

  	
   

  	
   

  	
   

  	
   

  
	
  M                 -                             HIPPA
  Business Associate Agreement 

  	
   

  	
   

  	
   

  	
   

  
	
  N                    -                             Form
  of Seller Subordination Agreement 

  	
   

  	
   

  	
   

  	
   

  
	
  O                    -                             Form
  of Borrowing Base Certificate 

  	
   

  	
   

  	
   

  	
   

  
	
  5.1(a)                    -  Compliance
  Certificate (Quarterly) 

  	
   

  	
   

  	
   

  	
   

  
	
  5.1(b)                   -  Compliance
  Certificate (Annual)

  	
   

  	
   

  	
   

  	
   

  

 

2

 

	
  Action/Document

  	
   

  	
  Responsible Party

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.               Updated
  Disclosure Schedules to Credit Agreement 
  

  	
   

  	
  Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1                                        -            Permitted
  Restructuring 

  	
   

  	
   

  	
   

  	
   

  
	
  3.1                                        -            Closing Date
  Litigation 

  	
   

  	
   

  	
   

  	
   

  
	
  4.5(a)                          -            Financial Statements 

  	
   

  	
   

  	
   

  	
   

  
	
  4.5(b)                         -            Borrowers’ Financial Projections 

  	
   

  	
   

  	
   

  	
   

  
	
  4.7                                        -            Litigation 

  	
   

  	
   

  	
   

  	
   

  
	
  4.13                                  -            Subsidiaries, Other EquityInvestments 

  	
   

  	
   

  	
   

  	
   

  
	
  4.19                                  -            Insurance Policies 

  	
   

  	
   

  	
   

  	
   

  
	
  6.15                                  -            Compliance Program 

  	
   

  	
   

  	
   

  	
   

  
	
  6.16(a)                    -            Government Receivables Deposit Accounts
  and Concentration Account 

  	
   

  	
   

  	
   

  	
   

  
	
  6.16(c)                    -            Blocked Accounts 

  	
   

  	
   

  	
   

  	
   

  
	
  7.1                                        -            Indebtedness 

  	
   

  	
   

  	
   

  	
   

  
	
  7.2                                        -            Closing Date Liens 

  	
   

  	
   

  	
   

  	
   

  
	
  7.4                                        -            Capital Structure 

  	
   

  	
   

  	
   

  	
   

  
	
  7.9                                        -            Existing Investments
  

  	
   

  	
   

  	
   

  	
   

  
	
  7.10(b)                   -                           Loans to Officers

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.               Reaffirmation
  Agreement, executed by each Credit Party and Agent

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.               Amended
  and Restated Revolving Note, executed by Borrowers

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.Amended and Restated Swingline Note, executed by
  Borrowers

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.               Amended
  and Restated Security Agreement, executed by Holdings and Agent

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.               Security
  Agreement, executed by Target and Agent

  	
   

  	
  Form KS/ Final D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.               Power
  of Attorney by Target

  	
   

  	
  D&W

  	
   

  	
   

  

 

3

 

	
  Action/Document

  	
   

  	
  Responsible Party

  	
   

  	
  Status

  
	
  10.         Intellectual Property Security Agreement,
  executed by Target

  	
   

  	
  Form KS/ Final D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule identifying registered patents and
  trademarks

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.         Amended and Restated Pledge Agreement,
  executed by Holdings

  	
   

  	
  Form KS/ Final
  D&W  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule I – Pledged Securities 

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule II – Pledge Amendment 

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule III – Related Control Agreement
  executed by Target

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.         Stock Certificate(s) of Target to be pledged

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.         Stock Power(s) dated in blank and endorsed
  in blank relating to pledges stock certificate(s) of Target

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.         Master Agreement for Standby Letters of
  Credit, executed by Holdings and Agent

  	
   

  	
  Form KS/ Final
  Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.         Master Agreement for Documentary Letters of
  Credit, executed by Holdings and Agent

  	
   

  	
  Form KS/ Final
  Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.         Intercreditor Agreement between UBS AG and
  Agent

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.         Certified copies of Subject Swap Documents

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.         Legal Opinion from D&W, as counsel to
  Credit Parties

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.         Legal Opinion from counsel to Target or
  Reliance Letters in favor of Agent and Lenders

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.         Curative Health Services, Inc. Closing
  Certificate

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.         Good Standing Certificates for Credit
  Parties

  	
   

  	
  Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.         Secretary Certificates for Credit Parties,
  together with following attachments:

  	
   

  	
  D&W

  	
   

  	
   

  

 

4

 

	
  Action/Document

  	
   

  	
  Responsible Party

  	
   

  	
  Status

  
	
  a)              Certificate
  of Incorporation/Formation, certified by applicable Secretary of State;

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b)             Bylaws/Operating
  Agreement;

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c)              Resolutions
  of Board/Managers/Members, as applicable

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.         Solvency Certificate and certification as to
  the pro forma covenant compliance of all Credit Parties, executed by Chief
  Financial Officer of Holdings

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.         Certificate of Secretary of Borrowers,
  attaching and certifying as to true, correct and complete copies of the
  Senior Unsecured High Yield Note Documents and CCS Purchase Agreement and all
  other related Acquisition documents

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.         Post-Closing Letter Agreement

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.         UCC, tax, lien and judgment bring down
  searches for Credit Parties in the jurisdictions specified in Schedule 1
  attached hereto

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.         UCC-1 Financing Statements for Credit
  Parties, to be filed in the jurisdictions specified in Schedule 2
  attached hereto

  	
   

  	
  KS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.         Tennessee Affidavit of Value, regarding
  Hemophilia Access UCC Financing Statement

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  29.         UCC-3 Termination Statements as set forth on
  Schedule 3 attached hereto and related filing authorization letter from
  each secured party

  	
   

  	
  D&W (KS to file)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  30.         Harris Bank Pay-off Letter

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31.         Assignment of Representations, Warranties
  and Indemnities (regarding representations, warranties and indemnities made
  by Target Sellers to applicable Credit Parties)

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  32.         HIPAA Business Associate Agreement between
  Target and Agent

  	
   

  	
  D&W

  	
   

  	
   

  

 

5

 

	
  Action/Document

  	
   

  	
  Responsible Party

  	
   

  	
  Status

  
	
  33.         Insurance Certificates for Credit Parties in
  form and substance satisfactory to Agent

  	
   

  	
  Borrowers/ D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  34.         Borrowing Base Certificate dated closing
  date duly executed by Holdings as Borrower Representative

  	
   

  	
  Form GE Capital/ Final
  Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  35.         Approval by Board of Target for Subject
  Acquisition, along with evidence satisfactory to Agent that Subject
  Acquisition has been consummated and necessary government and third party
  approvals have been obtained

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  36.         Responses to Legal Due Diligence Request :

  	
   

  	
  Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  37.         Pay Proceeds Letter

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  38.         Statement of Sources and Uses relating to
  proceeds of Senior Unsecured High Yield Notes and the Loans made on the
  Restatement Effective Date

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  39.         2003 Audited Financial Statements for Target
  and the financial statements as required under Section 3.1(w) of the
  Credit Agreement

  	
   

  	
  Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  40.Payment of fees and expenses as required under GE
  Capital Fee Letter

  	
   

  	
  Borrowers

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  41.         Payment of fees and expenses of Kilpatrick
  Stockton LLP

  	
   

  	
  Borrowers

  	
   

  	
   

  

 

POST
CLOSING ITEMS

 

	
  1.               Blocked
  Account Agreements, executed by Agent, depository bank and Target

  	
   

  	
  Form KS/ Final D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.               Government
  Receivables Deposit Account Agreements, executed by Agent, depository bank
  and Target

  	
   

  	
  Form KS/ Final D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.               Landlord
  Waiver Agreements identified on Schedule 1 to Post-Closing Letter
  Agreement

  	
   

  	
  D&W

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.               Post-Closing
  UCC lien searches

  	
   

  	
  KS

  	
   

  	
   

  

 

6

 

Schedule 1

 

UCC, Tax, Lien and
Judgment Searches

Note:
5-Part Lien Searches (UCC, Fixture/Real
Estate, Federal Tax, State Tax, Judgment), are needed from the state
and county levels specified below, if available.

 

 

	
  Name (Including
  All Corporate Endings)

  	
   

  	
  Jurisdiction

  	
   

  	
  Search Type

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Schedule 2

 

UCC-1 Financing
Statements

 

	
  Name of Debtor

  	
   

  	
  Filing
  Office

  	
   

  
	
  Curative
  Health Services, Inc.

  	
   

  	
  Minnesota SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  eBioCare.com,
  Inc.

  	
   

  	
  Delaware SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Hemophilia
  Access, Inc.

  	
   

  	
  Tennessee SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Apex
  Therapeutic Care, Inc.

  	
   

  	
  California SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CHS Services,
  Inc.

  	
   

  	
  Delaware SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Curative
  Health Services of New York, Inc.

  	
   

  	
  New York SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Infinity
  Infusion, LLC

  	
   

  	
  Delaware SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Infinity
  Infusion II, LLC

  	
   

  	
  Delaware SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Optimal
  Care Plus, Inc.

  	
   

  	
  Delaware SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Infinity
  Infusion Care, Ltd.

  	
   

  	
  Texas SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  MedCare,
  Inc.

  	
   

  	
  Delaware SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Curative
  Pharmacy Services, Inc.

  	
   

  	
  Delaware SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Curative
  Health Services Co.

  	
   

  	
  Minnesota SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Curative
  Health Services III Co.

  	
   

  	
  Minnesota SOS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Critical
  Care Systems, Inc.

  	
   

  	
  Delaware SOS

  	
   

  

 

 

Schedule 3

List of Required
UCC-3 Terminations, Partial Releases and other Lien Releases*

*Authorization to release
Harris Bank UCC financing statements will be contained in the payoff letter
from Harris Bank.

	
  Debtor Name

  	
  Secured Party

  	
  Jurisdiction

  	
  Collateral

  	
  File #

  	
  File
  Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT L

to

CREDIT AGREEMENT

 

FORM OF ASSIGNMENT
AGREEMENT

 

This Assignment Agreement
(this “Agreement”) is made as of
                      ,
      by and between
                                                   
(“Assignor Lender”)
and                                     (“Assignee
Lender”) and acknowledged and consented to by GENERAL ELECTRIC CAPITAL
CORPORATION, in its capacity as Agent for Lenders (“Agent”).  All capitalized terms used in this Agreement
and not otherwise defined herein will have the respective meanings set forth in
the Credit Agreement as hereinafter defined.

 

RECITALS:

 

WHEREAS, Curative Health
Services, Inc., eBioCare.com, Inc., Hemophilia Access, Inc., Apex Therapeutic
Care, Inc., CHS Services, Inc., Curative Health Services of New York, Inc.,
Optimal Care Plus, Inc., Infinity Infusion, LLC, Infinity Infusion II, LLC,
Infinity Infusion Care, Ltd., MedCare, Inc., Curative Pharmacy Services, Inc.,
Curative Health Services Co., Critical Care Systems, Inc. (each a “Borrower”,
and collectively, the “Borrowers”), the other Credit Parties signatory
thereto, Agent and the Persons designated as Lenders in the Credit Agreement
(the “Lenders”) have entered into that certain Amended and Restated
Credit Agreement, dated as of April 23, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
pursuant to which Assignor Lender has agreed to make certain Loans to, and
incur certain L/C Obligations for, Borrowers;

 

WHEREAS, Assignor Lender
desires to assign to Assignee Lender [all/a portion] of its interest in the
Loans (as described below), the L/C Obligations and the Collateral and to
delegate to Assignee Lender [all/a portion] of its Commitments and other duties
with respect to such Loans, L/C Obligations and Collateral;

 

WHEREAS, Assignee Lender
desires to become a Lender under the Credit Agreement and to accept such
assignment and delegation from Assignor Lender; and

 

WHEREAS, Assignee Lender
desires to appoint Agent to serve as agent for Assignee Lender under the Credit
Agreement.

 

NOW, THEREFORE, in
consideration of the premises and the agreements, provisions, and covenants
herein contained, Assignor Lender and Assignee Lender agree as follows:

 

1.                                       ASSIGNMENT,
DELEGATION, AND ACCEPTANCE

 

1.1.                              Assignment.  Assignor Lender hereby transfers and assigns
to Assignee Lender, without recourse and without representations or warranties
of any kind (except as set forth in Section 3.2 below), [all/such
percentage] of Assignor Lender’s right, title, and interest in

 

 

[the Revolving Loan ],
[the Term Loan], [the Loans], [L/C Obligations], Loan Documents and Collateral
as will result in Assignee Lender having as of the Effective Date (as
hereinafter defined) a Lender’s Percentage thereof, as follows:

 

	
  Assignee Lender’s Loans

  	
   

  	
  Principal
  Amount

  	
   

  	
  Lender’s
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revolving
  Loan

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Term
  Loan

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  

 

1.2.                              Delegation.  Assignor Lender hereby irrevocably assigns
and delegates to Assignee Lender [all/a portion] of its Commitments and its
other duties and obligations as a Lender under the Loan Documents equivalent to
[100%/      %] of Assignor Lender’s Revolving
Credit Commitment (such percentage representing a commitment of $
                      ),
and [100%/      %] of Assignor Lender’s Term Loan
Commitment (such percentage representing a commitment of $
            ).

 

1.3.                              Acceptance
by Assignee Lender.  By its
execution of this Agreement, Assignee Lender irrevocably purchases, assumes and
accepts such assignment and delegation and agrees to be a Lender with respect
to the delegated interest under the Loan Documents and to be bound by the terms
and conditions thereof.  By its
execution of this Agreement, Assignor Lender agrees, to the extent provided
herein, to relinquish its rights and be released from its obligations and
duties under the Credit Agreement.

 

1.4.                              Effective
Date.  Such assignment and
delegation by Assignor Lender and acceptance by Assignee Lender will be
effective and Assignee Lender will become a Lender under the Loan Documents as
of                                       
[the date of this Agreement] (“Effective Date”) and upon payment of the
Assigned Amount and the Assignment Fee (as each term is defined below).  Interest and Fees accrued prior to the
Effective Date are for the account of Assignor Lender, and Interest and Fees
accrued from and after the Effective Date are for the account of Assignee
Lender.

 

2.                                       INITIAL
PAYMENT AND DELIVERY OF NOTES

 

2.1.                              Payment
of the Assigned Amount.  Assignee
Lender will pay to Assignor Lender, in immediately available funds, not later
than 12:00 noon (New York time) on the Effective Date, an amount equal to its
Lender’s Percentage of the then outstanding principal amount of the Loans as
set forth above in Section 1.1 [together with accrued
interest, fees and other amounts as set forth on Schedule 2.1] (the “Assigned
Amount”).

 

2.2.                              Payment
of Assignment Fee.  [Assignor Lender
and/or Assignee Lender] will pay to Agent, for its own account in immediately
available funds, not later than 12:00 noon

 

2

 

(New York time) on the
Effective Date, the assignment fee in the amount of $[3500] (the “Assignment
Fee”) as required pursuant to Section 11.6(b) of the Credit
Agreement.

 

2.3.                              Execution
and Delivery of Notes.  Following payment
of the Assigned Amount and the Assignment Fee, Assignor Lender will deliver to
Agent the Notes previously delivered to Assignor Lender for redelivery to
Borrowers and Agent will obtain from Borrowers for delivery to [Assignor Lender
and] Assignee Lender, new executed Notes evidencing Assignee Lender’s [and
Assignor Lender’s respective] Lender’s Percentage[s] in the Loans after giving
effect to the assignment described in Section 1 above.  Each new Note will be issued in the
aggregate maximum principal amount of the [applicable] Commitment [of the
Lender to whom such Note is issued] or [the Assignee Lender].

 

3.                                       REPRESENTATIONS,
WARRANTIES AND COVENANTS

 

3.1.                              Assignee
Lender’s Representations, Warranties and Covenants.  Assignee Lender hereby represents, warrants,
and covenants the following to Assignor Lender and Agent:

 

(a)                                  This
Agreement is a legal, valid, and binding agreement of Assignee Lender,
enforceable according to its terms;

 

(b)                                 The
execution and performance by Assignee Lender of its duties and obligations
under this Agreement and the Loan Documents will not require any registration
with, notice to, or consent or approval by any Governmental Authority;

 

(c)                                  Assignee
Lender is familiar with transactions of the kind and scope reflected in the Loan
Documents and in this Agreement;

 

(d)                                 Assignee
Lender has made its own independent investigation and appraisal of the
financial condition and affairs of each Credit Party, has conducted its own
evaluation of the Loans and L/C Obligations, the Loan Documents and each Credit
Party’s creditworthiness, has made its decision to become a Lender to Borrowers
under the Credit Agreement independently and without reliance upon Assignor
Lender or Agent, and will continue to do so;

 

(e)                                  Assignee
Lender is entering into this Agreement in the ordinary course of its business,
and is acquiring its interest in the Loans and L/C Obligations for its own
account and not with a view to or for sale in connection with any subsequent
distribution; provided, however, that at all times the distribution of Assignee
Lender’s property shall, subject to the terms of the Credit Agreement, be and
remain within its control;

 

(f)                                    No
future assignment or participation granted by Assignee Lender pursuant to Section 11.6
of the Credit Agreement will require Assignor Lender,

 

3

 

Agent, or Borrowers to
file any registration statement with the Securities and Exchange Commission or
to apply to qualify under the blue sky laws of any state;

 

(g)                                 Assignee
Lender has no loans to, written or oral agreements with, or equity or other
ownership interest in any Credit Party;

 

(h)                                 Assignee
Lender will not enter into any written or oral agreement with, or acquire any
equity or other ownership interest in, any Credit Party without the prior
written consent of Agent; and

 

(i)                                     As
of the Effective Date, Assignee Lender (i) is entitled to receive payments of
principal and interest in respect of the Obligations without deduction for or
on account of any taxes imposed by the United States of America or any
political subdivision thereof [, (ii) is not subject to capital adequacy or
similar requirements under Section 9.4 of the Credit Agreement,
(iii) does not require the payment of any increased costs under Section 9.4
of the Credit Agreement, and (iv) is not unable to fund LIBOR Loans under Section 9.4
of the Credit Agreement, ] and Assignee Lender will indemnify Agent from and
against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, or expenses that result from Assignee Lender’s failure
to fulfill its obligations under the terms of Section 9.4 of the
Credit Agreement [or from any other inaccuracy in the foregoing].

 

3.2.                              Assignor
Lender’s Representations, Warranties and Covenants.  Assignor Lender hereby represents, warrants
and covenants the following to Assignee Lender:

 

(a)                                  Assignor
Lender is the legal and beneficial owner of the Assigned Amount;

 

(b)                                 This
Agreement is a legal, valid and binding agreement of Assignor Lender, enforceable
according to its terms;

 

(c)                                  The
execution and performance by Assignor Lender of its duties and obligations
under this Agreement and the Loan Documents will not require any registration
with, notice to or consent or approval by any Governmental Authority;

 

(d)                                 Assignor
Lender has full power and authority, and has taken all action necessary to
execute and deliver this Agreement and to fulfill the obligations hereunder and
to consummate the transactions contemplated hereby;

 

(e)                                  Assignor
Lender is the legal and beneficial owner of the interests being assigned
hereby, free and clear of any adverse claim, lien, encumbrance, security
interest, restriction on transfer, purchase option, call or similar right of a
third party; and

 

4

 

(f)                                    This
Assignment by Assignor Lender to Assignee Lender complies, in all material
respects, with the terms of the Loan Documents.

 

4.                                       LIMITATIONS
OF LIABILITY

 

Neither Assignor Lender
(except as provided in Section 3.2 above) nor Agent makes any
representations or warranties of any kind, nor assumes any responsibility or
liability whatsoever, with regard to (a) the Loan Documents or any other
document or instrument furnished pursuant thereto or the Loans, L/C Obligations
or other Obligations, (b) the creation, validity, genuineness, enforceability,
sufficiency, value or collectibility of any of them, (c) the amount, value or
existence of the Collateral,  (d) the
perfection or priority of any Lien upon the Collateral, or (e) the financial
condition of any Credit Party or other obligor or the performance or observance
by any Credit Party of its obligations under any of the Loan Documents.  Neither Assignor Lender nor Agent has or
will have any duty, either initially or on a continuing basis, to make any
investigation, evaluation, appraisal of, or any responsibility or liability
with respect to the accuracy or completeness of, any information provided to
Assignee Lender which has been provided to Assignor Lender or Agent by any Credit
Party.  Nothing in this Agreement or in
the Loan Documents shall impose upon the Assignor Lender or Agent any fiduciary
relationship in respect of the Assignee Lender.

 

5.                                       FAILURE
TO ENFORCE

 

No failure or delay on
the part of Agent or Assignor Lender in the exercise of any power, right, or
privilege hereunder or under any Loan Document will impair such power, right,
or privilege or be construed to be a waiver of any default or acquiescence
therein.  No single or partial exercise
of any such power, right, or privilege will preclude further exercise thereof
or of any other right, power, or privilege. 
All rights and remedies existing under this Agreement are cumulative
with, and not exclusive of, any rights or remedies otherwise available.

 

6.                                       NOTICES

 

Unless otherwise
specifically provided herein, any notice or other communication required or
permitted to be given will be in writing and addressed to the respective party
as set forth below its signature hereunder, or to such other address as the
party may designate in writing to the other.

 

7.                                       AMENDMENTS
AND WAIVERS

 

No amendment,
modification, termination, or waiver of any provision of this Agreement will be
effective without the written concurrence of Assignor Lender, Agent and
Assignee Lender.

 

8.                                       SEVERABILITY

 

Whenever possible, each
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law. 
In the event any provision of this

 

5

 

Agreement is or is held
to be invalid, illegal, or unenforceable under applicable law, such provision
will be ineffective only to the extent of such invalidity, illegality, or
unenforceability, without invalidating the remainder of such provision or the
remaining provisions of the Agreement. 
In addition, in the event any provision of or obligation under this
Agreement is or is held to be invalid, illegal, or unenforceable in any
jurisdiction, the validity, legality, and enforceability of the remaining
provisions or obligations in any other jurisdictions will not in any way be
affected or impaired thereby.

 

9.                                       SECTION TITLES

 

Section and
Subsection titles in this Agreement are included for convenience of
reference only, do not constitute a part of this Agreement for any other purpose,
and have no substantive effect.

 

10.                                 SUCCESSORS
AND ASSIGNS

 

This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.

 

11.                                 APPLICABLE
LAW

 

THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE.

 

12.                                 COUNTERPARTS

 

This Agreement and any
amendments, waivers, consents, or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which, when so executed and delivered, will be deemed an original and all of
which shall together constitute one and the same instrument.

 

[signature page
follows]

 

6

 

IN WITNESS WHEREOF, this
Assignment Agreement has been duly executed as of the date first written above.

 

 

	
  ASSIGNEE LENDER:  

  	
   

  	
  ASSIGNOR LENDER:  By: 
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Notice Address:

  	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

 

ACKNOWLEDGED AND CONSENTED TO:

 

GENERAL ELECTRIC CAPITAL

CORPORATION,
as Agent

 

	
  By:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
  Its Duly Authorized
  Signatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

CURATIVE HEALTH SERVICES, INC.,

as
Borrower Representative

 

	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  ](1)

  	
   

  
	
  Its Duly Authorized
  Signatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

(1) Note: Borrower
consent is not required during the occurrence and continuance of an Event of
Default.

 

 

SCHEDULE 2.1

 

Assignor Lender’s Loans

 

	
  Principal Amount

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Revolving
  Loan

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Term
  Loan

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Accrued
  Interest

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Unused
  Line Fee

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Other
  + or -

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
   

  	
   

  

 

All determined as of the
Effective Date.

 

 

EXHIBIT
M

to

CREDIT AGREEMENT

 

BUSINESS ASSOCIATE
AGREEMENT

 

AND

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

This Business Associate Agreement (“B.A.
Agreement”), effective
                             ,
20      (“Effective Date”), is entered
into between General Electric
Capital Corporation (“GECC”) and
                         ,
a                  corporation
(“Covered Entity”). 

 

1.              BACKGROUND AND PURPOSE.  Covered Entity and GECC are considering
entering into a transaction pursuant to which GECC may provide working capital,
acquisition and/or other financing to Covered Entity and/or certain of its
subsidiaries or affiliates, as the case may be (the “Proposed Transaction”),
which Proposed Transaction, if and to the extent consummated, will be
documented in one or more related agreements (collectively, the “Underlying
Contracts”).  The Parties
acknowledge that both (i) the pre-closing origination and underwriting and
other related activities in respect of the Proposed Transaction, and (ii) the
performance and/or enforcement of the Underlying Contracts, if any, may involve
the access, use and/or disclosure by GECC of Protected Health Information (as
defined in 45 C.F.R. §164.501 and limited for purposes of this B.A. Agreement
solely to the information (x) received by GECC from Covered Entity or (y)
created or received by GECC on behalf of Covered Entity, in each case with
respect to the origination or underwriting of the transaction and/or the
Underlying Contract, in accordance with the terms of this B.A. Agreement) (the
“PHI”) that is subject to the federal privacy regulations issued
pursuant to the Health Insurance Portability and Accountability Act (“HIPAA”)
and codified at 45 C.F.R. parts 160 and 164 (the “Privacy Rule”).  The purpose of this B.A. Agreement is to
allow for Covered Entity’s compliance with the Privacy Rule with respect to GECC’s
access to and/or use or disclosure of the PHI with respect to the Proposed
Transaction and/or the Underlying Contracts, if any.  It is the intent of the Parties that, in the event and to the
extent any Underlying Contracts are executed between them, this B.A. Agreement
will be specifically incorporated into and made a part of such Underlying
Contracts. 

 

2.              DEFINITIONS.  Unless otherwise defined in this B.A. Agreement, all capitalized
terms used in this B.A. Agreement shall have the meanings ascribed in HIPAA
and/or the Privacy Rule, as applicable.

 

3.              OBLIGATIONS OF THE PARTIES WITH RESPECT TO PHI.

 

3.1              Uses and Disclosures of PHI by GECC. 
Except as otherwise specified in this B.A. Agreement, GECC may make any
and all uses and disclosures of PHI necessary to originate, underwrite, audit,
perform and/or enforce the Underlying Contracts.  In addition, unless otherwise limited in this B.A. Agreement,
GECC may (a) use the PHI in its possession for its proper management and
administration and to carry out the legal responsibilities of GECC, (b)
disclose the PHI in its possession

 

1

 

to a third party for the
purpose of GECC’s proper management and administration or to carry out the
legal responsibilities of GECC, provided that such disclosure is required by
law or GECC obtains reasonable assurances from the third
party that the PHI will be held confidentially and used or disclosed only as
required by law or for the purpose for which it was disclosed to such third
party and in accordance with the Privacy Rule, and the third
party is obligated to notify GECC of any instances of which the third party is
aware in which the confidentiality of the PHI has been breached, (c)
provide Data Aggregation services relating to the health care operations of the
Covered Entity, and (d) de-identify any and all PHI obtained by GECC under this
B.A. Agreement, and use such de-identified data, all in accordance with the
de-identification requirements of the Privacy Rule. 

 

3.2                                       Obligations
of GECC.  With regard to its use
and/or disclosure of PHI, GECC agrees to:

 

a.               not use or further disclose the PHI other than as permitted
or required by this B.A. Agreement or as required by law;

 

b.              use appropriate safeguards to prevent use or disclosure of
the PHI other than as permitted in Section 3.2(a);

 

c.               report to Covered Entity in writing within
fourteen (14) days any use or disclosure of the PHI other
than as permitted in Section 3.2(a) of which GECC’s management becomes
aware;

 

d.              ensure
that any agents and subcontractors to which GECC
provides PHI agree to the same restrictions and conditions that apply to GECC
with respect to such PHI; 

 

e.               within
twenty (20) days, make available the PHI necessary for
Covered Entity to respond to individuals’ requests for access to PHI about them
in the event that the PHI in GECC’s possession constitutes a Designated Record
Set;

 

f.                 within
forty-five (45) days, make available the
PHI for amendment and incorporate any amendments to the PHI in accordance with
the Privacy Rule in the event that the PHI in GECC’s possession constitutes a
Designated Record Set;

 

g.              Within
forty-five (45) days of a request from the Covered Entity, make available the information required for the Covered Entity
to provide an accounting of disclosures in accordance with the Privacy Rule;

 

h.              make its internal practices, books and records relating to
the use and disclosure of PHI available to the Secretary of HHS for purposes of
determining Covered Entity’s compliance with the Privacy Rule;
and

 

i.                  return to Covered Entity or destroy, within ninety (90) days
of the termination of this B.A. Agreement with respect to the Underlying
Contract, the PHI in its possession as a result of the Underlying Contract and
retain no copies, if it is feasible to do so. 
If GECC in its discretion determines that return or destruction is
infeasible, GECC agrees to extend all protections contained in this B.A.
Agreement to GECC’s use and/or disclosure of any retained PHI, and to limit any
further uses and/or disclosures to the purposes that make the return or
destruction of the PHI infeasible.

 

3.3                                       Obligations of Covered Entity. 
Covered Entity agrees to timely notify GECC in writing of any
arrangements between Covered Entity and the individual that is the subject of
any PHI that may impact in any manner the use and/or disclosure of that PHI by
GECC under this B.A. Agreement.

 

3.4                                       Effect of Changes to the Privacy Rule. 
To the extent that any relevant provision of the Privacy Rule is
materially amended in a manner that changes the obligations of Business
Associates or Covered

 

2

 

Entities
that are embodied in the terms of this B.A. Agreement, the Parties agree to
negotiate in good faith appropriate amendment(s) to this B.A. Agreement to give
effect to these revised obligations. 

 

4.              TERMINATION
BY COVERED ENTITY.  With respect to any
Underlying Contract, upon Covered Entity’s knowledge of a material breach of
the terms of this B.A. Agreement by GECC, Covered Entity shall provide
GECC written notice of that breach in sufficient detail to enable
GECC to understand the specific nature of that breach and afford GECC an
opportunity to cure the breach.  If GECC
fails to cure the breach within a reasonable time specified by Covered Entity
(but in any event not less than thirty (30) days), Covered Entity may terminate
this B.A. Agreement as well as terminate those portions, but only those
portions, of the Underlying Contract that, by their express terms, require or
permit GECC to access and/or use or disclose the PHI and only to the extent of
that requirement or permission.  In such
instance, the remaining provisions of the Underlying Contract that do not, by
their express terms, require or permit GECC to access and/or use or disclose
the PHI shall remain in full force and effect, including
without limitation any and all of Covered Entity’s
payment and performance obligations (to the extent any such performance
obligations do not require GECC to access and/or use or disclose the PHI);
provided that, notwithstanding the foregoing, Covered Entity shall be entitled
to terminate the Underlying Contract in its entirety if and to the extent that
the overall intent and purpose of the Underlying Contract (a) is directly and
materially related to and dependent upon GECC having the ability to access
and/or use or disclose the PHI, and (b) would be frustrated if Covered Entity
were not permitted to terminate the Underlying Contract.  In addition, if GECC, in its sole
discretion, can perform and/or enforce the Underlying Contract with information
that has been de-identified under the Privacy Rule, the Underlying Contract
will remain in full force and effect, except with respect to, and only with
respect to, those provisions that require or permit GECC to access and/or use
or disclose the PHI, which provisions shall be deemed modified to provide GECC
to access and/or use or disclose the PHI that has been de-identified under the
Privacy Rule. 

 

5.              MISCELLANEOUS.

 

5.1                                 Conflict with Underlying Contract. 
The terms of this B.A. Agreement shall prevail in the case of any
conflict with the terms of the Underlying Contract to the extent and only to
the extent necessary to allow Covered Entity to comply with the Privacy Rule.

 

5.2                                 Survival. 
Sections 1, 2, 3.2, 3.3, 4 and 5 of this B.A. Agreement shall survive
termination of this B.A. Agreement and continue indefinitely solely with
respect to PHI GECC retains in accordance with Section 3.2.i.

 

5.3                                 LIMITATION OF LIABILITY. 
NO PARTY SHALL BE LIABLE TO ANY OTHER PARTY FOR ANY INCIDENTAL,
CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES OF ANY KIND OR NATURE RELATING TO
OR ARISING FROM THE PERFORMANCE OR BREACH OF OBLIGATIONS SET FORTH IN THIS B.A.
AGREEMENT, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT
(INCLUDING NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE OTHER
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGES, PROVIDED THAT THIS PROVISION SHALL NOT PRECLUDE ANY PARTY FROM
SEEKING ACTUAL DAMAGES ARISING FROM ANOTHER PARTY’S PERFORMANCE OR BREACH OF
SUCH OBLIGATIONS.   

 

5.4                                 Entire Agreement; Amendments. 
This B.A. Agreement constitutes the full and entire understanding and
agreement among the Parties with regard to its subject matter and supersedes
all prior written or oral agreements, understandings, representations and
warranties made with respect to that subject matter.  No amendment, supplement or modification of this B.A. Agreement
nor any waiver of any of its provisions shall be made except in writing
executed by each of the Parties.  

 

5.5                                 No Waiver; Cumulative Rights. 
No waiver by any Party to this B.A. Agreement of any one or more
defaults by any other Party in the performance of any of the provisions of this
B.A. Agreement shall

 

3

 

operate
or be construed as a waiver of any future default or defaults, whether of a
like or different nature.  No failure or
delay on the part of any Party in exercising any right, power or remedy under
this B.A. Agreement, nor acceptance of partial performance or partial payment,
shall operate as a waiver of such right, power or remedy nor shall any single
or partial exercise of any such right, power or remedy preclude any other or
further exercise of such right, power or remedy or the exercise of any other
right, power or remedy.  The remedies
provided for in this B.A. Agreement are cumulative and are not exclusive of any
remedies that may be available to any Party to this B.A. Agreement at law, in
equity or otherwise.

 

5.6                                 Notices. 
Any notice or other communication required or permitted under this B.A.
Agreement shall be in writing and personally delivered, mailed by registered or
certified mail (return receipt requested and postage prepaid), sent by
telecopier (with a confirming copy sent by regular mail), or sent by prepaid
overnight courier service, and addressed to the relevant Party at its address
set forth below, or at such other address as such Party may, by written notice,
designate as its address for purposes of notice under this B.A. Agreement:

 

	
  a.

  	
   

  	
  If to GECC, at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  General Electric Capital Corporation

  
	
   

  	
   

  	
  2 Bethesda Metro Center, Suite 600

  
	
   

  	
   

  	
  Bethesda, Maryland  20814

  
	
   

  	
   

  	
  Attention:  Legal
  Department

  
	
   

  	
   

  	
  Telephone:  (301)
  961-1640

  
	
   

  	
   

  	
  Telecopier:  (301) 664-9866

  
	
   

  	
   

  	
   

  
	
  b.

  	
   

  	
  If to Covered
  Entity, at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/o
  Curative Health Services, Inc.

  
	
   

  	
   

  	
  150
  Motor Parkway

  
	
   

  	
   

  	
  Hauppauge,
  New York 11788

  
	
   

  	
   

  	
  Attention:  Nancy Lanis, General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Curative
  Health Services, Inc.

  
	
   

  	
   

  	
  150
  Motor Parkway

  
	
   

  	
   

  	
  Hauppauge,
  New York 11788

  
	
   

  	
   

  	
  Attention:  Thomas Axmacher, CFO

  

 

If mailed, notice shall be deemed to be given five (5) days after
being sent, and if sent by personal delivery, telecopier or prepaid courier,
notice shall be deemed to be given when delivered.

 

5.7                                 Severability. 
If any term, covenant or condition of this B.A. Agreement, or the
application of such term, covenant or condition to any Party or circumstance
shall be found by a court of competent jurisdiction to be, to any extent,
invalid or unenforceable, the remainder of this B.A. Agreement and the
application of such term, covenant, or condition to Parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law.  Upon determination that any such term is invalid, illegal or
unenforceable, GECC may, but is not obligated to, advance funds to Covered
Entity under the Underlying Contract until the Parties to this B.A. Agreement
amend this B.A. Agreement so as to effect the original intent of the Parties as
closely as possible in a valid and enforceable manner.

 

4

 

5.8                                 Successors and Assigns. 
This B.A. Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors and assigns and shall bind all
persons who become bound as a debtor to the Underlying Contract. Notwithstanding
the foregoing, Covered Entity may not assign any of its rights or delegate any
of its obligations under this B.A. Agreement without the prior written consent
of GECC, which may be withheld in its sole discretion.  GECC may sell, assign, transfer, or
participate any or all of its rights or obligations under this B.A. Agreement
without notice to or consent of Covered Entity.

 

5.9                                 Counterparts. 
This B.A. Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall
constitute but one instrument. 

 

5.10                           Interpretation. 
No provision of this Agreement shall be interpreted or construed against
any Party because that Party or its legal representative drafted that
provision.  The titles of the paragraphs
of this B.A. Agreement are for convenience of reference only and are not to be
considered in construing this B.A. Agreement. 
Any pronoun used in this B.A. Agreement shall be deemed to include
singular and plural and masculine, feminine and neuter gender as the case may be.  The words “herein,” “hereof,” and
“hereunder” shall be deemed to refer to this entire B.A. Agreement, except as
the context otherwise requires.

 

5.11                           No Third Parties Beneficiaries. 
Nothing in this B.A. Agreement shall confer upon any person other than
the Parties and their respective successors or permitted assigns any rights,
remedies, obligations or liabilities whatsoever.

 

[Remainder of page
left intentionally blank; signature page follows]

 

5

 

IN WITNESS WHEREOF, each of the undersigned has caused this
B.A. Agreement to be duly executed in its name and on its behalf.

 

	
  GECC:

  	
  COVERED
  ENTITY:

  
	
   

  	
   

  
	
  GENERAL ELECTRIC CAPITAL CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  
	
    Its Duly Authorized Signatory

  	
  Print Title:

  	
   

  	
   

  
									

 

 

EXHIBIT N

to 

CREDIT AGREEMENT

 

SUBORDINATION AGREEMENT

 

THIS AGREEMENT,
dated as of
                       ,
                ,
is made and entered into by and among
                       ,
a                       corporation
(together with its successors in interest and assigns, the “Subordinated
Creditor”),
                    ,
a
                 corporation
(the “Debtor”), and General Electric Capital Corporation, a Delaware
corporation (“GE Capital”).

 

Background Statement

 

A.                                   In
connection with the Debtor’s acquisition of
                         ,
the Debtor issued to the Subordinated Creditor a Promissory Note
dated                ,
in the original principal amount of
                    (the
“Promissory Note”);

 

B.                                     The
Promissory Note provides that the agreement, and Debtor’s obligations
thereunder, are expressly subordinated to any senior secured debt facility that
Debtor may enter into;

 

C.                                     The
Promissory Note provides that the Subordinated Creditor will enter into such
future agreements or instruments as may be requested by the lender or lenders
under such facility in order to further evidence such subordination; and

 

D.                                    Curative
Health Services, Inc., a Minnesota corporation formerly known as Curative
Holding Co., and GE Capital are parties to the Amended and Restated Credit
Agreement, dated as of April 23, 2004, with the Persons signatory thereto
as Credit Parties (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), pursuant to which GE Capital
will provide senior secured loans and other extensions of credit to Debtor and
its affiliates.

 

Agreement

 

In consideration of the
loans and other extensions of credit made and to be made under the Credit
Agreement, and for other good and valuable consideration, the parties hereby
agree as follows:

 

1.                                                              Definitions.  When used herein, the following terms shall
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):

 

“Bankruptcy Code”
shall mean 11 U. S. C. §§ 101-1330 and any amendment, supplement or
successor of such provision.

 

“Event of Default”
shall have the meaning assigned to such term in the Credit Agreement.

 

“Loan Documents”
shall have the meaning assigned to such term in the Credit Agreement.

 

 

“Paid in full”
shall mean, with respect to the Senior Debt, the indefeasible payment in full
in cash or cash equivalents of 100% of the principal, interest, fees, expenses
and other amounts due or to become due to GE Capital under the Credit Agreement
and the other Loan Documents in the manner provided under the terms of such
documents or in such other manner to which GE Capital shall have consented in
writing.

 

“Person” means an
individual, corporation, partnership, limited liability company, trust or
unincorporated organization, a government or any agency or political
subdivision thereof, or any other entity.

 

“Senior Debt”
shall mean any and all indebtedness, obligations or liabilities that now or
hereafter may be owing by the Debtor or any affiliate thereof to GE Capital
under the Credit Agreement or any of the other Loan Documents, whether for
principal, interest, fees or other amounts, and whether such indebtedness,
obligations or liabilities are from time to time reduced and thereafter
increased or entirely extinguished and thereafter reincurred, and whether such
indebtedness, obligations or liabilities are absolute, joint or several, or due
or to become due, as well as all indebtedness, obligations or liabilities of
the Debtor to GE Capital now or hereafter existing under this Agreement, and
any amendment, restatement, supplement, extension, renewal, refinancing,
modification or replacement of or for any of the foregoing (including any
credit agreement, loan agreement, or other agreement, document, or instrument
replacing the Credit Agreement or any other Loan Documents whether or not with
the same agent or lenders), and including without limitation any interest
which, but for the filing by or against the Debtor or any affiliate thereof, of
a petition in bankruptcy, would accrue on any of the foregoing indebtedness,
obligations or liabilities as well as any other indebtedness, obligations or
liabilities of the Debtor or any affiliate thereof to GE Capital which may be
incurred in any bankruptcy proceeding of the Debtor or any affiliate thereof
whether or not recoverable by GE Capital from the Debtor or any affiliate
thereof or its estate under 11 U.S.C. § 506.

 

“Subordinated Debt”
shall mean the indebtedness evidenced by the Promissory Note, and any
amendment, restatement, supplement, extension, renewal, refinancing,
modification or replacement of or for the Promissory Note.

 

“Termination Date”
shall mean the date on which (i) all Senior Debt has been paid in full, and
(ii) GE Capital is under no obligation to make any further loans or extend any
further credit to or for the benefit of the Debtor.

 

2.                                      Payment
Subordination Provisions.  

 

a)                                      No Payments.  From and after the date of this Agreement
and thereafter so long as this Agreement is in effect, and unless GE Capital
expressly consents in writing to the contrary, no payment on the Subordinated
Debt shall be made or given by or on behalf of the Debtor or any affiliate
thereof and no payment on account thereof shall be received, accepted or
retained by the Subordinated Creditor, nor shall the Subordinated Creditor
accelerate, make any demand for, or attempt to receive, collect or retain the
same, whether by collection, set-off, foreclosure, counterclaim or otherwise; provided
that, as long as no Event of Default shall have occurred and be continuing
or would

 

2

 

result therefrom, the
Debtor may make, and the Subordinated Creditor may receive the scheduled
principal and interest payments of the Subordinated Debt listed on Schedule 1
hereto.

 

b)                                      Turnover of
Payments.  Should any payment or
prepayment be received by the Subordinated Creditor in violation of this
Agreement, the Subordinated Creditor forthwith shall deliver the same to GE
Capital in precisely the form received (but with the endorsement of the
Subordinated Creditor where necessary for the collection thereof by GE Capital)
for application on the Senior Debt in accordance with the Credit Agreement, and
the Subordinated Creditor agrees that, until so delivered, the same shall be
deemed received by the Subordinated Creditor as agent for GE Capital and such
payment or prepayment shall be held in trust by the Subordinated Creditor as
property of GE Capital.

 

3.                                      Modification
or Prepayment of Subordinated Debt. 
The payment terms of the Subordinated Debt shall not be modified, nor
shall any prepayment (in whole or in part) be made on the Subordinated Debt,
without the express prior written consent of GE Capital.

 

4.                                      Insolvency
Proceedings.  GE Capital shall
have the right and is hereby empowered to vote the full amount of the
Subordinated Debt in any insolvency or receivership proceeding, any proceeding
under the Bankruptcy Code or any other proceeding under any bankruptcy or
insolvency law or laws relating to the relief of debtors, readjustment of
indebtedness, reorganizations, compositions or extensions which may be brought
by or against the Debtor or any affiliate thereof and at any meeting of
creditors of the Debtor or any affiliate thereof whether or not such meeting is
held in a proceeding under any insolvency, bankruptcy or similar laws.  In any of the foregoing proceedings or at
any of the foregoing meetings, GE Capital shall be entitled to vote the
Subordinated Debt as GE Capital in its sole good faith discretion shall
determine without regard to the interests of anyone other than GE Capital.  In any of the foregoing proceedings, GE
Capital shall be entitled to collect and enforce the Subordinated Debt and to receive
any distributions, dividends or other payments upon the Subordinated Debt by
filing such claim, proof of debt or proof of claim as appropriate in the
proceeding, in GE Capital’s name or the Subordinated Creditor’s name.  GE Capital and any officer or employee
designated by GE Capital for such purpose is hereby constituted and appointed
attorney-in-fact for the Subordinated Creditor with full power (which power,
being coupled with an interest, shall be irrevocable so long as this Agreement
is in effect) to vote the Subordinated Debt in any of the foregoing proceedings
and at any meeting of the creditors of the Debtor or any affiliate thereof and
to file any claim, proof of debt or proof of claim in any such proceeding, and
to compromise, settle and to give releases for any of the Subordinated Debt,
and to endorse the Subordinated Creditor’s name upon any instruments given as a
payment on or distribution in connection with the Subordinated Debt.

 

5.                                      Pledge
or Transfer of Subordinated Debt. 
The Subordinated Creditor agrees not to assign, transfer, pledge, or
grant a security interest in all or any part of the Subordinated Debt unless
(i) such assignment, transfer, pledge or grant is made expressly subject to
this Agreement and (ii) the Subordinated Creditor’s assignee, transferee,
pledgee or grantee expressly agrees in writing to assume the Subordinated
Creditor’s obligations hereunder, and (iii) if requested by GE Capital, the
Subordinated Creditor places on any promissory notes, agreements or other instruments
evidencing the Subordinated Debt a legend, in form and substance satisfactory
to

 

3

 

GE Capital, stating that
such notes, agreements or other instruments are subordinated to the Senior Debt
pursuant to this Agreement. 

 

6.                                      Waivers.  The Subordinated Creditor agrees and
consents (a) to waive, and does hereby waive, any and all notice of the
creation, renewal, extension, modification, compromise or release of any of the
Senior Debt or any collateral therefor or guaranties thereof, in whole or in
part; (b) that without further notice to or further assent by the Subordinated
Creditor, the liability of the Debtor or any affiliate thereof or any other
party or parties for or upon any of the Senior Debt may, from time to time, in
whole or in part, be renewed, extended, modified, compromised or released by GE
Capital as it may deem advisable; and (c) that any collateral for or guaranties
of the Senior Debt, or any part of the Senior Debt, may, from time to time, in
whole or in part, be modified, released, collected, sold or otherwise disposed
of by GE Capital, as it may deem advisable, and that any balance of funds with
GE Capital at any time standing to the credit of the Debtor or any affiliate
thereof may, from time to time, in whole or in part, be surrendered or released
by GE Capital, as it may deem advisable. 

 

7.                                      Collateral
and Guaranty Subordination.  

 

a)                                      The Subordinated
Creditor hereby subordinates and makes inferior any and all of its now existing
or hereafter acquired security interests in, security titles to, and other
liens and encumbrances on any of the present or future, real or personal,
tangible or intangible, property of the Debtor or any affiliate thereof
(collectively, the “Collateral”) to the security interests, security
titles, and other liens and encumbrances of GE Capital, whether now existing or
hereafter acquired, in, to and on the Collateral.  If the Debtor or any affiliate thereof shall default under any
Senior Debt secured by any of the Collateral, GE Capital may exercise any or
all of its rights and remedies with respect to such Collateral without any
obligation to give the Subordinated Creditor notice of such exercise and
without regard to any interest of the Subordinated Creditor in such
Collateral.  The Subordinated Creditor
shall not contest the validity, perfection, priority or enforceability of any
Lien granted to GE Capital in any of the Collateral.  

 

b)                                      The Subordinated
Creditor subordinates and makes inferior any and all of its now existing or
hereafter acquired guaranties of the Subordinated Debt from whomever received
and in whatever form to the rights of GE Capital on the same terms and
conditions as apply to the subordination of the Subordinated Debt to the Senior
Debt hereunder.

 

8.                                      Continuing
Agreement and Termination.

                                                

a)                                      This is a
continuing agreement, and this Agreement and the subordination of indebtedness
(the “Debt Subordination”) and the subordination of security interests,
security titles, liens and encumbrances and guaranties (the “Security
Interest Subordination”) provided for herein shall remain in full force and
effect until the Termination Date regardless of whether the Senior Debt is from
time to time reduced and thereafter increased or entirely extinguished and
thereafter reincurred or incurred anew. 
This Agreement, the Debt Subordination and the Security Interest
Subordination shall remain in full force and effect and shall be irrevocable
until and shall terminate on the Termination Date.  No notice purporting to terminate this Agreement, the Debt

 

4

 

Subordination or the
Security Interest Subordination which is received by GE Capital at any time
prior to the Termination Date shall be effective, in any manner or at any time
whatsoever, to terminate this Agreement, the Debt Subordination or the Security
Interest Subordination. 

 

b)                                      This Agreement,
the Debt Subordination and the Security Interest Subordination shall continue
to be effective regardless of the solvency or insolvency of the Debtor or any
affiliate thereof or the Subordinated Creditor; the liquidation or dissolution
of the Debtor or any affiliate thereof or the Subordinated Creditor; the
institution by or against the Debtor or any affiliate thereof or the
Subordinated Creditor of any proceeding under the Bankruptcy Code or any
similar law; the appointment of a receiver or trustee for the Debtor or any
affiliate thereof or any of such Person’s property or for the Subordinated
Creditor or any of the Subordinated Creditor’s property or for any guarantor or
any guarantor’s property; any reorganization, merger or consolidation of the
Debtor or any affiliate thereof or the Subordinated Creditor or any guarantor;
or any other change in the ownership, composition or nature of the Debtor or
any affiliate thereof or the Subordinated Creditor or any guarantor. This
Agreement the Debt Subordination and the Security Interest Subordination shall
be reinstated in the event any payment on the Senior Debt is rescinded, disgorged
as a preference or otherwise or must otherwise be returned by GE Capital.  

 

9.                                      Acknowledgments,
Consents and Agreements.  

 

The Debtor does hereby
acknowledge and consent to the execution, delivery and performance of this
Agreement by the Subordinated Creditor and GE Capital and further agrees to be
bound by the provisions of this Agreement as they relate to the relative
rights, remedies and priorities of the Subordinated Creditor and GE Capital and
the respective obligations of the Debtor or any affiliate thereof to them; provided,
however that nothing in this Agreement shall amend, modify, change or supersede
the respective terms of any of the Senior Debt or the Subordinated Debt as
between the Debtor or any affiliate thereof, on the one hand, and GE Capital or
the Subordinated Creditor, on the other hand, and in the event of any conflict
or inconsistency between the terms of this Agreement and those of any
agreement, note or other document evidencing or securing any of the Senior
Debt, the Subordinated Debt or the Collateral, the provisions of such other
agreement, instrument or document shall govern as between the Debtor or any
affiliate thereof, on the one hand, and GE Capital or the Subordinated Creditor
(as the case may be), on the other hand, and the Debtor further agrees that
this Agreement shall not give the Debtor any substantive rights relative to GE
Capital or the Subordinated Creditor and the Debtor shall not be entitled to
raise any actions or inactions on the part of GE Capital or the Subordinated
Creditor hereunder as a defense, counterclaim or other claim against such
party.

 

10.                               Miscellaneous.

 

a)                                      Wherever
possible, each provision of this Agreement is to be interpreted in such manner
as to be effective and valid under applicable law, but if any provision hereof
is prohibited or invalid under such law, such provision is to be ineffective
only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.

 

5

 

b)                                      This Agreement
shall be binding upon the Debtor, the Subordinated Creditor and their
respective heirs, legal representatives, successors and assigns, and shall
inure to the benefit of GE Capital and its successors and assigns.

 

c)                                      This Agreement
constitutes the sole and entire agreement between the Subordinated Creditor, on
the one hand, and GE Capital, on the other, with respect to the subject matter
hereof and supersedes and replaces any and all prior or concurrent agreements,
understandings, negotiations or correspondence between them with respect
thereto.

 

d)                                      Time is of the
essence of this Agreement.

 

e)                                      No amendment or
waiver of any provision of this Agreement, nor consent to any departure therefrom,
shall be effective or binding upon GE Capital unless GE Capital shall first
have given its written consent thereto.

 

f)                                        This Agreement
may be executed in one or more counterparts and each such counterpart shall
constitute an original and all such counterparts together shall constitute one
and the same instrument.

 

g)                                     All sections
headings herein are for convenience of reference only and shall not limit or
otherwise affect the meaning or interpretation of this Agreement.

 

h)                                     All notices,
demands and other communications hereunder to GE Capital or the Subordinated
Creditor shall be effective:

 

i)                                         if
given by telecopy, when such communication is transmitted to the telecopy
number set forth beneath such Person’s signature below (with such telecopy to
be promptly confirmed by delivery of a copy thereof by personal delivery or
United States mail as otherwise provided herein),

 

ii)                                      if
given by mail, three business days after such communication is deposited in the
United States mail with first class postage prepaid, return receipt requested,
and addressed to such Person at its address set forth beneath its signature
below,

 

iii)                                   if
sent for overnight delivery by Federal Express, United Parcel Service or other
reputable national overnight delivery service, one business day after such
communication is entrusted to such service for overnight delivery and with
recipient signature required, addressed as aforesaid, or

 

iv)                                  if
given by any other means, when delivered at the address of such Person shown
below.

 

GE Capital or the
Subordinated Creditor may designate a different address or telecopy number for
its receipt of such notices or other communications but no such change shall be
effective unless and until the other party actually receives such written
notice.

 

6

 

i)                                        This Agreement
shall be governed by, and construed and enforced in accordance with, the laws
of the State of New York applicable to contracts made and performed in such
state.

 

11.                               Waiver
of Certain Rights.  The
Subordinated Creditor expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration or contribution or any other claim which
the Subordinated Creditor may now or hereafter have against the Debtor or any
affiliate thereof or against any property of the Debtor or any affiliate
thereof arising from the existence, performance or enforcement of the
Subordinated Creditor’s obligations and liabilities under this Agreement until
such time as the Senior Debt shall have been paid in full. 

 

12.                               Jury
Trial Waiver and Forum Consents. 
EACH OF THE SUBORDINATED CREDITOR, GE CAPITAL AND THE DEBTOR HEREBY
WAIVES ANY RIGHT SUCH PERSON MAY HAVE UNDER ANY APPLICABLE LAW TO A TRIAL BY
JURY WITH RESPECT TO ANY SUIT OR LEGAL ACTION WHICH MAY BE COMMENCED OR AGAINST
SUCH PERSON CONCERNING THE INTERPRETATION, CONSTRUCTION, VALIDITY, ENFORCEMENT
OR PERFORMANCE OF THIS AGREEMENT.  IN
THE EVENT ANY SUCH SUIT OR LEGAL ACTION IS COMMENCED BY GE CAPITAL, EACH OF THE
SUBORDINATED CREDITOR AND THE DEBTOR HEREBY EXPRESSLY AGREES, CONSENTS AND
SUBMITS TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN
THE CITY AND STATE OF NEW YORK, WITH RESPECT TO SUCH SUIT OR LEGAL ACTION AND
FURTHER EXPRESSLY CONSENTS AND SUBMITS TO AND AGREES THAT VENUE IN ANY SUCH
SUIT OR LEGAL ACTION IS PROPER IN SAID COURTS AND FURTHER EXPRESSLY WAIVES ANY
AND ALL PERSONAL RIGHTS UNDER APPLICABLE LAW OR IN EQUITY TO OBJECT TO THE
JURISDICTION AND VENUE OF SAID COURTS. 
THE JURISDICTION AND VENUE OF THE COURTS CONSENTED TO AND SUBMITTED TO
AND AGREED UPON IN THIS SECTION ARE NOT EXCLUSIVE BUT ARE CUMULATIVE AND
IN ADDITION TO THE JURISDICTION AND VENUE OF ANY OTHER COURT UNDER ANY
APPLICABLE LAW OR IN EQUITY.

 

 

[Remainder of page
intentionally blank; next page is signature page]

 

7

 

IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly signed, sealed and delivered,
all as of the day and year first above written.

 

 

	
   

  	
  [SUBORDINATED CREDITOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (CORPORATE SEAL)

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  	
   

  
	
   

  	
  Telecopy:
  (        )

  	
   

  	
   

  
									

 

 

	
   

  	
  GENERAL ELECTRIC CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Its Duly
  Authorized Signatory

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (CORPORATE SEAL)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  2 Bethesda Metro
  Center,

  
	
   

  	
   

  	
  Suite 600, Bethesda, MD
  20814

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:  Account Manager

  
	
   

  	
   

  	
  Telecopy:

  	
  301-347-3175

  
						

 

 

	
   

  	
  [DEBTOR]                               ,
  as Debtor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (CORPORATE SEAL)

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  	
   

  
	
   

  	
  Telecopy:
  (        )

  	
   

  	
   

  
									

 

 

SCHEDULE 1

 

Scheduled
Principal and Interest Payments:

 

EXHIBIT O

 

SCHEDULE I

 

 

Borrowing Base Certificate

 

General Electric Capital Corporation 

2 Bethesda Metro Center, Suite 600

Bethesda, MD 20814

 

Borrowing Base Availability @ 12/31/03:

 

Pursuant to the Amended and Restated  Credit Agreement dated as of April 23,
2004 among the undersigned as Borrower Representative, the other persons
designated therein as Borrowers, the persons designated therein as Credit
Parties, the other persons designated therein as Lenders and GENERAL ELECTRIC
CAPITAL CORPORATION as Agent and Lender (the “Credit Agreement”), the
undersigned certifies that as of the close of business on the date set forth
below, the Borrowing Base is computed as set forth below.

 

(a) 
The undersigned represents and warrants that this Borrowing Base Certificate
is a true and correct statement of, and that the information contained herein
is true and correct in all material respects regarding, the status of Eligible
Accounts and Eligible Inventory, and that the amounts reflected herein are in
compliance with the provisions of the Credit Agreement and the Appendices
thereto.  The undersigned further
represents and warrants that there is no Default or Event of Default and all
representations and warranties contained in the Credit Agreement and other Loan
Documents are true and correct in all material respects.  The undersigned understands that the Lenders
will extend loans in reliance upon the information contained herein.  In the event of a conflict between the
following summary of eligibility criteria and the Credit Agreement, the
eligibility criteria in the Credit Agreement shall govern.  Capitalized terms used herein and not
otherwise defined herein shall have the meanings specified in the Credit
Agreement.

 

	
   

  	
   

  	
  SHS

  	
   

  	
  eBioCare

  	
   

  	
  Apex

  	
   

  	
  Allcare

  	
   

  	
  Prescription

  City

  	
   

  	
  Infinity

  	
   

  	
  OptNY

  	
   

  	
  OptVA

  	
   

  	
  Medcare

  	
   

  	
  CCS

  	
   

  	
  Total

  	
   

  
	
  A/R Aging:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Current

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31 - 60 Days

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  61 - 90 Days

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  91-120 Days

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  121-150 Days

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  151-180 Days

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total A/R Aging

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less Ineligibles:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A/R over 150 Days

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cross-Aged Payors (<150)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Private (<150)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other Ineligible 3rd Party (< 150)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit Balances (>150)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eligible Receivables

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Liquidity Rates

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Eligible Collateral

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Advance Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Availability

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Inventory per 12/31/03 Perpetual / Physical

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ineligibles:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Locations w/ Less than $100M in Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Locations w/o Landlord Waivers

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Out on consignment

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Work in Process Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Excess / Obsolete Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Ineligible

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eligible Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Advance Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subject Swap Reserve

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Available Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL AVAILABILITY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OUTSTANDING BALANCE

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Rent Reserve

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Swap Reserve

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET AVAILABILITY

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MAXIMUM COMMITMENT AMOUNT

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(b)                                 As
of the date hereof, Borrowers are in compliance with each of the terms,
covenants, and conditions set forth in the Credit Agreement. 

 

(c)                                  Within
the ninety (90) days preceding and through the date hereof, no Borrower has
received any notice from any state or federal regulatory or law enforcement
agency citing specific deficiencies that (i) amount to a substandard quality of
care; or (ii) would otherwise threaten such Borrower’s continued participation in
the Medicare, Medicaid, and/or any other applicable government program.

 

(d)                                 Within
the ninety (90) days preceding and through the date hereof, no Borrower has
been subject to any non-routine investigatory visits by or received any
correspondence from any state or federal agency alleging possible improper
billing or claims activity.

 

(e)                                  After
the making of the advance requested by this Certificate, the total aggregate
principal amount outstanding under the Credit Agreement will be approximately 

$                         .

 

(f)                                    Borrower’s
most recent Accounts Receivable Aging Report, dated as
of                            (including
all necessary and appropriate documentation required to interpret the Report
and to complete this Borrowing Base Certificate), is attached hereto and made a
part hereof. All Accounts included on such reports have been properly billed
and collections have been properly posted to the respective Accounts to reduce
Eligible Accounts accordingly.  All
proceeds of Accounts that have not been posted to the Accounts reported herein
(including unbilled and/or estimated Accounts) have been disclosed to Lender on
line 32b herein.

 

(g)                                 As
of the date hereof, Borrowers have paid all State and Federal payroll
withholding taxes immediately due and payable through
                 .

 

(h)                                 As
of the date hereof, Borrowers have directed all Account Debtors to deliver all
payments on Accounts to the existing Blocked Accounts or Concentration Account,
in accordance with Section 6.18 in the Credit Agreement, and as of the
date hereof, Borrowers have not diverted or permitted to be diverted any such
payments on Accounts, whether such diversion is for the benefit of Borrowers or
any third party.

 

(i)                                     Borrowers
are current on all real and personal property lease and rent obligations
through the date hereof.

 

 

	
   

  	
  CURATIVE HEALTH SERVICES, INC., a Minnesota corporation, individually
  and as Borrower Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

 

EXHIBIT 5.1(a)

 

[FORM OF COMPLIANCE CERTIFICATE (QUARTERLY)]

 

            ,
20    

 

 

General Electric Capital Corporation, as Agent

2 Bethesda Metro Center, Suite 600

Bethesda, Maryland  20814

 

Re:                               Compliance
Certificate (Quarterly)

 

Ladies and Gentlemen:

 

This certificate is given in accordance with that certain Amended and
Restated Credit Agreement, dated as of April 23, 2004 (as the same may be
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), by and among Curative Health Services, Inc., a Minnesota
corporation formerly known as Curative Holding Co. (“Borrower Representative”),
eBioCare.com, Inc., Hemophilia Access, Inc., Apex Therapeutic Care, Inc., CHS
Services, Inc., Curative Health Services of New York, Inc., Optimal Care Plus,
Inc., Infinity Infusion, LLC, Infinity Infusion II, LLC, Infinity Infusion
Care, Ltd., MedCare, Inc., Curative Pharmacy Services, Inc., Curative Health
Services Co., a Minnesota corporation formerly known as Curative Health
Services, Inc., and Critical Care Systems, Inc. (each a “Borrower” and
collectively with Borrower Representative, the “Borrowers”), any
Additional Borrowers that become party thereto, the Lenders listed on the
signature pages thereof, and General Electric Capital Corporation, as lender
and agent. Capitalized terms used herein without definition shall have the
meanings assigned to such terms in the Credit Agreement. I hereby certify that:

 

(a)                                  I
am the Chief Financial Officer of Borrower Representative;

 

(b)                                 The enclosed
consolidated and consolidating balance sheets, and related consolidated and
consolidating statements of income and cash flows fairly present the financial
condition of Credit Parties as for the Fiscal Quarter indicated, and I have
reviewed such statements in preparing this certificate;

 

(c)                                  I have reviewed the
terms of the Credit Agreement and have made, or caused to be made under my
supervision, a review in reasonable detail of the transactions and financial
condition of Credit Parties during the accounting period covered by the
enclosed financial statements.

 

(d)                                 The examination in
paragraph (c) did not disclose and I have no knowledge of the existence of any
condition or event that constitutes a Default or an Event of Default as of the
date of this certificate except as set forth below.

 

 

Described below (or in a separate attachment hereto) are the
exceptions, if any, to paragraph (d), listing in detail the nature of the
conditions or event, the period during which it has existed and the action
which Credit Parties have taken, are taking or propose to take with respect to
each such condition or event.

 

(e)                                  Except as disclosed
in paragraph (d) above, Credit Parties are in compliance with the financial
covenants contained in Article 7 of the Credit Agreement, as detailed in
the attached work sheet.

 

The foregoing certifications and the financial statements delivered
with this Compliance Certificate in support hereof are made and delivered
this            day
of                      ,
20          .

 

	
   

  	
  BORROWER REPRESENTATIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH
  SERVICES, INC.,

  a Minnesota corporation formerly known as Curative Holding Co., individually
  and as Borrower Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
							

 

 

Worksheet Regarding

Financial Covenant Compliance

 

 

[to be attached by Borrower Representative]

 

 

EXHIBIT 5.1(b)

 

[FORM OF COMPLIANCE CERTIFICATE (ANNUAL)]

 

              ,
20         

 

 

General Electric Capital Corporation, as Agent

2 Bethesda Metro Center, Suite 600

Bethesda, Maryland  20814

 

Re:                               Compliance
Certificate (Annual)

 

Ladies and Gentlemen:

 

This certificate is given in accordance with that certain Credit
Agreement, dated as of June 9, 2003 (as the same may be amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
by and among Curative Health Services, Inc., a Minnesota corporation formerly
known as Curative Holding Co. (“Borrower Representative”), eBioCare.com,
Inc., Hemophilia Access, Inc., Apex Therapeutic Care, Inc., CHS Services, Inc.,
Curative Health Services of New York, Inc., Optimal Care Plus, Inc., Infinity
Infusion, LLC, Infinity Infusion II, LLC, Infinity Infusion Care, Ltd.,
MedCare, Inc., Curative Pharmacy Services, Inc., Curative Health Services Co.,
a Minnesota corporation formerly known as Curative Health Services, Inc., and
Critical Care Systems, Inc. (each a “Borrower” and collectively with
Borrower Representative, the “Borrowers”), any Additional Borrowers that
become party thereto, the Lenders listed on the signature pages thereof, and
General Electric Capital Corporation, as lender and agent.  Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Credit
Agreement. I hereby certify that:

 

(a)                                  I
am the Chief Financial Officer of Borrower Representative;

 

(b)                                 The enclosed audited
consolidated and consolidating balance sheets, and related audited consolidated
and consolidating statements of income and cash flows fairly present the
financial condition of Credit Parties as for the Fiscal Year indicated, such
statements have no “going concern” or other qualification or exception by an
accounting firm, and I have reviewed such statements in preparing this
certificate;

 

(c)                                  I have reviewed the
terms of the Credit Agreement and have made, or caused to be made under my
supervision, a review in reasonable detail of the transactions and financial
condition of Credit Parties during the accounting period covered by the
enclosed financial statements.

 

(d)                                 The examination in
paragraph (c) did not disclose and I have no knowledge of the existence of any
condition or event that constitutes a Default or an Event of Default as of the
date of this certificate except as set forth below.

 

 

Described below (or in a separate attachment hereto) are the
exceptions, if any, to paragraph (d), listing in detail the nature of the
conditions or event, the period during which it has existed and the action
which Credit Parties have taken, are taking or propose to take with respect to
each such condition or event.

 

(e)                                  Except as disclosed
in paragraph (d) above, Credit Parties are in compliance with the financial
covenants contained in Article 7 of the Credit Agreement, as detailed in
the attached work sheet.

 

The foregoing certifications and the financial statements delivered
with this Compliance Certificate in support hereof are made and delivered
this           day
of            ,
20      .

 

	
   

  	
  BORROWER REPRESENTATIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH
  SERVICES, INC.,
a Minnesota
  corporation formerly known as Curative Holding Co., individually and as
  Borrower Representative

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
							

 

 

Worksheet Regarding

Financial Covenant Compliance

 

 

[to be attached by Borrower Representative]

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