Document:

Exhibit 10.1

	$125,000,000

	CREDIT AGREEMENT

	among

	BRADLEY PHARMACEUTICALS, INC.,
as
Borrower,

	and

	CERTAIN SUBSIDIARIES OF THE
BORROWER,
as Guarantors,

	THE LENDERS PARTIES HERETO,

	WACHOVIA BANK, NATIONAL
ASSOCIATION,
as Administrative Agent,

	GENERAL ELECTRIC CAPITAL
CORPORATION
and
CITIBANK F.S.B.,
as Co-Syndication Agents,

	and

	PNC BANK, National Association

and
KEYBANK NATIONAL ASSOCIATION,
as Co-Documentation Agents

	Dated as of September 28, 2004

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

 

 
	 	
	 

 

  
  

 
	 TABLE OF CONTENTS
      
	 	 	Page
      

    
	 ARTICLE I DEFINITIONS 	  	1
	         	  Section 1.1	 Defined Terms	  	  1
	  	  Section 1.2	 Other Definitional Provisions	  	  27
	  	  Section 1.3	 Accounting Terms	  	  27
	  	  Section 1.4	 Time References	  	  28
	 ARTICLE II THE LOANS; AMOUNT AND
      TERMS  	  	 28
	  	  Section 2.1	 Revolving Loans	  	  28
	  	  Section 2.2	 Term Loan	  	 30
	  	  Section 2.3	 Letter of Credit Subfacility	  	32
	  	  Section 2.4	 Swingline Loan Subfacility	  	 35
	  	  Section 2.5	 [Reserved]	  	 37
	  	  Section 2.6	 Fees	  	 37
	  	  Section 2.7	 Commitment Reductions	  	 38
	  	  Section 2.8	 Prepayments	  	 38
	  	  Section 2.9	 Lending Offices	  	 41
	  	  Section 2.10	 Default Rate	  	 41
	  	  Section 2.11	 Conversion Options	  	 41
	  	  Section 2.12	 Computation of Interest and Fees	  	  42
	  	  Section 2.13	 Pro Rata Treatment and Payments	  	  43
	  	  Section 2.14	 Non-Receipt of Funds by the Administrative
      Agent	  	45
	  	  Section 2.15	 Inability to Determine Interest Rate	  	  46
	  	  Section 2.16	 Illegality	  	 46
	  	  Section 2.17	 Requirements of Law	  	 47
	  	  Section 2.18	 Indemnity	  	 48
	  	  Section 2.19	 Taxes	  	 49
	  	  Section 2.20	 Indemnification; Nature of Issuing
      Lender's Duties	  	51
	 ARTICLE III REPRESENTATIONS AND
      WARRANTIES 	  	52
	  	  Section 3.1	 Financial Condition	  	 52
	  	  Section 3.2	 No Change	  	 53
	  	  Section 3.3	 Corporate Existence; Compliance with
      Law	  	  53
	  	  Section 3.4	 Corporate Power; Authorization; Enforceable
      Obligations	  	54
	  	  Section 3.5	 No Legal Bar; No Default	  	  54
	  	  Section 3.6	 No Material Litigation	  	 55
	  	  Section 3.7	 Investment Company Act	  	 55
	  	  Section 3.8	 Margin Regulations	  	 55
	  	  Section 3.9	 ERISA	  	 55
	  	  Section 3.10	 Environmental Matters	  	 56
	  	  Section 3.11	 Use of Proceeds	  	 57
	  	  Section 3.12	 Subsidiaries	  	 57
	  	  Section 3.13	 Ownership	  	 57
	  	  Section 3.14	 Indebtedness	  	 57
	  	  Section 3.15	 Taxes	  	 58
	  	  Section 3.16	 Intellectual Property	  	 58

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	  	  Section 3.17	 Solvency	  	 59
	  	  Section 3.18	 Investments	  	 59
	  	  Section 3.19	 Location of Collateral	  	 59
	  	  Section 3.20	 Brokers' Fees	  	 59
	  	  Section 3.21	 Labor Matters	  	 59
	  	  Section 3.22	 Security Documents	  	 60
	  	  Section 3.23	 Accuracy and Completeness of Information	  	 60
	  	  Section 3.24	 Fraud and Abuse	  	 60
	  	  Section 3.25	 Licensing and Accreditation	  	  61
	  	  Section 3.26	 Other Regulatory Protection	  	  61
	  	  Section 3.27	 Material Contracts	  	 61
	  	  Section 3.28	 Insurance	  	 61
	  	  Section 3.29	 Reimbursement from Third Party Payors	  	 62
	  	  Section 3.30	 Other Agreements	  	 62
	  	  Section 3.31	 Classification as Senior Indebtedness	  	 62
	  	  Section 3.32	 Foreign Assets Control Regulations,
      Etc	  	 62
	 ARTICLE IV CONDITIONS PRECEDENT
      	  	63
	  	  Section 4.1	 Conditions to Closing Date and Initial
      Extensions of Credit	  	63
	  	  Section 4.2	 Conditions to All Extensions of
      Credit	  	 68
	 ARTICLE V AFFIRMATIVE COVENANTS
      	  	69
	  	  Section 5.1	 Financial Statements	  	 69
	  	  Section 5.2	 Certificates; Other Information	  	 70
	  	  Section 5.3	 Payment of Obligations	  	 71
	  	  Section 5.4	 Conduct of Business and Maintenance
      of Existence	  	71
	  	  Section 5.5	 Maintenance of Property; Insurance	  	 71
	  	  Section 5.6	 Inspection of Property; Books and
      Records; Discussions	  	72
	  	  Section 5.7	 Notices	  	 72
	  	  Section 5.8	 Environmental Laws	  	 74
	  	  Section 5.9	 Financial Covenants	  	 74
	  	  Section 5.10	 Additional Guarantors	  	 75
	  	  Section 5.11	 Compliance with Law	  	 75
	  	  Section 5.12	 Pledged Assets	  	 76
	  	  Section 5.13	 Post-Closing Covenants	  	 76
	 ARTICLE VI NEGATIVE COVENANTS
      	  	77
	  	  Section 6.1	 Indebtedness	  	 77
	  	  Section 6.2	 Liens	  	 78
	  	  Section 6.3	 Nature of Business	  	 78
	  	  Section 6.4	 Consolidation, Merger, Sale or Purchase
      of Assets, etc	  	78
	  	  Section 6.5	 Advances, Investments and Loans	  	 79
	  	  Section 6.6	 Transactions with Affiliates	  	 79
	  	  Section 6.7	 Ownership of Subsidiaries; Restrictions	  	 79
	  	  Section 6.8	 Fiscal Year; Organizational Documents;
      Material Contracts	  	80
	  	  Section 6.9	 Limitation on Restricted Actions	  	 80
	  	  Section 6.10	 Restricted Payments	  	 80
	  	  Section 6.11	 Sale Leasebacks	  	 81
	  	  Section 6.12	 No Further Negative Pledges	  	 81

	 	 ii	 

 

  
  

	  	  Section 6.13	 Operating Lease Obligations	  	 81
	 ARTICLE VII EVENTS OF DEFAULT
      	  	82
	  	  Section 7.1	 Events of Default	  	 82
	  	  Section 7.2	 Acceleration; Remedies	  	 85
	 ARTICLE VIII THE AGENT
       	  	85
	  	  Section 8.1	 Appointment	  	 85
	  	  Section 8.2	 Delegation of Duties	  	 86
	  	  Section 8.3	 Exculpatory Provisions	  	 .86
	  	  Section 8.4	 Reliance by Administrative Agent	  	 86
	  	  Section 8.5	 Notice of Default	  	 87
	  	  Section 8.6	 Non-Reliance on Administrative Agent
      and Other Lenders	  	87
	  	  Section 8.7	 Indemnification	  	 88
	  	  Section 8.8	 The Administrative Agent in Its
      Individual Capacity	  	88
	  	  Section 8.9	 Successor Administrative Agent	  	 88
	  	  Section 8.10	 Other Agents	  	 89
	 ARTICLE IX MISCELLANEOUS
       	  	89
	  	  Section 9.1	 Amendments, Waivers and Release
      of Collateral	  	  
	  	  Section 9.2	 Notices	  	 92
	  	  Section 9.3	 No Waiver; Cumulative Remedies	  	 93
	  	  Section 9.4	 Survival of Representations and
      Warranties	  	 93
	  	  Section 9.5	 Payment of Expenses and Taxes	  	 93
	  	  Section 9.6	 Successors and Assigns; Participations;
      Purchasing Lenders	  	94
	  	  Section 9.7	 Adjustments; Set-off	  	 97
	  	  Section 9.8	 Table of Contents and Section Headings	  	 98
	  	  Section 9.9	 Counterparts	  	 98
	  	  Section 9.10	 Effectiveness	  	 98
	  	  Section 9.11	 Severability	  	 99
	  	  Section 9.12	 Integration	  	 99
	  	  Section 9.13	 Governing Law	  	 99
	  	  Section 9.14	 Consent to Jurisdiction and Service
      of Process	  	99
	  	  Section 9.15	 Arbitration	  	 100
	  	  Section 9.16	 Confidentiality	  	 101
	  	  Section 9.17	 Acknowledgments	  	 102
	  	  Section 9.18	 Waivers of Jury Trial; Waiver of
      Consequential Damages	  	102
	  	  Section 9.19	 Patriot Act Notice	  	 102
	 ARTICLE X GUARANTY 
      	  	103
	  	  Section 10.1	 The Guaranty	  	 103
	  	  Section 10.2	 Bankruptcy	  	 103
	  	  Section 10.3	 Nature of Liability	  	 104
	  	  Section 10.4	 Independent Obligation	  	 104
	  	  Section 10.5	 Authorization	  	 104
	  	  Section 10.6	 Reliance	  	 105
	  	  Section 10.7	 Waiver	  	 105
	  	  Section 10.8	 Limitation on Enforcement	  	  106
	  	  Section 10.9	 Confirmation of Payment	  	  106

 
	 	
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	Schedules
      

    			 
	 	 	 	 
	Schedule 1.1-1		Account Designation Letter	 
	Schedule 1.1-2		Permitted Investments	 
	Schedule 1.1-3		Permitted Liens	 
	Schedule 1.1-4		Consolidated EBITDA	 
	Schedule 2.1(a)		Schedule of Lenders and Commitments	 
	Schedule 2.1(b)(i)		Form of Notice of Borrowing	 
	Schedule 2.1(e)		Form of Revolving Note	 
	Schedule 2.2(d)		Form of Term Note	 
	Schedule 2.4(d)		Form of Swingline Note	 
	Schedule 2.11		Form of Notice of Conversion/Extension	 
	Schedule 2.19		Tax Exempt Certificate	 
	Schedule 3.12		Subsidiaries	 
	Schedule 3.16		Intellectual Property	 
	Schedule 3.19(a)		Location of Real Property	 
	Schedule 3.19(b)		Location of Collateral	 
	Schedule 3.19(c)		Chief Executive Offices	 
	Schedule 3.21		Labor Matters	 
	Schedule 3.27		Material Contracts	 
	Schedule 3.28		Insurance	 
	Schedule 4.1-1		Form of Secretary’s Certificate	 
	Schedule 4.1-2		Litigation	 
	Schedule 4.1-3		Form of Solvency Certificate	 
	Schedule 4.1-4		Mortgaged Properties	 
	Schedule 5.10		Form of Joinder Agreement	 
	Schedule 6.1(b)		Indebtedness	 
	Schedule 9.2		Lenders’ Lending Offices	 
	Schedule 9.6(c)		Form of Commitment Transfer Supplement	 

 
	 	
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	     CREDIT AGREEMENT,
dated as of September 28, 2004, among BRADLEY PHARMACEUTICALS, INC., a Delaware
corporation (the “Borrower”), those Domestic Subsidiaries of the Borrower
identified as a “Guarantor” on the signature pages hereto and such other
Domestic Subsidiaries of the Borrower as may from time to time become a party hereto
(each a “Guarantor” and, collectively, the “Guarantors”), the
several banks and other financial institutions as are, or may from time to time become
parties to this Agreement (collectively, the “Lenders”; and individually, a
“Lender”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, as administrative agent for the Lenders hereunder (in such capacity, the
“Administrative Agent”).

	W I T N E S S E T H:

	     WHEREAS, the
Borrower has requested that the Lenders make loans and other financial accommodations to
the Borrower in the amount of up to $125,000,000, as more particularly described herein;
and

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

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

	ARTICLE I

	DEFINITIONS

	     Section 1.1Defined Terms.

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

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

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

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

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

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

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

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

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

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

 
	 	
2	 

 

  
  

 
	
      

    
	    Level	   Leverage

      Ratio	  Alternate

      Base Rate 

      Margin 	 LIBOR Rate 

      Margin and 

      Letter of Credit

      Fee	   Commitment

      Fee
	
      

    
	 I	 > 2.50 to 1.0	 1.75%	 2.75%	 0.50%
	
      

    
	 II	 > 2.00 to 1.0 but <
      2.50 to 1.0	 1.50%	 2.50%	 0.50%
	
      

    
	 III	 > 1.50 to 1.0 but <
      2.00 to 1.0	 1.25%	 2.25%	 0.50%
	
      

    
	 IV	 < 1.50 to 1.0	 1.00%	 2.00%	 0.375%
	
      

    

	     The Applicable
Percentage shall, in each case, be determined and adjusted quarterly on the date five
(5) Business Days after the date on which Administrative Agent has received from the
Borrower the quarterly financial information and certifications required to be delivered
to Administrative Agent and Lenders in accordance with the provisions of Sections 5.1(a)
and 5.1(b) (each an “Interest Determination Date”). Subject to the last
sentence of this definition, such Applicable Percentage shall be effective from such
Interest Determination Date until the next such Interest Determination Date.
Notwithstanding the foregoing, the initial Applicable Percentages shall be set at Level
II until the first Interest Determination Date to occur after December 31, 2004. If
Borrower shall fail to provide the quarterly financial information and certifications in
accordance with the provisions of Sections 5.1(a) and 5.1(b), the Applicable Percentage
shall, on the date five (5) Business Days after the date by which Borrower was so
required to provide such financial information and certifications to Administrative
Agent and Lenders, be based on Level I until such time as such information and
certifications are provided, whereupon the Level shall be determined by the then current
Leverage Ratio.

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

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

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

	     “Bioglan” shall
mean Bioglan Pharmaceuticals, Inc.

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

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

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

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

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

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

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

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

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

 
	 	
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	     “Change of
Control” shall mean the occurrence of any of the following: (a) any “person” or
“group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule l3d-3
under the Securities Exchange Act of 1934) of more than 25% of then outstanding Voting
Stock of the Borrower, measured by voting power rather than the number of shares, but
shall not include any transfer of Voting Stock of the Borrower by Daniel Glassman for
estate planning purposes to any family members of Daniel Glassman, or an entity
controlled by any thereof or a trust for the benefit of any thereof so long as Daniel
Glassman remains chairman of the board of directors and chief executive officer of the
Borrower; (b) Continuing Directors shall cease for any reason to constitute a majority
of the members of the board of directors of the Borrower then in office or (c) the
occurrence of a “Change of Control” (or any comparable term) under, and as
defined in, the documents evidencing or governing any Subordinated Indebtedness.

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

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

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

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

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

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

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

	     “Commitment
Period” shall mean (a) with respect to Revolving Loans, the period from and
including the Closing Date to but excluding the Maturity Date and (b) with respect to
Letters of Credit, the period from and including the Closing Date to but excluding the
date that is 30 days prior to the Maturity Date.

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

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

 
	 	
5	 

 

 

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

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

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

	     “Consolidated
Net Income” shall mean, for any period, net income (excluding extraordinary losses
up to $3,000,000 in any twelve month period and excluding extraordinary gains) after
taxes for such period of the Borrower and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.

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

 
	 	
6	 

 

 

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

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

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

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

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

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

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

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

 
	 	
7	 

 

 

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

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

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

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

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

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

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

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

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

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

 
	 	
8	 

 

 

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

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

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

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

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

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

	     “Fixed Charge
Coverage Ratio” shall mean, with respect to the Borrower  and its Subsidiaries on a
consolidated basis for the twelve-month period ending  on the last day of any fiscal
quarter of the Borrower, the ratio of (i)  Consolidated EBITDA for such period minus
Consolidated Capital Expenditures for  such period to (ii) the sum of Consolidated
Interest Expense for such period  plus Scheduled Funded Debt Payments for such period
plus cash taxes paid or  payable during such period plus Restricted Payments made during
such period.  Notwithstanding the foregoing, for purposes of calculating the Fixed Charge
Coverage Ratio for the fiscal quarters ending December 31, 2004, March 31, 2005  and June
30, 2005, the Fixed Charge Coverage Ratio shall be determined by  annualizing the
Scheduled Funded Debt Payments during such fiscal quarters such  that (i) for the
calculation of the Fixed Charge Coverage Ratio as of December  31, 2004, the Scheduled
Funded Debt Payments for the fiscal quarter ending  December 31, 2004 would be multiplied
by four (4), (ii) for the calculation of  the Fixed Charge Coverage Ratio as of March 31,
2005, the Scheduled Funded Debt  Payments for 

 
	 	
9	 

 

 

	the two fiscal quarter period then ending would
be multiplied by  two (2) and (iii) for the calculation of the Fixed Charge Coverage
Ratio as of  June 30, 2005, the Scheduled Funded Debt Payments for the three fiscal
quarter  period then ending would be multiplied by one and one-third (1 1/3).

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

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

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

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

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

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

 
	 	
10	 

 

 

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

	     “Guaranty
Obligations” shall mean, with respect to any Person, without  duplication, any
obligations of such Person (other than endorsements in the  ordinary course of business
of negotiable instruments for deposit or collection)  guaranteeing or intended to
guarantee any Indebtedness of any other Person in  any manner, whether direct or
indirect, and including without limitation any  obligation, whether or not contingent,
(i) to purchase any such Indebtedness or  any property constituting security therefor,
(ii) to advance or provide funds or  other support for the payment or purchase of any
such Indebtedness or to  maintain working capital, solvency or other balance sheet
condition of such  other Person (including without limitation keep well agreements,
maintenance  agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease or  purchase
Property, securities or services primarily for the purpose of assuring  the holder of
such Indebtedness, or (iv) to otherwise assure or hold harmless  the holder of such
Indebtedness against loss in respect thereof. The amount of  any Guaranty Obligation
hereunder shall (subject to any limitations set forth  therein) be deemed to be an amount
equal to the outstanding principal amount (or  maximum principal amount, if larger) of
the Indebtedness in respect of which  such Guaranty Obligation is made.

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

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

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

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

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

 
	 	
11	 

 

 

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

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

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

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

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

 
	 	
12	 

 

 

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

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

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

	 	     provided
that the foregoing provisions are subject to the following:

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

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

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

	 	     (D)
any Interest Period in respect of any Loan that  would otherwise extend beyond the
Maturity Date shall end on  the Maturity Date, and further with regard to the Term Loan,
no Interest Period shall extend beyond any principal  amortization payment date unless
the portion of such Term Loan  consisting of Alternate Base Rate Loans together with the
portion of such Term Loan consisting of LIBOR Rate Loans with  Interest Periods expiring
prior to or concurrently with the  date such principal amortization payment date is due,
is at  least equal to the amount of such principal amortization  payment due on such
date; and

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

 
	 	
13	 

 

 

	 	combined at
the end of existing Interest  Periods to constitute a new LIBOR Rate Loan with a single
Interest Period.

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

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

	     “Issuing
Lender” shall mean Wachovia.

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

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

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

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

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

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

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

 
	 	
14	 

 

 

	offered to leading banks at approximately 11:00
A.M. London  time, two Business Days prior to the commencement of the applicable Interest
Period for settlement in immediately available funds by leading banks in the  London
interbank market for a period equal to the Interest Period selected.

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

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

	LIBOR Rate = 	LIBOR 
      

      1.00 - Eurodollar Reserve Percentage  	 

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

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

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

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

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

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

 
	 	
15	 

 

 

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

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

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

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

	     “Material
Contract” shall mean any contract or other arrangement,  whether written or oral, to
which any Credit Party or any of its Subsidiaries is  a party as to which the breach,
nonperformance, cancellation or failure to renew  by any party thereto could reasonably
be expected to have a Material Adverse  Effect.

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

	     “Maturity Date” shall
mean the earlier to occur of (i) September 28,  2009; and (ii) May 15, 2008, if on a Pro
Forma Basis after giving effect to the  redemption of the Convertible Notes on June 15,
2008 as calculated and set forth  on the officer’s certificate of the Borrower
delivered to the Lenders pursuant  to Section 5.2(b) for the fiscal quarter ending March
31, 2008, (A) the Senior  Leverage Ratio shall be greater than the ratio that is 0.25
lower than the  Senior Leverage Ratio then applicable, (B) there shall be less than
$10,000,000  of borrowing availability under Section 2.1 or (C) a Default or Event of
Default  shall then exist or would exist after giving effect thereto.

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

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

 
	 	
16	 

 

 

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

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

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

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

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

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

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

 
	 	
17	 

 

 

	or any person succeeding to the  functions of
any of the foregoing) promulgated pursuant to or in connection with  any of the foregoing
having the force of law, as each may be amended,  supplemented or otherwise modified from
time to time.

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

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

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

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

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

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

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

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

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

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

 
	 	
18	 

 

 

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

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

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

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

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

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

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

	     “Permitted
Acquisition” shall mean an acquisition or any series of  related acquisitions by a
Credit Party of (a) all or substantially all of the  assets or a majority of the
outstanding Voting Stock or economic interests of a  Person that is incorporated, formed
or organized in the United States or (b) any  division, line of business or other
business unit of a Person that is  incorporated, formed or organized in the United States
(such Person or such  division, line of business or other business unit of such Person
shall be  referred to herein as the “Target”), in each case that is a type of
business (or  assets used in a type of business) permitted to be engaged in by the Credit
Parties and their Subsidiaries pursuant to Section 6.4 hereof, so long as (i) no  Default
or Event of Default shall then exist or would exist after giving effect  thereto, (ii)
the Credit Parties shall demonstrate to the reasonable  satisfaction of the
Administrative Agent and the Required Lenders that, after  giving effect to the
acquisition on a pro forma basis, the Credit Parties are in  compliance with each of the
financial covenants set forth in Section 5.9, (iii)  the Administrative Agent, on behalf
of the Lenders, shall have received (or  shall receive in connection with the closing of
such acquisition) a first  priority perfected security interest in all property
(including, without  limitation, Capital Stock and real estate) acquired with respect to
the Target  in accordance with the terms of Sections 5.10 and 5.12 and the Target, if a
Person, shall have executed a Joinder Agreement in accordance with the terms of  Section
5.10, (iv) the Administrative Agent and the Lenders shall have received  (A) a
description of the material terms of such acquisition, (B) audited  financial statements
(or, if unavailable, management-prepared 

 
	 	
19	 

 

 

	financial  statements) of the Target for its two
most recent fiscal years and for any  fiscal quarters ended within the fiscal year to
date and (C) consolidated  projected income statements of the Borrower and its
consolidated Subsidiaries  (giving effect to such acquisition), all in form and substance
reasonably  satisfactory to the Administrative Agent, (v) the Target shall have earnings
before interest, taxes, depreciation and amortization for the four fiscal  quarter period
prior to the acquisition date in an amount greater than $0, (vi)  such acquisition shall
not be a “hostile” acquisition and shall have been  approved by the Board of
Directors and/or shareholders of the applicable Credit  Party and the Target, (vii) after
giving effect to such acquisition, there shall  be at least $10,000,000 of borrowing
availability under the Revolving Committed  Amount and (viii) the aggregate consideration
(including without limitation  equity consideration, earn outs or deferred compensation
or non-competition  arrangements and the amount of Indebtedness and other liabilities
assumed by the  Credit Parties and their Subsidiaries) paid by the Credit Parties and
their  Subsidiaries (A) in connection with any individual acquisition shall not exceed
$20,000,000 and (B) for all acquisitions made during any twelve month period  shall not
exceed $30,000,000.

	     “Permitted
Investments” shall mean:

	 	     (i)
cash and Cash Equivalents;

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

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

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

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

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

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

	 	     (viii)
Permitted Acquisitions; and

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

 
	 	
20	 

 

 

	     “Permitted
Liens” shall mean:

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

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

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

	 	     (iv)
Liens for taxes, assessments, charges or other  governmental levies not yet due or as to
which the period of grace (not  to exceed 90 days), if any, related thereto has not
expired or which  are being contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on the books  of the any
Credit Party or its Subsidiaries, as the case may be, in  conformity with GAAP;

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

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

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

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

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

 
	 	
21	 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 
	 	
22	 

 

 

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

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

	     “Requirement
of Law” shall mean, as to any Person, the Certificate of  Incorporation and By-laws
or other organizational or governing documents of such  Person, and each law, treaty,
rule or regulation or determination of an  arbitrator or a court or other Governmental
Authority, in each case applicable  to or binding upon such Person or any of its property
or to which such Person or  any of its property is subject.

	     “Responsible
Officer” shall mean, as to any Credit Party, any of the  President, the Chief
Executive Officer, the Chief Financial Officer or any  Vice-President of such Credit
Party.

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

 
	 	
23	 

 

 

	amount of Restricted Payments as of June 30,
2005, the  amount of Restricted Payments for the three fiscal quarter period then ending
will be multiplied by one and one-third (1 1/3).

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

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

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

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

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

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

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

	     “Scheduled
Funded Debt Payments” shall mean, as of any date of  determination for the Borrower
and its Subsidiaries, the sum of all scheduled  payments of principal on Funded Debt for
the applicable period ending on the  date of determination (including the principal
component of payments due on  Capital Leases during the applicable period ending on the
date of  determination).

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

	     “SEC Letter” shall
mean that certain letter, dated July 12, 2004, from  the SEC to the Borrower relating to
the Borrower’s acquisition of Bioglan  Pharmaceuticals, Inc.

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

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

 
	 	
24	 

 

 

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

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

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

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

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

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

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

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

	     “Swingline
Lender” shall mean Wachovia.

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

 
	 	
25	 

 

 

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

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

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

	     “Term Loan” shall
have the meaning set forth in Section 2.2(a).

	     “Term Loan
Commitment” shall mean, with respect to each Term Loan  Lender, the commitment of
such Term Loan Lender to make its portion of the Term  Loan in a principal amount equal
to such Term Loan Lender’s Term Loan Commitment  Percentage of the Term Loan
Committed Amount (and for purposes of making  determinations of Requisite Lenders
hereunder after the Closing Date, the  principal amount outstanding on the Term Loan).

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

	     “Term Loan
Committed Amount” shall have the meaning set forth in  Section 2.2(a).

	     “Term Loan
Exposure” means, with respect to any Lender as of any date  of determination (i)
prior to the funding of the Term Loans, that Lender’s Term  Loan Commitment and (ii)
after the funding of the Term Loans, the outstanding  principal amount of the Term Loan
of that Lender.

	     “Term Loan
Lender” shall mean, as of any date of determination, any  Lender that holds a
portion of the outstanding Term Loan on such date.

	     “Term Note” or
“Term Notes” shall mean the promissory notes of Borrower  in favor of each of
the Term Loan Lenders evidencing the portion of the Term  Loan provided pursuant to
Section 2.2(d), individually or collectively, as  appropriate, as such promissory notes
may be amended, modified, restated,  supplemented, extended, renewed or replaced from
time to time.

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

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

	     “Trademarks” shall
mean (a) all trademarks, trade names, corporate  names, company names, business names,
fictitious business names, trade dress and  service marks, logos and other source or
business identifiers, and the goodwill  associated therewith, now existing or hereafter 

 
	 	
26	 

 

 

	adopted or acquired, all  registrations and
recordings thereof, and all applications in connection  therewith, whether in the United
States Patent and Trademark Office or in any  similar office or agency of the United
States, any State thereof or any other  country or any political subdivision thereof, or
otherwise, including, without  limitation, any thereof referred to in Schedule 3.16, and
(b) all renewals  thereof, including, without limitation, any thereof referred to in
Schedule  3.16.

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

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

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

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

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

	     “WCM” shall
mean Wachovia Capital Markets, LLC.

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

	     Section 1.2  Other
Definitional Provisions.

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

	 	     (b)
The words “hereof”, “herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this  Agreement as a whole and
not to any particular provision of this  Agreement, and Section, subsection, Schedule and
Exhibit references are  to this Agreement unless otherwise specified.

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

	     Section 1.3
Accounting Terms.

	     Unless otherwise
specified herein, all accounting terms used herein  shall be interpreted, all accounting
determinations hereunder shall be made, and  all financial statements required to 

 
	 	
27	 

 

 

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

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

	     For purposes of
computing the financial covenants set forth in Section  5.9 for any applicable test
period, any Permitted Acquisition or permitted sale  of assets (including a stock sale)
shall have been deemed to have taken place as  of the first day of such applicable test
period.

	     Section 1.4 Time
References.

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

	ARTICLE II

	THE LOANS; AMOUNT AND TERMS

	     Section 2.1 Revolving Loans.

	 	     (a)
Revolving Commitment. During the Commitment Period, subject to the terms and conditions
hereof, each Revolving Lender severally, but not jointly, agrees to make revolving
credit loans (“Revolving Loans”) to the Borrower from time to time in an
aggregate principal amount of up to FIFTY MILLION DOLLARS ($50,000,000) (as such
aggregate maximum amount may be reduced from time to time as provided in Section 2.7,
the “Revolving Committed Amount”) for the purposes hereinafter set forth;
provided, however, that (i) with regard to each Revolving Lender individually, the sum
of such Revolving Lender’s Revolving Commitment Percentage of outstanding Revolving
Loans plus such Revolving Lender’s Revolving Commitment Percentage of outstanding
Swingline Loans plus such Revolving Lender’s Revolving Commitment Percentage of 

 
	 	
28	 

 

 

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

	 	     (b)
Revolving Loan Borrowings.

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

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

	 	     (iii)
Advances. Each Revolving Lender will make its  Revolving Commitment Percentage of each
Revolving Loan  borrowing available to the Administrative Agent for the  account of the
Borrower at the office of the Administrative  Agent specified in Section 9.2, or at such
other office as the  Administrative Agent may designate in writing, by 1:00 P.M. on  the
date specified in the applicable Notice of Borrowing in  Dollars and in funds immediately
available to the  Administrative Agent. Such borrowing will then be 

 
	 	
29	 

 

 

	 	made
available to the Borrower by the Administrative Agent by  crediting the account of the
Borrower on the books of such  office with the aggregate of the amounts made available to
the  Administrative Agent by the Revolving Lenders and in like  funds as received by the
Administrative Agent.

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

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

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

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

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

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

	     Section 2.2 Term Loan.

	 	     (a)
Term Loan. Subject to the terms and conditions hereof and in reliance upon the
representations and warranties set forth herein, each Term Loan Lender severally agrees
to make available to the Borrower on the Closing Date such Term Loan Lender’s Term
Loan Commitment Percentage of a term loan in Dollars (the “Term Loan”) in the
aggregate principal amount of SEVENTY-FIVE MILLION DOLLARS ($75,000,000) (the “Term
Loan Committed Amount”) for the purposes hereinafter set forth. The Term Loan may
consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a combination thereof, as
Borrower may request; provided that on the Closing Date and on the two Business Days
following the Closing Date the Term Loan shall bear interest at the Alternate Base Rate.
LIBOR Rate Loans shall be made by each Term Loan Lender at its LIBOR Lending Office and
Alternate Base Rate Loans at its Domestic Lending Office. Amounts repaid or prepaid on
the Term Loan may not be reborrowed.

 
	 	
30	 

 

 

	 	     (b)
Repayment of Term Loan. The principal amount of the Term  Loan shall be repaid in twenty
(20) consecutive quarterly installments  unless accelerated sooner pursuant to Section
7.2 (as reduced pursuant  to Section 2.8) as follows:

		
	
      

    
	Principal Amortization 

      Payment  Date		Term Loan

      Principal Amortization Payment
	
      

    
	      December
      31, 2004		$3,750,000	
	
      

    
	        March
      31, 2005		$3,750,000	
	
      

    
	        June
      30, 2005		$3,750,000	
	
      

    
	      September
      30, 2005		$3,750,000	
	
      

    
	      December
      31, 2005		$3,750,000	
	
      

    
	        March
      31, 2006		$3,750,000	
	
      

    
	        June
      30, 2006		$3,750,000	
	
      

    
	      September
      30, 2006		$3,750,000	
	
      

    
	      December
      31, 2006		$3,750,000	
	
      

    
	        March
      31, 2007		$3,750,000	
	
      

    
	        June
      30, 2007		$3,750,000	
	
      

    
	      September
      30, 2007		$3,750,000	
	
      

    
	      December
      31, 2007		$3,750,000	
	
      

    
	        March
      31, 2008		$3,750,000	
	
      

    
	        June
      30, 2008		$3,750,000	
	
      

    
	      September
      30, 2008		$3,750,000	
	
      

    
	      December
      31, 2008		$3,750,000	
	
      

    
	        March
      31, 2009		$3,750,000	
	
      

    
	        June
      30, 2009		$3,750,000	
	
      

    
	        Maturity
      Date		Remaining principal balance	 
	
      

    

	 	     (c)
Interest on the Term Loan. Subject to the provisions of  Section 2.9, the Term Loan shall
bear interest as follows:

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

 
	 	
31	 

 

 

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

	 	     (d)
Term Notes. The Borrower’s obligation to pay each Term  Loan Lender’s Term Loan
shall be evidenced, upon such Term Loan  Lender’s request, by a Term Note made
payable to such Lender in  substantially the form of Schedule 2.2(d).

	     Section 2.3 Letter of Credit
      Subfacility.

	 	     (a)
Issuance. Subject to the terms and conditions hereof and of the LOC Documents, if any,
and any other terms and conditions which the Issuing Lender may reasonably require,
during the Commitment Period the Issuing Lender shall issue, and the Revolving Lenders
shall participate in, Letters of Credit for the account of the Borrower from time to
time upon request in a form acceptable to the Issuing Lender; provided, however, that
(i) the aggregate amount of LOC Obligations shall not at any time exceed TWO MILLION
FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) (the “LOC Committed Amount”), (ii)
the sum of outstanding Revolving Loans plus outstanding Swingline Loans plus LOC
Obligations shall not at any time exceed the Revolving Committed Amount, (iii) all
Letters of Credit shall be denominated in U.S. Dollars and (iv) Letters of Credit shall
be issued for lawful corporate purposes and may be issued as standby letters of credit,
including in connection with workers’ compensation and other insurance programs,
and trade letters of credit. Except as otherwise expressly agreed upon by all the
Revolving Lenders, no Letter of Credit shall have an original expiry date more than
twelve (12) months from the date of issuance; provided, however, so long as no Default
or Event of Default has occurred and is continuing and subject to the other terms and
conditions to the issuance of Letters of Credit hereunder, the expiry dates of Letters
of Credit may be extended annually or periodically from time to time on the request of
the Borrower or by operation of the terms of the applicable Letter of Credit to a date
not more than twelve (12) months from the date of extension; provided, further, that no
Letter of Credit, as originally issued or as extended, shall have an expiry date
extending beyond the date that is thirty days prior to the Maturity Date. Each Letter of
Credit shall comply with the related LOC Documents. The issuance and expiry date of each
Letter of Credit shall be a Business Day. Any Letters of Credit issued hereunder shall
be in a minimum original face amount of $100,000 or such lesser amount as approved by
the Issuing Lender. Wachovia shall be the Issuing Lender on all Letters of Credit issued
on or after the Closing Date.

	 	     (b)
Notice and Reports. The request for the issuance of a  Letter of Credit shall be
submitted to the Issuing Lender at least five  Business Days prior to the requested date
of issuance. The Issuing  Lender will promptly upon request provide to the Administrative
Agent  for dissemination to the Revolving Lenders a detailed report specifying  the
Letters of Credit which are then issued and outstanding and any  activity with respect
thereto which may have occurred since the date of  any prior report, and 

 
	 	
32	 

 

 

	 	including
therein, among other things, the  account party, the beneficiary, the face amount, expiry
date as well as  any payments or expirations which may have occurred. The Issuing Lender
will further provide to the Administrative Agent promptly upon request  copies of the
Letters of Credit. The Issuing Lender will provide to the  Administrative Agent promptly
upon request a summary report of the  nature and extent of LOC Obligations then
outstanding.

	 	     (c)
Participations. Each Revolving Lender upon issuance of a  Letter of Credit shall be
deemed to have purchased without recourse a  risk participation from the Issuing Lender
in such Letter of Credit and  the obligations arising thereunder and any collateral
relating thereto,  in each case in an amount equal to its Revolving Commitment Percentage
of the obligations under such Letter of Credit and shall absolutely,  unconditionally and
irrevocably assume, as primary obligor and not as  surety, and be obligated to pay to the
Issuing Lender therefor and  discharge when due, its Revolving Commitment Percentage of
the  obligations arising under such Letter of Credit. Without limiting the  scope and
nature of each Revolving Lender’s participation in any Letter  of Credit, to the
extent that the Issuing Lender has not been  reimbursed as required hereunder or under
any LOC Document, each such  Revolving Lender shall pay to the Issuing Lender its
Revolving  Commitment Percentage of such unreimbursed drawing in same day funds on  the
day of notification by the Issuing Lender of an unreimbursed  drawing pursuant to and in
accordance with the provisions of subsection  (d) hereof. The obligation of each
Revolving Lender to so reimburse the  Issuing Lender shall be absolute and unconditional
and shall not be  affected by the occurrence of a Default, an Event of Default or any
other occurrence or event. Any such reimbursement shall not relieve or  otherwise impair
the obligation of the Borrower to reimburse the  Issuing Lender under any Letter of
Credit, together with interest as  hereinafter provided.

	 	     (d)
Reimbursement. In the event of any drawing under any  Letter of Credit, the Issuing
Lender will promptly notify the Borrower  and the Administrative Agent. The Borrower
shall reimburse the Issuing  Lender on the day of drawing under any Letter of Credit
(with the  proceeds of a Revolving Loan obtained hereunder or otherwise) in same  day
funds as provided herein or in the LOC Documents. If the Borrower  shall fail to
reimburse the Issuing Lender as provided herein, the  unreimbursed amount of such drawing
shall bear interest at a per annum  rate equal to the ABR Default Rate. Unless the
Borrower shall  immediately notify the Issuing Lender and the Administrative Agent of
its intent to otherwise reimburse the Issuing Lender, the Borrower  shall be deemed to
have requested a Revolving Loan in the amount of the  drawing as provided in subsection
(e) hereof, the proceeds of which  will be used to satisfy the reimbursement obligations.
The Borrower’s  reimbursement obligations hereunder shall be absolute and
unconditional  under all circumstances irrespective of any rights of set-off,
counterclaim or defense to payment the Borrower may claim or have  against the Issuing
Lender, the Administrative Agent, the Lenders, the  beneficiary of the Letter of Credit
drawn upon or any other Person,  including without limitation any defense based on any
failure of the  Borrower to receive consideration or the legality, validity, regularity
or unenforceability of the Letter of Credit. The Issuing Lender will  promptly notify the
other Revolving Lenders of the amount of any  unreimbursed drawing and each Revolving
Lender shall promptly pay to

 
	 	
33	 

 

 

	 	the
Administrative Agent for the account of the Issuing Lender in  Dollars and in immediately
available funds, the amount of such  Revolving Lender’s Revolving Commitment
Percentage of such unreimbursed  drawing. Such payment shall be made on the day such
notice is received  by such Revolving Lender from the Issuing Lender if such notice is
received at or before 2:00 P.M., otherwise such payment shall be made  at or before 12:00
Noon on the Business Day next succeeding the day  such notice is received. If such
Revolving Lender does not pay such  amount to the Issuing Lender in full upon such
request, such Revolving  Lender shall, on demand, pay to the Administrative Agent for the
account of the Issuing Lender interest on the unpaid amount during the  period from the
date of such drawing until such Revolving Lender pays  such amount to the Issuing Lender
in full at a rate per annum equal to,  if paid within three Business Days of the date of
drawing, the Federal  Funds Effective Rate and thereafter at a rate equal to the
Alternate  Base Rate. Each Revolving Lender’s obligation to make such payment to
the Issuing Lender, and the right of the Issuing Lender to receive the  same, shall be
absolute and unconditional, shall not be affected by any  circumstance whatsoever and
without regard to the termination of this  Agreement or the Commitments hereunder, the
existence of a Default or  Event of Default or the acceleration of the Credit Party
Obligations  hereunder and shall be made without any offset, abatement, withholding  or
reduction whatsoever.

	 	     (e)
Repayment with Revolving Loans. On any day on which the  Borrower shall have requested,
or been deemed to have requested, a  Revolving Loan to reimburse a drawing under a Letter
of Credit, the  Administrative Agent shall give notice to the Revolving Lenders that a
Revolving Loan has been requested or deemed requested in connection  with a drawing under
a Letter of Credit, in which case a Revolving Loan  borrowing comprised entirely of
Alternate Base Rate Loans (each such  borrowing, a “Mandatory LOC Borrowing”)
shall be immediately made  (without giving effect to any termination of the Commitments
pursuant  to Section 7.2) pro rata based on each Revolving Lender’s respective
Revolving Commitment Percentage (determined before giving effect to any  termination of
the Commitments pursuant to Section 7.2) and the  proceeds thereof shall be paid directly
to the Issuing Lender for  application to the respective LOC Obligations. Each Revolving
Lender  hereby irrevocably agrees to make such Revolving Loans immediately upon  any such
request or deemed request on account of each Mandatory LOC  Borrowing in the amount and
in the manner specified in the preceding  sentence and on the same such date
notwithstanding (i) the amount of  Mandatory LOC Borrowing may not comply with the
minimum amount for  borrowings of Revolving Loans otherwise required hereunder, (ii)
whether any conditions specified in Section 4.2 are then satisfied,  (iii) whether a
Default or an Event of Default then exists, (iv)  failure for any such request or deemed
request for Revolving Loan to be  made by the time otherwise required in Section 2.1(b),
(v) the date of  such Mandatory LOC Borrowing, or (vi) any reduction in the Revolving
Committed Amount after any such Letter of Credit may have been drawn  upon; provided,
however, that in the event any such Mandatory LOC  Borrowing should be less than the
minimum amount for borrowings of  Revolving Loans otherwise provided in Section
2.1(b)(ii), the Borrower  shall pay to the Administrative Agent for its own account an
administrative fee of $500. In the event that any Mandatory LOC  Borrowing cannot for any
reason be made on the 

 
	 	
34	 

 

 

	 	date otherwise
required  above (including, without limitation, as a result of the commencement  of a
proceeding under the Bankruptcy Code with respect to any Credit  Party), then each such
Revolving Lender hereby agrees that it shall  forthwith fund (as of the date the
Mandatory LOC Borrowing would  otherwise have occurred, but adjusted for any payments
received from  the Borrower on or after such date and prior to such purchase) its
Participation Interests in the LOC Obligations; provided, further, that  in the event any
Revolving Lender shall fail to fund its Participation  Interest on the day the Mandatory
LOC Borrowing would otherwise have  occurred, then the amount of such Revolving Lender’s
unfunded  Participation Interest therein shall bear interest payable by such  Revolving
Lender to the Issuing Lender upon demand, at the rate equal  to, if paid within three
Business Days of such date, the Federal Funds  Effective Rate, and thereafter at a rate
equal to the Alternate Base  Rate.

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

	 	     (g)
Uniform Customs and Practices. The Issuing Lender shall  have the Letters of Credit be
subject to The Uniform Customs and  Practice for Documentary Credits, as published as of
the date of issue  by the International Chamber of Commerce (the “UCP”), in
which case the  UCP may be incorporated therein and deemed in all respects to be a part
thereof.

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

	     Section 2.4 Swingline Loan
      Subfacility.

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

	 	     (b)
Swingline Loan Borrowings.

 
	 	
35	 

 

 

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

	 	     (ii)
Repayment of Swingline Loans. Each Swingline  Loan borrowing shall be due and payable on
the Maturity Date.  The Swingline Lender may, at any time, in its sole discretion,  by
written notice to the Borrower and the Administrative  Agent, demand repayment of its
Swingline Loans by way of a  Revolving Loan borrowing, in which case the Borrower shall
be  deemed to have requested a Revolving Loan borrowing comprised  entirely of Alternate
Base Rate Loans in the amount of such  Swingline Loans; provided, however, that, in the
following  circumstances, any such demand shall also be deemed to have  been given one
Business Day prior to each of (A) the Maturity  Date, (B) the occurrence of any Event of
Default described in  Section 7.1(f), (C) upon acceleration of the Credit Party
Obligations hereunder, whether on account of an Event of  Default described in Section
7.1(f) or any other Event of  Default, and (D) the exercise of remedies in accordance
with  the provisions of Section 7.2 hereof (each such Revolving Loan  borrowing made on
account of any such deemed request therefor  as provided herein being hereinafter
referred to as “Mandatory  Swingline Borrowing”). Each Revolving Lender hereby
irrevocably agrees to make such Revolving Loans promptly upon  any such request or deemed
request on account of each  Mandatory Swingline Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such date  notwithstanding (1) the
amount of Mandatory Swingline  Borrowing may not comply with the minimum amount for
borrowings of Revolving Loans otherwise required hereunder,  (2) whether any conditions
specified in Section 4.2 are then  satisfied, (3) whether a Default or an Event of
Default then  exists, (4) failure of any such request or deemed request for  Revolving
Loans to be made by the time otherwise required in  Section 2.1(b)(i), (5) the date of
such Mandatory Swingline  Borrowing, or (6) any reduction in the Revolving Committed
Amount or termination of the Revolving Commitments immediately  prior to such Mandatory
Swingline Borrowing or  contemporaneously therewith. In the event that any Mandatory
Swingline Borrowing cannot for any reason be made on the date  otherwise required above
(including, without limitation, as a  result of the commencement of a proceeding under
the  Bankruptcy Code), then each Revolving Lender hereby agrees  that it shall forthwith
purchase (as of the date the Mandatory  Swingline Borrowing would otherwise have
occurred, but  adjusted for any payments received from the Borrower on or  after such
date and prior to such purchase) from the Swingline  Lender such participations in the
outstanding Swingline Loans  as shall be necessary to cause each such Revolving Lender to
share in such Swingline Loans ratably based upon its  respective Revolving Commitment
Percentage (determined before  giving effect to any termination of 

 
	 	
36	 

 

 

	 	the
Commitments pursuant  to Section 7.2); provided that (x) all interest payable on the
Swingline Loans shall be for the account of the Swingline  Lender until the date as of
which the respective participation  is purchased, and (y) at the time any purchase of
participations pursuant to this sentence is actually made, the  purchasing Revolving
Lender shall be required to pay to the  Swingline Lender interest on the principal amount
of such  participation purchased for each day from and including the  day upon which the
Mandatory Swingline Borrowing would  otherwise have occurred to but excluding the date of
payment  for such participation, at the rate equal to, if paid within  three Business
Days of the date of the Mandatory Swingline  Borrowing, the Federal Funds Effective Rate,
and thereafter at  a rate equal to the Alternate Base Rate.

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

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

	     Section 2.5 [Reserved].

	     Section 2.6 Fees.

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

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

 
	 	
37	 

 

 

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

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

	     Section 2.7 Commitment Reductions.

	 	     (a)
Voluntary Reductions. The Borrower shall have the right to  terminate or permanently
reduce the unused portion of the Revolving  Committed Amount at any time or from time to
time upon not less than  five Business Days’ prior notice to the Administrative
Agent (which  shall notify the Lenders thereof as soon as practicable) of each such
termination or reduction, which notice shall specify the effective date  thereof and the
amount of any such reduction which shall be in a  minimum amount of $1,000,000 or a whole
multiple of $500,000 in excess  thereof and shall be irrevocable and effective upon
receipt by the  Administrative Agent, provided that no such reduction or termination
shall be permitted if after giving effect thereto, and to any  prepayments of the Loans
made on the effective date thereof, the sum of  the outstanding Revolving Loans plus
outstanding Swingline Loans plus  LOC Obligations would exceed the Revolving Committed
Amount.

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

	     Section 2.8 Prepayments.

	 	     (a)
Optional Prepayments. The Borrower shall have the right to  prepay Loans in whole or in
part from time to time; provided, however,  that each partial prepayment of a Revolving
Loan and the Term Loan  shall be in a minimum principal amount of $1,000,000 and integral
multiples of $500,000 in excess thereof, and each partial prepayment of  a Swingline Loan
shall be in a minimum principal amount of $100,000 and  integral multiples of $100,000 in
excess thereof. The Borrower shall  give three Business Days’ irrevocable notice in
the case of LIBOR Rate  Loans and one Business Day’s irrevocable notice in the case
of  Alternate Base Rate Loans, to the Administrative Agent (which shall  notify the
Lenders thereof as soon as practicable). To the extent the  Borrower elects to prepay the
Term Loans, amounts prepaid under this  Section 2.8(a) shall be applied to the remaining
amortization payments  thereof on a pro rata basis, first to Alternate Base Rate Loans
and  then to LIBOR Rate Loans in direct order of Interest Period maturities.  All
prepayments under this Section 2.8(a) shall be subject to Section  2.18, but otherwise
without premium or penalty. Interest on the  principal amount prepaid shall be payable on
the next occurring  Interest Payment Date that would have occurred 

 
	 	
38	 

 

 

	 	had such Loans
not been  prepaid or, at the request of the Administrative Agent, interest on the
principal amount prepaid shall be payable on any date that a prepayment  is made
hereunder through the date of prepayment. Amounts prepaid on  the Revolving Loans and the
Swingline Loans may be reborrowed in  accordance with the terms hereof. Amounts prepaid
on the Term Loans may  not be reborrowed.

	 	     (b)
Mandatory Prepayments.

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

	 	     (ii)
Asset Dispositions. Promptly following any Asset  Disposition (or related series of Asset
Dispositions), the  Borrower shall prepay the Loans and cash collateralize the LOC
Obligations in an aggregate amount equal to 100% of the Net  Cash Proceeds derived from
such Asset Disposition (or related  series of Asset Dispositions) (such prepayment to be
applied  as set forth in clause (vi) below); provided, however, that  such Net Cash
Proceeds shall not be required to be so applied  to the extent the Borrower delivers to
the Administrative  Agent promptly following such Asset Disposition a certificate
stating that it intends to use such Net Cash Proceeds to  acquire like assets used in the
business of the Borrower and  its Subsidiaries within 180 days of the receipt of such Net
Cash Proceeds, it being expressly agreed that any Net Cash  Proceeds not so reinvested
shall be applied to prepay the  Loans and cash collateralize the LOC Obligations
immediately  thereafter (such prepayment to be applied as set forth in  clause (vi)
below).

	 	     (iii)
Issuances. Immediately upon receipt by any  Credit Party of proceeds from (A) any Debt
Issuance, the  Borrower shall prepay the Loans and cash collateralize the LOC
Obligations in an aggregate amount equal to one hundred  percent (100%) of the Net Cash
Proceeds of such Debt Issuance  to the Lenders (such prepayment to be applied as set
forth in  clause (vi) below) or (B) any Equity Issuance, the Borrower  shall prepay the
Loans and cash collateralize the LOC  Obligations in an aggregate amount equal to fifty
percent  (50%) of the Net Cash Proceeds of such Equity Issuance (such  prepayment to be
applied as set forth in clause (vi) below).

	 	     (iv)
Recovery Event. Immediately upon receipt by any  Credit Party of proceeds from any
Recovery Event, the Borrower  shall prepay the Loans and cash collateralize the LOC
Obligations in an aggregate amount equal to one hundred  percent (100%) of such cash
proceeds (such prepayment to be  applied as set forth in clause (vi) below; provided,
however,  that, so long as no Default or Event of Default has occurred  and is continuing
at the time of such Recovery Event, 

 
	 	
39	 

 

 

	 	(A) the
Borrower and its Subsidiaries may retain Net Cash Proceeds  consisting of business
interruption insurance proceeds and (B)  any other Net Cash Proceeds shall not be
required to be so  applied to the extent the Borrower delivers to the  Administrative
Agent a certificate stating that the Borrower  intends to use such Net Cash Proceeds to
repair, restore or  replace the assets subject to the Recovery Event within 180  days of
the receipt of such Net Cash Proceeds, it being  expressly agreed that any Net Cash
Proceeds not so reinvested  by the end of the applicable period shall be applied to repay
the Loans and/or cash collateralize the LOC Obligations  immediately thereafter (such
prepayment to be applied as set  forth in clause (vi) below).

	 	     (v)
Excess Cash Flow. Within 90 days after the end of  each fiscal year (commencing with the
fiscal year ending  December 31, 2005), the Borrower shall prepay the Loans and  cash
collateralize the LOC Obligations in an amount equal to  75% of the Excess Cash Flow
earned during such prior fiscal  year (such prepayments to be applied as set forth in
clause  (vi) below).

	 	     (vi)
Application of Mandatory Prepayments. All  amounts required to be paid pursuant to this
Section 2.8(b)  shall be applied as follows: (A) with respect to all amounts  prepaid
pursuant to Sections 2.8(b)(i), (1) first, to the  outstanding Swingline Loans, (2)
second, to the outstanding  Revolving Loans and (3) third (after all Revolving Loans have
been repaid), to a cash collateral account in respect of LOC  Obligations, and (B) with
respect to all amounts prepaid  pursuant to Sections 2.8(b)(ii), (iii), (iv) and (v), (1)
first, to the remaining Term Loan amortization payments set  forth in Section 2.2(b) on
pro rata basis, (2) second, to the  outstanding Swingline Loans (without a corresponding
permanent  reduction in the Revolving Committed Amount), (3) third, to  the outstanding
Revolving Loans (without a corresponding  permanent reduction in the Revolving Committed
Amount) and (4)  fourth (after all Revolving Loans have been repaid), to a cash
collateral account in respect of LOC Obligations. Within the  parameters of the
applications set forth above, prepayments  shall be applied first to Alternate Base Rate
Loans and then  to LIBOR Rate Loans in direct order of Interest Period  maturities. Each
Lender shall receive its pro rata share  (except with respect to prepayments of Swingline
Loans) of any  such prepayment based on its Revolving Commitment Percentage  or Term Loan
Commitment Percentages, as applicable. All  prepayments under this Section 2.8(b) shall
be subject to  Section 2.18 and be accompanied by interest on the principal  amount
prepaid through the date of prepayment.

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

 
	 	
40	 

 

 

	     Section 2.9 Lending Offices.

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

	     Section 2.10 Default Rate.

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

	     Section 2.11 Conversion
      Options.

	 	     (a)
The Borrower may, in the case of Revolving Loans and the  Term Loan, elect from time to
time to convert all or any portion of an  Alternate Base Rate Loan to a LIBOR Rate Loan
by giving the  Administrative Agent at least three Business Days’ prior irrevocable
written notice of such election; provided that (i) no Alternate Base  Rate Loan or
portion thereof may be converted into a LIBOR Rate Loan  when any Default or Event of
Default has occurred and is continuing and  (ii) conversions shall be in an aggregate
principal amount of (A) in  the case of Revolving Loans $1,000,000 or a whole multiple of
$500,000  in excess thereof and (B) in the case of the Term Loan, $2,000,000 or a  whole
multiple of $1,000,000 in excess thereof. In addition, the  Borrower may elect from time
to time to convert all or any portion of a  LIBOR Rate Loan to an Alternate Base Rate
Loan by giving the  Administrative Agent irrevocable written notice thereof by 11:00 A.M.
one Business Date prior to the proposed date of conversion. A form of  Notice of
Conversion/Extension is attached as Schedule 2.11. If the  date upon which an Alternate
Base Rate Loan is to be converted to a  LIBOR Rate Loan is not a Business Day, then such
conversion shall be  made on the next succeeding Business Day and during the period from
such last day of an Interest Period to such succeeding Business Day  such Loan shall bear
interest as if it were an Alternate Base Rate  Loan. LIBOR Rate Loans may only be
converted to Alternate Base Rate  Loans on the last day of the applicable Interest
Period. If the date  upon which a LIBOR Rate Loan is to be converted to an Alternate Base
Rate Loan is not a Business Day, then such conversion shall be made on  the next
succeeding Business Day and during the period from such last  day of an Interest Period
to such succeeding Business Day such Loan  shall bear interest as if it were an Alternate
Base Rate Loan.

	 	     (b)
Any LIBOR Rate Loans may be continued as such upon the  expiration of an Interest Period
with respect thereto by compliance by  the Borrower with the notice provisions contained
in Section 2.11(a);  provided, that no LIBOR Rate Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, in which  case such Loan
shall be automatically converted to an Alternate Base  Rate Loan at the end of the
applicable Interest Period with respect  thereto. If the Borrower shall fail 

 
	 	
41	 

 

 

	 	to give timely
notice of an  election to continue a LIBOR Rate Loan, or the continuation of LIBOR  Rate
Loans is not permitted hereunder, such LIBOR Rate Loans shall be  automatically converted
to Alternate Base Rate Loans at the end of the  applicable Interest Period with respect
thereto.

	     Section 2.12 Computation
      of Interest and Fees.

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

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

	 	     (c)
It is the intent of the Lenders and the Credit Parties to  conform to and contract in
strict compliance with applicable usury law  from time to time in effect. All agreements
between the Lenders and the  Credit Parties are hereby limited by the provisions of this
paragraph  which shall override and control all such agreements, whether now  existing or
hereafter arising and whether written or oral. In no way,  nor in any event or
contingency (including but not limited to  prepayment or acceleration of the maturity of
any Credit Party  Obligation), shall the interest taken, reserved, contracted for,
charged, or received under this Credit Agreement, under the Notes or  otherwise, exceed
the maximum nonusurious amount permissible under  applicable law. If, from any possible
construction of any of the Credit  Documents or any other document, interest would
otherwise be payable in  excess of the maximum nonusurious amount, any such construction
shall  be subject to the provisions of this paragraph and such interest shall  be
automatically reduced to the maximum nonusurious amount permitted  under applicable law,
without the necessity of execution of any  amendment or new document. If any Lender shall
ever receive anything of  value which is characterized as interest on the Loans under
applicable  law and which would, apart from this provision, be in excess of the  maximum
nonusurious amount, an amount equal to the amount which would  have been excessive
interest shall, without penalty, be applied to the  reduction of the principal amount
owing on the Loans and not to the  payment of interest, or refunded to the Borrower or
the other payor  thereof if and to the extent such amount which would have been
excessive exceeds such unpaid principal amount of the Loans. The right  to demand 

 
	 	
42	 

 

 

	 	payment of the
Loans or any other Indebtedness evidenced by  any of the Credit Documents does not
include the right to receive any  interest which has not otherwise accrued on the date of
such demand,  and the Lenders do not intend to charge or receive any unearned  interest
in the event of such demand. All interest paid or agreed to be  paid to the Lenders with
respect to the Loans shall, to the extent  permitted by applicable law, be amortized,
prorated, allocated, and  spread throughout the full stated term (including any renewal
or  extension) of the Loans so that the amount of interest on account of  such
indebtedness does not exceed the maximum nonusurious amount  permitted by applicable law.

	     Section 2.13 Pro Rata Treatment
      and Payments.

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

 
	 	
43	 

 

 

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

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

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

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

	 	     FOURTH,
to the payment of all of the Credit Party  Obligations consisting of accrued fees and
interest;

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

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

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

 
	 	
44	 

 

 

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

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

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

	 	     (b)
Unless the Administrative Agent shall have been notified  in writing by the Borrower,
prior to the date on which any payment is  due from it hereunder (which notice shall be
effective upon receipt)  that the Borrower does not intend to make such payment, the
Administrative Agent may assume that such Borrower has made such  payment when due, and
the Administrative Agent may in reliance upon  such assumption (but shall not 

 
	 	
45	 

 

 

	 	be required
to) make available to each  Lender on such payment date an amount equal to the portion of
such  assumed payment to which such Lender is entitled hereunder, and if the  Borrower
has not in fact made such payment to the Administrative Agent,  such Lender shall, on
demand, repay to the Administrative Agent the  amount made available to such Lender. If
such amount is repaid to the  Administrative Agent on a date after the date such amount
was made  available to such Lender, such Lender shall pay to the Administrative  Agent on
demand interest on such amount in respect of each day from the  date such amount was made
available by the Administrative Agent to such  Lender to the date such amount is
recovered by the Administrative Agent  at a per annum rate equal to the Federal Funds
Effective Rate.

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

	     Section 2.15 Inability to
      Determine Interest Rate.

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

	     Section 2.16 Illegality.

	     Notwithstanding
any other provision of this Agreement, if the adoption  of or any change in any
Requirement of Law or in the interpretation or  application thereof by the relevant
Governmental Authority to any Lender shall  make it unlawful for such Lender or its LIBOR
Lending Office to make or maintain  LIBOR Rate Loans as contemplated by this Agreement or
to obtain in the interbank  eurodollar market through its LIBOR Lending Office the funds
with which to make  such Loans, (a) such Lender shall promptly notify the Administrative
Agent and  the Borrower thereof, (b) the commitment of such Lender hereunder to make
LIBOR  Rate Loans or continue LIBOR Rate Loans as such shall forthwith be suspended
until the Administrative Agent shall give notice that the condition or situation  which
gave rise to the suspension shall no 

 
	 	
46	 

 

 

	longer exist, and (c) such Lender’s  Loans
then outstanding as LIBOR Rate Loans, if any, shall be converted on the  last day of the
Interest Period for such Loans or within such earlier period as  required by law to
Alternate Base Rate Loans. The Borrower hereby agrees  promptly to pay any Lender, upon
its demand, any additional amounts necessary to  compensate such Lender for actual and
direct costs (but not including  anticipated profits) reasonably incurred by such Lender
including, but not  limited to, any interest or fees payable by such Lender to lenders of
funds  obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to this Section  submitted by
such Lender, through the Administrative Agent, to the Borrower  shall be conclusive in
the absence of manifest error. Each Lender agrees to use  reasonable efforts (including
reasonable efforts to change its LIBOR Lending  Office) to avoid or to minimize any
amounts which may otherwise be payable  pursuant to this Section; provided, however, that
such efforts shall not cause  the imposition on such Lender of any additional costs or
legal or regulatory  burdens deemed by such Lender in its sole discretion to be material.

	     Section 2.17 Requirements
      of Law.

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

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

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

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

	 	     and
the result of any of the foregoing is to increase the cost  to such Lender of making or
maintaining LIBOR Rate Loans or the Letters  of Credit (or the Participations Interests
therein) or to reduce any  amount receivable hereunder or under any Note, then, in any
such case,  the Borrower shall promptly pay such Lender, upon its demand, any  additional
amounts necessary to compensate such Lender for such  additional cost or reduced amount
receivable which such Lender  reasonably deems to be material as determined by such
Lender with  respect to its LIBOR Rate Loans or Letters of Credit. A certificate as  to
any additional amounts payable pursuant to this Section submitted by  such Lender,
through the Administrative Agent, to the Borrower shall be  conclusive in the absence of
manifest error. Each Lender agrees to use  reasonable efforts (including 

 
	 	
47	 

 

 

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

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

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

	     Section 2.18 Indemnity.

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

 
	 	
48	 

 

 

	     Section 2.19 Taxes.

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

	 	     (b)
Each Lender that is not a United States person (as such  term is defined in Section
7701(a)(30) of the Code) agrees to deliver  to the Borrower and the Administrative Agent
on or prior to the Closing  Date, or in the case of a Lender that is an assignee or
transferee of  an interest under this Credit Agreement pursuant to Section 9.6(d)
(unless the respective Lender was already a Lender hereunder  immediately prior to such
assignment or transfer), on the date of such  assignment or transfer to such Lender, (i)
if the Lender is a “bank” within the meaning of Section 881(c)(3)(A) of the
Code, two accurate  and complete original signed copies of Internal Revenue Service Form
W-8BEN, W-8ECI or W-8IMY (or successor forms) certifying such Lender’s  entitlement
to a complete exemption from United States withholding tax  with respect to payments to
be made under this Credit Agreement and  under any Note, or (ii) if the Lender is not a
“bank” within the  meaning of Section 881(c)(3)(A) of the Code, Internal
Revenue Service  Form W-8BEN, W-8ECI or W-8IMY as set forth in clause (i) above, or (x)
a certificate in substantially the form of Schedule 2.19 (any such  certificate, a “Tax
Exempt Certificate”) and (y) two accurate and  complete original signed copies of
Internal Revenue Service Form W-8BEN  (or successor form) certifying such Lender’s
entitlement to an  exemption from United States withholding tax with respect to payments
of interest to be made under this Credit Agreement and under any Note.  In addition, each
Lender agrees that it will deliver upon the  Borrower’s request updated versions of
the foregoing, as applicable,  whenever the previous certification has become obsolete or
inaccurate  in any material respect, together with such other forms as may be  required
in order to 

 
	 	
49	 

 

 

	 	confirm or
establish the entitlement of such  Lender to a continued exemption from or reduction in
United States  withholding tax with respect to payments under this Credit Agreement  and
any Note. Notwithstanding anything to the contrary contained in  Section 2.19(a), but
subject to the immediately succeeding sentence,  (x) the Borrower shall be entitled, to
the extent it is required to do  so by law, to deduct or withhold Taxes imposed by the
United States (or  any political subdivision or taxing authority thereof or therein) from
interest, fees or other amounts payable hereunder for the account of  any Lender which is
not a United States person (as such term is defined  in Section 7701(a)(30) of the Code)
for U.S. federal income tax  purposes to the extent that such Lender has not provided to
the  Borrower U.S. Internal Revenue Service Forms that establish a complete  exemption
from such deduction or withholding and (y) the Borrower shall  not be obligated pursuant
to Section 2.19(a) hereof to gross-up  payments to be made to a Lender in respect of
Taxes imposed by the  United States if (I) such Lender has not provided to the Borrower
the  Internal Revenue Service Forms required to be provided to the Borrower  pursuant to
this Section 2.19(b) or (II) in the case of a payment,  other than interest, to a Lender
described in clause (ii) above, to the  extent that such Forms do not establish a
complete exemption from  withholding of such Taxes. Notwithstanding anything to the
contrary  contained in the preceding sentence or elsewhere in this Section 2.19,  the
Borrower agrees to pay additional amounts and to indemnify each  Lender in the manner set
forth in Section 2.19(a) (without regard to  the identity of the jurisdiction requiring
the deduction or  withholding) in respect of any amounts deducted or withheld by it as
described in the immediately preceding sentence as a result of any  changes after the
Closing Date in any applicable law, treaty,  governmental rule, regulation, guideline or
order, or in the  interpretation thereof, relating to the deducting or withholding of
Taxes.

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

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

 
	 	
50	 

 

 

	 	of any tax
benefit or any other amount or the basis of its  determination referred to in the proviso
to the first sentence of this  Section 2.19 to the Borrower or any other party.

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

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

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

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

	 	     (c)
In furtherance and extension and not in limitation of the  specific provisions
hereinabove set forth, any action taken or omitted  by the Issuing Lender or any
Revolving Lender, under or in connection  with any Letter of Credit or the related
certificates, if taken or  omitted in the absence of gross negligence or willful
misconduct, shall  not put such Issuing Lender or such Revolving Lender under any
resulting liability to the Borrower. It is the intention of the parties  that this Credit
Agreement shall be construed and applied to protect  and indemnify the Issuing Lender and
each Revolving 

 
	 	
51	 

 

 

	 	Lender against
any  and all risks involved in the issuance of the Letters of Credit, all of  which risks
are hereby assumed by the Borrower, including, without  limitation, any and all risks of
the acts or omissions, whether  rightful or wrongful, of any Government Authority. The
Issuing Lender  and the Revolving Lenders shall not, in any way, be liable for any
failure by the Issuing Lender or anyone else to pay any drawing under  any Letter of
Credit as a result of any Government Acts or any other  cause beyond the control of the
Issuing Lender and the Revolving  Lenders.

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

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

	ARTICLE III

	REPRESENTATIONS AND WARRANTIES

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

	     Section 3.1 Financial Condition.

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

	 	     (a)
balance sheets and the related statements of income and of  cash flows of (i) the
Borrower for fiscal years ended December 31, 2002  and December 31, 2003 audited by Grant
Thornton LLP and (ii) Bioglan  and its Subsidiaries for the fiscal year ended December
31, 2003  audited by PriceWaterhouseCoopers LLP;

	 	     (b)
company-prepared unaudited (i) monthly balance sheets and  related statements of income
and cash flows for the Borrower through  the month most recently ended prior to the
Closing Date for which such  statements are available, (ii) balance sheet(s) of Bioglan
and its  Subsidiaries as of March 31, 2004 and, June 30, 2004, (iii) 

 
	 	
52	 

 

 

	 	income
statements, cash flows and statements of equity of Bioglan and its  Subsidiaries for the
six-month period ended June 30, 2004;

	 	     (c)
an opening pro forma balance sheet of the Borrower as of  June 30, 2004 in form and
substance satisfactory to the Administrative  Agent and the Lenders giving effect to the
initial fundings hereunder  and the other transactions to occur on the Closing Date; and

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

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

	     Section 3.2 No Change.

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

	     Section 3.3 Corporate Existence;
      Compliance with Law.

	     Each of the
Borrower and the other Credit Parties (a) is duly  organized, validly existing and in
good standing under the laws of the  jurisdiction of its incorporation or organization;
(b) has the requisite power  and authority and the legal right to own and operate all its
property, to lease  the property it operates as lessee and to conduct the business in
which it is  currently engaged; (c) is duly qualified to conduct business and in good
standing under the laws of each jurisdiction where its ownership, lease or  operation of
property or the conduct of its business requires such qualification  except to the extent
that the failure to so qualify or be in good standing could  not, in the aggregate,
reasonably be expected to have a Material Adverse Effect;  and (d) is in compliance with
all Requirements of Law except to the extent that  the failure to comply therewith could
not, in the aggregate, reasonably be  expected to have a Material Adverse Effect;
provided, however, that the Borrower  is not in compliance with certain SEC requirements
as set forth in the SEC  Letter but such non-compliance could not reasonably be expected
to have a  Material Adverse Effect. Without limiting the generality of the foregoing,
each  of the Borrower and the other Credit Parties represents that:

	 	     (i)
(A) There is no Credit Party or individual employed by any  Credit Party who may
reasonably be expected to have criminal  culpability or to be excluded or suspended from
participation in any  Medical Reimbursement Program for their corporate or individual
actions  or failures to act where such culpability, exclusion and/or suspension  has or
could be reasonably expected to result in a Material Adverse  Effect; and (B) there is no
member of management continuing to be  employed by any Credit 

 
	 	
53	 

 

 

	 	Party who may
reasonably be expected to have  individual culpability for matters under investigation by
any  Governmental Authority unless such member of management has been,  within a
reasonable period of time after discovery of such actual or  potential culpability,
either suspended or removed from positions of  responsibility related to those activities
under challenge by the  Governmental Authority and where such failure to suspend or
remove such  Person has or could be reasonably expected to result in a Material  Adverse
Effect;

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

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

	     Section 3.4
Corporate Power; Authorization; Enforceable Obligations.  

	     Each of the
Borrower and the other Credit Parties has full power and  authority and the legal right
to make, deliver and perform the Credit Documents  to which it is party and has taken all
necessary limited liability company or  corporate action to authorize the execution,
delivery and performance by it of  the Credit Documents to which it is party. No consent
or authorization of,  filing with, notice to or other act by or in respect of, any
Governmental  Authority or any other Person (except as it may relate to immaterial
contracts)  is required in connection with the borrowings hereunder or with the
execution,  delivery or performance of any Credit Document by the Borrower or the other
Credit Parties (other than those which have been obtained) or with the validity  or
enforceability of any Credit Document against the Borrower or the other  Credit Parties
(except such filings as are necessary in connection with the  perfection of the Liens
created by such Credit Documents). Each Credit Document  to which it is a party has been
duly executed and delivered on behalf of the  Borrower or the other Credit Parties, as
the case may be. Each Credit Document  to which it is a party constitutes a legal, valid
and binding obligation of the  Borrower or the other Credit Parties, as the case may be,
enforceable against  the Borrower or such other Credit Party, as the case may be, in
accordance with  its terms, except as enforceability may be limited by applicable
bankruptcy,  insolvency, reorganization, moratorium or similar laws affecting the
enforcement  of creditors’ rights generally and by general equitable principles
(whether  enforcement is sought by proceedings in equity or at law).

	     Section 3.5 No Legal Bar;
      No Default.

	     The execution,
delivery and performance of the Credit Documents, the  borrowings thereunder and the use
of the proceeds of the Loans will not violate  any Requirement of Law or any material
Contractual Obligation of the Borrower or  any other Credit Party (except those as to
which waivers or consents have been  obtained), and will not result in, or require, the
creation or 

 
	 	
54	 

 

 

	imposition of any  Lien on any of its or their
respective properties or revenues pursuant to any  Requirement of Law or Contractual
Obligation other than the Liens arising under  or contemplated in connection with the
Credit Documents. Neither the Borrower  nor any other Credit Party is in default under or
with respect to any of its  Contractual Obligations in any respect which could reasonably
be expected to  have a Material Adverse Effect. No Default or Event of Default has
occurred and  is continuing.

	     Section 3.6 No Material
      Litigation.

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

	     Section 3.7 Investment Company
      Act.

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

	     Section 3.8 Margin Regulations.

	     No part of the
proceeds of any Loan hereunder will be used directly or  indirectly for any purpose which
violates, or which would be inconsistent with,  the provisions of Regulation T, U or X of
the Board of Governors of the Federal  Reserve System as now and from time to time
hereafter in effect. The Credit  Parties and their Subsidiaries taken as a group do not
own “margin stock” except  as identified in the financial statements referred
to in Section 3.1 and the  aggregate value of all “margin stock” owned by the
Credit Parties and their  Subsidiaries taken as a group does not exceed 25% of the value
of their assets.

	     Section 3.9 ERISA.

	     Neither a
Reportable Event nor an “accumulated funding deficiency” (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has  occurred during the five-year
period prior to the date on which this  representation is made or deemed made with
respect to any Plan, and each Plan  has complied in all material respects with the
applicable provisions of ERISA  and the Code, except to the extent that any such
occurrence or failure to comply  would not reasonably be expected to have a Material
Adverse Effect. No  termination of a Single Employer Plan has occurred resulting in any
liability  that has remained underfunded, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period which could reasonably be expected to have  a
Material Adverse Effect. The present value of all accrued benefits under each

 
	 	
55	 

 

 

	Single Employer Plan (based on those assumptions
used to fund such Plans) did  not, as of the last annual valuation date prior to the date
on which this  representation is made or deemed made, exceed the value of the assets of
such  Plan allocable to such accrued benefits by an amount which, as determined in
accordance with GAAP, could reasonably be expected to have a Material Adverse  Effect.
Neither any Credit Party nor any Commonly Controlled Entity is currently  subject to any
liability for a complete or partial withdrawal from a  Multiemployer Plan which could
reasonably be expected to have a Material Adverse  Effect.

	     Section 3.10 Environmental
      Matters.

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

	 	     (b)
To the best knowledge of the Borrower and the other Credit  Parties, the Properties and
all operations of the Borrower and the  other Credit Parties and/or their Subsidiaries at
the Properties are in  compliance, and have during the last five years (or in the case of
leased Property, during the period of time that the applicable Credit  Party have leased
such Property), been in compliance, in all material  respects with all applicable
Environmental Laws, and there is no  contamination at, under or about the Properties or
violation of any  Environmental Law with respect to the Properties or the business
operated by the Borrower and the other Credit Parties or any of their  Subsidiaries (the
“Business”) for which any Credit Party could  reasonably be expected to have
liability that could result in a  Material Adverse Effect.

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

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

 
	 	
56	 

 

 

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

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

	     Section 3.11 Use of Proceeds.

	     The proceeds of
the Extensions of Credit shall be used solely by the  Borrower to (i) repay certain
existing indebtedness (including the Borrower’s  existing credit facility), (ii) pay
any fees and expenses owing to the Lenders  and the Administrative Agent in connection
with this Agreement and (iii) provide  for working capital and other general corporate
purposes including Permitted  Acquisitions.

	     Section 3.12 Subsidiaries.

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

	     Section 3.13 Ownership.

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

 
	 	
57	 

 

 

	     Section 3.14 Indebtedness.

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

	     Section 3.15 Taxes.

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

	     Section 3.16 Intellectual
      Property.

	     Each of the Credit
Parties and its Subsidiaries owns, or has the legal  right to use, all Intellectual
Property to conduct its business as currently  conducted, except to the extent that the
failure thereof in the aggregate could  not reasonably be expected to have a Material
Adverse Effect. Set forth on  Schedule 3.16 is a list of all Intellectual Property owned
by each of the Credit  Parties and its Subsidiaries or that each of the Credit Parties or
any of its  Subsidiaries has the right to use. Except as disclosed on Schedule 3.16
hereto,  (a) and except for the licensed Intellectual Property as disclosed on Schedule
3.16, the specified Credit Party has the right to use the material Intellectual  Property
disclosed on Schedule 3.16 hereto in perpetuity and without payment of  royalties, (b)
all registrations with and applications to Governmental  Authorities in respect of the
material Intellectual Property owned by the Credit  Parties, and to the knowledge of the
Credit Parties, the material licensed  Intellectual Property, are valid and in full force
and effect and are not  subject to the payment of any taxes or maintenance fees to
maintain their  validity or effectiveness, and (c) there are no restrictions on the
direct or  indirect transfer of any material Intellectual Property, or any interest
therein, held by any of the Credit Parties in respect of any such material  Intellectual
Property which has not been obtained. To the knowledge of the  Credit Parties: (i) none
of the Credit Parties is in default (or with the giving  of notice or lapse of time or
both, would be in default) under any license to  use such material Intellectual Property;
(ii) no claim has been asserted and is  pending by any Person challenging or questioning
the use of any such material  Intellectual Property or the validity or effectiveness of
any such material  Intellectual Property, nor do the Credit Parties or any of their
Subsidiaries  know of any such claim which could reasonably be expected to have a
Material  Adverse Effect; and, to the knowledge of the Credit Parties or any of their
Subsidiaries, the use of such material Intellectual Property by any of the  Credit
Parties or any of its Subsidiaries does not infringe on the rights of any  Person, in
each case which could reasonably be expected to have a Material  Adverse Effect. The
Credit Parties have recorded or deposited with and paid to  the United States Copyright
Office, the Register of Copyrights, the Copyrights  Royalty Tribunal or other
Governmental Authority, all notices, statements of  account, royalty fees and other
documents and instruments required to be  recorded or deposited by any of the Credit
Parties under the terms and  conditions 

 
	 	
58	 

 

 

	of any Contractual Obligation of the Credit
Parties applicable to the  Intellectual Property and/or under Title 17 of the United
States Code and the  rules and regulations issued thereunder (collectively, the “Copyright
Act”), and  are not liable to any Person for copyright infringement under the
Copyright Act  or any other law, rule, regulation, contract or license as a result of
their  business operations. Schedule 3.16 may be updated from time to time by the
Borrower to include new Intellectual Property by giving written notice thereof  to the
Administrative Agent.

	     Section 3.17 Solvency.

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

	     Section 3.18 Investments.

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

	     Section 3.19 Location of
      Collateral.

	     Set forth on
Schedule 3.19(a) is a list of the Properties of the Credit  Parties and their
Subsidiaries with street address, county and state where  located. Set forth on Schedule
3.19(b) is a list of all locations where any  tangible personal property of the Credit
Parties and their Subsidiaries with a  fair market value in excess of $25,000 is located,
including county and state  where located. Set forth on Schedule 3.19(c) is the chief
executive office and  principal place of business of each of the Credit Parties and their
Subsidiaries  and the State of incorporation or organization of each such Person.
Schedule  3.19(a), 3.19(b) and 3.19(c) may be updated from time to time by the Borrower
to  include new properties or locations by giving written notice thereof to the
Administrative Agent.

	     Section 3.20 Brokers’
      Fees.

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

	     Section 3.21 Labor Matters.

	     There are no
collective bargaining agreements or Multiemployer Plans  covering the employees of any of
the Credit Parties or any of its Subsidiaries  as of the Closing Date, other than as set
forth in Schedule 3.21 hereto, and  none of the Credit Parties or any of its Subsidiaries
(i) has suffered any  strikes, walkouts, work stoppages or other material labor
difficulty within the

 
	 	
59	 

 

 

	last five years, other than as set forth in
Schedule 3.21 hereto or (ii) has  knowledge of any potential or pending strike, walkout
or work stoppage. Other  than as set forth on Schedule 3.21, no unfair labor practice
complaint is  pending against any Credit Party or any of its Subsidiaries or, to the best
knowledge of the Credit Parties, before any Governmental Authority.

	     Section 3.22 Security Documents.

	     The Security
Documents create valid security interests in, and Liens  on, the Collateral purported to
be covered thereby, which security interests and  Liens are currently (or will be, upon
the filing of appropriate financing  statements in favor of the Administrative Agent, on
behalf of the Lenders, and  upon the Administrative Agent, on behalf of the Lenders,
obtaining Control (as  defined in the Security Agreement) over those items of Collateral
in which a  security interest is perfected through Control) perfected security interests
and  Liens, prior to all other Liens other than Permitted Liens.

	     Section 3.23 Accuracy and
      Completeness of Information.

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

	     Section 3.24 Fraud and Abuse.

	     Neither the Credit
Parties nor, to the knowledge of the officers of the  Credit Parties, any of their
officers or directors, have engaged in any  activities which are prohibited under federal
Medicare and Medicaid statutes, 42  U.S.C. ss.1320a-7b, or 42 U.S.C. ss.1395nn or the
regulations promulgated  pursuant to such statutes or related state or local statutes or
regulations, or  which are prohibited by binding rules of professional conduct, including
but not  limited to the following: (a) knowingly and willfully making or causing to be
made a false statement or representation of a material fact in any applications  for any
benefit or payment; (b) knowingly and willfully making or causing to be  made any false
statement or representation of a material fact for use in  determining rights to any
benefit or payment; (c) failing to disclose knowledge  by a claimant of the occurrence of
any event affecting the initial or continued  right to any benefit or payment on its own
behalf or on behalf of another with  the intent to secure such benefit or payment
fraudulently; (d) knowingly and  willfully soliciting or receiving any remuneration
(including any kickback,  bribe or rebate), directly or indirectly, overtly or covertly,
in cash or in  kind or offering to pay such remuneration (i) in return for referring an
individual to a Person for the furnishing or arranging for the furnishing of any  item or
service for which payment may be 

 
	 	
60	 

 

 

	made in whole or in part by Medicare,  Medicaid
or other applicable third party payors, or (ii) in return for  purchasing, leasing or
ordering or arranging for or recommending the purchasing,  leasing or ordering of any
good, facility, service, or item for which payment  may be made in whole or in part by
Medicare, Medicaid or other applicable third  party payors.

	     Section 3.25 Licensing and
      Accreditation.

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

	     Section 3.26 Other Regulatory
      Protection.

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

	     Section 3.27 Material Contracts.

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

	     Section 3.28 Insurance.

	     The present
insurance coverage of the Credit Parties and their  Subsidiaries is outlined as to
carrier, policy number, expiration date, type and  amount on Schedule 3.28 and such
insurance 

 
	 	
61	 

 

 

	coverage complies with the  requirements set
forth in Section 5.5(b) or has been otherwise approved by the  Administrative Agent.

	     Section 3.29 Reimbursement
      from Third Party Payors.

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

	     Section 3.30 Other Agreements.

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

	     Section 3.31 Classification
      as Senior Indebtedness.

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

	     Section 3.32 Foreign Assets
      Control Regulations, Etc.

	     None of the Credit
Parties and none of their Subsidiaries is an “enemy” or an “ally of the
enemy” within the meaning of Section 2 of the Trading with  the Enemy Act of the
United States of America (50 U.S.C. App. ss.ss. 1 et seq.),  as amended. None of the
Credit Parties and none of their Subsidiaries is in  violation of (a) the Trading with
the Enemy Act, as amended, (b) any of the  foreign assets control regulations of the
United States Treasury Department (31  CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive  order relating thereto or (c) the Patriot Act (as
defined in Section 9.19). None  of the Credit Parties (i) is a blocked person 

 
	 	
62	 

 

 

	described in section 1 of the  Anti-Terrorism
Order or (ii) to the best of its knowledge, engages in any  dealings or transactions, or
is otherwise associated, with any such blocked  person.

	ARTICLE IV

	CONDITIONS PRECEDENT

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

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

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

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

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

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

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

	 	     (iv)
Good Standing. Copies of (i) certificates of  good standing, existence or its equivalent
with respect to the  each Credit Party certified as of a 

 
	 	
63	 

 

 

	 	recent date by
the  appropriate Governmental Authorities of the state of  incorporation or organization
and each other state in which  the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse Effect on  the business or operations
of the Credit Parties and their  Subsidiaries in such state and (ii) a certificate
indicating  payment of all corporate franchise taxes certified as of a  recent date by
the appropriate governmental taxing  authorities.

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

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

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

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

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

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

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

 
	 	
64	 

 

 

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

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

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

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

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

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

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

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

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

	 	     (f)
Liability, Casualty and Business Interruption Insurance.  The Administrative Agent shall
have received copies of insurance  policies or certificates of insurance evidencing
liability and casualty  insurance meeting the requirements set forth herein or in the
Security  Documents and business interruption insurance satisfactory to the
Administrative Agent. The Administrative Agent shall be named as loss  payee or
mortgagee, as its interest may appear, and/or additional  insured with respect to any
such 

 
	 	
65	 

 

 

	 	insurance
providing coverage in  respect of any Collateral, and each provider of any such insurance
shall agree, by endorsement upon the policy or policies issued by it or  by independent
instruments furnished to the Administrative Agent, that  it will give the Administrative
Agent thirty days prior written notice  before any such policy or policies shall be
altered or canceled.

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

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

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

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

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

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

 
	 	
66	 

 

 

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

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

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

	 	     (p)
Minimum Consolidated EBITDA. The Administrative Agent  shall have received evidence
satisfactory thereto provided by the  Borrower that the Consolidated EBITDA of the
Borrower and its  Subsidiaries on a Pro Forma Basis as of June 30, 2004 shall be no less
than $53,000,000.

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

	 	     (r)
Termination of Existing Indebtedness. All existing  Indebtedness (except for Indebtedness
set forth on Schedule 6.1(b)) for  borrowed money of the Borrower and its Subsidiaries
shall have been  repaid in full and all commitments relating thereto shall have been
terminated and all Liens relating thereto shall have been terminated.

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

	 	     (t)
Patriot Act Certificate. The Administrative Agent shall  have received a certificate
satisfactory thereto, for benefit of itself  and the Lenders, provided by the 

 
	 	
67	 

 

 

	 	Borrower that
sets forth information  required by the Patriot Act (as defined in Section 9.19)
including,  without limitation, the identity of the Borrower, the name and address  of
the Borrower and other information that will allow the  Administrative Agent or any
Lender, as applicable, to identify the  Borrower in accordance with the Patriot Act.

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

	     Section 4.2 Conditions to
      All Extensions of Credit. 

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

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

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

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

	 	     (d)
Additional Conditions to Extensions of Credit. If such  Extension of Credit is made
pursuant to Sections 2.1, 2.2, 2.3 or 2.4  all conditions set forth in such Section shall
have been satisfied.

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

 
	 	
68	 

 

 

	ARTICLE V

	AFFIRMATIVE COVENANTS

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

	     Section 5.1 Financial Statements.

	     Furnish to the
Administrative Agent and each of the Lenders:

	 	     (a)
Annual Financial Statements. As soon as available, and in  any event no later than the
earlier of (i) the date the Borrower is  required by the SEC to deliver its Form 10-K for
any fiscal year of the  Borrower and (ii) ninety (90) days after the end of each fiscal
year of  the Borrower, a copy of the consolidated and consolidating balance  sheet of the
Borrower and its consolidated Subsidiaries as at the end  of such fiscal year and the
related consolidated and consolidating  statements of income and retained earnings and of
cash flows of the  Borrower and its consolidated Subsidiaries for such year, audited
(with  respect to the consolidated statements only) by a firm of independent  certified
public accountants of nationally recognized standing  reasonably acceptable to the
Administrative Agent, in each case setting  forth in comparative form consolidated and
consolidating figures for  the preceding fiscal year, reported on without a “going
concern” or  like qualification or exception, or qualification indicating that the
scope of the audit was inadequate to permit such independent certified  public
accountants to certify such financial statements without such  qualification;

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

	 	     (c)
Monthly Financial Statements. As soon as available and in  any event within thirty (30)
days after the end of each month of the  Borrower from the Closing Date through the end
of fiscal year 2004, a  company-prepared consolidated balance sheet of 

 
	 	
69	 

 

 

	 	the Borrower
and its  consolidated Subsidiaries as at the end of such period and related
company-prepared consolidated statements of income for the Borrower and  its consolidated
Subsidiaries for such monthly period and for the  portion of the fiscal year ending with
such period, in each case  setting forth in comparative form consolidated figures for the
corresponding period or periods of the preceding fiscal year (subject  to normal
recurring year-end audit adjustments); and

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

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

	     Section 5.2 Certificates;
      Other Information.

	     Furnish to the
Administrative Agent and each of the Lenders:

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

	 	     (b)
concurrently with the delivery of the financial statements  referred to in Sections
5.1(a) and 5.1(b) above (commencing with the  fiscal year and fiscal quarter ending
December 31, 2004), a certificate  of a Responsible Officer stating that, to the best of
such Responsible  Officer’s knowledge, during such period each of the Credit Parties
observed or performed in all material respects all of its covenants and  other
agreements, and satisfied in all material respects every  condition, contained in this
Agreement to be observed, performed or  satisfied by it, and that such Responsible
Officer has obtained no  knowledge of any Default or Event of Default except as specified
in  such certificate and such certificate shall include the calculations in  reasonable
detail required to indicate compliance with Section 5.9 as  of the last day of such
period;

	 	     (c)
within ten days after the same are sent, copies of all  reports (other than those
otherwise provided pursuant to Section 5.1  and those which are of a promotional nature)
and other financial  information which the Borrower sends to its members and 

 
	 	
70	 

 

 

	 	equity
holders,  and within ten days after the same are filed, copies of all financial
statements and non-confidential reports which the Borrower may make to,  or file with the
Securities and Exchange Commission or any successor or  analogous Governmental Authority;

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

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

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

	     Section 5.3 Payment of Obligations.

	     Pay, discharge or
otherwise satisfy at or before maturity or before  they become delinquent, as the case
may be, all its taxes (Federal, state, local  and any other taxes) and all its other
obligations and liabilities of whatever  nature and any additional costs that are imposed
as a result of any failure to  so pay, discharge or otherwise satisfy such obligations
and liabilities, except  when the amount or validity of such obligations, liabilities and
costs is  currently being contested in good faith by appropriate proceedings and
reserves,  if applicable, in conformity with GAAP with respect thereto have been provided
on the books of the Borrower or its Subsidiaries, as the case may be or except  to the
extent that failure to so pay, discharge or otherwise satisfy such  obligations and
liabilities could not, in the aggregate, reasonably be expected  to have a Material
Adverse Effect.

	     Section 5.4 Conduct of Business
      and Maintenance of Existence.

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

	     Section 5.5 Maintenance
      of Property; Insurance.

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

 
	 	
71	 

 

 

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

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

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

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

	     Section 5.7 Notices.
      

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

 
	 	
72	 

 

 

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

	 	     (b)
promptly, but in any event within three Business Days  after any Credit Party knows or
has reason to know thereof, any default  or event of default under any Contractual
Obligation of any Credit  Party or any of its Subsidiaries which could reasonably be
expected to  have a Material Adverse Effect or involve a monetary claim in excess of
$1,000,000;

	 	     (c)
promptly, but in any event within three Business Days  after any Credit Party knows or
has reason to know thereof, any  litigation, or any investigation or proceeding known to
a Credit Party,  affecting any Credit Party or any of its Subsidiaries which, if
adversely determined, could reasonably be expected to have a Material  Adverse Effect;

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

	 	     (e)
promptly, of the institution of any investigation or  proceeding against any Credit Party
to suspend, revoke or terminate or  which may result in the termination of any Medicaid
Provider Agreement,  Medicaid Certification, Medicare Provider Agreement, Medicare
Certification or exclusion from any Medical Reimbursement Program;

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

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

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

 
	 	
73	 

 

 

	     Section 5.8 Environmental
      Laws.

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

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

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

	     Section 5.9 Financial Covenants.

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

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

 
	 	
74	 

 

  
  

 
		
	 Period
      

    		Ratio
      

    	
	 	Closing Date through
      June 30, 2005		2.50 to 1.00	
	 	July 1, 2005 through June 30,
      2006		2.25 to 1.00	
	 	July 1, 2006 and thereafter		2.00 to 1.00	

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

		
	 Period
      

    		Ratio
      

    	
	 	Closing Date through June 30,
      2005		3.00 to 1.00	
	 	July 1, 2005 through June 30,
      2006		2.75 to 1.00	
	 	July 1, 2006 and thereafter		2.50 to 1.0	

	 	     (c)
Fixed Charge Coverage Ratio. The Fixed Charge Coverage  Ratio at all times shall be
greater than or equal to 1.20 to 1.00.

	     For purposes of
all calculations made in determining compliance with  this Section 5.9 after the Closing
Date and through the fiscal quarter ending  September 30, 2005, income statement items
and other balance sheet items  (whether positive or negative) attributable to Bioglan and
its Subsidiaries  shall be included in such calculations to the extent relating to such
applicable  period.

	     Section 5.10 Additional
      Guarantors.

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

	     Section 5.11 Compliance
      with Law.

	     Each Credit Party
will, and will cause each of its Subsidiaries to, (a)  comply with all laws, rules,
regulations and orders, and all applicable  restrictions imposed by all Governmental
Authorities, applicable to it and its  Property if noncompliance with any such law, rule,
regulation, order or  restriction could reasonably be expected to have a Material Adverse
Effect and  (b) conform with and duly observe in all material respects all laws, rules
and  regulations and all other valid requirements of any regulatory authority with
respect to the conduct of its business, including without limitation Titles  XVIII and
XIX of the Social Security Act, Medicare Regulations, Medicaid  Regulations, and all
laws, rules and regulations of Governmental Authorities,  pertaining to the business of
the Credit Parties if noncompliance with any such  law, 

 
	 	
75	 

 

 

	rule, regulation, order or restriction could
reasonably be expected to have  a Material Adverse Effect; and (c) obtain and maintain
all licenses, permits,  certifications and approvals of all applicable Governmental
Authorities as are  required for the conduct of its business as currently conducted and
herein  contemplated, including without limitation professional licenses, Medicaid
Certifications and Medicare Certifications, if failure to do so could have a  Material
Adverse Effect. Specifically, but without limiting the foregoing, and  except where any
such failure to comply could not reasonably be expected to have  a Material Adverse
Effect: (i) billing policies, arrangements, protocols and  instructions will comply with
reimbursement requirements under Medicare,  Medicaid and other Medical Reimbursement
Programs and will be administered by  properly trained personnel; and (ii) medical
director compensation arrangements  and other arrangements with referring physicians will
comply with applicable  state and federal self-referral and anti-kickback laws, including
without  limitation 42 U.S.C. Section 1320a-7b(b)(1) - (b)(2) 42 U.S.C. and 42 U.S.C.
Section 1395nn.

	     Section 5.12 Pledged Assets.

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

	     Section 5.13 Post-Closing
      Covenants.

	 	     (a)
The Borrower shall, as soon as possible after the Closing  Date (taking into account the
applicable governmental time periods),  deliver to the Administrative Agent a certificate
of dissolution or  other comparable document reasonably satisfactory to the
Administrative  Agent from the appropriate Governmental Authority evidencing the
dissolution of Bradley Pharmaceuticals (Canada) Inc.

	 	     (b)
No later than October 15, 2004 (or such later date as  agreed to by the Administrative
Agent) the Borrower shall deliver to  the Lenders a pro forma balance sheet of the
Borrower and its  subsidiaries as of August 10, 2004, giving effect to the initial
fundings hereunder and the other transactions on the Closing Date, in  form and substance
satisfactory to the Administrative Agent and the  Lenders.

	 	     (c)
The Borrower shall use its commercially reasonable efforts  to deliver to the
Administrative Agent such documentation as may be  reasonably required by the
Administrative Agent to correct any  chain-of-title issues in the records of the United
States Patent and  Trademark Office and the United States Copyright Office with respect
to  the IP Collateral of the Credit Parties and to release of record any  security
interests filed against such IP Collateral in favor of any  Person other than the
Administrative Agent. The Borrower hereby  represents and warrants to the Lenders that
none of the IP 

 
	 	
76	 

 

 

	 	Collateral
requiring such chain-of-title or release-of-record corrective measures  is material to
the Borrower’s business.

	ARTICLE VI

	NEGATIVE COVENANTS

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

	     Section 6.1 Indebtedness.

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

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

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

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

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

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

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

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

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

	     Section 6.2 Liens. 

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

	     Section 6.3 Nature of Business.

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

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

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

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

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

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

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

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

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

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

	 	     (vii)
the voluntary termination of Hedging  Agreements;

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

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

	     Section 6.5 Advances, Investments
      and Loans.

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

	     Section 6.6 Transactions
      with Affiliates.

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

	     Section 6.7 Ownership of
      Subsidiaries; Restrictions.

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

 
	 	
79	 

 

 

	dispose of any of their Capital  Stock or other
equity interests, except in a transaction permitted by Section  6.4.

	     Section 6.8 Fiscal Year;
      Organizational Documents; Material Contracts.

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

	     Section 6.9 Limitation on
      Restricted Actions.

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

	     Section 6.10 Restricted
      Payments.

	     Each of the Credit
Parties will not, nor will it permit any Subsidiary  to, directly or indirectly, declare,
order, make or set apart any sum for or pay  any Restricted Payment, except (a) to make
dividends payable solely in the same  class of Capital Stock of such Person, (b) to make
dividends or other  distributions payable to any Credit Party (directly or indirectly
through  Subsidiaries), (c) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower may repurchase shares of its Capital Stock in an
aggregate amount not 

 
	 	
80	 

 

 

	to exceed $3,000,000 during the term of this
Credit  Agreement, (d) so long as no Default or Event of Default has occurred and is
continuing, the Borrower may pay accrued and unpaid interest on the Convertible  Bonds
and (e) so long as no Default or Event of Default has occurred and is  continuing or
shall result therefrom, on or after June 15, 2008, to repay the  Convertible Bonds.

	     Section 6.11 Sale Leasebacks.

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

	     Section 6.12 No Further
      Negative Pledges.

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

	     Section 6.13 Operating Lease
      Obligations.

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

 
	 	
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	ARTICLE VII

	EVENTS OF DEFAULT

	     Section 7.1 Events of Default.

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

	 	     (a)
The Borrower shall fail to pay any principal on any Loan  when due in accordance with the
terms thereof or hereof; or the  Borrower shall fail to reimburse the Issuing Lender for
any LOC  Obligations when due in accordance with the terms hereof; or the  Borrower shall
fail to pay any interest on any Loan or any fee or other  amount payable hereunder when
due in accordance with the terms thereof  or hereof and such failure shall continue
unremedied for three Business  Days (or any Guarantor shall fail to pay on the Guaranty
in respect of  any of the foregoing or in respect of any other Guaranty Obligations
thereunder within the aforesaid period of time); or

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

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

	 	     (d)
Any Credit Party or any of its Subsidiaries shall (i)  default in any payment of
principal of or interest on any Indebtedness  (other than the Notes) in a principal
amount outstanding of at least  $1,000,000 in the aggregate for the Credit Parties and
their  Subsidiaries beyond the period of grace (not to exceed 30 days), if  any, provided
in the instrument or agreement under which such  Indebtedness was created; or (ii)
default in the observance or  performance of any other agreement or condition relating to
any  Indebtedness in a principal amount outstanding of at least $1,000,000  in the
aggregate for the Credit Parties and their Subsidiaries or  contained in any instrument
or agreement evidencing, securing or  relating thereto, or any other event shall occur or
condition exist,

 
	 	
82	 

 

 

	 	the effect of
which default or other event or condition is to cause, or  to permit the holder or
holders of such Indebtedness or beneficiary or  beneficiaries of such Indebtedness (or a
trustee or agent on behalf of  such holder or holders or beneficiary or beneficiaries) to
cause, with  the giving of notice if required, such Indebtedness to become due prior  to
its stated maturity; or (iii) breach or default in any material  respect under any
Secured Hedging Agreement; or

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

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

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

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

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

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

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

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

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

 
	 	
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	     Section 7.2 Acceleration;
      Remedies.

	     Upon the
occurrence of an Event of Default, then, and in any such  event, (a) if such event is an
Event of Default specified in Section 7.1(f)  above, automatically the Commitments shall
immediately terminate and the Loans  (with accrued interest thereon), and all other
amounts under the Credit  Documents (including without limitation the maximum amount of
all contingent  liabilities under Letters of Credit) shall immediately become due and
payable,  and (b) if such event is any other Event of Default, any or all of the
following  actions may be taken: (i) with the written consent of the Required Lenders,
the  Administrative Agent may, or upon the written request of the Required Lenders,  the
Administrative Agent shall, by notice to the Borrower declare the  Commitments to be
terminated forthwith, whereupon the Commitments shall  immediately terminate; (ii) the
Administrative Agent may, or upon the written  request of the Required Lenders, the
Administrative Agent shall, by notice of  default to the Borrower, declare the Loans
(with accrued interest thereon) and  all other amounts owing under this Agreement and the
Notes to be due and payable  forthwith and direct the Borrower to pay to the
Administrative Agent cash  collateral as security for the LOC Obligations for subsequent
drawings under  then outstanding Letters of Credit in an amount equal to the maximum
amount of  which may be drawn under Letters of Credit then outstanding, whereupon the
same  shall immediately become due and payable; (iii) exercise any rights or remedies  of
the Administrative Agent or the Lenders under this Agreement or any other  Credit
Document, including, without limitation, any rights or remedies with  respect to the
Collateral; and (iv) exercise any rights or remedies available to  the Administrative
Agent or Lenders under applicable law.

	ARTICLE VIII

	THE AGENT

	     Section 8.1 Appointment.

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

 
	 	
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	     Section 8.2 Delegation of
      Duties.

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

	     Section 8.3 Exculpatory
      Provisions.

	     Neither the
Administrative Agent nor any of its officers, directors,  employees, agents,
attorneys-in-fact, Subsidiaries or affiliates shall be (a)  liable for any action
lawfully taken or omitted to be taken by it or such Person  under or in connection with
this Credit Agreement (except for its or such  Person’s own gross negligence or
willful misconduct) or (b) responsible in any  manner to any of the Lenders for any
recitals, statements, representations or  warranties made by any Credit Party or any
officer thereof contained in this  Credit Agreement or in any certificate, report,
statement or other document  referred to or provided for in, or received by the
Administrative Agent under or  in connection with, this Credit Agreement or for the
value, validity,  effectiveness, genuineness, enforceability or sufficiency of any of the
Credit  Documents or for any failure of any Credit Party to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any  obligation to
any Lender to ascertain or to inquire as to the observance or  performance by any Credit
Party of any of the agreements contained in, or  conditions of, this Credit Agreement, or
to inspect the properties, books or  records of any Credit Party.

	     Section 8.4 Reliance by
      Administrative Agent.

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

 
	 	
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	 	such action.
The Administrative Agent shall  in all cases be fully protected in acting, or in
refraining from  acting, under any of the Credit Documents in accordance with a request
of the Required Lenders or all of the Lenders, as may be required under  this Credit
Agreement, and such request and any action taken or failure  to act pursuant thereto
shall be binding upon all the Lenders and all  future holders of the Notes.

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

	     Section 8.5 Notice of Default.

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

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

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

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

	     Section 8.7 Indemnification.

	     The Lenders agree
to indemnify the Agent in its capacity hereunder (to  the extent not reimbursed by the
Borrower and without limiting the obligation of  the Borrower to do so), ratably
according to their respective Commitment  Percentages in effect on the date on which
indemnification is sought under this  Section, from and against any and all liabilities,
obligations, losses, damages,  penalties, actions, judgments, suits, costs, expenses or
disbursements of any  kind whatsoever which may at any time (including, without
limitation, at any  time following the payment of the Notes or any Reimbursement
Obligation) be  imposed on, incurred by or asserted against the Agent in any way relating
to or  arising out of any Credit Document or any documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby or any  action
taken or omitted by the Agent under or in connection with any of the  foregoing;
provided, however, that no Lender shall be liable for the payment of  any portion of such
liabilities, obligations, losses, damages, penalties,  actions, judgments, suits, costs,
expenses or disbursements to the extent  resulting from the Agent’s gross negligence
or willful misconduct, as determined  by a court of competent jurisdiction. The
agreements in this Section 8.7 shall  survive the termination of this Credit Agreement
and payment of the Notes, any  Reimbursement Obligation and all other amounts payable
hereunder.

	     Section 8.8 The Administrative
      Agent in Its Individual Capacity. 

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

	     Section 8.9 Successor Administrative
      Agent.

	     The Administrative
Agent may resign as Administrative Agent upon 30  days’ prior written notice to the
Borrower and the Lenders. If the  Administrative Agent shall resign as Administrative
Agent under this Credit  Agreement and the other Credit Documents, then the Required
Lenders shall  appoint from among the Lenders a successor administrative agent for the
Lenders,  which successor agent shall have capital of at least $500,000,000 and be
approved by the Borrower (such approval not to be unreasonably withheld) so long  as no
Default or Event of Default has occurred and is continuing, whereupon such  successor
administrative agent shall 

 
	 	
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	succeed to the rights, powers and duties of  the
Administrative Agent, and the term “Administrative Agent” shall mean such
successor administrative agent effective upon such appointment and approval, and  the
former Administrative Agent’s rights, powers and duties as Administrative  Agent
shall be terminated, without any other or further act or deed on the part  of such former
Administrative Agent or any of the parties to this Credit  Agreement or any holders of
the Notes. If no successor Administrative Agent has  accepted appointment as
Administrative Agent within thirty (30) days after the  retiring Administrative Agent’s
giving notice of resignation, the retiring  Administrative Agent shall have the right, on
behalf of the Lenders, to appoint  a successor administrative agent, which successor
shall have capital of at least  $500,000,000 and be approved by the Borrower (such
approval not to be  unreasonably withheld) so long as no Default or Event of Default has
occurred  and is continuing. If no successor administrative agent has accepted
appointment  as Administrative Agent within sixty (60) days after the retiring
Administrative  Agent’s giving notice of resignation, the retiring Administrative
Agent’s  resignation shall nevertheless become effective and the Lenders shall
perform  all duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor administrative agent as provided for above.  After
any retiring Administrative Agent’s resignation as Administrative Agent,  the
indemnification provisions of this Credit Agreement and the other Credit  Documents and
the provisions of this Article VIII shall inure to its benefit as  to any actions taken
or omitted to be taken by it while it was Administrative  Agent under this Credit
Agreement.

	     Section 8.10 Other Agents.

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

	ARTICLE IX

	MISCELLANEOUS

	     Section 9.1 Amendments,
      Waivers and Release of Collateral.

	     Neither this
Credit Agreement, nor any of the Notes, nor any of the  other Credit Documents, nor any
terms hereof or thereof may be amended,  supplemented, waived or modified except in
accordance with the provisions of  this Section, nor may the Borrower or any Guarantor be
released except in  accordance with the provisions of this Section 9.1. The Required
Lenders may,  or, with the written consent of the Required Lenders, the Administrative
Agent  may, from 

 
	 	
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	time to time, (a) enter into with the Borrower
or any other Credit  Party written amendments, supplements or modifications hereto and to
the other  Credit Documents for the purpose of adding any provisions to this Credit
Agreement or the other Credit Documents or changing in any manner the rights of  the
Lenders or of the Borrower or any other Credit Party hereunder or thereunder  or (b)
waive, on such terms and conditions as the Required Lenders may specify  in such
instrument, any of the requirements of this Credit Agreement or the  other Credit
Documents or any Default or Event of Default and its consequences;  provided, however,
that no such waiver and no such amendment, waiver,  supplement, modification or release
shall:

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

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

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

	 	     (iv)
release the Borrower or all or substantially all  of the Guarantors from their respective
obligations hereunder  or under the Guaranty, without the written consent of all of  the
Lenders and, to the extent the Secured Hedging Agreements  will cease to rank pari passu
with the Credit Party  Obligations in connection therewith, all of the Hedging  Agreement
Providers; or

	 	     (v)
release all or substantially all of the  Collateral without the written consent of all of
the Lenders  and, to the extent the Secured Hedging Agreements will cease  to rank pari
passu with the Credit Party Obligations in  connection therewith, all of the Hedging
Agreement Providers;  or

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

 
	 	
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	 	     (vii)
without the consent of Lenders holding in the  aggregate more than 50% of the outstanding
Revolving  Commitments (or if the Revolving Commitments have been  terminated, the
outstanding Revolving Loans), amend, modify or  waive any provision in Section 4.2 or
waive any Default or  Event of Default (or amend any Credit Document to effectively
waive any Default or Event of Default) if the effect of such  waiver is that the Lenders
shall be required to fund Revolving  Loans when such Lenders would otherwise not be
required to do  so; or

	 	     (viii)
amend, modify or waive any provision of the  Credit Documents affecting the rights or
duties of the  Administrative Agent, the Issuing Lender or the Swingline  Lender under
any Credit Document without the written consent  of the Administrative Agent, the Issuing
Lender and/or the  Swingline Lender, as applicable, in addition to the Lenders  required
hereinabove to take such action; or

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

	 	     (x)
amend the definitions of “Credit Party  Obligations,” Secured Hedging Agreement,” or
“Hedging  Agreement Provider” without the consent of any Hedging  Agreement
Provider that would be adversely affected thereby.

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

	     Notwithstanding
any of the foregoing to the contrary, the consent of  the Borrower shall not be required
for any amendment, modification or waiver of  the provisions of Article VIII (other than
the provisions of Section 8.9);  provided, however, that the Administrative Agent will
provide written notice to  the Borrower of any such amendment, modification or waiver. In
addition, the  Borrower and the Lenders hereby authorize the Administrative Agent to
modify  this Credit Agreement by unilaterally amending or supplementing Schedule 2.1(a)
from time to time in the manner requested by the Borrower, the Administrative  Agent or
any Lender in order to reflect any assignments or transfers of the  Loans as provided for
hereunder; provided further, however, that the  Administrative Agent shall promptly
deliver a copy of any such modification to  the Borrower and each Lender.

	     Notwithstanding
the fact that the consent of all the Lenders is  required in certain circumstances as set
forth above, (x) each Lender is  entitled to vote as such Lender sees fit on any
bankruptcy reorganization plan  that affects the Loans, and each Lender acknowledges that
the 

 
	 	
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	provisions of Section 1126(c) of the Bankruptcy Code supersedes
      the unanimous consent provisions set forth herein and (y) the Required Lenders
      may consent to allow a Credit Party to use cash collateral in the context
      of a bankruptcy or insolvency proceeding. 

	     Section 9.2 Notices.

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

	The Borrower

      and the other 

      Credit Parties: 	Bradley Pharmaceuticals, Inc. 

      383 Route 46 West 

      Fairfield, New Jersey 07084-2402 

      Attention: R. Brent Lenczycki, 

                  
          Chief Financial Officer 

      Telecopier: 973-575-5366 

      Telephone: 973-882-1505 (x510) 

      

      with a copy to: 

      

      Epstein Becker & Green, P.C. 

      250 Park Avenue 

      New York, NY 10177 

      Attention: Theodore L. Polin, Esq.

      Telecopier: (212) 878-8622 

      Telephone: (212) 351-4522 	 
	 	 	 
	The Administrative 

      Agent: 	Wachovia Bank, National Association, as Administrative
      Agent 

      Charlotte Plaza 

      201 South College Street, CP-8 

      Charlotte, North Carolina 28288-0680 

      Attention: Syndication Agency Services

      Telecopier: (704) 383-0288 

      Telephone: (704) 715-8946 

      	 

 
	 	
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	   	 with a copy to: 

      

      Wachovia Bank, National Association, 

      One Wachovia Center, DC-5 

      Charlotte, North Carolina 28288-0737 

      Attention: Christian Bradeen 

                  
          Agency Management 

      Telecopier: (704) 383-7611 

      Telephone: (704) 715-7708 	 

	     Section 9.3 No Waiver; Cumulative
      Remedies.

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

	     Section 9.4 Survival of
      Representations and Warranties.

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

	     Section 9.5 Payment of Expenses
      and Taxes.

	     The Credit Parties
agree (a) to pay or reimburse the Administrative  Agent and the Arranger for all their
reasonable out-of-pocket costs and expenses  incurred in connection with the development,
preparation, negotiation, printing  and execution of, and any amendment, supplement or
modification to, this  Agreement and the other Credit Documents and any other documents
prepared in  connection herewith or therewith, and the consummation and administration of
the  transactions contemplated hereby and thereby, together with the reasonable fees  and
disbursements of counsel to the Administrative Agent and the Arranger, (b)  to pay or
reimburse each Lender and the Administrative Agent for all its costs  and expenses
incurred in connection with the enforcement or preservation of any  rights under this
Agreement and the other Credit Documents, including, without  limitation, the reasonable
fees and disbursements of counsel to the  Administrative Agent and to the Lenders
(including reasonable allocated costs of  in-house legal counsel), and (c) on demand, to
pay, indemnify, and hold each  Lender, the Administrative Agent and the Arranger harmless
from, any and all  recording and filing fees and any and all liabilities with respect to,
or  resulting from any delay in paying, stamp, excise and other similar taxes, if  any,
which may be payable or determined to be payable in connection with the  execution and
delivery of, or consummation or administration of any of the  transactions contemplated
by, or any amendment, supplement or modification of,  or any waiver or consent 

 
	 	
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	under or in respect of, the Credit Documents and
any  such other documents, and (d) to pay, indemnify, and hold each Lender, the
Administrative Agent, the Arranger and their Affiliates and their respective  officers,
directors, employees, partners, members, counsel, agents,  representatives, advisors and
affiliates (collectively called the “Indemnitees”)  harmless from and against,
any and all other liabilities, obligations, losses,  damages, penalties, actions,
judgments, suits, costs, expenses or disbursements  of any kind or nature whatsoever with
respect to the execution, delivery,  enforcement, performance and administration of the
Credit Documents and any such  other documents and the use, or proposed use, of proceeds
of the Loans (all of  the foregoing, collectively, the “indemnified liabilities”);
provided, however,  that the Borrower shall not have any obligation hereunder to an
Indemnitee with  respect to indemnified liabilities arising from the gross negligence or
willful  misconduct of such Indemnitee, as determined by a court of competent
jurisdiction pursuant to a final non-appealable judgment. The agreements in this  Section
9.5 shall survive repayment of the Loans, Notes and all other amounts  hereunder.

	     Section 9.6 Successors and
      Assigns; Participations; Purchasing Lenders.

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

	 	     (b)
Any Lender may, in the ordinary course of its business and  in accordance with applicable
law, at any time sell to one or more  banks or other entities (“Participants”)
participating interests in any  Loan owing to such Lender, any Note held by such Lender,
any Commitment  of such Lender, or any other interest of such Lender hereunder. In the
event of any such sale by a Lender of participating interests to a  Participant, such
Lender’s obligations under this Agreement to the  other parties to this Agreement
shall remain unchanged, such Lender  shall remain solely responsible for the performance
thereof, such  Lender shall remain the holder of any such Note for all purposes under
this Agreement, and the Borrower and the Administrative Agent shall  continue to deal
solely and directly with such Lender in connection  with such Lender’s rights and
obligations under this Agreement. No  Lender shall transfer or grant any participation
under which the  Participant shall have rights to approve any amendment to or waiver of
this Agreement or any other Credit Document except to the extent such  amendment or
waiver would (i) extend the scheduled maturity of any Loan  or Note or any installment
thereon in which such Participant is  participating, or reduce the stated rate or extend
the time of payment  of interest or fees thereon (except in connection with a waiver of
interest at the increased post-default rate) or reduce the principal  amount thereof, or
increase the amount of the Participant’s  participation over the amount thereof then
in effect (it being  understood that a waiver of any Default or Event of Default shall
not  constitute a change in the terms of such participation, and that an  increase in any
Commitment or Loan shall be permitted without consent  of any participant if the
Participant’s participation is not increased  as a result thereof), (ii) release all
or substantially all of the  Guarantors from their obligations under the Guaranty, (iii)
release all  or substantially all of the Collateral, or (iv) consent to the  assignment
or transfer by 

 
	 	
94	 

 

 

	 	the Borrower
of any of its rights and  obligations under this Agreement. In the case of any such
participation, the Participant shall not have any rights under this  Agreement or any of
the other Credit Documents (the Participant’s  rights against such Lender in respect
of such participation to be those  set forth in the agreement executed by such Lender in
favor of the  Participant relating thereto) and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such  participation;
provided that each Participant shall be entitled to the  benefits of Sections 2.15, 2.16,
2.17, 2.18 and 9.5 with respect to its  participation in the Commitments and the Loans
outstanding from time to  time; provided further, that no Participant shall be entitled
to  receive any greater amount pursuant to such Sections than the  transferor Lender
would have been entitled to receive in respect of the  amount of the participation
transferred by such transferor Lender to  such Participant had no such transfer occurred.

	 	     (c)
Any Lender may, in the ordinary course of its business and  in accordance with applicable
law, at any time, sell or assign to any  Lender or any Affiliate or Related Fund thereof
and, with the consent  of the Administrative Agent and, so long as no Default or Event of
Default has occurred and is continuing, the Borrower (in each case,  which consent shall
not be unreasonably withheld or delayed), to one or  more additional banks, insurance
companies, funds or financial  institutions or entities (each such Lender, Affiliate,
Related Fund,  bank, insurance company, fund or financial institution or entity, a  “Purchasing
Lender”), all or any part of its rights and obligations  under this Agreement and
the Notes in minimum amounts of (A) $2,000,000  with respect to its Revolving Commitment
or its Revolving Loans and (B)  $1,000,000 with respect to its Term Loan Commitment (or,
if less, the  entire amount of such Lender’s obligations), pursuant to a Commitment
Transfer Supplement, executed by such Purchasing Lender and such  transferor Lender (and,
to the extent required above, the  Administrative Agent and the Borrower), and delivered
to the  Administrative Agent for its acceptance and recording in the Register;  provided,
however, that any sale or assignment to an existing Lender or  an Affiliate or Related
Fund of an existing Lender shall not require  the consent of the Administrative Agent or
the Borrower nor shall any  such sale or assignment be subject to the minimum assignment
amounts  specified herein. Upon such execution, delivery, acceptance and  recording, from
and after the Transfer Effective Date specified in such  Commitment Transfer Supplement,
(x) the Purchasing Lender thereunder  shall be a party hereto and, to the extent provided
in such Commitment  Transfer Supplement, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein, and (y) the  transferor Lender
thereunder shall, to the extent provided in such  Commitment Transfer Supplement, be
released from its obligations under  this Agreement (and, in the case of a Commitment
Transfer Supplement  covering all or the remaining portion of a transferor Lender’s
rights  and obligations under this Agreement, such transferor Lender shall  cease to be a
party hereto; provided, however, that such Lender shall  still be entitled to any
indemnification rights that expressly survive  hereunder). Such Commitment Transfer
Supplement shall be deemed to  amend this Agreement to the extent, and only to the
extent, necessary  to reflect the addition of such Purchasing Lender and the resulting
adjustment of Commitment Percentages arising from the purchase by such  Purchasing Lender
of all or a portion of the rights and obligations of  such transferor Lender under this
Agreement and the Notes. On or prior  to the Transfer Effective Date specified in 

 
	 	
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	 	such
Commitment Transfer  Supplement, the Borrower, at its own expense, shall execute and
deliver  to the Administrative Agent in exchange for the Notes delivered to the
Administrative Agent pursuant to such Commitment Transfer Supplement  new Notes to the
order of such Purchasing Lender in an amount equal to  the Commitment assumed by it
pursuant to such Commitment Transfer  Supplement and, unless the transferor Lender has
not retained a  Commitment hereunder, new Notes to the order of the transferor Lender  in
an amount equal to the Commitment retained by it hereunder. Such new  Notes shall be
dated the Closing Date and shall otherwise be in the  form of the Notes replaced thereby.
The Notes surrendered by the  transferor Lender shall be returned by the Administrative
Agent to the  Borrower marked “canceled”.

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

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

	 	     (f)
The Borrower authorizes each Lender to disclose to any  Participant or Purchasing Lender
(each, a “Transferee”) and any  prospective Transferee any and all financial
information in such  Lender’s possession concerning the Borrower and its Affiliates
which  has been delivered to such Lender by or on behalf of the Borrower  pursuant to
this Agreement or which has been delivered to such Lender  by or on behalf of the
Borrower in connection with such Lender’s credit  evaluation of the Borrower and its
Subsidiaries prior to becoming a  party to this Agreement, in each case subject to
Section 9.15.

	 	     (g)
At the time of each assignment pursuant to this Section  9.6 to a Person which is not
already a Lender hereunder and which is  not a United States person (as such term is
defined in Section  7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Lender shall provide to the Borrower and the  Administrative Agent 

 
	 	
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	 	the
appropriate Internal Revenue Service Forms  (and, if applicable, a Tax Exempt
Certificate) described in Section  2.18.

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

	     Section 9.7 Adjustments;
      Set-off.

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

	 	     (b)
In addition to any rights and remedies of the Lenders  provided by law (including,
without limitation, other rights of  set-off), each Lender shall have the right, without
prior notice to the  Borrower, any such notice being expressly waived by the Borrower to
the  extent permitted by applicable law, upon the occurrence of any Event of  Default, to
setoff and appropriate and apply any and all deposits  (general or special, time 

 
	 	
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	 	or demand,
provisional or final), in any  currency, and any other credits, indebtedness or claims,
in any  currency, in each case whether direct or indirect, absolute or  contingent,
matured or unmatured, at any time held by or owing to such  Lender or any branch or
agency thereof to or for the credit or the  account of the Borrower or any other Credit
Party, or any part thereof  in such amounts as such Lender may elect, against and on
account of the  Loans and other Credit Party Obligations of the Borrower and the other
Credit Parties to such Lender hereunder and claims of every nature and  description of
such Lender against the Borrower and the other Credit  Parties, in any currency, whether
arising hereunder, under any other  Credit Document or any Hedging Agreement provided by
such Lender  pursuant to the terms of this Agreement, as such Lender may elect,  whether
or not such Lender has made any demand for payment and although  such obligations,
liabilities and claims may be contingent or  unmatured. The aforesaid right of set-off
may be exercised by such  Lender against the Borrower, any other Credit Party or against
any  trustee in bankruptcy, debtor in possession, assignee for the benefit  of creditors,
receiver or execution, judgment or attachment creditor of  the Borrower or any other
Credit Party, or against anyone else claiming  through or against the Borrower, any other
Credit Party or any such  trustee in bankruptcy, debtor in possession, assignee for the
benefit  of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been  exercised by
such Lender prior to the occurrence of any Event of  Default. Each Lender agrees promptly
to notify the Borrower and the  Administrative Agent after any such set-off and
application made by  such Lender; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application.

	     Section 9.8 Table of Contents
      and Section Headings. 

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

	     Section 9.9 Counterparts.

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

	     Section 9.10 Effectiveness.

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

 
	 	
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	     Section 9.11 Severability.

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

	     Section 9.12 Integration.

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

	     Section 9.13 Governing Law.

	     This Agreement and
the other Credit Documents and the rights and  obligations of the parties under this
Agreement and the other Credit Documents  shall be governed by, and construed and
interpreted in accordance with, the law  of the State of New York without regard to
principles of conflicts of laws that  would call for the application of the laws of any
other jurisdiction.

	     Section 9.14 Consent to
      Jurisdiction and Service of Process.  

	     All judicial
proceedings brought against the Borrower and/or any other  Credit Party with respect to
this Agreement, any Note or any of the other Credit  Documents may be brought in any
state or federal court of competent jurisdiction  in the State of New York, and, by
execution and delivery of this Agreement, each  of the Borrower and the other Credit
Parties accepts, for itself and in  connection with its properties, generally and
unconditionally, the non-exclusive  jurisdiction of the aforesaid courts and irrevocably
agrees to be bound by any  final judgment rendered thereby in connection with this
Agreement, any Note or  any other Credit Document from which no appeal has been taken or
is available.  Each of the Borrower and the other Credit Parties irrevocably agrees that
all  service of process in any such proceedings in any such court may be effected by
mailing a copy thereof by registered or certified mail (or any substantially  similar
form of mail), postage prepaid, to it at its address set forth in  Section 9.2 or at such
other address of which the Administrative Agent shall  have been notified pursuant
thereto, such service being hereby acknowledged by  the each of the Borrower and the
other Credit Parties to be effective and  binding service in every respect. Each of the
Borrower, the other Credit  Parties, the Administrative Agent and the Lenders irrevocably
waives any  objection, including, without limitation, any objection to the laying of
venue  based on the grounds of forum non conveniens which it may now or hereafter have
to the bringing of any such action or proceeding in any such jurisdiction.  Nothing
herein shall affect the right to serve process in any other manner  permitted by law or
shall limit the right of any Lender to bring proceedings  against the Borrower or the
other Credit Parties in the court of any other  jurisdiction.

 
	 	
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	     Section 9.15 Arbitration.

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

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

	 	     (b)
Notwithstanding the preceding binding arbitration  provisions, the Administrative Agent,
the Lenders, the Borrower and the  other Credit Parties agree to preserve, without
diminution, certain  remedies that the Administrative Agent on behalf of the Lenders may
employ or exercise freely, independently or in connection with an  arbitration proceeding
or after an arbitration action is brought. The  Administrative Agent on behalf of the
Lenders shall have the right to  proceed in any court of proper jurisdiction or by
self-help to exercise  or prosecute the following remedies, as applicable (i) all rights
to  foreclose against any real or personal property or other security by  exercising a
power of sale granted under Credit Documents or under  applicable law or by judicial
foreclosure and sale, including a  proceeding to confirm the sale; (ii) all rights of
self-help including  peaceful occupation of real property and collection of rents,
set-off,  and peaceful possession of personal property; (iii) obtaining  provisional or
ancillary remedies including injunctive relief,  sequestration, garnishment, attachment,
appointment of receiver and  filing an involuntary bankruptcy proceeding; and (iv) when
applicable,  a judgment by confession of judgment. Preservation of these remedies  does
not limit the power of an arbitrator to grant similar remedies  that may be requested by
a party in a Dispute.

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

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

	     Section 9.16 Confidentiality.

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

 
	 	
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	investment in such Securitization; provided that
such Person shall have been  made aware of this Section 9.16 and shall have agreed to be
bound by its  provisions as if it were a party to this Agreement, or (k) to a Person that
is a  trustee, collateral manager, servicer, noteholder or secured party in a
Securitization in connection with the administration, servicing and reporting on  the
assets serving as collateral for such Securitization; provided that such  Person shall
have been made aware of this Section 9.16 and shall have agreed to  be bound by its
provisions as if it were a party to this Agreement. For purposes  of this Section “Securitization” shall
mean a public or private offering by a  Lender or any of its affiliates or their
respective successors and assigns, of  securities which represent an interest in, or
which are collateralized in whole  or in part by, the Loans.

	     Section 9.17 Acknowledgments.

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

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

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

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

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

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

	     Section 9.19 Patriot Act
      Notice.

	     Each Lender and
the Administrative Agent (for itself and not on behalf  of any other party) hereby
notifies the Borrower that, pursuant to the  requirements of the USA Patriot Act, Title
III of Pub. L. 107-56, signed into  law October 26, 2001 (the “Patriot Act”),
it is required to obtain, verify and  record information that identifies the Borrower,
which information includes 

 
	 	
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	the  name and address of the Borrower and other
information that will allow such  Lender or the Administrative Agent, as applicable, to
identify the Borrower in  accordance with the Patriot Act.

	ARTICLE X

	GUARANTY

	     Section 10.1 The Guaranty.

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

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

	     Section 10.2 Bankruptcy.

	     Additionally, each
of the Guarantors unconditionally and irrevocably  guarantees jointly and severally the
payment of any and all Credit Party  Obligations of the Borrower to the Lenders 

 
	 	
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	and any Hedging Agreement Provider  whether or
not due or payable by the Borrower upon the occurrence of any of the  events specified in
Section 7.1(f), and unconditionally promises to pay such  Credit Party Obligations to the
Administrative Agent for the account of the  Lenders and to any such Hedging Agreement
Provider, or order, on demand, in  lawful money of the United States. Each of the
Guarantors further agrees that to  the extent that the Borrower or a Guarantor shall make
a payment or a transfer  of an interest in any property to the Administrative Agent, any
Lender or any  Hedging Agreement Provider, which payment or transfer or any part thereof
is  subsequently invalidated, declared to be fraudulent or preferential, or  otherwise is
avoided, and/or required to be repaid to the Borrower or a  Guarantor, the estate of the
Borrower or a Guarantor, a trustee, receiver or any  other party under any bankruptcy
law, state or federal law, common law or  equitable cause, then to the extent of such
avoidance or repayment, the  obligation or part thereof intended to be satisfied shall be
revived and  continued in full force and effect as if said payment had not been made.

	     Section 10.3 Nature of Liability.

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

	     Section 10.4 Independent
      Obligation.

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

	     Section 10.5 Authorization.

	     Each of the
Guarantors authorizes the Administrative Agent, each Lender  and each Hedging Agreement
Provider without notice or demand (except as shall be  required by applicable statute and
cannot be waived), and without affecting or  impairing its liability hereunder, from time
to time to (a) renew, compromise,  extend, increase, accelerate or otherwise change the
time for payment of, or  otherwise change the terms of the Credit Party Obligations or 

 
	 	
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	any part thereof  in accordance with this
Agreement and any Secured Hedging Agreement, as  applicable, including any increase or
decrease of the rate of interest thereon,  (b) take and hold security from any Guarantor
or any other party for the payment  of this Guaranty or the Credit Party Obligations and
exchange, enforce waive and  release any such security, (c) apply such security and
direct the order or  manner of sale thereof as the Administrative Agent and the Lenders
in their  discretion may determine and (d) release or substitute any one or more
endorsers, Guarantors, the Borrower or other obligors.

	     Section 10.6 Reliance.

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

	     Section 10.7 Waiver.

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

	 	     (b)
Each of the Guarantors waives all presentments, demands  for performance, protests and
notices, including without limitation  notices of nonperformance, notice of protest,
notices of dishonor,  notices of acceptance of this Guaranty, and notices of the
existence,  creation or incurring of new or additional Credit 

 
	 	
105	 

 

 

	 	Party
Obligations.  Each Guarantor assumes all responsibility for being and keeping itself
informed of the Borrower’s financial condition and assets, and of all  other
circumstances bearing upon the risk of nonpayment of the Credit  Party Obligations and
the nature, scope and extent of the risks which  such Guarantor assumes and incurs
hereunder, and agrees that neither  the Administrative Agent nor any Lender shall have
any duty to advise  such Guarantor of information known to it regarding such
circumstances  or risks.

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

	     Section 10.8 Limitation
      on Enforcement.

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

	     Section 10.9 Confirmation
      of Payment.

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

 
	 	
106	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

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

	BORROWER:	BRADLEY PHARMACEUTICALS, INC., 

      a Delaware corporation
	 	 
	 	By: /s/ R. Brent Lenczycki 
      

      Name: R. Brent Lenczycki 

      Title: CFO & Vice President  
	 	 
	 	 
	GUARANTORS:	DOAK DERMATOLOGICS, INC., 

      a New York corporation
	 	 
	 	By: /s/ R. Brent Lenczycki 

      
      

       Name: R. Brent Lenczycki 

      Title: CFO & Vice President 
	 	 
	 	 
	 	BIOGLAN PHARMACEUTICALS CORP., 

      a Delaware corporation 
	 	 
	 	By: /s/ R. Brent Lenczycki

      
      

       Name: R. Brent Lenczycki 

      Title: CFO & Vice President 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	ADMINISTRATIVE AGENT

      AND LENDERS: 	WACHOVIA BANK, NATIONAL 

      ASSOCIATION, 

      as Administrative Agent and as a Lender 
	 	 
	 	By: /s/ Chris McCoy 
      

      Name: Chris McCoy 

      Title: Vice President 

      

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	KEY BANK NATIONAL ASSOCIATION,

      as a Lender 
	 	 
	 	By: /s/ Christopher A. Swindell 
      

      Name: Christopher A. Swindell 

      Title: Portfolio Manager 

      

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	RAYMOND JAMES BANK, FSB,

      as a Lender
	 	 
	 	By: /s/ Andrew D. Hahn 
      

      Name: Andrew D. Hahn 

      Title: Vice President 

      

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	BROWN BROTHERS HARRIMAN & CO.,

      as a Lender 
	 	 
	 	By: /s/ Donald H. Roberts, Jr. 
      

      Name: Donald H. Roberts, Jr.

      Title: Senior Vice President 

      

      

      

      [Signature Pages Continue] 
	 	 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	JPMORGAN CHASE BANK, 

      as a Lender
	 	 
	 	By: /s/ Catherine Brody 
      

      Name: Catherine Brody 

      Title: Vice President

      

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	FIRSTRUST BANK, 

      as a Lender
	 	 
	 	By: /s/ Bryan T. Denney 
      

      Name: Bryan T. Denney 

      Title: Vice President

      

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	FLEET NATIONAL BANK, 

      as a Lender
	 	 
	 	By: /s/ Laura H. McAulay 
      

      Name: Laura H. McAulay

      Title: Senior Vice President

      

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	RZB FINANCE LLC, 

      as a Lender
	 	 
	 	By: /s/ Astrid Wilke 
      

      Name: Astrid Wilke 

      Title: Vice President 

      

      

      By: /s/ Christoph Hoedl 
      

      Name: Christoph Hoedl 

      Title: Vice President 

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	PNC BANK, NATIONAL ASSOCIATION, 

      as a Lender
	 	 
	 	By: /s/ Brian J. Clark 
      

      Name: Brian J. Clark Title:

      Senior Vice President

      

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	GENERAL ELECTRIC CAPITAL CORPORATION, 

      as a Lender
	 	 
	 	By: /s/ Keith Kennedy
      

      Name: Keith Kennedy 

      Title: Duly Authorized Signatory

      

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	CITIBANK F.S.B., 

      as a Lender 
	 	 
	 	By: /s/ Thomas J. Harris 
      

      Name: Thomas J. Harris

      Title: Group Vice President 

      

      

      

      [Signature Pages Continue] 
	 	 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	SOVEREIGN BANK, 

      as a Lender 
	 	 
	 	By: /s/ Eric Ritter 
      

      Name: Eric Ritter 

      Title: AVP

      

      

      

      [Signature Pages Continue] 
	 	 

 

 
	 	
	 

 

 

	BRADLEY PHARMACEUTICALS, INC.

CREDIT AGREEMENT

	 	COMMERCEBANK, N.A., 

      as a Lender
	 	 
	 	By: /s/ Peter L. Davis 
      

      Name: Peter L. Davis 

      Title: SVP 

      

      

      

      [Signature Pages Continue]INDEMNIFICATION AGREEMENT

     INDEMNIFICATION AGREEMENT, dated as of September 29, 2004, by and
among Citadel Broadcasting Corporation, a Delaware corporation (the
"Company"), Citadel Broadcasting Company, a Nevada corporation and a
wholly-owned subsidiary of the Company, (the "Subsidiary") and the director
and/or officer of the Company whose name appears on the signature page of
this Agreement ("Indemnitee").

                                  RECITALS

     A.   Highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or officers or in other capacities
unless they are provided with reasonable protection through insurance or
indemnification against risks of claims and actions against them arising
out of their service to and activities on behalf of the corporations.

     B.   The Board of Directors of the Company (the "Board") has determined
that the Company should act to assure its directors and officers that there
will be increased certainty of such protection in the future.

     C.   It is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest
extent permitted by applicable law so that they will serve or continue to
serve the Company free from undue concern that they will not be so
indemnified.

     D.   Indemnitee is willing to serve, to continue to serve and to take on
additional service for or on behalf of the Company and/or the Subsidiary on
the condition that Indemnitee be so indemnified.

     E.   In consideration of the benefits received and to be received by the
Company and/or the Subsidiary in connection with actions taken and to be
taken by the Board and by the officers of the Company, the Company and the
Subsidiary have determined that it is in their best interests for the
reasons set forth above to be a party to this Agreement and to provide
indemnification to the directors and officers of the Company in connection
with their service to and activities on behalf of the Company and the
Subsidiary.

     F.   The Subsidiary acknowledges that for purposes of this Agreement the
directors and officers of the Company who enter into this Agreement are
serving in such capacities at the request of the Subsidiary.

     G.   The Subsidiary further acknowledges that such directors and
officers are willing to serve, to continue to serve and to take on
additional service for or on behalf of the Company, thereby benefiting the
Subsidiary, on the condition that the Subsidiary enter into, and provide
indemnification pursuant to, this Agreement.

                                 AGREEMENT

     In consideration of the premises and the covenants contained herein,
the Company, Subsidiary and Indemnitee do hereby covenant and agree as
follows:

          1.   Definitions.

               (a)  For purposes of this Agreement:

                    (i)  "Affiliate" shall mean any corporation,
partnership, joint venture, trust or other enterprise in respect of which
Indemnitee is or was or will be serving as a director or officer directly
or indirectly at the request of the Company or the Subsidiary, and
including, but not limited to, service with respect to an employee benefit
plan.

                    (ii)  "Disinterested Director" shall mean a director of
the Company who is not or was not a party to the Proceeding in respect of
which indemnification is being sought by Indemnitee.

                    (iii) "Expenses" shall include all attorneys' fees and
costs, retainers, court costs, transcripts, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements or
expenses incurred in connection with asserting or defending claims.

                    (iv) "fines" shall include any excise taxes assessed on
Indemnitee with respect to any employee benefit plan.

                    (v)  "Independent Counsel" shall mean a law firm or
lawyer that neither is presently nor in the past year has been retained to
represent: (i) the Company, the Subsidiary or Indemnitee in any matter
material to any such party or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder in any matter material to
such other party. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any firm or person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing any of the Company, the Subsidiary or Indemnitee
in an action to determine Indemnitee's right to indemnification under this
Agreement. All Expenses of the Independent Counsel incurred in connection
with acting pursuant to this Agreement shall be borne by the Company.

                    (vi)  "Losses" shall mean all expenses, liabilities,
losses and claims (including attorneys' fees, judgments, fines, excise
taxes under the Employee Retirement Income Security Act of 1974, as amended
from time to time, penalties and amounts to be paid in settlement) incurred
in connection with any Proceeding.

                    (vii)  "Proceeding" shall include any threatened,
pending or completed action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative.

               (b)  For purposes of this Agreement, a person who acted in
good faith and in a manner such person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the Company" as referred to in this Agreement; the term
"serving at the request of the Company or the Subsidiary" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and references to the "Company" or the
"Subsidiary" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify Indemnitee in
its capacity as a director, officer, or employee or agent, so that
Indemnitee shall stand in the same position under this Agreement with
respect to the resulting or surviving corporation as Indemnitee would have
with respect to such constituent corporation if its separate existence had
continued.

          2.  Service by Indemnitee. Indemnitee agrees to begin or continue
to serve the Company or any Affiliate as a director and/or officer.
Notwithstanding anything contained herein, this Agreement shall not create
a contract of employment between the Company or the Subsidiary and
Indemnitee, and the termination of Indemnitee's relationship with the
Company or the Subsidiary or an Affiliate by either party hereto shall not
be restricted by this Agreement.

          3.  Indemnification. The Company and Subsidiary jointly and
severally agree to indemnify Indemnitee for, and hold Indemnitee harmless
from and against, any Losses or Expenses at any time incurred by or
assessed against Indemnitee arising out of or in connection with the
service of Indemnitee as a director or officer of the Company or of an
Affiliate (collectively referred to as an "Officer or Director of the
Company") to the fullest extent permitted by the laws of the State of
Delaware in effect on the date hereof or as such laws may from time to time
hereafter be amended to increase the scope of such permitted
indemnification. Without diminishing the scope of the indemnification
provided by this Section, the rights of indemnification of Indemnitee
provided hereunder shall include but shall not be limited to those rights
set forth hereinafter.

          4.  Action or Proceeding Other Than an Action by or in the Right
of the Company or the Subsidiary. Indemnitee shall be entitled to the
indemnification rights provided herein if Indemnitee is a person who was or
is made a party or is threatened to be made a party to or is involved
(including, without limitation, as a witness) in any Proceeding (other than
an action by or in the right of the Indemnitee (unless approved in advance
in writing by the Company's Board of Directors), the Company or the
Subsidiary, as the case may be) by reason of (a) the fact that Indemnitee
is or was an Officer or Director of the Company or any other entity which
Indemnitee is or was or will be serving at the request of the Company or
the Subsidiary, as the case may be, or (b) anything done or not done by
Indemnitee in any such capacity.

          5.  Actions by or in the Right of the Company. Indemnitee shall be
entitled to the indemnification rights provided herein if Indemnitee is a
person who was or is a party or is threatened to be made a party to or is
involved (including, without limitation, as a witness) in any Proceeding
brought by or in the right of the Company or the Subsidiary to procure a
judgment in its favor by reason of (a) the fact that Indemnitee is or was
an Officer or Director of the Company or any Affiliate, or (b) anything
done or not done by Indemnitee in any such capacity. Pursuant to this
Section, Indemnitee shall be indemnified against Losses or Expenses
incurred or suffered by Indemnitee or on Indemnitee's behalf in connection
with the defense or settlement of any Proceeding if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company or the Subsidiary.
Notwithstanding the foregoing provisions of this Section, no such
indemnification shall be made in respect of any claim, issue or matter as
to which Delaware law expressly prohibits such indemnification by reason of
an adjudication of liability of Indemnitee to the Company or the Subsidiary
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such Losses and Expenses which the
Court of Chancery or such other court shall deem proper.

          6.  Indemnification for Losses and Expenses of Party Who is Wholly
or Partly Successful. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been wholly successful on the
merits or otherwise in any Proceeding referred to in Sections 3, 4 or 5
hereof on any claim, issue or matter therein, Indemnitee shall be
indemnified against all Losses and Expenses incurred by Indemnitee or on
Indemnitee's behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in
such Proceeding, the Company and the Subsidiary jointly and severally agree
to indemnify Indemnitee to the maximum extent permitted by law against all
Losses and Expenses incurred by Indemnitee in connection with each
successfully resolved claim, issue or matter. In any review or Proceeding
to determine the extent of indemnification, the Company shall bear the
burden of proving any lack of success and which amounts sought in indemnity
are allocable to claims, issues or matters which were not successfully
resolved. For purposes of this Section and without limitation, the
termination of any such claim, issue or matter by dismissal with or without
prejudice shall be deemed to be a successful resolution as to such claim,
issue or matter.

          7.  Payment for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of
the fact that Indemnitee is or was an Officer or Director of the Company or
any Affiliate, as the case may be, a witness in any Proceeding, the Company
and the Subsidiary jointly and severally agree to pay to Indemnitee all
Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's
behalf in connection therewith.

          8.  Advancement of Expenses and Costs. All Expenses incurred by or
on behalf of Indemnitee (or reasonably expected by Indemnitee to be
incurred by Indemnitee within three months) in connection with any
Proceeding shall be paid by the Company or the Subsidiary in advance of the
final disposition of such Proceeding within twenty days after the receipt
by the Company or the Subsidiary of a statement or statements from
Indemnitee requesting from time to time such advance or advances, whether
or not a determination to indemnify has been made under Section 9.
Indemnitee's entitlement to such advancement of Expenses shall include
those incurred in connection with any Proceeding by Indemnitee seeking an
adjudication or award in arbitration pursuant to this Agreement. The
financial ability of Indemnitee to repay an advance shall not be a
prerequisite to the making of such advance. Such statement or statements
shall reasonably evidence such Expenses incurred (or reasonably expected to
be incurred) by Indemnitee in connection therewith and shall include or be
accompanied by a written undertaking by or on behalf of Indemnitee to repay
such amount if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified therefor pursuant to the terms of this
Agreement.

          9.  Procedure for Determination of Entitlement to Indemnification.

               (a) When seeking indemnification under this Agreement (which
shall not include in any case the right of Indemnitee to receive payments
pursuant to Section 7 and Section 8 hereof, which shall not be subject to
this Section 9), Indemnitee shall submit a written request for
indemnification to the Company and the Subsidiary. Determination of
Indemnitee's entitlement to indemnification shall be made promptly, but in
no event later than 60 days after receipt by the Company and the Subsidiary
of Indemnitee's written request for indemnification. The Secretary of the
Company shall, promptly upon receipt of Indemnitee's request for
indemnification, advise the Board that Indemnitee has made such request for
indemnification.

               (b) The entitlement of Indemnitee to indemnification under
this Agreement shall be determined, with respect to a person who is a
director or officer at the time of such determination, in the specific case
(1) by the Board of Directors by a majority vote of the Disinterested
Directors, even though less than a quorum, or (2) by a committee of the
Disinterested Directors designated by majority vote of the Disinterested
Directors, even though less than a quorum, or (3) if there are no
Disinterested Directors, or if such Disinterested Directors so direct, by
Independent Counsel, or (4) by the stockholders. The entitlement of the
Indemnitee to indemnification shall be determined with respect to any
person who is not a director or officer at the time of such determination
by any means reasonably determined by the Company.

               (c) In the event the determination of entitlement is to be
made by Independent Counsel, such Independent Counsel shall be selected by
the Board and the Board of Directors of the Subsidiary and approved by
Indemnitee. Upon failure of the Board and the Board of Directors of the
Subsidiary to so select such Independent Counsel or upon failure of
Indemnitee to so approve, such Independent Counsel shall be selected by the
American Arbitration Association of New York, New York or such other person
as such Association shall designate to make such selection.

               (d) If a determination is made pursuant to Section 9(b) is
that Indemnitee is not entitled to indemnification to the full extent of
Indemnitee's request, Indemnitee shall have the right to seek entitlement
to indemnification in accordance with the procedures set forth in Section
10 hereof.

               (e) If a determination with respect to entitlement to
indemnification shall not have been made within 60 days after receipt by
the Company and the Subsidiary of such request, the requisite determination
of entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be absolutely entitled to such indemnification, absent (i)
misrepresentation by Indemnitee of a material fact in the request for
indemnification or (ii) a final judicial determination that all or any part
of such indemnification is expressly prohibited by law.

               (f) The termination of any Proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, adversely affect the rights of Indemnitee
to indemnification hereunder except as may be specifically provided herein,
or create a presumption that Indemnitee did not act in good faith and in a
manner which Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company or the Subsidiary, as the case may be, or
create a presumption that (with respect to any criminal action or
proceeding) Indemnitee had reasonable cause to believe that Indemnitee's
conduct was unlawful.

               (g) For purposes of any determination of good faith
hereunder, Indemnitee shall be deemed to have acted in good faith if in
taking such action Indemnitee relied on the records or books of account of
the Company or an Affiliate, including financial statements, or on
information supplied to Indemnitee by the officers of the Company or an
Affiliate in the course of their duties, or on the advice of legal counsel
for the Company or an Affiliate or on information or records given or
reports made to the Company or an Affiliate by an independent certified
public accountant or by an appraiser or other expert selected with
reasonable care to the Company or an Affiliate. The Company shall have the
burden of establishing the absence of good faith. The provisions of this
Section 9(g) shall not be deemed to be exclusive or to limit in any way the
other circumstances in which Indemnitee may be deemed to have met the
applicable standard of conduct set forth in this Agreement.

               (h) The knowledge and/or actions, or failure to act, of any
other director, officer, agent or employee of the Company or an Affiliate
shall not be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement.

          10. Remedies in Cases of Determination Not to Indemnify or to
     Advance Expenses.

               (a) In the event that (i) a determination is made that
Indemnitee is not entitled to indemnification hereunder, (ii) advances are
not made pursuant to Section 8 hereof or (iii) payment has not been timely
made following a determination of entitlement to indemnification pursuant
to Section 9 hereof, Indemnitee shall be entitled to seek a final
adjudication either through an arbitration proceeding or in an appropriate
court of the State of Delaware or any other court of competent jurisdiction
of Indemnitee's entitlement to such indemnification or advance.

               (b) In the event a determination has been made in accordance
with the procedures set forth in Section 9 hereof, in whole or in part,
that Indemnitee is not entitled to indemnification, any judicial proceeding
or arbitration referred to in Section 10(a) shall be de novo and Indemnitee
shall not be prejudiced by reason of any such prior determination that
Indemnitee is not entitled to indemnification, and the Company shall bear
the burdens of proof specified in Sections 6 and 9 hereof in such
proceeding.

               (c) If a determination is made or deemed to have been made
pursuant to the terms of Section 9 or 10 hereof that Indemnitee is entitled
to indemnification, the Company and the Subsidiary shall be bound by such
determination in any judicial proceeding or arbitration in the absence of
(i) a misrepresentation of a material fact by Indemnitee or (ii) a final
judicial determination that all or any part of such indemnification is
expressly prohibited by law.

               (d) To the extent deemed appropriate by the court, interest
shall be paid by the Company or the Subsidiary, or both, to Indemnitee at a
reasonable interest rate for amounts which the Company or the Subsidiary,
or both, indemnifies or is obliged to indemnify Indemnitee for the period
commencing with the date on which Indemnitee requested indemnification (or
reimbursement or advancement of any Expenses) and ending with the date on
which such payment is made to Indemnitee by the Company or the Subsidiary,
or both.

          11.  Expenses Incurred by Indemnitee to Enforce this Agreement.
All Expenses incurred by Indemnitee in connection with the preparation and
submission of Indemnitee's request for indemnification hereunder shall be
jointly and severally borne by the Company and the Subsidiary In the event
that Indemnitee is a party to or intervenes in any proceeding in which the
validity or enforceability of this Agreement is at issue or seeks an
adjudication to enforce Indemnitee's rights under, or to recover damages
for breach of, this Agreement, Indemnitee, if Indemnitee prevails in whole
in such action, shall be entitled to recover from the Company and the
Subsidiary, and shall be jointly and severally indemnified by the Company
and the Subsidiary against, any Expenses incurred by Indemnitee. If it is
determined that Indemnitee is entitled to indemnification for part (but not
all) of the indemnification so requested, Expenses incurred in seeking
enforcement of such partial indemnification shall be reasonably prorated
among the claims, issues or matters for which Indemnitee is entitled to
indemnification and for claims, issues or matters for which Indemnitee is
not so entitled.

          12.  Non-Exclusivity. The rights of indemnification and to receive
advances as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under any law,
certificate of incorporation, by-law, other agreement, vote of stockholders
or resolution of directors or otherwise, both as to action in Indemnitee's
official capacity and as to action in another capacity while holding such
office. To the extent Indemnitee would be prejudiced thereby, no amendment,
alteration, rescission or replacement of this Agreement or any provision
hereof shall be effective as to Indemnitee with respect to any action taken
or omitted by such Indemnitee in Indemnitee's position with the Company or
an Affiliate or any other entity which Indemnitee is or was serving at the
request of the Company or the Subsidiary prior to such amendment,
alteration, rescission or replacement.

          13.  Duration of Agreement. This Agreement shall apply to any
claim asserted and any Losses and Expenses incurred in connection with any
claim asserted on or after the effective date of this Agreement and shall
continue until and terminate upon the later of: (a) ten years after
Indemnitee has ceased to occupy any of the positions or have any of the
relationships described in Section 3, 4 or 5 hereof; or (b) one year after
the final termination of all pending or threatened Proceedings of the kind
described herein with respect to Indemnitee. This Agreement shall be
binding upon the Company and the Subsidiary and their respective successors
and assigns and shall inure to the benefit of Indemnitee and Indemnitee's
spouse, assigns, heirs, devisee, executors, administrators or other legal
representatives.

          14.  Maintenance of D&O Insurance.

               (a) The Company and the Subsidiary each hereby covenants and
agrees with Indemnitee that, so long as Indemnitee shall continue to serve
as an Officer or Director of the Company and thereafter so long as
Indemnitee shall be subject to any possible claim or threatened, pending or
completed Proceeding, whether civil, criminal or investigative, by reason
of the fact that Indemnitee was an Officer or Director of the Company or
any other entity which Indemnitee was serving at the request of the Company
or the Subsidiary, the Company and the Subsidiary shall maintain in full
force and effect (i) the directors' and officers' liability insurance
issued by the insurer and having the policy amount and deductible as
currently in effect with respect to directors and officers of the Company
or any of its subsidiaries and (ii) any replacement or substitute policies
issued by one or more reputable insurers providing in all respects coverage
at least comparable to and in the same amount as that currently provided
under such existing policy (collectively, "D&O Insurance").

               (b) In all policies of D&O Insurance, Indemnitee shall be
named as an insured in such a manner as to provide Indemnitee the same
rights and benefits, subject to the same limitations, as are accorded to
the Company's directors or officers most favorably insured by such policy.

               (c) Notwithstanding anything to the contrary set forth in
(a) above, the Company and the Subsidiary shall have no obligation to
maintain D&O Insurance if the Company and the Subsidiary determine in good
faith that such insurance is not reasonably available, the premium cost for
such insurance is disproportionate to the amount of coverage provided or
the coverage provided by such insurance is limited by exclusions so as to
provide an insufficient benefit.

          15.  Severability. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions hereof shall not be
affected thereby, and the illegal or unenforceable portions hereof shall be
and hereby are redrafted to conform with applicable law, while leaving the
remaining portions hereof intact.

          16.  Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.

          17.  Headings. Section headings are for convenience only and do
not control or affect meaning or interpretation of any terms or provisions
hereof.

          18.  Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by
each of the parties hereto.

          19.  No Duplicative Payment. The Company and the Subsidiary shall
not be liable under this Agreement to make any payment of amounts otherwise
indemnifiable hereunder if and to the extent that Indemnitee has otherwise
actually received such payment (net of Expenses incurred in collecting such
payment) under any insurance policy, contract, agreement or otherwise.

          20.  Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing
(including telecopier or similar writing) and shall be deemed to have been
given at the time when mailed, enclosed in a registered or certified
postpaid envelope, in any general or branch office of the United States
Postal Service, or sent by Federal Express or other similar overnight
courier service, addressed to the address of the parties stated below or to
such changed address as such party may have fixed by notice or, if given by
telecopier, when such telecopy is transmitted and the appropriate
answerback is received.

               (a) If to Indemnitee, to the address appearing on the
signature page hereof.

               (b) If to the Company or the Subsidiary to:

                           Citadel Broadcasting Corporation
                           City Center West, Suite 400
                           7201 West Lake Mead Blvd.
                           Las Vegas, Nevada 89128
                           Attention: Secretary

          21.  Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the internal
laws of the State of Delaware without regard to its conflicts of law rules.

          22.  Entire Agreement. Subject to the provisions of Section 12
hereof, this Agreement constitutes the entire understanding between the
parties and supersedes all proposals, commitments, writings, negotiations
and understandings, oral and written, and all other communications between
the parties relating to the subject matter hereof. This Agreement may not
be amended or otherwise modified except in writing duly executed by all of
the parties. A waiver by any party of any breach or violation of this
Agreement shall not be deemed or construed as a waiver of any subsequent
breach or violation thereof.

<PAGE>

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

                                    CITADEL BROADCASTING CORPORATION
                                    CITADEL BROADCASTING COMPANY

                                     By: /s/ Farid Suleman
                                        -------------------------------------
                                        Farid Suleman
                                        Chief Executive Officer, of each of
                                        the above listed entities

                                     INDEMNITEE

                                     Name: /s/ Kate Brown
                                          -----------------------------------
                                          Kate Brown
                                          [Address]

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