Document:

Exhibit 4.1

 

 

 

CREDIT AGREEMENT

 

Dated as of August 4, 2003

 

among

 

CARRIAGE
SERVICES, INC.,

as the Borrower,

 

 

BANK
OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender

and

L/C Issuer,

 

WELLS
FARGO BANK TEXAS, NATIONAL ASSOCIATION,
as Syndication Agent

 

and

 

The Other Lenders Party Hereto

 

 

 

BANC
OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

 

 

TABLE OF CONTENTS

Section

 

	
  ARTICLE
  I.

  	
   

  	
  DEFINITIONS AND ACCOUNTING TERMS

  
	
  1.01

  	
   

  	
  Defined Terms

  
	
  1.02

  	
   

  	
  Other Interpretive
  Provisions

  
	
  1.03

  	
   

  	
  Accounting Terms.

  
	
  1.04

  	
   

  	
  Rounding

  
	
  1.05

  	
   

  	
  References to
  Agreements and Laws

  
	
  1.06

  	
   

  	
  Times of Day

  
	
  1.07

  	
   

  	
  Letter
  of Credit Amounts

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II.

  	
   

  	
  THE COMMITMENTS AND CREDIT EXTENSIONS

  
	
  2.01

  	
   

  	
  Revolving Loans

  
	
  2.02

  	
   

  	
  Borrowings,
  Conversions and Continuations of Loans.

  
	
  2.03

  	
   

  	
  Letters of
  Credit.

  
	
  2.04

  	
   

  	
  Swing Line Loans.

  
	
  2.05

  	
   

  	
  Prepayments.

  
	
  2.06

  	
   

  	
  Termination
  or Reduction of Aggregate Revolving Commitments.

  
	
  2.07

  	
   

  	
  Repayment
  of Loans.

  
	
  2.08

  	
   

  	
  Interest.

  
	
  2.09

  	
   

  	
  Fees

  
	
  2.10

  	
   

  	
  Computation of
  Interest and Fees

  
	
  2.11

  	
   

  	
  Evidence of Debt.

  
	
  2.12

  	
   

  	
  Payments
  Generally.

  
	
  2.13

  	
   

  	
  Sharing
  of Payments

  
	
  2.14

  	
   

  	
  Increase in
  Revolving Commitments.

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III.

  	
   

  	
  TAXES, YIELD PROTECTION AND ILLEGALITY

  
	
  3.01

  	
   

  	
  Taxes.

  
	
  3.02

  	
   

  	
  Illegality

  
	
  3.03

  	
   

  	
  Inability to Determine
  Rates

  
	
  3.04

  	
   

  	
  Increased
  Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans.

  
	
  3.05

  	
   

  	
  Funding Losses

  
	
  3.06

  	
   

  	
  Matters
  Applicable to all Requests for Compensation.

  
	
  3.07

  	
   

  	
  Survival

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV.

  	
   

  	
  CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

  
	
  4.01

  	
   

  	
  Conditions of
  Initial Credit Extension

  
	
  4.02

  	
   

  	
  Conditions to all
  Credit Extensions

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V.

  	
   

  	
  REPRESENTATIONS AND WARRANTIES

  
	
  5.01

  	
   

  	
  Existence,
  Qualification and Power

  
	
  5.02

  	
   

  	
  Authorization; No
  Contravention

  
	
  5.03

  	
   

  	
  Governmental
  Authorization; Other Consents

  
	
  5.04

  	
   

  	
  Binding Effect

  
	
  5.05

  	
   

  	
  Financial
  Statements; No Material Adverse Effect.

  
	
  5.06

  	
   

  	
  Litigation

  
	
  5.07

  	
   

  	
  No Default

  
	
  5.08

  	
   

  	
  Ownership of Property;
  Liens

  
	
  5.09

  	
   

  	
  Environmental Compliance.

  
	
  5.10

  	
   

  	
  Insurance

  

 

i

 

	
  5.11

  	
   

  	
  Taxes

  
	
  5.12

  	
   

  	
  ERISA Compliance.

  
	
  5.13

  	
   

  	
  Capitalization;
  Subsidiaries.

  
	
  5.14

  	
   

  	
  Margin
  Regulations; Investment Company Act; Public Utility Holding Company Act.

  
	
  5.15

  	
   

  	
  Disclosure

  
	
  5.16

  	
   

  	
  Compliance
  with Laws

  
	
  5.17

  	
   

  	
  Tax
  Shelter Regulations

  
	
  5.18

  	
   

  	
  Intellectual
  Property; Licenses, Etc

  
	
  5.19

  	
   

  	
  Common
  Enterprise

  
	
  5.20

  	
   

  	
  Solvency

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI.

  	
   

  	
  AFFIRMATIVE COVENANTS

  
	
  6.01

  	
   

  	
  Financial
  Statements

  
	
  6.02

  	
   

  	
  Certificates; Other
  Information

  
	
  6.03

  	
   

  	
  Notices

  
	
  6.04

  	
   

  	
  Payment
  of Obligations

  
	
  6.05

  	
   

  	
  Preservation of
  Existence, Etc

  
	
  6.06

  	
   

  	
  Maintenance of Properties

  
	
  6.07

  	
   

  	
  Maintenance of Insurance

  
	
  6.08

  	
   

  	
  Compliance
  with Laws

  
	
  6.09

  	
   

  	
  Books and
  Records

  
	
  6.10

  	
   

  	
  Inspection
  Rights

  
	
  6.11

  	
   

  	
  Use of Proceeds

  
	
  6.12

  	
   

  	
  New
  Subsidiaries.

  
	
  6.13

  	
   

  	
  Maintenance
  of Trust Reserves and Trust Accounts

  
	
  6.14

  	
   

  	
  Maintenance of Trust
  Balance

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII.

  	
   

  	
  NEGATIVE COVENANTS

  
	
  7.01

  	
   

  	
  Liens

  
	
  7.02

  	
   

  	
  Investments

  
	
  7.03

  	
   

  	
  Debt

  
	
  7.04

  	
   

  	
  Fundamental
  Changes

  
	
  7.05

  	
   

  	
  Dispositions

  
	
  7.06

  	
   

  	
  Restricted
  Payments; Issuance of Preferred Stock.

  
	
  7.07

  	
   

  	
  Change in Nature of
  Business

  
	
  7.08

  	
   

  	
  Transactions with
  Affiliates

  
	
  7.09

  	
   

  	
  Burdensome
  Agreements

  
	
  7.10

  	
   

  	
  Use of Proceeds

  
	
  7.11

  	
   

  	
  Financial
  Covenants.

  
	
  7.12

  	
   

  	
  Maintenance of
  Ownership of Subsidiaries

  
	
  7.13

  	
   

  	
  Trust Funds

  
	
  7.14

  	
   

  	
  Settlement of Litigation

  
	
  7.15

  	
   

  	
  Modification of Senior
  Notes

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
   

  	
  EVENTS OF DEFAULT AND REMEDIES

  
	
  8.01

  	
   

  	
  Events of Default

  
	
  8.02

  	
   

  	
  Remedies Upon Event of
  Default

  
	
  8.03

  	
   

  	
  Application
  of Funds

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX.

  	
   

  	
  ADMINISTRATIVE AGENT

  
	
  9.01

  	
   

  	
  Appointment
  and Authorization of Administrative Agent.

  
	
  9.02

  	
   

  	
  Delegation
  of Duties

  

 

ii

 

	
  9.03

  	
   

  	
  Liability of
  Administrative Agent

  
	
  9.04

  	
   

  	
  Reliance by
  Administrative Agent.

  
	
  9.05

  	
   

  	
  Notice of Default

  
	
  9.06

  	
   

  	
  Credit
  Decision; Disclosure of Information by Administrative Agent

  
	
  9.07

  	
   

  	
  Indemnification
  of Administrative Agent

  
	
  9.08

  	
   

  	
  Administrative
  Agent in its Individual Capacity

  
	
  9.09

  	
   

  	
  Successor Administrative
  Agent

  
	
  9.10

  	
   

  	
  Administrative
  Agent May File Proofs of Claim

  
	
  9.11

  	
   

  	
  Guaranty Matters

  
	
  9.12

  	
   

  	
  Other Agents;
  Arrangers and Managers

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X.

  	
   

  	
  MISCELLANEOUS

  
	
  10.01

  	
   

  	
  Amendments, Etc

  
	
  10.02

  	
   

  	
  Notices
  and Other Communications; Facsimile Copies.

  
	
  10.03

  	
   

  	
  No Waiver; Cumulative
  Remedies

  
	
  10.04

  	
   

  	
  Attorney Costs,
  Expenses and Taxes

  
	
  10.05

  	
   

  	
  Indemnification by the
  Borrower

  
	
  10.06

  	
   

  	
  Payments
  Set Aside

  
	
  10.07

  	
   

  	
  Successors
  and Assigns.

  
	
  10.08

  	
   

  	
  Confidentiality

  
	
  10.09

  	
   

  	
  Set-off

  
	
  10.10

  	
   

  	
  Interest Rate Limitation

  
	
  10.11

  	
   

  	
  Counterparts

  
	
  10.12

  	
   

  	
  Integration

  
	
  10.13

  	
   

  	
  Survival of
  Representations and Warranties

  
	
  10.14

  	
   

  	
  Severability

  
	
  10.15

  	
   

  	
  Tax Forms.

  
	
  10.16

  	
   

  	
  Replacement
  of Lenders

  
	
  10.17

  	
   

  	
  Governing Law.

  
	
  10.18

  	
   

  	
  Waiver of Right to
  Trial by Jury

  
	
  10.19

  	
   

  	
  Replacement

  
	
  10.20

  	
   

  	
  Entire
  Agreement

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATURES

  

 

iii

 

SCHEDULES

 

	
   

  	
  1.01

  	
  Existing Preferred Stock

  
	
   

  	
  2.01

  	
  Revolving Commitments and Revolving Pro
  Rata Shares

  
	
   

  	
  2.03

  	
  Existing Letters of Credit

  
	
   

  	
  5.05

  	
  Supplement to Interim Financial Statements

  
	
   

  	
  5.06

  	
  Litigation

  
	
   

  	
  5.09

  	
  Environmental Disclosure

  
	
   

  	
  5.13

  	
  Capitalization; Subsidiaries

  
	
   

  	
  7.02

  	
  Existing Investments

  
	
   

  	
  7.03

  	
  Existing Debt

  
	
   

  	
  10.02

  	
  Administrative Agent’s Office, Certain
  Addresses for Notices

  

 

EXHIBITS

 

	
   

  	
  Form
  of

  
	
   

  	
  A

  	
  Revolving Loan Notice

  
	
   

  	
  B

  	
  Swing Line Loan Notice

  
	
   

  	
  C

  	
  Revolving Loan Note

  
	
   

  	
  D

  	
  Swing Line Note

  
	
   

  	
  E

  	
  Compliance Certificate

  
	
   

  	
  F

  	
  Assignment and Assumption

  
	
   

  	
  G

  	
  Guaranty

  
	
   

  	
  H

  	
  Opinion Matters

  
	
   

  	
  I

  	
  Joinder Agreement

  

 

iv

 

CREDIT AGREEMENT

 

This CREDIT
AGREEMENT (“Agreement”) is entered into as of August 4, 2003,  among
Carriage Services, Inc.,  a Delaware corporation (the “Borrower”),
each lender from time to time party hereto (collectively, the “Lenders”
and individually, a “Lender”), BANK OF AMERICA, N.A.,  as
Administrative Agent, Swing Line Lender and L/C Issuer, and WELLS FARGO BANK
TEXAS, NATIONAL ASSOCIATION, as Syndication Agent.

 

The Borrower
has requested that the Lenders provide a credit facility consisting of
Revolving Loans, and the Lenders are willing to do so on the terms and
conditions set forth herein.

 

In
consideration of the mutual covenants and agreements herein contained, the parties
hereto covenant and agree as follows:

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

1.01        Defined Terms.  As used in this Agreement, the following
terms shall have the meanings set forth below:

 

“Acquisition”
means the acquisition by any Person of (a) a majority of the Capital Stock
of another Person, (b) all or substantially all of the assets of another
Person or (c) all or substantially all of a line of business of another
Person, in each case (i) whether or not involving a merger or consolidation
with such other Person and (ii) whether in one transaction or a series of
related transactions.

 

“Acquisition
Consideration” means the consideration given by the Borrower or any of its
Subsidiaries for an Acquisition, including but not limited to the sum of (without
duplication) (a) the fair market value of any cash, property (including
Capital Stock) or services given, plus (b) the amount of any Debt assumed,
incurred or guaranteed (to the extent not otherwise included) in connection
with such Acquisition by the Borrower or any of its Subsidiaries.

 

“Administrative
Agent” means Bank of America in its capacity as administrative agent under
any of the Loan Documents, or any successor administrative agent.

 

“Administrative
Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other
address or account as the Administrative Agent may from time to time notify the
Borrower and the Lenders.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.

 

“Affiliate”
means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified. 
“Control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto. 
Without limiting the generality of the foregoing, a Person shall be
deemed to be Controlled by another Person if such other Person possesses,
directly or indirectly, power to vote 10% or more of the Voting Shares of such
Person.

 

“Agent-Related
Persons” means the Administrative Agent, together with its Affiliates
(including, in the case of Bank of America in its capacity as the
Administrative Agent, the Arranger), and the officers, directors, employees, agents
and attorneys-in-fact of such Persons and Affiliates.

 

“Aggregate
Revolving Commitments” has the meaning specified in the definition of “Revolving
Commitment.”

 

1

 

“Agreement”
means this Credit Agreement.

 

“Amended
Trust Laws” has the meaning specified in Section 6.14.

 

“Applicable
Law” means (a) in respect of any Person, all provisions of Laws
applicable to such Person, and all orders and decrees of all courts and
determinations of arbitrators applicable to such Person and (b) in respect
of contracts made or performed in the State of Texas, “Applicable Law”
shall also mean the laws of the United States of America, including, without
limitation the foregoing, 12 USC Sections 85 and 86, as amended to the
date hereof and as the same may be amended at any time and from time to time
hereafter, and any other statute of the United States of America now or at any
time hereafter prescribing the maximum rates of interest on loans and
extensions of credit, and the laws of the State of Texas.

 

“Applicable
Rate” means the following percentages per annum, based upon the Leverage
Ratio as set forth in the most recent Compliance Certificate received by the
Administrative Agent pursuant to Section 6.02(a):

 

Applicable Rate

 

	
  Pricing

  Level

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Eurodollar
  Rate +

  	
   

  	
   

  	
   

  
	
   

  	
  Leverage
  Ratio

  	
   

  	
  Commitment
  Fee

  	
   

  	
  Letters of
  Credit

  	
   

  	
  Base Rate
  +

  	
   

  
	
  1

  	
   

  	
  Less than
  2.25 to 1.00

  	
   

  	
  0.500

  	
   

  	
  2.000

  	
   

  	
  0.500

  	
   

  
	
  2

  	
   

  	
  Less than
  2.75 to 1.00 but equal to or greater than 2.25 to 1.00

  	
   

  	
  0.500

  	
   

  	
  2.500

  	
   

  	
  1.000

  	
   

  
	
  3

  	
   

  	
  Less than
  3.25 to 1.00 but equal to or greater than 2.75 to 1.00

  	
   

  	
  0.500

  	
   

  	
  2.750

  	
   

  	
  1.250

  	
   

  
	
  4

  	
   

  	
  Greater than
  or equal to 3.25 to 1.00

  	
   

  	
  0.500

  	
   

  	
  3.000

  	
   

  	
  1.500

  	
   

  

 

Any increase
or decrease in the Applicable Rate resulting from a change in the Leverage
Ratio shall become effective as of the first Business Day immediately following
the date a Compliance Certificate is delivered pursuant to Section 6.02(a);
provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then Pricing Level 4
shall apply as of the first Business Day after the date on which such
Compliance Certificate was required to have been delivered and shall remain in
effect until the first Business Day immediately following the date such
Compliance Certificate is actually delivered to the Administrative Agent.  Notwithstanding the foregoing, the
Applicable Rate in effect from the Closing Date through and including the date
the first Compliance Certificate is delivered pursuant to Section 6.02(a)
after the Closing Date shall be determined based upon Pricing Level 4.

 

“Approved
Fund” has the meaning specified in Section 10.07(g).

 

“Arranger”
means Banc of America  Securities LLC, in its capacity as sole
lead arranger and sole book manager.

 

“Assignment
and Assumption” means an Assignment and Assumption substantially in the
form of Exhibit F.

 

“Attorney
Costs” means and includes all reasonable fees, expenses and disbursements
of any law firm or other external counsel.

 

“Attributable
Indebtedness” means, on any date, (a) in respect of any Capital Lease
of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, and
(b) in respect of any Synthetic Lease Obligation, the capitalized amount
of the

 

2

 

remaining
lease payments under the relevant lease that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease were
accounted for as a capital lease.

 

“Audited
Financial Statements” means the audited consolidated balance sheet of the
Borrower and its Subsidiaries for the fiscal year ended December 31, 2002,
and the related consolidated statements of income or operations, shareholders’ equity
and cash flows for such fiscal year of the Borrower and its Subsidiaries,
including the notes thereto.

 

“Availability
Period” means the period from and including the Closing Date to the
earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Revolving Commitments pursuant to Section 2.06, and
(c) the date of termination of the commitment of each Lender to make Loans
and of the obligation of the of the L/C Issuer to make L/C Credit Extensions
pursuant to Section 8.02 or pursuant to any other term or provision
of this Agreement or any other Loan Document.

 

“Bank of
America” means Bank of America, N.A. and its successors.

 

“Base Rate”  means for any day a fluctuating
rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2
of 1% and (b) the rate of interest in effect for such day as publicly
announced from time to time by Bank of America as its “prime rate.”  The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’s costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.  Any change in such
rate announced by Bank of America shall take effect at the opening of business
on the day specified in the public announcement of such change.

 

“Base Rate
Loan” means a Loan that bears interest based on the Base Rate.

 

“The
Borrower” has the meaning specified in the introductory paragraph hereto.

 

“Borrowing”
means a Revolving Borrowing or a Swing Line Borrowing, as the context may
require.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office is located and, if
such day relates to any Eurodollar Rate Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in the London
interbank eurodollar market.

 

“Capital
Expenditures” means, with respect to any Person for any period, the sum of
the aggregate of any expenditures by such Person during such period for an
asset which is properly classifiable in relevant financial statements of such
Person as property, equipment or improvements, fixed assets, or a similar type
of tangible capital asset in accordance with GAAP.  For purposes of this definition, (a) the purchase price of
equipment or property that is (i) purchased substantially simultaneously
with the trade-in of existing equipment or property, (ii) exchanged in
connection with a swap of existing equipment or property or
(iii) purchased or repaired with insurance proceeds (promptly following
receipt thereof on account of such property or equipment being replaced or
repaired) shall be included in Capital Expenditures only to the extent of the
gross amount by which such purchase price exceeds the credit granted by the
seller of such equipment or property for the equipment or property being so
repaired, traded in or exchanged or the amount of such insurance proceeds, and
(b) any expenditure funded with warranty proceeds, proceeds from an
indemnity claim, settlement payments, condemnation or eminent domain awards or
any other payments made to compensate such Person for any damage, defect, delay
or loss relating to the expenditure being made shall not be included in Capital
Expenditures to the extent such expenditure does not exceed the applicable
proceeds or payments.  Capital
Expenditures specifically excludes deferred obtaining costs.

 

“Capital
Leases” means, as applied to any Person, any lease of any Property by such
Person as lessee which would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on the balance sheet of such Person.

 

3

 

“Capital
Stock” means, as to any Person, the equity interests in such Person,
including, without limitation, the shares of each class of capital stock in any
Person that is a corporation, each class of partnership interest in any Person
that is a partnership, and each class of membership interest in any Person that
is a limited liability company, and any warrants or options to purchase or
otherwise acquire any such equity interests.

 

“Carriage
Business Development Program” shall mean a program of the Borrower whereby
not more than 20 former owners of funeral homes or cemeteries receive preferred
securities of a Subsidiary pursuant to which the holder is entitled to receive
up to 10% of such Subsidiary’s cash flow in excess of a predetermined
level.  Not more than ten Subsidiaries
will participate in the program and the recipients of the preferred securities
are individuals whose funeral homes or cemeteries were acquired by the Borrower
or a Subsidiary.  The preferred
securities entitle the holders to receive in the aggregate up to 10% of the
aggregate excess cash flow of the participating Subsidiaries as and when
earned, do not constitute a claim on the assets of any Subsidiary, and are
subject to mandatory redemption by the applicable Subsidiary at maturity (not
to exceed ten years) at a redemption price expressed as a multiple of such
excess cash flow.

 

“Cash
Collateralize” has the meaning specified in Section 2.03(g).

 

“Change of
Control” means, with respect to any Person, an event or series of events by
which:

 

(a)           any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, but excluding (i) any employee benefit plan of such person or its
subsidiaries, and any person acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan and (ii) the Borrower’s
officers and directors) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except
that a person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire (such right, an “option
right”), whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of 20% or more of the Voting Shares
of such Person; or

 

(b)           during any period of 12 consecutive
months, a majority of the members of the board of directors or other equivalent
governing body of such Person cease to be composed of individuals (i) who
were members of that board or equivalent governing body on the first day of
such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body or (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at the
time of such election or nomination at least a majority of that board or
equivalent governing body; provided that the requirement in clause (ii) or
(iii) that the election or nomination of an individual be by a majority of the
board for other governing body shall not apply in the case of a replacement of
a member whose seat becomes vacant as a result of death or disability.

 

“Closing
Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 4.01 (or, in the
case of Section 4.01(b), waived by the Person entitled to receive
the applicable payment).

 

“Code”
means the Internal Revenue Code of 1986.

 

“Commitment”
means, as to each Lender, its obligation to (a) make Loans to the Borrower
pursuant to Section 2.01, (b) purchase participations in L/C
Obligations, and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01 or in any
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
or in any amendment hereto, as applicable, as such amount may be adjusted from
time to time in accordance with this Agreement.

 

“Commitment
Fee” has the meaning specified in Section 2.09.

 

4

 

“Compensation
Period” has the meaning specified in Section 2.12(c)(iii).

 

“Compliance
Certificate” means a certificate substantially in the form of Exhibit E,
with such changes, or in such other form, as agreed to by the Administrative
Agent.

 

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

 

“Control”
has the meaning specified in the definition of “Affiliate.”

 

“Core
Acquisition” means any Acquisition of a funeral home, cemetery, or related
business.

 

“Credit
Extension” means each of the following: (a) a Borrowing and
(b) an L/C Credit Extension.

 

“Debt”
means, as to any Person at a particular time, without duplication, all of the
following whether or not included as liabilities or indebtedness in accordance
with GAAP: (a) the outstanding principal amount of all obligations of such
Person, whether current or long-term, for borrowed money (including Obligations
hereunder) and all obligations evidenced by bonds, debentures, notes, loan
agreements or other similar instruments; (b) obligations of such Person to
pay the deferred purchase price of property or services (other than trade
payables in the ordinary course of business), including without limitation,
Deferred Purchase Price; (c) all direct obligations of such Person arising
under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds (provided an amount is owing by such
Person in respect of any surety bond as a result of a claim made with respect thereto)
and similar instruments, (d) all net obligations of such Person under any
Swap Contracts; (e) all Attributable Indebtedness of such Person in
respect of Capital Leases and Synthetic Lease Obligations, (f) Pre-need
Obligations, except to the extent that Pre-Need Obligations are trusted or
covered by insurance; (g) without duplication, all Guaranty Obligations of
such Person with respect to outstanding Debt of the types specified in
clauses (a) through (f) above of Persons other than the Borrower or any
Subsidiary; (h) all Debt of the types referred to in clauses (a)
through (g) above of any partnership or joint venture (other than a joint
venture that is itself a corporation or limited liability company) in which the
Borrower or a Subsidiary is a general partner or joint venturer, unless such
Debt is expressly made non-recourse to the Borrower or such Subsidiary;
(i) all liabilities of such Person in respect of unfunded vested benefits
under any Plan subject to Title IV of ERISA or Section 412 of the Code;
and (j) all indebtedness or obligations of others of the kinds referred to
in clauses (a) through (h) secured by any Lien on or in respect of any
property of such Person, up to (but not exceeding) the value of such property.  The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date.  The amount of
any Capital Lease or Synthetic Lease Obligation as of any date shall be deemed
to be the amount of Attributable Indebtedness in respect thereof as of such
date.

 

“Debt
Documents” has the meaning specified in Section 8.01(l).

 

“Debtor
Relief Laws” means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

“Default”
means any event or condition that constitutes an Event of Default or that, with
the giving of any notice, the passage of time, or both, would be an Event of
Default.

 

“Default
Rate” means an interest rate equal to the lesser of (a) the Highest
Lawful Rate and (b) the sum of (i) the Base Rate plus
(ii) the Applicable Rate, if any, applicable to Base Rate Loans plus
(iii) 2% per annum; provided, however, that with respect to
a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the
interest rate (including any Applicable Rate) otherwise applicable to such Loan
plus 2% per annum, in each case to the fullest extent permitted by Applicable
Laws and not in any event to exceed the Highest Lawful Rate.

 

5

 

“Defaulting
Lender” means any Lender that (a) has failed to fund any portion of
the Loans, participations in L/C Obligations or participations in Swing Line
Loans required to be funded by it hereunder within one Business Day of the date
required to be funded by it hereunder, (b) has otherwise failed to pay
over to the Administrative Agent or any other Lender any other amount required
to be paid by it hereunder within one Business Day of the date when due, unless
the subject of a good faith dispute, or (c) has been deemed insolvent or
become the subject of a bankruptcy or insolvency proceeding.

 

“Deferred
Purchase Price” means any purchase price or other consideration, including
payments under agreements not to compete, payable to the sellers in an
Acquisition (whether consummated before or after the date of this Agreement)
after consummation of such Acquisition, whether evidenced by notes, debentures
or the contractual promise to pay on a deferred basis.

 

“Disposition”
or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction, but excluding the
issuance of any Capital Stock of the Borrower) of any property by any Person,
including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

 

“Dividends”,
in respect of any Person, means (a) cash dividends or any other
distributions of property, or otherwise, on, or in respect of, any class of Capital
Stock of such Person (other than dividends or other distributions payable
solely in Capital Stock of such Person or options, warrants or other rights to
purchase Capital Stock of such Person), and (b) any and all funds, cash or
other payments made in respect of the redemption, repurchase or acquisition of
such Capital Stock (specifically including, without limitation, a Treasury
Stock Purchase), unless such Capital Stock shall be redeemed or acquired
through the exchange of such Capital Stock with Capital Stock of the same or
another class or options or warrants to purchase such Capital Stock or Capital
Stock of another class.

 

“Dollar”
and “$” mean lawful money of the United States.

 

“Dollar
Equivalent” means for all purposes of this Agreement, the equivalent in
another currency of an amount in Dollars to be determined by reference to the
rate of exchange quoted by Bank of America, at 10:00 a.m. on the date of
determination, for the spot purchase in the foreign exchange market of such
amount of Dollars with such other currency.

 

“Domestic
Subsidiary” means any Subsidiary that is organized under the laws of any
political subdivision of the United States.

 

“EBITDA”
means, for any period, for the Borrower and its Subsidiaries on a consolidated
basis, an amount equal to Net Income for such period plus (a) the
following to the extent deducted in calculating such Net Income:
(i) Interest Expense for such period, (ii) the provision for federal,
state, local and foreign income taxes payable by the Borrower and its
Subsidiaries for such period, (iii) depreciation and amortization expense
and payments in respect of Deferred Purchase Price, and (iv) other
expenses of the Borrower and its Subsidiaries reducing such Net Income which do
not represent a cash item in such period or any future period and minus
(b) all non-cash items increasing Net Income for such period.

 

“Eligible
Assignee” has the meaning specified in Section 10.07(g).

 

“Environmental
Laws” means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions of, by or with any Governmental Authority relating to pollution
and the protection of the environment or the release of any materials into the
environment, including those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.

 

“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower, any other Loan Party or any of their respective
Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials,

 

6

 

(c) exposure
to any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

 

“Environmental
Permit” means any permit, license, order, approval or other authorization
under Environmental Law material to business of the Borrower.

 

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

 

“ERISA
Affiliate” means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

 

“ERISA
Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the
Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that
a Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under
Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the
PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

 

“Eurodollar
Rate” means for any Interest Period with respect to any Eurodollar Rate
Loan (rounded up to the next 1/100th of 1%):

 

(a)           the rate per annum equal to the rate
determined by the Administrative Agent to be the offered rate that appears on
page 3750 of the Telerate screen (or any successor thereto) that displays
an average British Bankers Association Interest Settlement Rate for deposits in
Dollars (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or

 

(b)           if the rate referenced in the
preceding clause (a) does not appear on such page or service or such page
or service shall not be available, the rate per annum equal to the rate
determined by the Administrative Agent to be the offered rate on such other
page or other service that displays an average British Bankers Association
Interest Settlement Rate for deposits in Dollars (for delivery on the first day
of such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, or

 

(c)           if the rates referenced in the
preceding clauses (a) and (b) are not available, the rate per annum
determined by the Administrative Agent as the rate of interest at which
deposits in Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Rate Loan being
made, continued or converted by Bank of America and with a term equivalent to
such Interest Period would be offered by Bank of America’s London Branch to
major banks in the London interbank eurodollar market at their request at
approximately 4:00 p.m. (London time) two Business Days prior to the first
day of such Interest Period.

 

“Eurodollar
Rate Loan” means a Loan that bears interest at a rate based on the
Eurodollar Rate.

 

“Excluded
Capital Stock” means, with respect to the Borrower, any class of Capital
Stock that is subject to mandatory dividend accrual or payment or mandatory
redemption, repurchase, repayment, refunding, or similar provisions or
arrangements, including preferred stock to the extent it does not constitute
Qualified Preferred Stock.

 

7

 

“Existing
Credit Agreement” has the meaning specified in Section 10.19.

 

“Existing
Letters of Credit” means the Letters of Credit issued under the Existing
Credit Agreement and listed on Schedule 2.03.

 

“Existing
Preferred Stock” means the preferred stock of the Borrower which is
outstanding on the date of this Agreement and listed on Schedule 1.01.

 

“Existing
Trust Laws” has the meaning specified in Section 6.14.

 

“Event of
Default” has the meaning specified in Section 8.01.

 

“Federal
Funds Rate”  means, for
any day, the rate per annum equal to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if no such rate
is so published on such next succeeding Business Day, the Federal Funds Rate
for such day shall be the average rate (rounded upward, if necessary, to a
whole multiple of 1/100 of 1%) charged to Bank of America on such day on such
transactions as determined by the Administrative Agent.

 

“Fee Letter”
means the letter agreement, dated June 9, 2003, among the Borrower, the
Administrative Agent and the Arranger, and any other fee letter entered into
from time to time among the Administrative Agent, the Borrower and the
Arranger, or any of them.

 

“Fixed
Charge Coverage Ratio” means, for any period of determination, for the
Borrower and its Subsidiaries, on a consolidated basis, the ratio of
(a) the sum of (i) EBITDA for such period minus
(ii) Capital Expenditures for such period minus (iii) the cash
taxes paid during such period plus (iv) any cash tax refunds
received during such period to (b) the sum of (i) cash Interest
Expense during such period (excluding cash Dividends paid in respect of the
Trust Preferred Stock prior to the Closing Date), plus
(ii) scheduled and required principal payments during such period in
respect of Debt (other than scheduled and required principal payments on the
Senior Notes) plus, (iii) to the extent not included in
subclause (i) or (ii) above of this clause (b), scheduled and
required payments made by the Borrower in respect of Deferred Purchase Price
for such period.

 

“Foreign
Lender” has the meaning specified in Section 10.15(a)(i).

 

“FRB”
means the Board of Governors of the Federal Reserve System of the United
States.

 

“Fund”
has the meaning specified in Section 10.07(g).

 

“GAAP”
means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied.

 

“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body,
court, administrative tribunal, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.

 

“Guarantors”
means, collectively, each direct or indirect Domestic Subsidiary of the
Borrower other than (i) the Trust Subsidiary and (ii) all
Unrestricted Subsidiaries.

 

8

 

“Guaranty”
means the Guaranty made by the Guarantors in favor of the Administrative Agent
on behalf of the Lenders, substantially in the form of Exhibit G.

 

“Guaranty
Obligation” means, as to any Person, any (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Debt or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Debt or other obligation of the payment or performance of such Debt or
other obligation, (iii) to maintain working capital, equity capital or any
other financial statement condition or liquidity or level of income or cash
flow of the primary obligor so as to enable the primary obligor to pay such
Debt or other obligation, or (iv) entered into for the purpose of assuring
in any other manner the obligee in respect of such Debt or other obligation of
the payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of
such Person securing any Debt or other obligation of any other Person, whether or
not such Debt or other obligation is assumed by such Person; provided, however,
that the term “Guaranty Obligation” does not include endorsements of
instruments for deposit or collection in the ordinary course of business.  The amount of any Guaranty Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such
Guaranty Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith.  The
term “Guarantee” as a verb has a corresponding meaning.

 

“Hazardous
Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum
or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all
other substances or wastes of any nature that are designated, classified or
regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.

 

“Highest
Lawful Rate” means at the particular time in question the maximum rate of
interest which, under Applicable Law, any Lender is then permitted to charge on
the Obligations.  If the maximum rate of
interest which, under Applicable Law, any Lender is permitted to charge on the
Obligations shall change after the date hereof, the Highest Lawful Rate shall
be automatically increased or decreased, as the case may be, from time to time
as of the effective time of each change in the Highest Lawful Rate without
notice to the Borrower.  For purposes of
determining the Highest Lawful Rate under Applicable Law, on each day, if any,
that Chapter 303 of the Texas Finance Code establishes the Highest Lawful
Rate, such rate shall be the weekly ceiling computed in accordance with
Section 303.003 for that day.

 

“Honor Date”
has the meaning specified in Section 2.03(c)(i).

 

“ICC”
has the meaning specified in Section 2.03(h).

 

“Increase
Effective Date” has the meaning specified in Section 2.14(b).

 

“Indemnified
Liabilities” has the meaning set forth in Section 10.05.

 

“Indemnitees”
has the meaning set forth in Section 10.05.

 

“Information”
has the meaning set forth in Section 10.08.

 

“Interest
Expense” means, with respect to the Borrower and its Subsidiaries and for
any period of determination, the interest expense of the Borrower and its
Subsidiaries for such period, whether paid or accrued (including that
attributable to obligations which have been or should be, in accordance with
GAAP, recorded as Capital Leases), including, without limitation, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers’ acceptance financing and net costs under any Swap
Contracts, all as determined in accordance with GAAP.  Interest Expense for a period also includes the aggregate amount
of

 

9

 

Restricted
Payments declared or paid by the Borrower during such period, exclusive of any
Restricted Payments with respect to the Trust Preferred Stock to the extent the
inclusion thereof would be duplicative with any interest expense attributable
to the Trust Notes.

 

“Interest
Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a
Eurodollar Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line
Loan), the last Business Day of each March, June, September and December and the
Maturity Date.

 

“Interest
Period” means, as to each Eurodollar Rate Loan, the period commencing on
the date such Eurodollar Rate Loan is disbursed or converted to or continued as
a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrower in its Revolving Loan Notice, provided
that:

 

(i)            any Interest Period that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day;

 

(ii)           any Interest Period 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 calendar month at the end of
such Interest Period; and

 

(iii)          no Interest Period shall extend beyond
the Maturity Date.

 

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
Capital Stock or other securities of another Person, (b) a loan, advance
or capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person, or (c) the purchase or other acquisition (in one transaction
or a series of transactions) of assets of another Person that constitute a
business unit.  For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.

 

“IP Rights”
has the meaning set forth in Section 5.18.

 

“IRS”
means the United States Internal Revenue Service.

 

“Joinder
Agreement” means a joinder agreement in the form of the attached Exhibit I
executed by any Subsidiary of the Borrower.

 

“Knowledge”
means, with respect to the Borrower, the actual knowledge of any of the
Borrower’s executive officers, and does not include constructive knowledge.

 

“Laws”
means, collectively, all applicable international, foreign, Federal, state and
local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority
(other than any such agreements which are entered into in respect of a
commercial transaction).

 

“L/C
Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Pro Rata Share.

 

“L/C
Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Revolving Borrowing.

 

10

 

“L/C Credit
Extension” means, with respect to any Letter of Credit, the issuance thereof
or extension of the expiry date thereof, or the renewal or increase of the
amount thereof.

 

“L/C Issuer”
means Bank of America in its capacity as issuer of Letters of Credit hereunder,
or any successor issuer of Letters of Credit hereunder.

 

“L/C Obligations”
means, as at any date of determination, the aggregate undrawn amount of all
outstanding Letters of Credit plus the aggregate of all Unreimbursed
Amounts, including all L/C Borrowings.

 

“Lender”
has the meaning specified in the introductory paragraph hereto and, as the
context requires, includes the L/C Issuer and the Swing Line Lender.

 

“Lending
Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

 

“Letter of
Credit” means any letter of credit issued hereunder.  A Letter of Credit may be a commercial
letter of credit or a standby letter of credit.

 

“Letter of
Credit Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.

 

“Letter of
Credit Expiration Date” means the day that is seven days prior to the Maturity
Date then in effect (or, if such day is not a Business Day, the next preceding
Business Day).

 

“Letter of
Credit Sublimit” means an amount equal to $7,500,000.  The Letter of Credit Sublimit is part of,
and not in addition to, the Aggregate 
Revolving Commitments.

 

“Leverage
Ratio” means, as of any date of determination, the ratio of (a) Total
Senior Debt (excluding the Trust Notes) on such date to (b) EBITDA
(plus, without duplication, the EBITDA of such period of any Person or assets
acquired by Acquisition during such period, if so requested by the Borrower, as
provided below) for the period of the four fiscal quarters most recently
ended.  For purposes of calculation of
the Leverage Ratio, whether or not the Acquisition is treated as a pooling
transaction, the financial results of the acquired Person or assets shall, if
requested in writing by the Borrower to the Administrative Agent, be added to
the applicable financial results of the Borrower in the same manner as if such
transaction were a pooling transaction with such adjustments thereto as are
required to reflect nonrecurring items (both positive and negative) that were
permitted to be adjusted in accordance with the pro forma financial statement
guidelines previously in effect by the SEC for acquisition accounting for
reported acquisitions by public companies prior to June 30, 2001 or as
approved by the Required Lenders, including addbacks to reflect contractual
salary and other compensation adjustments related to the applicable sellers and
related parties, contractual lease payment adjustments, and other non-recurring
expenses approved by the Required Lenders which are related to the Acquisition,
such as broker commissions and advisory fees. 
With respect to any such Acquisition in which the Borrower so requests
adjustments to reflect such nonrecurring items, the Borrower shall deliver to
the Administrative Agent (promptly, but in any event together with the
Compliance Certificate calculating the inclusion of the financial results of
such Person or assets with the financial results of the Borrower) the financial
reports of the acquired Person or assets, which reports must be
(a) audited or reviewed financial reports prepared by an independent
certified public accounting firm, or (b) otherwise approved by the
Required Lenders.

 

“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or
other security interest or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
and any financing lease having substantially the same economic effect as any of
the foregoing).

 

“Liquid
Investments” means (a) direct or indirect obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by, the
United States; (b) mutual funds investing in securities issued by the
United States, (c) (i) negotiable or nonnegotiable certificates of
deposit, time deposits, or other similar banking

 

11

 

arrangements
maturing within 180 days from the date of acquisition thereof (“bank debt
securities”), issued by (a) any Lender or (b) any other bank or trust
company which has either (I) obtained insurance from the Federal
Depositor’s Insurance Corporation supporting such bank’s or trust company’s
obligation to repay the bank debt securities or (II) a combined capital
surplus and undivided profit of not less than $250,000,000 or the Dollar Equivalent
thereof, if at the time of deposit or purchase, such bank debt securities are
rated not less than “A” (or the then equivalent) by the rating service of
Standard & Poor’s Rating Group (a Division of McGraw-Hill, Inc.) or of
Moody’s Investors Service, Inc., and (ii) commercial paper issued by
(a) any Lender or (b) any other Person if at the time of purchase
such commercial paper is rated not less than “A-2” (or the then equivalent) by
the rating service of Standard & Poor’s Rating Group or not less than
“P-2” (or the then equivalent) by the rating service of Moody’s Investors
Service, Inc., or upon the discontinuance of both of such services, such other
nationally recognized rating service or services, as the case may be, as shall
be selected by the Borrower with the consent of the Required Lenders;
(d) repurchase agreements relating to investments described in
clauses (a) and (c) above with a market value at least equal to the
consideration paid in connection therewith, with any Person who regularly
engages in the business of entering into repurchase agreements and has a
combined capital surplus and undivided profit of not less than $250,000,000 or
the Dollar Equivalent thereof, if at the time of entering into such agreement
the debt securities of such Person are rated not less than “BBB” (or the then
equivalent) by the rating service of Standard & Poor’s Rating Group or
of Moody’s Investors Service, Inc.; and (e) such other investments as the
Borrower may request and the Administrative Agent may approve in writing, which
approval will not be unreasonably withheld.

 

“Loan”
means an extension of credit by a Lender to the Borrower under Article II
in the form of a Revolving Loan or a Swing Line Loan.

 

“Loan
Documents” means this Agreement, the Notes, the Fee Letter, any Swap
Contract entered into with any Lender or any Affiliate of any Lender, each
Guaranty, each Request for Credit Extension, each Compliance Certificate, and
any other agreement executed, delivered or performable by any Loan Party in connection
herewith or as security for the Obligations.

 

“Loan
Parties” means, collectively, the Borrower and each Guarantor.

 

“Material
Adverse Effect” means any of the following events: (a) a material
adverse change in, or a material adverse effect upon, the operations, business,
properties, affairs, financial condition, or assets of the Borrower and its
Subsidiaries taken as a whole; (b) the occurrence and continuance of any
event or circumstance which could reasonably be expected to have a material adverse
effect on the Borrower’s ability to perform its obligations under this
Agreement or any other Loan Document, or (c) a material adverse change in,
or a material adverse effect upon, the validity or enforceability of this
Agreement or any other Loan Document.

 

“Maturity
Date” means March 31, 2006.

 

“Maximum
Amount” means the maximum amount of interest which, under Applicable Law, a
Lender is permitted to charge on the Obligations.

 

“Multiemployer
Plan” means any employee benefit plan of the type described in Section 4001(a)(3)
of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to
make contributions, or during the preceding five plan years, has made or been
obligated to make contributions.

 

“Net Cash
Proceeds” means, with respect to the sale of any asset by the Borrower or
any Subsidiary, the excess, if any, of (i) the sum of cash and cash
equivalents received in connection with such sale (including any cash received
by way of deferred payment pursuant to, or by monetization of, a note receivable
or otherwise, but only as and when so received) over (ii) the sum of
(A) the principal amount of any Debt that is secured by such asset and
that is required to be repaid in connection with the sale thereof (other than
Debt under the Loan Documents), (B) the out-of-pocket expenses incurred by
the Borrower or any Subsidiary in connection with such sale and (C) income
taxes reasonably estimated to be actually payable within two years of the date
of the relevant asset sale as a result of any gain recognized in connection
therewith.

 

12

 

“Net Income”
means, with respect to the Borrower and its Subsidiaries on a consolidated
basis, and for any period of determination, the net income of the Borrower and
its Subsidiaries for such period, as determined in accordance with GAAP,
excluding, however, extraordinary items, such as (i) any net gain or loss
during such period arising from the sale, exchange, or other disposition of
capital assets (such term to include all fixed assets and all securities) other
than in the ordinary course of business and (ii) any write-up of assets.

 

“Net Worth”
means, with respect to the Borrower and its Subsidiaries on a consolidated
basis and for any time of determination, the sum of (a) the par value (or
value stated on the books of the Borrower and its Subsidiaries) of all classes
of Capital Stock of  the Borrower and
its Subsidiaries other than Excluded Capital Stock, (b) the additional
paid-in capital of the Borrower and its Subsidiaries allocable to all classes
of Capital Stock of the Borrower and its Subsidiaries other than Excluded
Capital Stock, (c) to the extent not already included in (a) or (b), the
par value (or value stated on the books of the Trust Subsidiary), and the additional
paid-in capital, of the Trust Preferred Stock, and (d) the amount of the
surplus and retained earnings, whether capital or earned, of the Borrower and
its Subsidiaries, all determined in accordance with GAAP.

 

“Notes”
means the Revolving Loan Notes and the Swing Line Loan Note, and “Note”
means a Revolving Loan Note or the Swing Line Loan Note, or any of them, as
applicable in the context used.

 

“Obligations”
means all debts, liabilities and obligations of any Loan Party arising under
any Loan Document, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising, and shall also include all fees, expenses and other amounts
owing to any Lender pursuant to cash management, depository accounts (including
chargebacks) or similar agreements. 
Without limiting the generality of the foregoing, “Obligations”
includes all amounts which would be owed by any Loan Party or any other Person
(other than Administrative Agent or Lenders) to Administrative Agent, Lenders
or any Affiliate of a Lender under any Loan Document, but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any Loan Party or any other
Person (including all such amounts which would become due or would be secured
but for the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding of any other Loan party or any
other Person under any Debtor Relief Law).

 

“Off-Balance
Sheet Liabilities” means, with respect to any Person as of any date of
determination thereof, without duplication and to the extent not included as a
liability on the consolidated balance sheet of such Person and its Subsidiaries
in accordance with GAAP: (a) with respect to any asset securitization
transaction (including any accounts receivable purchase facility) (i) the
unrecovered investment of purchasers or transferees of assets so transferred, and
(ii) any other payment, recourse, repurchase, hold harmless, indemnity or
similar obligation of such Person or any of its Subsidiaries in respect of
assets transferred or payments made in respect thereof, other than limited
recourse provisions that are customary for transactions of such type and that
neither (x) have the effect of limiting the loss or credit risk of such
purchasers or transferees with respect to payment or performance by the
obligors of the assets so transferred nor (y) impair the characterization of
the transaction as a true sale under applicable Laws (including Debtor Relief
Laws); (b) the monetary obligations under any financing lease or so-called
“synthetic,” tax retention or off-balance sheet lease transaction which, upon
the application of any Debtor Relief Law to such Person or any of its
Subsidiaries, would be characterized as indebtedness; (c) the monetary
obligations under any sale and leaseback transaction which does not create a
liability on the consolidated balance sheet of such Person and its
Subsidiaries; or (d) any other monetary obligation arising with respect to
any other transaction which (i) upon the application of any Debtor Relief
Law to such Person or any of its Subsidiaries, would be characterized as
indebtedness or (ii) is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the consolidated balance
sheet of such Person and its Subsidiaries (for purposes of this
clause (d), any transaction structured to provide tax deductibility as
interest expense of any dividend, coupon or other periodic payment will be
deemed to be the functional equivalent of a borrowing).

 

“Organization
Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or
articles of formation or organization, regulations and/or operating agreement;
and (c) with respect to any partnership, joint venture, trust or other
form of business entity, the partnership, joint venture or other applicable
agreement of formation or organization and any agreement, instrument, filing or
notice with respect thereto filed in connection with its

 

13

 

formation or
organization with the applicable Governmental Authority in the jurisdiction of
its formation or organization and, if applicable, any certificate or articles
of formation or organization of such entity.

 

“Other
Taxes” has the meaning set forth in Section 3.01(b).

 

“Outstanding
Amount” means (i) with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments thereof, occurring on such date; and (ii) with
respect to any L/C Obligations on any date, the amount of such L/C Obligations
on such date after giving effect to any L/C Credit Extension occurring on such
date and any other changes in the aggregate amount of the L/C Obligations as of
such date, including as a result of any reimbursements of outstanding unpaid
drawings under any Letters of Credit or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such date.

 

“Participant”
has the meaning specified in Section 10.07(d).

 

“PBGC”
means the Pension Benefit Guaranty Corporation.

 

“Pension
Plan” means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject
to Title IV of ERISA and is sponsored or maintained by the Borrower or any
ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or
has an obligation to contribute, or in the case of a multiple employer or other
plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

 

“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.

 

“Plan”
means any “employee benefit plan” (as such term is defined in Section 3(3)
of ERISA) established by the Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

 

“Pre-need
Obligations” means the liabilities and obligations of the Borrower and its
Subsidiaries to perform funeral or cemetery related services or provide funeral
or cemetery property, merchandise or inventory pursuant to written contracts
with their customers.

 

“Property”
of any Person means any property or assets (whether real, personal, or mixed,
tangible or intangible) of such Person.

 

“Pro Rata
Percentage” has the meaning specified in Section 2.06(c).

 

“Qualified
Preferred Stock” means:

 

(a)           Trust Preferred Stock; and

 

(b)           Redeemable Preferred Stock issued
after  August 13,
1996, that provides (i) for its mandatory redemption on a date, if at all,
that is on or after the first anniversary of the Maturity Date, as the same may
be extended from time to time, and (ii) that no holder of such shares will
be entitled to retain or receive Restricted Payments in respect of such shares
for a period of not less than 180 days after receipt by such holder of written
notice from any Lender or the Borrower that an Event of Default hereunder has
occurred and is then continuing and that such payments should be blocked, and
indefinitely, for so long as there shall exist any default in the payment of
any Obligations, whether by maturity, acceleration, or otherwise, all such
provisions to be in form and content reasonably acceptable to the
Administrative Agent.

 

“Quarterly
Date” means the last Business Day of each March, June, September and
December during the term of this Agreement.

 

14

 

“Redeemable
Preferred Stock” means shares of the Borrower’s preferred stock which by
its terms requires or permits the Borrower to redeem such shares.

 

“Register”
has the meaning set forth in Section 10.07(c).

 

“Release”
shall have the meaning set forth in CERCLA or under any other Environmental
Law.

 

“Reportable
Event” means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30 day notice period has been waived.

 

“Request
for Credit Extension” means (a) with respect to a Revolving Borrowing,
or a  conversion or continuation of
Revolving Loans, a Revolving Loan Notice, (b) with respect to an L/C
Credit Extension, a Letter of Credit Application, and (c) with respect to
a Swing Line Loan, a Swing Line Loan Notice.

 

“Required
Lenders” means, as of any date of determination, Lenders having at least
66-2/3% of the Aggregate Revolving Commitments or, if the commitment of each
Lender to make Revolving Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 8.02,
Lenders holding in the aggregate at least 66-2/3% of the Total Outstandings
(with the aggregate amount of each Lender’s risk participation and funded
participation in L/C Obligations and Swing Line Loans being deemed “held” by
such Lender for purposes of this definition); provided that the
(i) Revolving Commitments of, and the portion of the Total Outstandings
held or deemed held by, any Defaulting Lender shall be excluded for purposes of
making a determination of Required Lenders, and (ii) Required Lenders
shall never mean less than two Lenders.

 

“Response”
shall have the meaning set forth in CERCLA or under any other Environmental
Law.

 

“Responsible
Officer” means the chief executive officer, president, chief financial
officer, treasurer or assistant treasurer of a Loan Party.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.

 

“Restricted
Payment” means (a) any Dividend, or (b) any payment or prepayment
of principal, interest, premium or penalty of or in respect of any Subordinated
Debt or any defeasance, redemption, purchase, repurchase or other acquisition
or retirement for value, in whole or in part, of any of the Subordinated Debt.

 

“Revolving
Borrowing” means a borrowing by the Borrower consisting of simultaneous
Revolving Loans of the same Type and having the same Interest Period made by
each of the Lenders pursuant to Section 2.01.

 

“Revolving
Commitment” means, as to each Lender, its obligation to make Revolving
Loans to the Borrower pursuant to Section 2.01, in an aggregate
principal amount at any one time outstanding not to exceed the amount set forth
opposite such Lender’s name on Schedule 2.01, as such amount may be
reduced, increased or adjusted from time to time in accordance with this
Agreement (collectively, the “Aggregate Revolving Commitments”).

 

“Revolving
Loan” has the meaning specified in Section 2.01.

 

“Revolving
Loan Note” means a promissory note made by the Borrower in favor of a
Lender evidencing Revolving Loans made by such Lender, substantially in the
form of Exhibit C.

 

“Revolving
Loan Notice” means a notice of (a) a Revolving Borrowing, (b) a
conversion of Revolving Loans from one Type to the other, or (c) a
continuation of Revolving Loans as the same Type, pursuant to Section 2.02(a),
which, if in writing, shall be substantially in the form of Exhibit A,
or in any other form acceptable to the Administrative Agent.

 

15

 

“Revolving
Pro Rata Share” means, with respect to each Lender at any time, a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of the Revolving Commitment of such Lender at
such time and the denominator of which is the amount of the Aggregate Revolving
Commitments at such time; provided that if the commitment of each Lender
to make Revolving Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02, then the
Revolving Pro Rata Share of each Lender shall be determined based on the
Revolving Pro Rata Share of such Lender immediately prior to such termination
and after giving effect to any subsequent assignments made pursuant to the
terms hereof.  The initial Revolving Pro
Rata Share of each Lender is set forth opposite the name of such Lender on Schedule 2.01
or in the Assignment and Assumption pursuant to which such Lender becomes a
party hereto, as applicable.

 

“SEC”
means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

 

“Series A
Note Payment Date” means the date on which the $25,000,000 7.73% Senior
Notes, Series 1999-A, due July 30, 2004, described in clause (a) of
the definition of “Senior Notes”, have been paid in full.

 

“Senior
Notes” means, collectively (a) the $25,000,000 7.73% Senior Notes of
the Borrower, Series 1999-A, due July 30, 2004,
(b) the $60,000,000 7.96% Senior Notes of the Borrower,
Series 1999-B, due July 30, 2006, and (c) the $25,000,000
8.06% Senior Notes of the Borrower, Series 1999-C, due July 30, 2008,
and in each including the unsecured guaranties thereof executed by certain Subsidiaries
of the Borrower.

 

“Solvent”
means, with respect to any Person, as of any date of determination, that the
fair value of the assets of such Person (at fair valuation) is, on the date of
determination, greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person as of such date, that
the present fair saleable value of the assets of such Person will, as of such
date, be greater than the amount that will be required to pay the probable
liability of such Person on its debt as such debt become absolute and matured,
and that, as of such date, such Person will be able to pay all liabilities of
such Person as such liabilities mature and such Person does not have
unreasonably small capital with which to carry on its business.  In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an actual
or matured liability discounted to present value at rates believed to be
reasonable by such Person.

 

“Subordinated
Debt” means, with respect to the Borrower and as of any date of its
issuance, any unsecured indebtedness for borrowed money for which the Borrower
is directly and primarily obligated that is expressly subordinated to the
Obligations and is approved by the Required Lenders in their sole discretion
that (a) arises after the date of this Agreement, (b) does not have
any stated maturity before the latest maturity of any of the Obligations,
(c) has terms that are no more restrictive than the terms of the Loan
Documents, and (d) has payment and other terms satisfactory to the
Required Lenders in their sole discretion.

 

“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person.  Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Borrower; provided an Unrestricted Subsidiary
shall not be a Subsidiary.

 

“Swap
Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to

 

16

 

the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International
Foreign Exchange Master Agreement, or any other master agreement (any such
master agreement, together with any related schedules, a “Master Agreement”),
including any such obligations or liabilities under any Master Agreement.

 

“Swap
Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for
any date prior to the date referenced in clause (a), the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which may
include a Lender or any Affiliate of a Lender).

 

“Swing Line”
means the revolving credit facility made available by the Swing Line Lender
pursuant to Section 2.04.

 

“Swing Line
Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.

 

“Swing Line
Lender” means Bank of America in its capacity as provider of Swing Line
Loans, or any successor swing line lender hereunder.

 

“Swing Line
Loan” has the meaning specified in Section 2.04(a).

 

“Swing Line
Note” means a promissory note made by the Borrower in favor of the Swing
Line Lender evidencing Swing Line Loans made by such Lender, substantially in
the form of Exhibit D.

 

“Swing Line
Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b),
which, if in writing, shall be substantially in the form of Exhibit B.

 

“Swing Line
Sublimit” means an amount equal to the lesser of (a) $5,000,000 and
(b) the Aggregate Revolving Commitments. 
The Swing Line Sublimit is part of, and not in addition to, the
Aggregate Revolving Commitments.

 

“Syndication
Agent” means Wells Fargo Bank Texas, National Association, in its capacity
as syndication agent under any of the Loan Documents.

 

“Synthetic
Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating
obligations that do not appear on the balance sheet of such Person but which,
upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).

 

“Taxes”
has the meaning set forth in Section 3.01(a).

 

“Total
Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

“Total
Revolving Outstandings” means the aggregate Outstanding Amount of all Revolving
Loans and all L/C Obligations.

 

“Total
Senior Debt” means, at any time, an amount equal to the remainder of Debt
of the Borrower and its Subsidiaries minus all Subordinated Debt of the
Borrower and its Subsidiaries.

 

“Treasury
Stock Purchase” means any purchase, redemption, retirement, defeasance or
other acquisition (including any sinking fund or similar deposit for such
purpose) by the Borrower or any Subsidiary of its Capital Stock or any
warrants, rights or options to acquire such Capital Stock.

 

17

 

“Trust
Accounts” means, collectively, those certain perpetual care trust, pre-need
trust, pre-construction trust or other trust arrangements established by the
Borrower as required to be established and maintained in accordance with
Applicable Law.

 

“Trust
Guaranties” means, collectively, the Borrower’s guaranties of the
obligations of the Trust Subsidiary in respect of the Trust Preferred Stock,
the common securities of the Trust Subsidiary, and the expenses of the Trust
Subsidiary incurred in connection with the foregoing.

 

“Trust
Notes” means the Convertible Junior Subordinated Debentures Due 2029 issued
by the Borrower in the original principal amount of the Trust Preferred Stock.

 

“Trust
Preferred Stock” means the 7% Convertible Preferred Securities, Term Income
Deferrable Equity Securities issued by the Trust Subsidiary.

 

“Trust
Reserves” means, at the time of any determination thereof, in connection
with the Trust Accounts, the aggregate of all amounts required by Applicable
Law to be set aside in reserve, trust, escrow or any similar arrangement, and
in respect to any jurisdiction in which the Applicable Laws do not require the
trusting of any such funds, then 100% of the funds received pursuant to each
Trust Account.

 

“Trust
Subsidiary” means Carriage Services Capital Trust, a statutory business
trust formed under the laws of the State of Delaware.

 

“Type”
means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

 

“Unfunded
Pension Liability” means the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.

 

“United
States” and “U.S.” mean the United States of America.

 

“Unreimbursed
Amount” has the meaning set forth in Section 2.03(c)(i).

 

“Unrestricted
Subsidiary” means any Person so designated by the Borrower in writing to
the Administrative Agent; provided  that a majority of such
Person’s outstanding Voting Shares, but less than 100% of such Voting Shares,
is owned by the Borrower or one or more of its Subsidiaries.

 

“Voting
Shares” of any Person means Capital Stock of any class or classes having
ordinary voting power for the election of at least a majority of the members of
the board of directors, managing general partners or the equivalent governing
body of such Person, irrespective of whether, at the time, Capital Stock of any
other class or classes of such entity shall have or might have voting power by
reason of the happening of any contingency.

 

1.02        Other Interpretive Provisions.  With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

 

(a)           The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.

 

(b)           (i)            The
words “herein,” “hereto,” “hereof” and “hereunder”
and words of similar import when used in any Loan Document shall refer to such
Loan Document as a whole and not to any particular provision thereof.

 

(ii)           Article, Section, Exhibit and
Schedule references are to the Loan Document in which such reference appears.

 

18

 

(iii)          The term “including” is by way
of example and not limitation.

 

(iv)          The term “documents” includes
any and all instruments, documents, agreements, certificates, notices, reports,
financial statements and other writings, however evidenced, whether in physical
or electronic form.

 

(c)           In the computation of periods of time
from a specified date to a later specified date, the word “from” means “from
and including;” the words “to” and “until” each mean “to
but excluding;” and the word “through” means “to and including.”

 

(d)           Section headings herein and in the
other Loan Documents are included for convenience of reference only and shall
not affect the interpretation of this Agreement or any other Loan Document.

 

1.03        Accounting Terms.

 

(a)           Accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed
herein.

 

(b)           If at any time any change in GAAP or
in the application of GAAP would affect the computation of any financial ratio
or requirement set forth in any Loan Document, and either the Borrower or the
Required Lenders shall so request, the Administrative Agent, the Lenders and
the Borrower shall negotiate in good faith to amend such ratio or requirement
to preserve the original intent thereof in light of such change in (or in the
application of) GAAP (subject to the approval of the Required Lenders); provided
that, until so amended, (i) such ratio or requirement shall
continue to be computed in accordance with GAAP prior to such change therein
and (ii) the Borrower shall provide to the Administrative Agent and the
Lenders financial statements and other documents required under this Agreement
or as reasonably requested hereunder setting forth a reconciliation between
calculations of such ratio or requirement made before and after giving effect
to such change in (or in the application of) GAAP as is reasonably necessary to
demonstrate compliance (or non-compliance) with such ratio or requirement.

 

(c)           Notwithstanding the foregoing, the
Trust Preferred Stock Trust Notes and Trust Guaranties shall be treated in the
manner described in this Agreement regardless of any changes in GAAP which
requires the Borrower to characterize or represent them differently for
financial reporting or other applicable purposes.

 

1.04        Rounding.  Any
financial ratios required to be maintained by the Borrower pursuant to this Agreement
shall be calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number of places by
which such ratio is expressed herein and rounding the result up or down to the
nearest number (with a rounding-up if there is no nearest number).

 

1.05        References to Agreements and Laws.  Unless otherwise expressly provided herein,
(a) references to Organization Documents, agreements (including the Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not
prohibited by any Loan Document; and (b) references to any Law shall
include all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting such Law.

 

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

 

19

 

1.07        Letter of Credit Amounts.  Unless otherwise
specified, all references herein to the amount of a Letter of Credit at any
time shall be deemed to mean the maximum face amount of such Letter of Credit
after giving effect to all increases thereof contemplated by such Letter of
Credit or the Letter of Credit Application therefor, whether or not such
maximum face amount is in effect at such time.

 

ARTICLE II.

THE COMMITMENTS AND CREDIT
EXTENSIONS

 

2.01        Revolving Loans.  Subject to the terms and conditions set
forth herein, each Lender severally agrees to make revolving loans (each such
loan, a “Revolving Loan”) to the Borrower from time to time, on any
Business Day during the Availability Period, in an aggregate amount not to
exceed at any time outstanding the amount of such Lender’s Revolving
Commitment; provided, however, that after giving effect to any
Revolving Borrowing, (i) the Total Revolving Outstandings and the
Outstanding Amount of all Swing Line Loans shall not exceed the Aggregate
Revolving Commitments, and (ii) the aggregate Outstanding Amount of the
Revolving Loans of any Lender, plus such Lender’s Revolving Pro Rata
Share of the Outstanding Amount of all L/C Obligations, plus such
Lender’s Revolving Pro Rata Share of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Revolving Commitment.  Within the limits of each Lender’s Revolving
Commitment, and subject to the other terms and conditions hereof, the Borrower
may borrow under this Section 2.01, prepay under Section 2.05,
and reborrow under this Section 2.01.  Revolving Loans may be Base Rate Loans or Eurodollar Rate Loans,
as further provided herein.

 

2.02        Borrowings, Conversions and
Continuations of Loans.

 

(a)           Each Borrowing, each conversion of
Loans from one Type to the other, and each continuation of Eurodollar Rate
Loans shall be made upon the Borrower’s irrevocable notice to the Administrative
Agent, which may be given by telephone. 
Each such notice must be received by the Administrative Agent not later
than 11:00 a.m. (i) three Business Days prior to the requested date
of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or
of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on
the requested date of any Borrowing of Base Rate Loans.  Each such telephonic notice by the Borrower
pursuant to this Section 2.02(a) must be confirmed promptly by delivery
to the Administrative Agent of a written Revolving Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower.  Each Borrowing of, conversion to or
continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000
or a whole multiple of $1,000,000 in excess thereof.  Except as provided in Sections 2.03(c) and 2.04,
each Borrowing of or conversion to Base Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof.  Each Revolving Loan (whether telephonic or
written) shall specify (i) whether the Borrower is requesting a Borrowing,
a conversion of Loans from one Type to the other, or a continuation of
Eurodollar Rate Loans, (ii) the requested date of the Borrowing,
conversion or continuation, as the case may be (which shall be a Business Day),
(iii) the principal amount of Loans to be borrowed, converted or
continued, (iv) the Type of Loans to be borrowed or to which existing
Loans are to be converted, and (v) if applicable, the duration of the
Interest Period with respect thereto. 
If the Borrower fails to specify a Type of Loan in a Revolving Loan
Notice, or if the Borrower fails to give a timely notice requesting a conversion
or continuation, then the applicable Loans shall be made as, or converted to,
Base Rate Loans.  Any such automatic
conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate
Loans.  If the Borrower requests a
Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any
such Revolving Loan Notice but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.

 

(b)           Following receipt of a Revolving Loan
Notice, the Administrative Agent shall promptly notify each Lender of the
amount of its Revolving Pro Rata Share of the applicable Loans, and if no
timely notice of a conversion or continuation is provided by the Borrower, the
Administrative Agent shall notify each Lender of the details of any automatic
conversion to Base Rate Loans described in the preceding subsection.  In the case of a Revolving Borrowing, each
Lender shall make the amount of its Loan available to the Administrative Agent
in immediately available funds at the Administrative Agent’s Office not later

 

20

 

than 1:00 p.m. on the Business Day
specified in the applicable Revolving Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.02
(and, if such Borrowing is the initial Credit Extension, Section 4.01),
the Administrative Agent shall make all funds so received available to the
Borrower in like funds as received by the Administrative Agent either by
(i) crediting the account of the Borrower on the books of Bank of America
with the amount of such funds or (ii) wire transfer of such funds, in each
case in accordance with instructions provided to (and reasonably acceptable to)
the Administrative Agent by the Borrower; provided, however, that
if, on the date the Revolving Loan Notice with respect to such Revolving
Borrowing is given by the Borrower, there are Swing Line Loans and/or L/C
Borrowings outstanding, then the proceeds of such Borrowing shall be applied, first,
to the payment in full of any such L/C Borrowings, second, to the
payment in full of any such Swing Line Loans, and third, to the Borrower
as provided above.

 

(c)           Except as otherwise provided herein,
a Eurodollar Rate Loan may be continued or converted only on the last day of an
Interest Period for such Eurodollar Rate Loan. 
During the existence of a Default, no Loans may be requested as,
converted to or continued as Eurodollar Rate Loans without the consent of the
Required Lenders.

 

(d)           The Administrative Agent shall
promptly notify the Borrower and the Lenders of the interest rate applicable to
any Interest Period for Eurodollar Rate Loans upon determination of such
interest rate.  The determination of the
Eurodollar Rate by the Administrative Agent shall be conclusive in the absence
of manifest error.  At any time that
Base Rate Loans are outstanding, the Administrative Agent shall notify the
Borrower and the Lenders of any change in Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change.

 

(e)           After giving effect to all
Borrowings, all conversions of Loans from one Type to the other, and all
continuations of Loans as the same Type, there shall not be more than eight
Interest Periods in effect with respect to all Loans.

 

2.03        Letters of Credit.

 

(a)           The Letter of Credit Commitment.

 

(i)            Subject to the terms and conditions
set forth herein, (A) the L/C Issuer agrees, in reliance upon the
agreements of the other Lenders set forth in this Section 2.03,
(1) from time to time on any Business Day during the period from the
Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of the Borrower or any Subsidiary designated by the
Borrower, and to amend or renew Letters of Credit previously issued by it, in
accordance with subsection (b) below, and (2) to honor drafts
under the Letters of Credit; and (B) the Lenders severally agree to
participate in Letters of Credit issued for the account of the Borrower or any
such Subsidiary; provided that (I) the L/C Issuer shall not be
obligated to make any L/C Credit Extension with respect to any Letter of Credit
if as of the date of such L/C Credit Extension, (x) the Outstanding Amount
of all L/C Obligations, Revolving Loans, and Swing Line Loans would exceed the
Aggregate Revolving Commitments, or (y) the Outstanding Amount of the L/C
Obligations would exceed the Letter of Credit Sublimit, and (II) no Lender
shall be obligated to participate in any Letter of Credit if as of the date of
such L/C Credit Extension, the aggregate Outstanding Amount of the Revolving
Loans of any Lender, plus such Lender’s Revolving Pro Rata Share of the
Outstanding Amount of all L/C Obligations, plus such Lender’s Revolving
Pro Rata Share of the Outstanding Amount of all Swing Line Loans would exceed
such Lender’s Revolving Commitment. 
Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrower’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed. 
All Existing Letters of Credit shall be deemed to have been issued pursuant
hereto, and from and after the Closing Date shall be subject to and governed by
the terms and conditions hereof.

 

21

 

(ii)           The L/C Issuer shall be under no
obligation to issue any Letter of Credit if:

 

(A)          any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the L/C Issuer from issuing such Letter of Credit, or any Law
applicable to the L/C Issuer or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over the
L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the
issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon the L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the L/C Issuer is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the L/C Issuer in good faith deems
material to it;

 

(B)           subject to Section 2.03(b)(iii),
the expiry date of such requested Letter of Credit would occur more than twelve
months after the date of issuance or last renewal, unless the Required Lenders
have approved such expiry date;

 

(C)           the expiry date of such requested
Letter of Credit would occur after the Letter of Credit Expiration Date, unless
all the Lenders have approved such expiry date;

 

(D)          the issuance of such Letter of Credit
would violate one or more policies of the L/C Issuer; or

 

(E)           such Letter of Credit is in an
initial amount less than $10,000, in the case of a commercial Letter of Credit,
or $50,000, in the case of a standby Letter of Credit, or is to be denominated
in a currency other than Dollars.

 

(iii)          The L/C Issuer shall be under no
obligation to amend any Letter of Credit if (A) the L/C Issuer would have
no obligation at such time to issue such Letter of Credit in its amended form
under the terms hereof, or (B) the beneficiary of such Letter of Credit
does not accept the proposed amendment to such Letter of Credit.

 

(b)           Procedures for Issuance and
Amendment of Letters of Credit.

 

(i)            Each Letter of Credit shall be
issued or amended, as the case may be, upon the request of the Borrower
delivered to the L/C Issuer (with a copy to the Administrative Agent) in the
form of a Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of the Borrower. 
Such Letter of Credit Application must be received by the L/C Issuer and
the Administrative Agent not later than 11:00 a.m. at least two Business
Days (or such later date and time as the L/C Issuer may agree in a particular
instance in its sole discretion) prior to the proposed issuance date or date of
amendment, as the case may be.  In the
case of a request for an initial issuance of a Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the L/C
Issuer: (A) the proposed issuance date of the requested Letter of Credit
(which shall be a Business Day); (B) the amount thereof; (C) the
expiry date thereof; (D) the name and address of the beneficiary thereof;
(E) the documents to be presented by such beneficiary in case of any
drawing thereunder; (F) the full text of any certificate to be presented
by such beneficiary in case of any drawing thereunder; and (G) such other
matters as the L/C Issuer may require. 
In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer (A) the Letter of Credit to be amended;
(B) the proposed date of amendment thereof (which shall be a Business Day);
(C) the nature of the proposed amendment; and (D) such other matters
as the L/C Issuer may require.

 

22

 

(ii)           Promptly after receipt of any Letter
of Credit Application, the L/C Issuer will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has received a
copy of such Letter of Credit Application from the Borrower and, if not, the
L/C Issuer will provide the Administrative Agent with a copy thereof.  Upon receipt by the L/C Issuer of
confirmation from the Administrative Agent that the requested issuance or
amendment is permitted in accordance with the terms hereof, then, subject to
the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue
a Letter of Credit for the account of the Borrower or enter into the applicable
amendment, as the case may be, in each case in accordance with the L/C Issuer’s
usual and customary business practices. 
Immediately upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the L/C Issuer a risk participation in such Letter of Credit in
an amount equal to the product of such Lender’s Revolving Pro Rata Share times
the amount of such Letter of Credit.

 

(iii)          If the Borrower so requests in any
applicable Letter of Credit Application, the L/C Issuer may, in its sole and
absolute discretion, agree to issue a Letter of Credit that has automatic
renewal provisions (each, an “Auto-Renewal Letter of Credit”); provided
that any such Auto-Renewal Letter of Credit must permit the L/C Issuer to
prevent any such renewal at least once in each twelve-month period (commencing
with the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a Business Day (the “Nonrenewal
Notice Date”) in each such twelve-month period to be agreed upon at the
time such Letter of Credit is issued. 
Unless otherwise directed by the L/C Issuer, the Borrower shall not be
required to make a specific request to the L/C Issuer for any such renewal,
once an Auto-Renewal Letter of Credit has been issued, the Lenders shall be
deemed to have authorized (but may not require) the L/C Issuer to permit the
renewal of such Letter of Credit at any time to an expiry date not later than
the Letter of Credit Expiration Date; provided, however, that the L/C Issuer
shall not permit any such renewal if (A) the L/C Issuer has determined
that it would have no obligation at such time to issue such Letter of Credit in
its renewed form under the terms hereof (by reason of the provisions of Section 2.03(a)(ii)
or otherwise), or (B) it has received notice (which may be by telephone or
in writing) on or before the date that is five Business Days before the
Nonrenewal Notice Date (1) from the Administrative Agent that the Required
Lenders have elected not to permit such renewal or (2) from the
Administrative Agent, any Lender or the Borrower that one or more of the
applicable conditions specified in Section 4.02 is not then
satisfied.

 

(iv)          Promptly after its delivery of any
Letter of Credit or any amendment to a Letter of Credit to an advising bank
with respect thereto or to the beneficiary thereof, the L/C Issuer will also
deliver to the Borrower and the Administrative Agent a true and complete copy
of such Letter of Credit or amendment.

 

(c)           Drawings and Reimbursements;
Funding of Participations.

 

(i)            Upon receipt from the beneficiary of
any Letter of Credit of any notice of a drawing under such Letter of Credit,
the L/C Issuer shall notify the Borrower and the Administrative Agent
thereof.  Not later than 11:00 a.m.
on the date of any payment by the L/C Issuer under a Letter of Credit (each
such date, an “Honor Date”), the Borrower shall reimburse the L/C Issuer
through the Administrative Agent in an amount equal to the amount of such
drawing.  If the Borrower fails to so
reimburse the L/C Issuer by such time, the Administrative Agent shall promptly
notify each Lender of the Honor Date, the amount of the unreimbursed drawing
(the “Unreimbursed Amount”), and the amount of such Lender’s Revolving
Pro Rata Share thereof.  In such event,
the Borrower shall be deemed to have requested a Revolving Borrowing of Base
Rate Loans to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Revolving Commitments and the conditions
set forth in Section 4.02 (other than the delivery of a Revolving
Loan Notice).  Any notice given by the
L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i)
may be given by telephone if immediately confirmed in

 

23

 

writing; provided that the lack of
such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice.

 

(ii)           Each Lender (including the Lender
acting as L/C Issuer) shall upon any notice pursuant to Section 2.03(c)(i)
make funds available to the Administrative Agent for the account of the L/C
Issuer at the Administrative Agent’s Office in an amount equal to its Revolving
Pro Rata Share of the Unreimbursed Amount not later than 1:00 p.m. on the
Business Day specified in such notice by the Administrative Agent, whereupon,
subject to the provisions of Section 2.03(c)(iii), each Lender that
so makes funds available shall be deemed to have made a Base Rate Loan to the
Borrower in such amount.  The
Administrative Agent shall remit the funds so received to the L/C Issuer.

 

(iii)          With respect to any Unreimbursed
Amount that is not fully refinanced by a Revolving Borrowing of Base Rate Loans
because the conditions set forth in Section 4.02 cannot be
satisfied or for any other reason, the Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the Default
Rate.  In such event, each Lender’s
payment to the Administrative Agent for the account of the L/C Issuer pursuant
to Section 2.03(c)(ii) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Lender in satisfaction of its participation obligation under this Section 2.03.

 

(iv)          Until each Lender funds its Revolving
Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse
the L/C Issuer for any amount drawn under any Letter of Credit, interest in
respect of such Lender’s Revolving Pro Rata Share of such amount shall be
solely for the account of the L/C Issuer.

 

(v)           Each Lender’s obligation to make
Revolving Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn
under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any set-off, counterclaim, recoupment, defense
or other right which such Lender may have against the L/C Issuer, the Borrower
or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing.  No such making of an L/C Advance shall relieve or otherwise
impair the obligation of the Borrower to reimburse the L/C Issuer for the
amount of any payment made by the L/C Issuer under any Letter of Credit,
together with interest as provided herein.

 

(vi)          If any Lender fails to make available
to the Administrative Agent for the account of the L/C Issuer any amount
required to be paid by such Lender pursuant to the foregoing provisions of this
Section 2.03(c) by the time specified in Section 2.03(c)(ii),
the L/C Issuer shall be entitled to recover from such Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the L/C Issuer at a rate per annum equal to the
Federal Funds Rate from time to time in effect.  A certificate of the L/C Issuer submitted to any Lender (through
the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.

 

(d)           Repayment of Participations.

 

(i)            At any time after the L/C Issuer has
made a payment under any Letter of Credit and has received from any Lender such
Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c),
if the Administrative Agent receives for the account of the L/C Issuer any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether

 

24

 

directly from the Borrower or otherwise,
including proceeds of Cash Collateral applied thereto by the Administrative
Agent), the Administrative Agent will distribute to such Lender its Revolving
Pro Rata Share thereof (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender’s L/C Advance
was outstanding) in the same funds as those received by the Administrative
Agent.

 

(ii)           If any payment received by the
Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i)
is required to be returned under any of the circumstances described in Section 10.06
(including pursuant to any settlement entered into by the L/C Issuer in its
discretion), each Lender shall pay to the Administrative Agent for the account
of the L/C Issuer its Revolving Pro Rata Share thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Lender, at a rate per annum equal to the
Federal Funds Rate from time to time in effect.

 

(e)           Obligations Absolute.  The obligation of the Borrower to
reimburse the L/C Issuer for each drawing under each Letter of Credit and to
repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

 

(i)            any lack of validity or
enforceability of such Letter of Credit, this Agreement, or any other agreement
or instrument relating thereto;

 

(ii)           the existence of any claim,
counterclaim, set-off, defense or other right that the Borrower may have at any
time against any beneficiary or any transferee of such Letter of Credit (or any
Person for whom any such beneficiary or any such transferee may be acting), the
L/C Issuer or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by such Letter of Credit or any agreement
or instrument relating thereto, or any unrelated transaction;

 

(iii)          any draft, demand, certificate or
other document presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such Letter of Credit;

 

(iv)          any payment by the L/C Issuer under
such Letter of Credit against presentation of a draft or certificate that does
not strictly comply with the terms of such Letter of Credit; or any payment
made by the L/C Issuer under such Letter of Credit to any Person purporting to
be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including any arising
in connection with any proceeding under any Debtor Relief Law; or

 

(v)           any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower.

 

The Borrower
shall promptly examine a copy of each Letter of Credit and each amendment
thereto that is delivered to it and, in the event of any claim of noncompliance
with the Borrower’s instructions or other irregularity, the Borrower will
immediately notify the L/C Issuer.  The
Borrower shall be conclusively deemed to have waived any such claim against the
L/C Issuer and its correspondents unless such notice is given as aforesaid.

 

(f)            Role of L/C Issuer.  Each Lender and the Borrower
agree that, in paying any drawing under a Letter of Credit, the L/C Issuer
shall not have any responsibility to obtain any document (other than any sight
draft, certificates and documents expressly required by the Letter of Credit)
or to ascertain or

 

25

 

inquire as to the validity or accuracy of any
such document or the authority of the Person executing or delivering any such
document.  None of the L/C Issuer, any
Agent-Related Person nor any of the respective correspondents, participants or
assignees of the L/C Issuer shall be liable to any Lender for (i) any
action taken or omitted in connection herewith at the request or with the
approval of the Lenders or the Required Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Letter of Credit Application.  The
Borrower hereby assumes all risks of the acts or omissions of any beneficiary
or transferee with respect to its use of any Letter of Credit; provided,
however, that this assumption is not intended to, and shall not,
preclude the Borrower’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.  None of the L/C Issuer, any Agent-Related
Person, nor any of the respective correspondents, participants or assignees of
the L/C Issuer, shall be liable or responsible for any of the matters described
in clauses (i) through (v) of Section 2.03(e); provided,
however, that anything in such clauses to the contrary notwithstanding,
the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be
liable to the Borrower, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by the Borrower
which the Borrower proves were caused by the L/C Issuer’s willful misconduct or
gross negligence or the L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit.   In furtherance and not in limitation of the
foregoing, the L/C Issuer may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary, and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.

 

(g)           Cash Collateral.  Upon the request of the Administrative
Agent, (i) if the L/C Issuer has honored any full or partial drawing
request under any Letter of Credit and such drawing has resulted in an L/C
Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any
Letter of Credit may for any reason remain outstanding and partially or wholly
undrawn, the Borrower shall immediately Cash Collateralize the then Outstanding
Amount of all L/C Obligations (in an amount equal to such Outstanding Amount
determined as of the date of such L/C Borrowing or the Letter of Credit
Expiration Date, as the case may be). 
For purposes hereof, “Cash Collateralize” means to pledge and
deposit with or deliver to the Administrative Agent, for the benefit of the L/C
Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit
account balances pursuant to documentation in form and substance satisfactory
to the Administrative Agent and the L/C Issuer (which documents are hereby
consented to by the Lenders). 
Derivatives of such term have corresponding meanings.  The Borrower hereby grants to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a
security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing.  Cash
collateral shall be maintained in blocked, non-interest bearing deposit
accounts at Bank of America (the “L/C Cash Collateral Account”).  The Borrower, no more than once in any
calendar quarter, may direct that the Administrative Agent to invest the funds
held in the L/C Cash Collateral Account (so long as the aggregate amount of
such funds exceeds any relevant minimum investment requirement) in
(i) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof and
(ii) one or more other types of investments permitted by the
Administrative Agent, in each case with such maturities as the Borrower, with
the consent of the Administrative Agent, may specify, pending application of
such funds on account of the L/C Obligations or on account of other
obligations, as the case may be.  In the
absence of any such direction from the Borrower, the Administrative Agent shall
invest the funds held in the L/C Cash Collateral Account (so long as the
aggregate amount of such funds exceeds any relevant minimum investment
requirement) in one or more types of investments with such maturities as the
Administrative Agent may specify, pending application of such funds on account
of the L/C Obligations or on account of other Obligations, as the case may
be.  All such investments shall be made
in the Administrative Agent’s name for the account of the Lenders, subject to
the ownership interest therein of the Borrower.  The Borrower recognizes that any losses or taxes with respect to
such investments shall be borne solely by the Borrower, and the Borrower agrees
to hold the Administrative Agent and the Lenders harmless from any and all such
losses and taxes.  The Administrative
Agent may liquidate any investment held in the L/C Cash Collateral Account in
order to apply the proceeds of such investment on account of the L/C

 

26

 

Obligations (or on account of any other
obligation then due and payable, as the case may be) without regard to whether
such investment has matured and without liability for any penalty or other fee
incurred (with respect to which the Borrower hereby agrees to reimburse the
Administrative Agent) as a result of such application.

 

(h)           Applicability of ISP98 and UCP.  Unless otherwise expressly agreed
by the L/C Issuer and the Borrower when a Letter of Credit is issued,
(i) the rules of the “International Standby Practices 1998” published by
the Institute of International Banking Law & Practice (or such later
version thereof as may be in effect at the time of issuance) shall apply to
each standby Letter of Credit, and (ii) the rules of the Uniform Customs
and Practice for Documentary Credits, as most recently published by the
International Chamber of Commerce (the “ICC”) at the time of issuance
(including the ICC decision published by the Commission on Banking Technique
and Practice on April 6, 1998 regarding the European single currency
(euro)) shall apply to each commercial Letter of Credit.

 

(i)            Letter of Credit Fees.  The Borrower shall pay to the Administrative
Agent for the account of each Lender in accordance with its Pro Rata Share  a
Letter of Credit fee for each Letter of Credit equal to the Applicable Rate times
the daily maximum amount available to be drawn under such Letter of Credit
(whether or not such maximum amount is then in effect under such Letter of
Credit).  Such letter of credit fees
shall be computed on a quarterly basis in arrears.  Such letter of credit fees shall be due and payable on the first
Business Day after the end of each March, June, September and December, commencing
with the first such date to occur after the issuance of such Letter of Credit,
on the Letter of Credit Expiration Date and thereafter on demand.  If there is any change in the Applicable
Rate during any quarter, the daily maximum amount of each Letter of Credit
shall be computed and multiplied by the Applicable Rate separately for each
period during such quarter that such Applicable Rate was in effect.

 

(j)            Fronting Fee and Documentary and
Processing Charges Payable to L/C Issuer. 
The Borrower shall pay directly to the L/C Issuer for its own
account a fronting fee with respect to each Letter of Credit equal to 1/8 of 1%
per annum times the daily maximum amount available to be drawn under
such Letter of Credit (whether or not such maximum amount is then in effect
under such Letter of Credit).  Such
fronting fee shall be computed on a quarterly basis in arrears, and shall be
payable on the first Business Day after the end of each March, June, September
and December, commencing with the first such date to occur after the issuance
of such Letter of Credit, on the Letter of Credit Expiration Date, and
thereafter on demand.  In addition, the
Borrower shall pay directly to the L/C Issuer for its own account the individual
customary issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of the L/C Issuer relating to letters of
credit as from time to time in effect. 
Such customary fees and standard costs and charges are due and payable
on demand and are nonrefundable.

 

(k)           Conflict with Letter of Credit
Application.  In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.

 

2.04        Swing Line Loans.

 

(a)           The Swing Line.  Subject to the terms and conditions set
forth herein, the Swing Line Lender agrees to make loans (each such loan, a “Swing
Line Loan”) to the Borrower from time to time on any Business Day during
the Availability Period in an aggregate amount not to exceed at any time
outstanding the amount of the Swing Line Sublimit, notwithstanding the fact
that such Swing Line Loans, when aggregated with the Revolving Pro Rata Share
of the Outstanding Amount of Revolving Loans and L/C Obligations of the Lender
acting as Swing Line Lender, may exceed the amount of such Lender’s Revolving
Commitment; provided, however, that after giving effect to any
Swing Line Loan, (i) the Total Revolving Outstandings shall not exceed the
Aggregate Revolving Commitments, and (ii) the aggregate Outstanding Amount
of the Revolving Loans of any Lender, plus such Lender’s Revolving Pro
Rata Share of the Outstanding Amount of all L/C Obligations, plus such
Lender’s Revolving Pro Rata Share of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Revolving Commitment, and provided,
further, that the Borrower shall not use the proceeds of any Swing Line
Loan to refinance any outstanding Swing Line Loan.  Within the foregoing limits, and subject to the other terms and
conditions

 

27

 

hereof, the Borrower may borrow under this Section 2.04,
prepay under Section 2.05, and reborrow under this Section 2.04.  Each Swing Line Loan shall be a Base Rate
Loan.  Immediately upon the making of a
Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swing Line Lender a risk
participation in such Swing Line Loan in an amount equal to the product of such
Lender’s Revolving Pro Rata Share times the amount of such Swing Line
Loan.

 

(b)           Borrowing Procedures.  Each Swing Line Borrowing shall be made upon
the Borrower’s irrevocable notice to the Swing Line Lender and the
Administrative Agent, which may be given by telephone. Each such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the requested borrowing date, and shall specify (i) the
amount to be borrowed, which shall be a minimum of $100,000, and (ii) the
requested borrowing date, which shall be a Business Day.  Each such telephonic notice must be
confirmed promptly by delivery to the Swing Line Lender and the Administrative
Agent of a written Swing Line Loan Notice, appropriately completed and signed
by a Responsible Officer of the Borrower. 
Promptly after receipt by the Swing Line Lender of any telephonic Swing
Line Loan Notice, the Swing Line Lender will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has also
received such Swing Line Loan Notice and, if not, the Swing Line Lender will
notify the Administrative Agent (by telephone or in writing) of the contents
thereof.  Unless the Swing Line Lender
has received notice (by telephone or in writing) from the Administrative Agent
(including at the request of any Lender) prior to 2:00 p.m. on the date of
the proposed Swing Line Borrowing (A) directing the Swing Line Lender not
to make such Swing Line Loan as a result of the limitations set forth in the
proviso to the first sentence of Section 2.04(a), or (B) that
one or more of the applicable conditions specified in Article IV is
not then satisfied, then, subject to the terms and conditions hereof, the Swing
Line Lender will, not later than 3:00 p.m. on the borrowing date specified
in such Swing Line Loan Notice, make the amount of its Swing Line Loan
available to the Borrower at its office by crediting the account of the
Borrower on the books of the Swing Line Lender in immediately available funds.

 

(c)           Refinancing of Swing Line Loans.

 

(i)            The Swing Line Lender at any time in
its sole and absolute discretion may request, on behalf of the Borrower (which
hereby irrevocably authorizes the Swing Line Lender to so request on its
behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s
Revolving Pro Rata Share of the amount of Swing Line Loans then
outstanding.  Such request shall be made
in writing (which written request shall be deemed to be a Revolving Loan Notice
for purposes hereof) and in accordance with the requirements of Section 2.02,
without regard to the minimum and multiples specified therein for the principal
amount of Base Rate Loans, but subject to the unutilized portion of the
Aggregate Revolving Commitments.  The
Swing Line Lender shall furnish the Borrower with a copy of the applicable Loan
Notice promptly after delivering such notice to the Administrative Agent.  Each Lender shall make an amount equal to
its Revolving Pro Rata Share of the amount specified in such Loan Notice
available to the Administrative Agent in immediately available funds for the
account of the Swing Line Lender at the Administrative Agent’s Office not later
than 1:00 p.m. on the day specified in such Loan Notice, whereupon,
subject to Section 2.05(c)(ii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to the Borrower in such
amount.  The Administrative Agent shall
remit the funds so received to the Swing Line Lender.

 

(ii)           If for any reason any Swing Line Loan
cannot be refinanced by such a Revolving Borrowing in accordance with Section 2.04(c)(i),
the request for Base Rate Loans submitted by the Swing Line Lender as set forth
herein shall be deemed to be a request by the Swing Line Lender that each of
the Lenders fund its risk participation in the relevant Swing Line Loan and
each Lender’s payment to the Administrative Agent for the account of the Swing
Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment
in respect of such participation.

 

(iii)          If any Lender fails to make available
to the Administrative Agent for the account of the Swing Line Lender any amount
required to be paid by such Lender pursuant to the

 

28

 

foregoing provisions of this Section 2.04(c)
by the time specified in Section 2.04(c)(i), the Swing Line Lender
shall be entitled to recover from such Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Swing Line Lender at a rate per annum equal to
the Federal Funds Rate from time to time in effect.  A certificate of the Swing Line Lender submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (iii) shall be conclusive absent manifest error.

 

(iv)          Each Lender’s obligation to make
Revolving Loans or to purchase and fund risk participations in Swing Line Loans
pursuant to this Section 2.04(c) shall be absolute and unconditional
and shall not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against the Swing Line Lender, the Borrower or any other Person for any reason
whatsoever, (B) the occurrence or continuance of a Default, or
(C) any other occurrence, event or condition, whether or not similar to
any of the foregoing.  No such funding
of risk participations shall relieve or otherwise impair the obligation of the
Borrower to repay Swing Line Loans, together with interest as provided herein.

 

(d)           Repayment of Participations.

 

(i)            At any time after any Lender has
purchased and funded a risk participation in a Swing Line Loan, if the Swing
Line Lender receives any payment on account of such Swing Line Loan, the Swing
Line Lender will distribute to such Lender its Revolving Pro Rata Share of such
payment (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Lender’s risk participation was funded) in
the same funds as those received by the Swing Line Lender.

 

(ii)           If any payment received by the Swing
Line Lender in respect of principal or interest on any Swing Line Loan is
required to be returned by the Swing Line Lender under any of the circumstances
described in Section 10.06 (including pursuant to any settlement
entered into by the Swing Line Lender in its discretion), each Lender shall pay
to the Swing Line Lender its Revolving Pro Rata Share thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned, at a rate per annum equal to the Federal Funds
Rate.  The Administrative Agent will
make such demand upon the request of the Swing Line Lender.

 

(e)           Interest for Account of Swing Line
Lender.  The Swing Line Lender shall
be responsible for invoicing the Borrower for interest on the Swing Line
Loans.  Until each Lender funds its Base
Rate Loan or risk participation pursuant to this Section 2.04 to
refinance such Lender’s Revolving Pro Rata Share of any Swing Line Loan,
interest in respect of such Revolving Pro Rata Share shall be solely for the
account of the Swing Line Lender.

 

(f)            Payments Directly to Swing Line
Lender.  The Borrower shall make all
payments of principal and interest in respect of the Swing Line Loans directly
to the Swing Line Lender.

 

2.05        Prepayments.

 

(a)           Voluntary Prepayments - Revolving
Loans.  The Borrower may, upon
notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Revolving Loans in whole or in part without premium or
penalty; provided that (i) such notice must be received by the
Administrative Agent not later than 11:00 a.m. (A) three Business
Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on
the date of prepayment of Base Rate Loans; (ii) any prepayment of
Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole
multiple of $500,000 in excess thereof; and (iii) any prepayment of Base
Rate Loans shall be in a principal amount of $200,000 or a whole multiple of
$100,000 in excess thereof or, in each case, if less, the entire principal
amount thereof then outstanding.

 

29

 

Each such notice shall specify the date and
amount of such prepayment and the Type(s) of Loans to be prepaid.  The Administrative Agent will promptly
notify each Lender of its receipt of each such notice, and of the amount of
such Lender’s Revolving Pro Rata Share of such prepayment.  If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.  Each voluntary prepayment shall be made and
applied as directed by the Borrower, provided that, if the Borrower fails to
give any direction, such prepayment shall be applied first to reduce the
Outstanding Amount of the Revolving Loans, and second to reduce and
repay all other obligations, if any.

 

(b)           Voluntary Prepayment - Swing Line
Loans.  The Borrower may, upon
notice to the Swing Line Lender (with a copy to the Administrative Agent), at
any time or from time to time, voluntarily prepay Swing Line Loans in whole or
in part without premium or penalty; provided that (i) such notice
must be received by the Swing Line Lender and the Administrative Agent not
later than 1:00 p.m. on the date of the prepayment, and (ii) any such
prepayment shall be in a minimum principal amount of $100,000.  Each such notice shall specify the date and
amount of such prepayment.  If such
notice is given by the Borrower, the Borrower shall make such prepayment and
the payment amount specified in such notice shall be due and payable on the
date specified therein.

 

(c)           Mandatory Prepayment - Excess
Outstandings.  If for any reason the
Outstanding Amount of all Revolving Loans at any time exceeds the Aggregate
Revolving Commitments then in effect, the Borrower shall immediately prepay
Revolving Loans in an aggregate amount equal to such excess.  If for any reason the Total Revolving
Outstandings and the Outstanding Amount of all Swing Line Loans at any time
exceed the Aggregate Revolving Commitments then in effect, the Borrower shall
immediately prepay Revolving Loans, Swing Line Loans and/or Cash Collateralize
the L/C Obligations in an aggregate amount equal to such excess; provided,
however, that the Borrower shall not be required to Cash Collateralize
the L/C Obligations pursuant to this Section 2.05(c) unless after
the prepayment in full of the Revolving Loans and Swing Line Loans the Total
Revolving Outstandings exceed the Aggregate Revolving Commitments then in
effect.

 

(d)           Repayments and Prepayments,
Generally.  All repayment or
prepayment of Loans shall include (and be applied to) interest to the date of
such prepayment on the principal amount prepaid and any additional amounts
required pursuant to Section 3.05. 
All repayments and prepayments shall be allocated among the Lenders in
accordance with the Revolving Pro Rata Shares of the Lenders.

 

2.06        Termination or Reduction of
Aggregate Revolving Commitments.

 

(a)           Voluntary.  The Borrower may, upon notice to the
Administrative Agent, terminate the Aggregate Revolving Commitments, or from
time to time permanently reduce the Aggregate Revolving Commitments; provided
that (i) any such notice shall be received by the Administrative Agent not
later than 11:00 a.m. five Business Days prior to the date of termination
or reduction, (ii) any such partial reduction shall be in an aggregate
amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof,
(iii) the Borrower shall not terminate or reduce the Aggregate Revolving
Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Total Revolving Outstandings and the Outstanding Amount of all
Swing Line Loans would exceed the Aggregate Revolving Commitments, and
(iv) if, after giving effect to any reduction of the Aggregate Revolving
Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds
the amount of the Aggregate Revolving Commitments, such Sublimit shall be
automatically reduced by the amount of such excess.  The Administrative Agent will promptly notify the Lenders of any
such notice of termination or reduction of the Aggregate Revolving Commitments.

 

(b)           Mandatory.  Subject to the immediately following provisos,
the Aggregate Revolving Commitments shall be automatically and permanently
reduced on (i) March 31, 2005 by $7,500,000 and
(ii) September 30, 2005 by $7,500,000; provided, however,
if (y) prior to either of such dates there has been any voluntary
reduction of the Aggregate Revolving Commitments pursuant to Section 2.06(a),
the mandatory reductions required in clauses (i) and (ii) immediately
preceding will be reduced by the amount

 

30

 

of any reduction, first, to the
reduction required in clause (i) (provided such voluntary reduction
occurred prior to March 31, 2005), and, second, to the reduction
required in clause (ii) and (z) prior to either of such dates the
Aggregate Revolving Commitments are increased pursuant to Section 2.14,
the mandatory reductions required pursuant to this Section 2.06(b)
shall be increased on a pro rata basis.

 

(c)           Mandatory Commitment Reduction –
Asset Sales.  In addition to any voluntary
or mandatory commitment reductions under Section 2.06(a) or (b),
the Aggregate Revolving Commitments shall be automatically and permanently
reduced by the amount of Net Cash Proceeds received by the Borrower or any
Subsidiary from any Disposition of assets (including the Capital Stock of any
Subsidiary, but not including Dispositions permitted under clauses (a) and
(b) of Section 7.04, clauses (a) through (d) of Section 7.05,
and clauses (a) and (c) of Section 7.12), in the manner
hereafter set forth.  Each such
reduction shall occur once in respect of each fiscal quarter of the Borrower in
which such a Disposition occurs, and the amount of each such reduction shall be
equal to the Pro Rata Percentage of 100% of such Net Cash Proceeds of all
Dispositions which occurred during such fiscal quarter.  The Borrower shall provide the
Administrative Agent with written notice of all Dispositions within a quarter
no later than 30 days following the end of such fiscal quarter, specifying the
amount of Net Cash Proceeds received from such Dispositions.  The reduction shall occur effective as of
the 15th day following delivery of such notice (but in no event less than the
45th day following the end of such fiscal quarter).  For purposes of the foregoing, “Pro Rata Percentage” means
the percentage obtained by dividing the Outstanding Amount of all Loans by the
sum of the outstanding principal balance of the Senior Notes plus the
Outstanding Amount of all Loans, in each case calculated as of the last day of
such fiscal quarter.  Notwithstanding
the foregoing, there shall be no reduction in the Aggregate Revolving
Commitments pursuant to this Section 2.06(c) for any fiscal quarter
in which Net Cash Proceeds are less than $1,000,000, but in such event the
amount of Net Cash Proceeds received during such fiscal quarter shall be
carried forward for purposes of calculating Net Cash Proceeds in future fiscal
quarters.  Notwithstanding anything
herein to the contrary, the aggregate amount by which the Aggregate Revolving
Commitments shall be reduced pursuant to this Section 2.06(c) shall
not exceed $5,000,000.  If, as a result
of any such reduction, the Aggregate Revolving Commitments would be reduced to
below the Outstanding Amount of all Revolving Loans, then Borrower shall
immediately prepay the amount of the excess in accordance with Section 2.05(c).

 

(d)           General Requirements.  Any reduction of the Aggregate Revolving
Commitments shall be applied to the Revolving Commitment of each Lender
according to its Revolving Pro Rata Share. 
All commitment  fees accrued until the effective date of
any termination of the Aggregate Revolving Commitments shall be paid on the
effective date of such termination.

 

2.07        Repayment of Loans.

 

(a)           The Borrower shall repay to the
Lenders on the Maturity Date the aggregate principal amount of the Loans
outstanding on such date and all other outstanding and unpaid Obligations.

 

(b)           The Borrower shall repay each Swing
Line Loan on the earlier to occur of (i) demand by the Swing Line Lender
and (ii) the Maturity Date.

 

2.08        Interest.

 

(a)           Subject to the provisions of
subsection (b) below, (i) each Eurodollar Rate Loan shall bear
interest on the outstanding principal amount thereof for each Interest Period
at a rate per annum equal to the lesser of (x) the Highest Lawful Rate and
(y) the Eurodollar Rate for such Interest Period plus the
Applicable Rate; and (ii) each Base Rate Loan and each Swing Line Loan
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the lesser of
(x) the Highest Lawful Rate and (y) the Base Rate plus the
Applicable Rate.

 

31

 

(b)           If any amount payable by the Borrower
under any Loan Document is not paid when due (without regard to any applicable
grace periods), whether at stated maturity, by acceleration or otherwise, such
amount shall thereafter bear interest at a fluctuating interest rate per annum
at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.  Furthermore, upon the
request of the Required Lenders, while any Event of Default exists, the
Borrower shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable
Laws.  Accrued and unpaid interest on
past due amounts (including interest on past due interest) shall be due and
payable upon demand.

 

(c)           Interest on each Loan shall be due
and payable in arrears on each Interest Payment Date applicable thereto and at
such other times as may be specified herein. 
Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

 

(d)           If the amount of interest payable in
respect of any interest computation period is reduced to the Highest Lawful
Rate and the amount of interest payable in respect of any subsequent interest
computation period would be less than the Maximum Amount, then the amount of
interest payable in respect of such subsequent interest computation period
shall be automatically increased to the Maximum Amount; provided that at no
time shall the aggregate amount by which interest paid has been increased
pursuant to this sentence exceed the aggregate amount by which interest has
been reduced pursuant to this sentence.

 

2.09        Fees.  In
addition to certain fees described in subsections (i) and (j) of Section 2.03:

 

(a)           Commitment Fee.  The Borrower shall pay to the
Administrative Agent for the account of each Lender in accordance with its
Revolving Pro Rata Share, a commitment fee (the “Commitment Fee”) equal
to the Applicable Rate times the actual daily amount by which the
Aggregate Revolving Commitments exceed the sum of (i) the Outstanding
Amount of Revolving Loans and (ii) the Outstanding Amount of L/C
Obligations.  The commitment fee shall
accrue at all times during the Availability Period, including at any time
during which one or more of the conditions in Article IV is not
met, and shall be due and payable quarterly in arrears on each Quarterly Date,
commencing with the first such date to occur after the Closing Date, and on the
Maturity Date.  The commitment fee shall
be calculated quarterly in arrears, and if there is any change in the
Applicable Rate during any quarter, the actual daily amount shall be computed
and multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect.    For purposes of computation of the Commitment Fee, Swing Line
Loans shall not be counted toward or considered usage of the Aggregate
Revolving Commitments.

 

(b)           Other Fees.

 

(i)            The Borrower shall pay to the Arranger
and the Administrative Agent for their own respective accounts fees in the
amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and shall not be
refundable for any reason whatsoever.

 

(ii)           The Borrower shall pay to the Lenders
such fees as shall have been separately agreed upon in writing in the amounts
and at the times so specified.  Such
fees shall be fully earned when paid and shall not be refundable for any reason
whatsoever.

 

2.10        Computation of Interest and Fees.  All computations of
interest for Base Rate Loans when the Base Rate is determined by Bank of
America’s “prime rate” shall be made on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed. 
Subject  to Section 10.01,
all other computations of fees and interest shall be made on the basis of a
360-day year and actual days elapsed (which results in more fees or interest,
as applicable, being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the
day on which the Loan is made, and shall not accrue on a Loan, or any portion
thereof, for the day on which the

 

32

 

Loan or such portion is paid, provided
that any Loan that is repaid on the same day on which it is made shall, subject
to Section 2.12(a), bear interest for one day.

 

2.11        Evidence of Debt.

 

(a)           The Credit Extensions made by each
Lender shall be evidenced by one or more accounts or records maintained by such
Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by the Lenders to the Borrower and
the interest and payments thereon.  Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Obligations. 
In the event of any conflict between the accounts and records maintained
by any Lender and the accounts and records of the Administrative Agent in
respect of such matters, the accounts and records of the Administrative Agent
shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative
Agent, the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Revolving Note and/or Swing Line Note, as applicable,
which shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach
schedules to its Note(s) and endorse thereon the date, Type (if applicable),
amount and maturity of its Loans and payments with respect thereto.

 

(b)           In addition to the accounts and
records referred to in subsection (a), each Lender and the Administrative
Agent shall maintain in accordance with its usual practice accounts or records
evidencing the purchases and sales by such Lender of participations in Letters
of Credit and Swing Line Loans.  In the
event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of
such matters, the accounts and records of the Administrative Agent shall
control in the absence of manifest error.

 

2.12        Payments Generally.

 

(a)           All payments to be made by the
Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff.  Except
as otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 2:00 p.m. on the
date specified herein.  The
Administrative Agent will promptly distribute to each Lender its Revolving Pro
Rata Share (or other applicable share as provided herein) of such payment in
like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative
Agent after 2:00 p.m. shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue.

 

(b)           Subject to the provisions of the
definition of “Interest Period”, if any payment to be made by the
Borrower shall come due on a day other than a Business Day, payment shall be
made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.

 

(c)           Unless the Borrower or any Lender has
notified the Administrative Agent, prior to the date any payment is required to
be made by it to the Administrative Agent hereunder, that the Borrower or such
Lender, as the case may be, will not make such payment, the Administrative
Agent may assume that the Borrower or such Lender, as the case may be, has
timely made such payment and may (but shall not be so required to), in reliance
thereon, make available a corresponding amount to the Person entitled thereto.  If and to the extent that such payment was
not in fact made to the Administrative Agent in immediately available funds,
then:

 

(i)            if the Borrower failed to make such
payment, each Lender shall forthwith on demand repay to the Administrative
Agent the portion of such assumed payment that was made

 

33

 

available to such Lender in immediately
available funds, together with interest thereon in respect of each day from and
including the date such amount was made available by the Administrative Agent
to such Lender to the date such amount is repaid to the Administrative Agent in
immediately available funds at the Federal Funds Rate from time to time in
effect; and

 

(ii)           if any Lender failed to make such
payment, such Lender shall forthwith on demand pay to the Administrative Agent
the amount thereof in immediately available funds, together with interest
thereon for the period from the date such amount was made available by the
Administrative Agent to the Borrower to the date such amount is recovered by
the Administrative Agent (the “Compensation Period”) at a rate per annum
equal to the Federal Funds Rate from time to time in effect. If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender’s Loan included in the applicable Borrowing.  If such Lender does not pay such amount
forthwith upon the Administrative Agent’s demand therefor, the Administrative
Agent may make a demand therefor upon the Borrower, and the Borrower shall pay
such amount to the Administrative Agent, together with interest thereon for the
Compensation Period at a rate per annum equal to the rate of interest
applicable to the applicable Borrowing. 
Nothing herein shall be deemed to relieve any Lender from its obligation
to fulfill its Revolving Commitment or to prejudice any rights which the
Administrative Agent or the Borrower may have against any Lender as a result of
any default by such Lender hereunder.

 

A notice of
the Administrative Agent to any Lender or the Borrower with respect to any
amount owing under this subsection (c) shall be conclusive, absent
manifest error.

 

(d)           If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided
in the foregoing provisions of this Article II, and such funds are
not made available to the Borrower by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV
are not satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

 

(e)           The obligations of the Lenders
hereunder to make Loans and to fund participations in Letters of Credit and
Swing Line Loans are several and not joint. 
The failure of any Lender to make any Loan or to fund any such
participation on any date required hereunder shall not relieve any other Lender
of its corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan or purchase
its participation.

 

(f)            Nothing herein shall be deemed to
obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or manner.

 

2.13        Sharing of Payments.  If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it,
or the participations in L/C Obligations or in Swing Line Loans held by it, any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify
the Administrative Agent of such fact, and (b) purchase from the other
Lenders such participations in the Loans made by them and/or such
subparticipations in the participations in L/C Obligations or Swing Line Loans
held by them, as the case may be, as shall be necessary to cause such
purchasing Lender to share the excess payment in respect of such Loans or such
participations, as the case may be, pro rata with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from the purchasing Lender under any of the circumstances described
in Section 10.06 (including pursuant to any settlement entered into
by the purchasing Lender in its discretion), such purchase shall to that extent
be rescinded and each other Lender shall repay to the purchasing Lender the
purchase price paid therefor, together with an amount equal to such paying
Lender’s ratable share (according to the proportion of (i) the amount of
such paying Lender’s required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered,
without further interest thereon.  The
Borrower agrees that any

 

34

 

Lender so purchasing a participation from
another Lender may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off, but subject to Section 10.09)
with respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.  The Administrative Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments.  Each Lender that purchases a participation pursuant to this
Section shall from and after such purchase have the right to give all notices,
requests, demands, directions and other communications under this Agreement
with respect to the portion of the Obligations purchased to the same extent as
though the purchasing Lender were the original owner of the Obligations
purchased.

 

2.14        Increase in Revolving Commitments.

 

(a)           Provided there exists no Default,
upon notice to the Administrative Agent (which shall promptly notify the
Lenders), the Borrower may on a one-time basis, request an increase in the
Aggregate Revolving Commitments by an amount not exceeding $5,000,000.  At the time of sending such notice, the
Borrower (in consultation with the Administrative Agent) shall specify the time
period within which each Lender is requested to respond (which shall in no
event be less than ten Business Days from the date of delivery of such notice
to the Lenders).  Each Lender shall
notify the Administrative Agent within such time period whether or not it
agrees to increase its Revolving Commitment and, if so, whether by an amount
equal to, greater than, or less than its Revolving Pro Rata Share of such
requested increase.  Any Lender not
responding within such time period shall be deemed to have declined to increase
its Revolving Commitment.  The
Administrative Agent shall notify the Borrower and each Lender of the Lenders’
responses to each request made hereunder. 
To achieve the full amount of a requested increase, the Borrower may
also invite additional Eligible Assignees to become Lenders pursuant to a
joinder agreement in form and substance satisfactory to the Administrative
Agent and its counsel.

 

(b)           If the Aggregate Revolving
Commitments are increased in accordance with this Section, the Administrative
Agent and the Borrower shall determine the effective date (the “Increase
Effective Date”) and the final allocation of such increase.  The Administrative Agent shall promptly
notify the Borrower and the Lenders of the final allocation of such increase
and the Increase Effective Date.  As a
condition precedent to such increase, the Borrower shall deliver to the
Administrative Agent a certificate of each Loan Party dated as of the Increase
Effective Date (in sufficient copies for each Lender) signed by a Responsible
Officer of such Loan Party (i) certifying and attaching the resolutions
adopted by such Loan Party approving or consenting to such increase, and
(ii) in the case of the Borrower, certifying that, before and after giving
effect to such increase, (A) the representations and warranties contained
in Article V and the other Loan Documents are true and correct on
and as of the Increase Effective Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for purposes
of this Section 2.14, the representations and warranties contained
in subsections (a) and (b) of Section 5.05 shall be deemed to
refer to the most recent statements furnished pursuant to subsections (a)
and (b), respectively, of Section 6.01, and (B) no Default
exists.  The Borrower shall prepay any
Revolving Loans outstanding on the Increase Effective Date (and pay any
additional amounts required pursuant to Section 3.05) to the extent
necessary to keep the outstanding Revolving Loans ratable with any revised
Revolving Pro Rata Shares arising from any nonratable increase in the Revolving
Commitments under this Section.

 

(c)           Upon the Increase Effective Date and
funding of the Loans described in Section 2.14(b), each new Lender
and/or increasing Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided participation in all outstanding Letters of Credit in accordance with
its Revolving Pro Rata Share.

 

(d)           This Section shall supersede any
provisions in Sections 2.13 or 10.01 to the contrary.

 

35

 

ARTICLE III.

TAXES, YIELD PROTECTION AND
ILLEGALITY

 

3.01        Taxes.

 

(a)           Any and all payments by the Borrower
to or for the account of the Administrative Agent or any Lender under any Loan
Document shall be made free and clear of and without deduction for any and all
present or future taxes, duties, levies, imposts, deductions, assessments,
fees, withholdings or similar charges, and all liabilities with respect
thereto, excluding, in the case of the Administrative Agent and each
Lender, taxes imposed on or measured by its overall net income, and franchise
taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the Laws of which the Administrative Agent
or such Lender, as the case may be, is organized or maintains a lending office
(all such non-excluded taxes, duties, levies, imposts, deductions, assessments,
fees, withholdings or similar charges, and liabilities being hereinafter
referred to as “Taxes”).  If the
Borrower shall be required by any Laws to deduct any Taxes from or in respect
of any sum payable under any Loan Document to the Administrative Agent or any
Lender, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section), each of the Administrative Agent and such
Lender receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable Laws, and
(iv) within 30 days after the date of such payment, the Borrower shall
furnish to the Administrative Agent (which shall forward the same to such
Lender) the original or a certified copy of a receipt evidencing payment
thereof.

 

(b)           In addition, the Borrower agrees to
pay any and all present or future stamp, court or documentary taxes and any
other excise or property taxes or charges or similar levies which arise from
any payment made under any Loan Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, any
Loan Document, except that the Borrower shall not be obligated to pay any such
taxes, charges or levies, costs or expenses that are incurred or payable by any
Person in connection with any assignment referred to in Section 10.07(b),
any participation referred to in Section 10.07(d) or any pledge or
security interest referred to in Section 10.07(f) (such taxes,
charges and similar levies with respect to which the Borrower is obligated to
pay are hereinafter referred to as “Other Taxes”).

 

(c)           If the Borrower shall be required to
deduct or pay any Taxes or Other Taxes from or in respect of any sum payable
under any Loan Document to the Administrative Agent or any Lender, the Borrower
shall also pay to the Administrative Agent or to such Lender, as the case may
be, at the time interest is paid, such additional amount that the
Administrative Agent or such Lender specifies is necessary to preserve the
after-tax yield (after factoring in all taxes, including taxes imposed on or
measured by net income) that the Administrative Agent or such Lender would have
received if such Taxes or Other Taxes had not been imposed.

 

(d)           The Borrower agrees to indemnify the
Administrative Agent and each Lender for (i) the full amount of Taxes and
Other Taxes (including any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section) paid by the Administrative
Agent and such Lender, (ii) amounts payable under Section 3.01(c)
and (iii) any liability (including additions to tax, penalties, interest
and expenses) arising therefrom or with respect thereto, in each case whether
or not such Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. 
Payment under this subsection (d) shall be made within 30 days
after the date the Lender or the Administrative Agent makes a demand therefor.

 

(e)           To the extent the Borrower pays sums
pursuant to this Section 3.01 and any Lender or the Administrative
Agent receives a refund or any or all of such sums, the party receiving such
refund shall

 

36

 

promptly pay over all such refunded sums to
the Borrower, provided that no Default is in existence at such time.

 

(f)            Notwithstanding anything in this Section 3.01
to the contrary, the demand by the Administrative Agent or any Lender for the
payment of Taxes or Other Taxes under this Section 3.01 shall not
include any Taxes or Other Taxes that occurred 180 days prior to the date that
the Administrative Agent or such Lender had actual knowledge of such Taxes or
Other Taxes unless the Administrative Agent or such Lender notifies the
Borrower of such Taxes or Other Taxes no later than 180 days after the date
that the Administrative Agent or such Lender had actual knowledge of such Taxes
or Other Taxes, except to the extent that any such Taxes or Other Taxes are
retroactive according to the terms of the applicable provisions related
thereto.

 

3.02        Illegality.  If
any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or
to determine or charge interest rates based upon the Eurodollar Rate, then, on
notice thereof by such Lender to the Borrower through the Administrative Agent,
any obligation of such Lender to make or continue Eurodollar Rate Loans or to
convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such
Lender notifies the Administrative Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrower
shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base
Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such
day, or immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans.  Upon any such
prepayment or conversion, the Borrower shall also pay accrued interest on the
amount so prepaid or converted.  Each
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of such
Lender, otherwise be materially disadvantageous to such Lender.

 

3.03        Inability to Determine Rates.  If the Required
Lenders determine that for any reason adequate and reasonable means do not
exist for determining the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Rate Loan, or that the Eurodollar Rate
for any requested Interest Period with respect to a proposed Eurodollar Rate
Loan does not adequately and fairly reflect the cost to such Lenders of funding
such Loan, the Administrative Agent will promptly so notify the Borrower and
each Lender.  Thereafter, the obligation
of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended
until the Administrative Agent (upon the instruction of the Required Lenders)
revokes such notice.  Upon receipt of
such notice, the Borrower may revoke any pending request for a Revolving
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for
a Revolving Borrowing of Base Rate Loans in the amount specified therein.

 

3.04        Increased Cost and Reduced Return;
Capital Adequacy; Reserves on Eurodollar Rate Loans.

 

(a)           If any Lender determines that as a
result of the introduction of or any change in or in the interpretation of any
Law, or such Lender’s compliance therewith, there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or maintaining
Eurodollar Rate Loans or (as the case may be) issuing or participating in
Letters of Credit, or a reduction in the amount received or receivable by such
Lender in connection with any of the foregoing (excluding for purposes of this
subsection (a) any such increased costs or reduction in amount resulting
from (i) Taxes or Other Taxes (as to which Section 3.01 shall
govern), (ii) changes in the basis of taxation of overall net income or
overall gross income by the United States or any foreign jurisdiction or any
political subdivision of either thereof under the Laws of which such Lender is
organized or has its Lending Office, and (iii) reserve requirements
contemplated by Section 3.04(c)), then from time to time upon
demand of such Lender (with a copy of such demand to the Administrative Agent),
the Borrower shall pay to such Lender such additional amounts as will
compensate such Lender for such increased cost or reduction.

 

37

 

(b)           If any Lender determines that the
introduction of any Law regarding capital adequacy or any change therein or in
the interpretation thereof, or compliance by such Lender (or its Lending
Office) therewith, has the effect of reducing the rate of return on the capital
of such Lender or any corporation controlling such Lender as a consequence of
such Lender’s obligations hereunder (taking into consideration its policies
with respect to capital adequacy and such Lender’s desired return on capital),
then from time to time upon demand of such Lender (with a copy of such demand
to the Administrative Agent), the Borrower shall pay to such Lender such
additional amounts as will compensate such Lender for such reduction.

 

(c)           The Borrower shall pay to each
Lender, as long as such Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits (currently known as “Eurocurrency liabilities”), additional
interest on the unpaid principal amount of each Eurodollar Rate Loan equal to
the actual costs of such reserves allocated to such Loan by such Lender (as
determined by such Lender in good faith, which determination shall be
conclusive), which shall be due and payable on each date on which interest is
payable on such Loan, provided the Borrower shall have received at least
15 days’ prior notice (with a copy to the Administrative Agent) of such
additional interest from such Lender. 
If a Lender fails to give notice 15 days prior to the relevant Interest
Payment Date, such additional interest shall be due and payable 15 days from
receipt of such notice.

 

3.05        Funding Losses. 
Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

(a)           any continuation, conversion, payment
or prepayment of any Loan other than a Base Rate Loan on a day other than the
last day of the Interest Period for such Loan (whether voluntary, mandatory,
automatic, by reason of acceleration, or otherwise);

 

(b)           any failure by the Borrower (for a
reason other than the failure of such Lender to make a Loan) to prepay, borrow,
continue or convert any Loan other than a Base Rate Loan on the date or in the
amount notified by the Borrower; or

 

(c)           any assignment of a Eurodollar Rate
Loan on a day other than the last day of the Interest Period therefor as a
result of a request by the Borrower pursuant to Section 10.16;

 

including any
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain such Loan or from fees payable to terminate the deposits from
which such funds were obtained.  The
Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.

 

For purposes
of calculating amounts payable by the Borrower to the Lenders under this Section 3.05,
each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it
at the Eurodollar Rate for such Loan by a matching deposit or other borrowing
in the London interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

 

3.06        Matters Applicable to all Requests
for Compensation.

 

(a)           A certificate of the Administrative
Agent or any Lender claiming compensation under this Article III
and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error.  In determining such amount, the Administrative Agent or such
Lender may use any reasonable averaging and attribution methods.  At the Borrower’s request, such Lender shall
provide to the Borrower such supporting information related to such claim for
compensation as may reasonably be requested, provided, however, that no Lender
shall be required to provide any information that it deems confidential.

 

(b)           Each Lender agrees that, as promptly
as practicable after it becomes aware of the occurrence of an event or the
existence of a condition which would entitle it to exercise any rights under

 

38

 

Section 3.01 or
Section 3.04, it shall use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to make, fund or
maintain the affected Loans of such Lender through another lending office of
such Lender if (a) as a result thereof the additional moneys which would
otherwise be required to be paid in respect of such Loans of such Lender would
be reduced or the illegality or other adverse circumstances which would
otherwise affect such Loans of such Lender would cease to exist or the
increased cost which would otherwise be required to be paid in respect of such
Loans would be reduced, and (b) the making, funding or maintaining of such
Loans through such other lending office would not, in the sole determination of
such Lender, otherwise adversely affect such Loans or such Lender.

 

(c)           Upon any Lender’s making a claim for
compensation under Section 3.01 or 3.04, the Borrower may
replace such Lender in accordance with Section 10.16.

 

3.07        Survival.  All
of the Borrower’s obligations under this Article III shall survive
termination of the Commitments and repayment of all other Obligations
hereunder.

 

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT
EXTENSIONS

 

4.01        Conditions of Initial Credit
Extension.  The
obligation of each Lender to make its initial Credit Extension hereunder is
subject to satisfaction of the following conditions precedent in form and
substance satisfactory to the Administrative Agent:

 

(a)           The Administrative Agent’s receipt of
the following, each of which shall be originals or facsimiles (followed
promptly by originals) unless otherwise specified, each properly executed by a
Responsible Officer of the signing Loan Party, each dated the Closing Date (or,
in the case of certificates of governmental officials, a recent date before the
Closing Date) and each in form and substance satisfactory to the Administrative
Agent and its legal counsel:

 

(i)            executed counterparts of this
Agreement and the Guaranty, sufficient in number for distribution to the
Administrative Agent, each Lender and the Borrower;

 

(ii)           Revolving Loan Notes executed by the
Borrower in favor of each Lender requesting a Revolving Loan Note, each in a
principal amount equal to such Lender’s Revolving Commitment;

 

(iii)          a Swing Line Note executed by the
Borrower in favor of the Administrative Agent;

 

(iv)          such certificates of resolutions or
other action, incumbency certificates and/or other certificates of Responsible
Officers of each Loan Party as the Administrative Agent may require evidencing
the identity, authority and capacity of each Responsible Officer thereof authorized
to act as a Responsible Officer in connection with this Agreement and the other
Loan Documents to which such Loan Party is a party;

 

(v)           such documents and certifications as
the Administrative Agent may reasonably require to evidence that each Loan Party
is duly organized or formed, and that each of the Borrower and Guarantor is
validly existing, in good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect;

 

(vi)          a favorable opinion of
Thompson & Knight LLP, counsel to the Loan Parties, addressed to the
Administrative Agent and each Lender, as to the matters set forth in Exhibit H

 

39

 

and such other matters concerning the Loan
Parties and the Loan Documents as the Required Lenders may reasonably request;

 

(vii)         a certificate of a Responsible Officer
of each Loan Party either (A) attaching copies of all consents, licenses
and approvals required in connection with the execution, delivery and
performance by such Loan Party and the validity against such Loan Party of the
Loan Documents to which it is a party, and such consents, licenses and
approvals shall be in full force and effect, or (B) stating that no such
consents, licenses or approvals are so required;

 

(viii)        a certificate signed by a Responsible
Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a)
and (b) have been satisfied, and (B) that there has been no event or
circumstance since the date of the Audited Financial Statements that has had or
could be reasonably expected to have, either individually or in the aggregate,
a Material Adverse Effect;

 

(ix)           evidence that all insurance required
to be maintained pursuant to the Loan Documents has been obtained and is in
effect; and

 

(x)            such other assurances, certificates,
documents, consents or opinions as the Administrative Agent, the L/C Issuer,
the Swing Line Lender or the Required Lenders reasonably may require.

 

(b)           Any fees required to be paid on or
before the Closing Date shall have been paid., and the Fee Letter shall be in
full force and effect.

 

(c)           Unless waived by the Administrative
Agent, the Borrower shall have paid all Attorney Costs of the Administrative
Agent to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute its reasonable
estimate of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude a final
settling of accounts between the Borrower and the Administrative Agent).

 

(d)           The Closing Date shall have occurred
on or before August 30, 2003.

 

(e)           No actions, suits, proceedings,
claims or disputes shall have been threatened or commenced in any court, in
arbitration or before any Governmental Authority, against the Borrower or any
of its Subsidiaries which (i) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby or (ii) if determined adversely, could reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect.

 

4.02        Conditions to all Credit Extensions.  The obligation of
each Lender to honor any Request for Credit Extension (other than a Revolving
Loan Notice requesting only a conversion of the Loans to the other Type, or a continuation
of Eurodollar Rate Loans) is subject to the following conditions precedent:

 

(a)           The representations and warranties of
the Borrower and each other Loan Party contained in Article V or
any other Loan Document, or which are contained in any document furnished at
any time hereunder or thereunder, shall be true and correct on and as of the
date of such Credit Extension, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date, and except that for purposes of
this Section 4.02, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to
refer to the most recent statements furnished pursuant to clauses (a) and
(b), respectively, of Section 6.01.

 

(b)           No Default shall exist, or would
result from such proposed Credit Extension.

 

40

 

(c)           The Administrative Agent and, if
applicable, the L/C Issuer or the Swing Line Lender shall have received a
Request for Credit Extension in accordance with the requirements hereof.

 

Each Request
for Credit Extension (other than a Revolving Loan Notice requesting only a
conversion of Loans to the other Type or a continuation of Eurodollar Rate
Loans) submitted by the Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b)
have been satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

 

The Borrower
represents and warrants to the Administrative Agent and the Lenders that:

 

5.01        Existence, Qualification and Power.  Each Loan Party
(a) is a corporation, partnership, business trust or limited liability
company duly organized or formed, validly existing and in good standing under
the Laws of the jurisdiction of its incorporation or organization, (b) has
all requisite power and authority and all requisite governmental licenses,
authorizations, consents and approvals to (i) own its assets and carry on
its business and (ii) execute, deliver and perform its obligations under
the Loan Documents to which it is a party, and (c) is duly qualified and
is licensed and in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license; except in each case referred to in
clause (b)(i) or (c), to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

5.02        Authorization; No Contravention.  The execution,
delivery and performance by each Loan Party of each Loan Document to which such
Person is party, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of
any of such Person’s Organization Documents; (b) conflict with or result
in any breach or contravention of, or the creation of any Lien under,
(i) any Contractual Obligation to which such Person is a party or
(ii) any order, injunction, writ or decree of any Governmental Authority
or any arbitral award to which such Person or its property is subject; or
(c) violate any Law.

 

5.03        Governmental Authorization; Other
Consents.  No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan
Document.

 

5.04        Binding Effect. 
This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. 
This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable against each Loan Party that is party thereto in accordance
with its terms, subject as to enforcement to any Debtor Relief Laws and to
general equitable principles.

 

5.05        Financial Statements; No Material
Adverse Effect.

 

(a)           The Audited Financial Statements
(i) were prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein;
(ii) fairly present the financial condition of the Borrower and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein; and
(iii) show all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Debt which are
required by GAAP to be shown thereon.

 

41

 

(b)           The unaudited consolidated financial
statements of the Borrower and its Subsidiaries dated March 31, 2003 and
the related consolidated statements of income or operations, stockholders’
equity and cash flows for the fiscal quarter ended on that date (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, and
(ii) fairly present the financial condition of the Borrower and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby, subject to the absence of footnotes and to normal
year-end audit adjustments.  Schedule 5.05
sets forth all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its consolidated Subsidiaries as of the date of
such financial statements which are not reflected or described therein,
including liabilities for taxes, material commitments and Debt.

 

(c)           Since the date of the Audited
Financial Statements, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

 

(d)           There are no Off-Balance Sheet
Liabilities.

 

5.06        Litigation.  Except
as specifically disclosed in Schedule 5.06, there are no actions,
suits, proceedings, claims or disputes pending or, to the Knowledge of the
Borrower after due and diligent investigation, threatened or contemplated, at
law, in equity, in arbitration or before any Governmental Authority, by or
against the Borrower or any of its Subsidiaries or against any of their
properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) either individually or in the aggregate, if determined
adversely, could reasonably be expected to have a Material Adverse Effect.

 

5.07        No Default.  Neither
the Borrower nor any Subsidiary is in default under or with respect to any
Contractual Obligation that could, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is continuing or
would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.

 

5.08        Ownership of Property; Liens.  Each of the
Borrower and each Subsidiary has good record and indefeasible title in fee
simple to, or valid leasehold interests in, all real property necessary or used
in the ordinary conduct of its business, except for such defects in title as
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.  The property
of the Borrower and its Subsidiaries is subject to no Liens, other than Liens
permitted by Section 7.01.

 

5.09        Environmental Compliance.

 

(a)           Permits, Etc.  The Borrower and its Subsidiaries
(i) have obtained all material Environmental Permits required by
Governmental Authorities necessary for the ownership and operation of their
respective Properties and the conduct of their respective businesses;
(ii) to the Borrower’s Knowledge, have been and are in compliance with all
terms and conditions of such Environmental Permits, if any, and with all other
material requirements of applicable Environmental Laws; (iii) have not
received notice of any violation or alleged violation of any Environmental Law
or Environmental Permit; and (iv) are not subject to any actual or
contingent Environmental Liability.

 

(b)           Certain Liabilities.  Except as set forth on Schedule 5.09,
to the Borrower’s Knowledge, none of the present or previously owned or
operated Properties of the Borrower or of any of its present or former
Subsidiaries, wherever located, (i) has been placed on or proposed to be
placed on the National Priorities List, the Comprehensive Environmental
Response Compensation Liability Information System list, or their state or
local analogs, or have been otherwise investigated, designated, listed or
identified as a potential site for removal, remediation, cleanup, closure,
restoration, reclamation, or other response activity under any Environmental
Laws, except for any such Property with respect to which the Borrower or the
applicable Subsidiary has received a closure letter or other official written
approval from the applicable Governmental Authority stating that all applicable
legal and regulatory standards have been met with

 

42

 

respect to all conditions identified with
respect to such Property; (ii) is subject to a Lien, arising under or in
connection with any Environmental Laws, that attaches to any revenues or to any
Property owned or operated by the Borrower or any of its Subsidiaries, wherever
located, which could reasonably be expected to have a Material Adverse Effect;
or (iii) has been the site of any Release of Hazardous Materials from
present or past operations which has caused at the site or at any third party
site any condition that has resulted in or could reasonably be expected to
result in the need for Response that would cause a Material Adverse Effect.

 

(c)           Certified Actions.  Without limiting the foregoing, (i) all
necessary notices have been properly filed, and no further action is required
under current Environmental Law as to each Response or other restoration or
remedial project taken by the Borrower, or its present or former Subsidiaries
on any of their presently or formerly owned or operated Properties and (ii) the
present, and, to the Borrower’s Knowledge, future liability, if any, of the
Borrower and its Subsidiaries which could reasonably be expected to arise in
connection with requirements under Environmental Laws will not result in a Material
Adverse Effect.

 

5.10        Insurance.  The
properties of the Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrower, in such
amounts (after giving effect to any self-insurance and retention levels
compatible with the following standards), with such deductibles and covering
such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Borrower or
the applicable Subsidiary operates.

 

5.11        Taxes.  The
Borrower and its Subsidiaries have filed all Federal, state and other material
tax returns and reports required to be filed, and have paid all Federal, state
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable, except those which are being contested in good faith by
appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP. 
There is no proposed tax assessment against the Borrower or any
Subsidiary that would, if made, have a Material Adverse Effect, and there are
no items that would give rise to a substantial understatement penalty for the
Borrower or any Subsidiary that would have a Material Adverse Effect.

 

5.12        ERISA Compliance.

 

(a)           Each Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
Federal or state Laws.  Each Plan that
is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the
Knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification.  The
Borrower and each ERISA Affiliate have made all required contributions to each
Plan subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section 412
of the Code has been made with respect to any Plan.

 

(b)           There are no pending or, to the
Knowledge of the Borrower, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan that could be reasonably
be expected to have a Material Adverse Effect. 
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

 

(c)           Except where the occurrence or
existence would not individually or in the aggregate be reasonable be expected
to have a Material Adverse Effect, (i) no ERISA Event has occurred or is
reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA); (iv) neither the Borrower nor any ERISA
Affiliate has incurred, or reasonably

 

43

 

expects to incur, any liability (and no event
has occurred which, with the giving of notice under Section 4219 of ERISA,
would result in such liability) under Sections 4201 or 4243 of ERISA with
respect to a Multiemployer Plan; and (v) neither the Borrower nor any
ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069
or 4212(c) of ERISA.

 

5.13        Capitalization; Subsidiaries.

 

(a)           Schedule 5.13 contains
(except as noted therein) complete and correct lists (i) of the Borrower’s
Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, the percentage of shares of each class of its
Capital Stock or similar equity interests outstanding owned by the Borrower and
each other Subsidiary and whether such Subsidiary is a Guarantor, (ii) of
the Borrower’s Unrestricted Subsidiaries, showing, as to each Unrestricted
Subsidiary, the correct name thereof, the jurisdiction of its organization, the
percentage of shares of each class of its Capital Stock or similar equity
interests outstanding owned by the Borrower and each other Subsidiary,
(iii) to the Borrower’s Knowledge, of the Borrower’s Affiliates, other
than Subsidiaries, and (iv) of the Borrower’s directors and executive
officers.

 

(b)           All of the outstanding shares of
Capital Stock or similar equity interests of each Subsidiary shown in Schedule 5.13
as being owned by the Borrower and its Subsidiaries have been validly issued,
are fully paid and nonassessable and are owned by the Borrower or another
Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.13).

 

(c)           No Subsidiary is a party to, or
otherwise subject to any legal restriction or any Contractual Obligation (other
than this Agreement, the Senior Notes and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Borrower or any of its Subsidiaries that owns outstanding shares of Capital
Stock or similar equity interests of such Subsidiary.

 

5.14        Margin Regulations; Investment
Company Act; Public Utility Holding Company Act.

 

(a)           The Borrower is not engaged and will
not engage, principally or as one of its important activities, in the business
of purchasing or carrying margin stock (within the meaning of Regulation U
issued by the FRB), or extending credit for the purpose of purchasing or
carrying margin stock.  Following
the application of the proceeds of each Borrowing or drawing under each Letter
of Credit, not more than 25% of the value of the assets (either of the Borrower
only or of the Borrower and its Subsidiaries on a consolidated basis) subject
to the provisions of Section 7.01 or Section 7.05 or
subject to any restriction contained in any agreement or instrument between the
Borrower and any Lender or any Affiliate of any Lender relating to Debt and
within the scope of Section 8.01(e) will be margin stock.

 

(b)           None of the Borrower, any Person
Controlling the Borrower, or any Subsidiary (i) is a “holding company,” or
a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding
company” or of a “subsidiary company” of a “holding company,” within the
meaning of the Public Utility Holding Company Act of 1935, or (ii) is or
is required to be registered as an “investment company” under the Investment
Company Act of 1940.

 

5.15        Disclosure.  As
of the Closing Date, there is no fact of which the Borrower has Knowledge which
could reasonably be expected to result in a Material Adverse Effect which has
not been set forth in this Agreement or in the certificates, statements,
agreements or other documents furnished in writing to the Administrative Agent
and the Lenders prior to or on the Closing Date in connection with the
transactions contemplated hereby.  No
report, financial statement, certificate or other information furnished
(whether in writing or orally) by or on behalf of any Loan Party to the
Administrative Agent or any Lender in connection with the transactions
contemplated hereby and the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not materially misleading;

 

44

 

provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.

 

5.16        Compliance with Laws.  Each of the
Borrower and each Subsidiary is in compliance in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which
(a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or
(b) the failure to comply therewith, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.

 

5.17        Tax Shelter Regulations.  The Borrower does not intend to treat the
Loans and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation
Section 1.6011-4).  In the event
the Borrower determines to take any action inconsistent with such intention, it
will promptly notify the Administrative Agent thereof.  If the Borrower so notifies the
Administrative Agent,  the Borrower acknowledges that one or more
of the Lenders may treat its Loans and/or its interest in Swing Line Loans
and/or Letters of Credit as part of a transaction that is subject to Treasury
Regulation Section 301.6112-1, and such Lender or Lenders, as applicable,
will maintain the lists and other records required by such Treasury Regulation.

 

5.18        Intellectual Property; Licenses, Etc.  The Borrower and its Subsidiaries own, or
possess the right to use, all material trademarks, service marks, trade names,
copyrights, patents, patent rights, franchises, licenses and other intellectual
property rights (collectively, “IP Rights”) that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person.  To
the Knowledge of the Borrower, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Borrower or any Subsidiary infringes upon
any rights held by any other Person.  No
claim or litigation regarding any of the foregoing is pending or, to the
Knowledge of the Borrower, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.19        Common Enterprise.  The Borrower and its Subsidiaries are
engaged in the businesses set forth in Section 5.19 as of the
Closing Date, as well as in certain other businesses.  These operations require financing on a basis such that the
credit supplied can be made available from time to time to the Borrower and
various of its Subsidiaries, as required for the continued successful operation
of the Borrower and its Subsidiaries as a whole.  The Borrower has requested the Lender to make credit available
hereunder primarily for the purposes set forth in Section 6.11 and
generally for the purposes of financing the operations of the Borrower and its
Subsidiaries.  The Borrower and each of
its Subsidiaries expects to derive benefit (and the Board of Directors of the
Borrower and the Board of Directors or similar governing body of each of its
Subsidiaries has determined that such Subsidiary may reasonably be expected to
derive benefit), directly or indirectly, from a portion of the credit extended
by the Lenders hereunder, both in its separate capacity and as a member of the
group of companies, since the successful operation and condition of the
Borrower and each of its Subsidiaries is dependent on the continued successful
performance of the functions of the group as a whole.  The Borrower acknowledges that, but for the agreement by each of
the Guarantors to execute and deliver its respective Guaranty, the
Administrative Agent and the Lenders would not have made available the credit
facilities established on the terms set forth herein.

 

5.20        Solvency.  The
Borrower is, and the Borrower and its Subsidiaries are on a consolidated basis,
Solvent.

 

ARTICLE VI.

AFFIRMATIVE COVENANTS

 

So long as any
Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit (unless
the Borrower has complied with Section 2.03(g), in which case the
Borrower need only comply with Sections 6.01 and 6.02(b), (c)
and (f)) shall remain outstanding:

 

6.01        Financial Statements.  The Borrower shall deliver to the
Administrative Agent and each Lender, in form and detail satisfactory to the
Administrative Agent and the Required Lenders:

 

45

 

(a)           as soon as available, but in any
event within 95 days after the end of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal year, and the related consolidated statements of income or
operations, stockholders’ equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail and prepared in accordance with GAAP, audited
and accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to the
Required Lenders, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception
as to the scope of such audit; and

 

(b)           as soon as available, but in any
event within 50 days after the end of each of the first three fiscal quarters
of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income or operations, stockholders’ equity
and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal
year then ended, setting forth in each case in comparative form the figures for
the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail and
certified by a Responsible Officer of the Borrower as fairly presenting the
financial condition, results of operations, stockholders’ equity and cash flows
of the Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes.

 

As to any
information contained in materials furnished pursuant to Section 6.02(c),
the Borrower shall not be separately required to furnish such information under
clause (a) or (b) above, but the foregoing shall not be in derogation of
the obligation of the Borrower to furnish the information and materials
described in subsections (a) and (b) above at the times specified therein.

 

6.02        Certificates; Other Information.  The Borrower shall
deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:

 

(a)           concurrently with the delivery of the
financial statements referred to in Sections 6.01(a) and (b),
a duly completed Compliance Certificate signed by a Responsible Officer of the
Borrower;

 

(b)           promptly after any request by the
Administrative Agent or any Lender, copies of any detailed audit reports,
management letters or recommendations submitted to the board of directors (or
the audit committee of the board of directors) of the Borrower by independent
accountants in connection with the accounts or books of the Borrower or any
Subsidiary, or any audit of any of them;

 

(c)           promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to the stockholders of the Borrower, and copies of
all annual, regular, periodic and special reports and registration statements
which the Borrower may file or be required to file with the SEC under Section 13
or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to
be delivered to the Administrative Agent pursuant hereto;

 

(d)           promptly after the Borrower has
notified the Administrative Agent of any intention by the Borrower to treat the
Loans and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation Section 1.6011-4),
a duly completed copy of IRS Form 8886 or any successor form;

 

(e)           promptly, following each issuance of
Qualified Preferred Stock, a list of the names, addresses, fax numbers (if
available) and number of shares of Qualified Preferred Stock acquired by each
Person in such issuance; and

 

(f)            promptly, such additional
information regarding the business, financial or corporate affairs of the
Borrower or any Subsidiary, or compliance with the terms of the Loan Documents,
as the Administrative Agent or any Lender may from time to time reasonably
request.

 

46

 

Documents
required to be delivered pursuant to Section 6.01(a) or (b)
or Section 6.02(c) (to the extent any such documents are included
in materials otherwise filed with the SEC) may be delivered electronically and
if so delivered, shall be deemed to have been delivered on the date (i) on
which the Borrower posts such documents, or provides a link thereto on the
Borrower’s website on the Internet at the website address listed on Schedule 10.02;
or (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency
or another relevant website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that:
(i) the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender and (ii) the Borrower shall
notify (which may be by facsimile or electronic mail) the Administrative Agent
and each Lender of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. 
Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(a) to the Administrative
Agent and each of the Lenders.  Except
for such Compliance Certificates, the Administrative Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such documents.

 

6.03        Notices.  The
Borrower shall promptly notify the Administrative Agent and each Lender:

 

(a)           of the occurrence of any Default;

 

(b)           of any matter that has resulted or
could reasonably be expected to result in a Material Adverse Effect, including
without limitation any of the following to the extent the same could reasonably
be expected to result in a Material Adverse Effect:  (i) breach or non-performance of, or any default under, a
Contractual Obligation of the Borrower or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between the
Borrower or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Borrower or any Subsidiary, including pursuant to any applicable
Environmental Laws;

 

(c)           of the occurrence of any ERISA Event;

 

(d)           of any material change in accounting
policies or financial reporting practices by the Borrower or any Subsidiary;
and

 

(e)           of any notice received by the
Borrower of its default under the Trust Notes, the Trust Guaranties, or the
Senior Notes.

 

Each notice
pursuant to clauses (a) through (e) of this Section shall be accompanied
by a statement of a Responsible Officer of the Borrower setting forth details
of the occurrence referred to therein and stating what action the Borrower has
taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

 

6.04        Payment of Obligations.  The Borrower shall
and shall cause each Subsidiary to pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all
tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon its
property, other than a Lien permitted under Section 7.01; and
(c) all Debt, as and when due and payable on or before any applicable cure
or grace periods, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Debt, except in each case where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

47

 

6.05        Preservation of Existence, Etc.  The Borrower shall
and shall cause each Subsidiary to (a) preserve, renew and maintain in
full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization except in a transaction permitted by Section 7.04,
7.05 or 7.06(a)(iii)(C); (b) take all reasonable action to
maintain all rights, privileges, permits, licenses and franchises necessary or
desirable in the normal conduct of its business, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect; and (c) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.

 

6.06        Maintenance of Properties.  The Borrower shall
and shall cause each Subsidiary to (a) maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear and damage
by casualty and condemnation excepted; (b) make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect; and
(c) use the standard of care typical in the industry in the operation and
maintenance of its facilities.  The
foregoing shall not be deemed to restrict a Disposition permitted under Section 7.05.

 

6.07        Maintenance of Insurance.  The Borrower shall
and shall cause each Subsidiary to maintain with financially sound and
reputable insurance companies not Affiliates of the Borrower, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts (including retention and self-insurance
levels) as are customarily carried or maintained under similar circumstances by
such other Persons.

 

6.08        Compliance with Laws.  The Borrower shall and shall cause each
Subsidiary to comply in all material respects with the requirements of all Laws
and all orders, writs, injunctions and decrees applicable to it or to its
business or property, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being contested in good
faith by appropriate proceedings diligently conducted; or (b) the failure
to comply therewith could not reasonably be expected to have a Material Adverse
Effect.

 

6.09        Books and Records. 
The Borrower shall and shall cause each
Subsidiary to  maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Borrower or such Subsidiary,
as the case may be.

 

6.10        Inspection Rights. 
The Borrower shall and shall cause each
Subsidiary to permit representatives and independent contractors of the
Administrative Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower; provided,
however, that (a) other than inspections conducted during the
existence and continuance of an Event of Default, no more than two such
inspections may be conducted during any fiscal year, one of which may be by the
Administrative Agent, and the Borrower shall only be liable for the expenses of
the Administrative Agent in connection with any such inspection (but excluding
expenses of the Administrative Agent or any Lender with respect to discussions
with the Borrower’s independent accountants, and provided the Administrative
Agent or such Lender shall pay any fees of such independent accountants
incurred with respect to such discussions) and (b) when an Event of Default
exists the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.

 

6.11        Use of Proceeds. 
The Borrower shall use the proceeds of the
Credit Extensions (a) to repay certain indebtedness, (b) for working
capital, (c) to make certain Capital Expenditures and (d) for general
corporate purposes not in contravention of any Law or of any Loan Document.

 

48

 

6.12        New Subsidiaries.

 

(a)           Upon the Borrower’s formation or
acquisition of any new Subsidiary, other than the Trust Subsidiary (and
specifically excluding Unrestricted Subsidiaries), the Borrower shall cause
such Subsidiary to promptly execute and deliver to the Administrative Agent a
Joinder Agreement with such modifications thereto as the Administrative Agent
may reasonably request for the purpose of joining such Subsidiary as a party to
the Guaranty.  In connection therewith,
the Borrower shall provide, contemporaneously with the delivery of its
financial statements pursuant to Section 6.01(b), corporate
documentation and, if requested by the Administrative Agent, opinion letters
reasonably satisfactory to the Administrative Agent reflecting the corporate
status of such Subsidiary and the enforceability of such Joinder Agreement; provided,
that upon the Administrative Agent’s written request, the Borrower shall
promptly provide such corporate documentation with respect to any previously
formed or acquired Subsidiary for which such items have not previously been
provided, and shall thereafter provide such corporate documentation
contemporaneously with the execution and delivery of each Joinder Agreement in
connection with any subsequent formation or acquisition of any new
Subsidiary.  With respect to the Trust
Subsidiary, the Borrower shall provide to the Administrative Agent corporate
and other related documentation as requested by the Administrative Agent.

 

(b)           Upon the occurrence of any Event of
Default, the Borrower shall cause all Unrestricted Subsidiaries to promptly
execute and deliver to the Administrative Agent a Joinder Agreement with such
modifications thereto as the Administrative Agent may reasonably request for
the purpose of joining such Persons as parties to the Guaranty, unless such
Unrestricted Subsidiary is bound by a Contractual Obligation preventing such
joinder.  In connection therewith, the
Borrower shall provide, contemporaneously with the execution and delivery of
each such Joinder Agreement, corporate documentation (to the extent not
previously provided to the Administrative Agent) and, if requested by the
Administrative Agent, opinion letters reasonably satisfactory to the
Administrative Agent reflecting the corporate status of each such Unrestricted
Subsidiary and the enforceability of such Joinder Agreement.

 

6.13        Maintenance of Trust Reserves and
Trust Accounts. 
The Borrower shall set aside, and shall cause its Subsidiaries to set
aside, where appropriate, in the appropriate Trust Accounts, all applicable
Trust Reserves at the time such funds are received by the Borrower or any of
its Subsidiaries, and the Borrower shall, and shall cause its Subsidiaries to,
establish and maintain all of the funding obligations of each of the Trust
Accounts in accordance with Applicable Law and the provisions set forth herein
and in the other Loan Documents.

 

6.14        Maintenance of Trust Balance.  The Borrower shall comply, and shall cause
its Subsidiaries to comply, with all merchandise, perpetual care and other
trusting requirements imposed on the Borrower or any of its Subsidiaries by any
and all applicable states having jurisdiction thereof, as in effect on the date
hereof (“Existing Trusting Laws”). 
If, however, the monetary trusting provisions of the laws of the
applicable state are amended during the term of this Agreement (“Amended
Trusting Laws”), the Borrower agrees that it will trust or cause to be
trusted, and will cause its Subsidiaries to trust or cause to be trusted, in
accordance with the provisions of Existing Trusting Laws or the Amended
Trusting Laws, whichever requires the Borrower or any such Subsidiary to place
greater amounts in trust, unless otherwise agreed to by the Required Lenders.

 

ARTICLE VII.

NEGATIVE COVENANTS

 

So long as any
Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding (unless the Borrower has complied with Section 2.03(g)),
the Borrower shall not, nor shall it permit any Subsidiary to, directly or
indirectly:

 

7.01        Liens.  Create,
incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, other than the following:

 

(a)           Liens pursuant to any Loan Document;

 

49

 

(b)           Liens for taxes not yet due or which
are being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;

 

(c)           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 30
days or which are being contested in good faith and by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto are maintained
on the books of the applicable Person;

 

(d)           pledges or deposits in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and other social security legislation, other than any Lien imposed by
ERISA;

 

(e)           deposits to secure the performance of
bids, trade contracts and leases (other than Debt), statutory obligations,
surety bonds (other than bonds related to judgments or litigation), performance
bonds and other obligations of a like nature incurred in the ordinary course of
business;

 

(f)            easements, rights-of-way,
restrictions and other similar encumbrances affecting real property which, in
the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the applicable Person;

 

(g)           Liens existing on Property acquired
by the Borrower or any of its Subsidiaries prior to its acquisition of such
Property or existing on Property of a newly acquired Subsidiary prior to the
Borrower’s or any other Subsidiary’s acquisition of stock of such newly
acquired Subsidiary; provided, however, that the aggregate
outstanding principal amount of the Debt secured by the Liens permitted by this
paragraph (g) shall not, when combined with the aggregate outstanding
principal amount of Debt secured by Liens permitted by paragraph (h) of
this Section 7.01, exceed 10% of the Borrower’s Net Worth at any
time on or after the date on which such Lien is created, assumed or incurred;

 

(h)           purchase money liens or purchase
money security interests upon or in any Property acquired or held by the
Borrower or any of its Subsidiaries to secure the purchase price of such
Property or to secure Debt incurred solely for the purpose of financing the acquisition
of such Property, and deposits to secure surety bonds related to judgments and
litigation not constituting an Event of Default under Section 8.01(h);
provided that the aggregate outstanding 
principal amount of the Debt secured by the Liens permitted by this
paragraph (h) shall not, when combined with the aggregate outstanding
principal amount of Debt secured by Liens permitted by paragraph (g) of
this Section 7.01, exceed 10% of the Borrower’s Net Worth at any
time on or after the date on which such Lien is created, assumed or incurred;

 

(i)            Liens against equipment arising from
precautionary UCC financing statement filings regarding operating leases
entered into in the ordinary course of business; and

 

(j)            Nonconsensual Liens in favor of
banking institutions arising as a matter of law and encumbering the deposits
(including the right of set-off) held by such banking institutions in the
ordinary course of business.

 

7.02        Investments.  Make
any Investments, except:

 

(a)           Investments existing on the date
hereof and listed on Schedule 7.02;

 

(b)           Investments held by the Borrower or
such Subsidiary in the form of Liquid Investments;

 

(c)           Guaranty Obligations permitted by Section 7.03;

 

50

 

(d)           Investments as a result of
Acquisitions, if each of the following conditions has been satisfied:  (i) immediately before and after giving
effect to such Acquisition, no Default shall have occurred and be continuing,
(ii) immediately after giving effect to the proposed Acquisition,
(A) the aggregate Acquisition Consideration for all Acquisitions during
the term of this Agreement shall not exceed $3,500,000 and (B) the
aggregate Acquisition Consideration for any single Acquisition (whether in one
transaction or a series of related transactions) shall not exceed $1,500,000,
(iii) such Acquisition is a Core Acquisition, (iv) such Acquisition
shall not be opposed by the board of directors or similar governing body of the
Person or assets being acquired, (v) if such Acquisition results in a
Domestic Subsidiary, such Subsidiary shall execute a Guaranty and the
Administrative Agent shall have received such items required by Section 6.12(a),
(vi) the Property to be acquired in connection with such Acquisition is in
compliance with Environmental Law and the Borrower, at its expense, shall have
conducted such affirmative due diligence concerning the environmental condition
of such Property (which may include environmental questionnaires or independent
site assessments) as the Borrower reasonably believes shall be warranted by
such Property and (vii) such Acquisition occurs following the
Series A Note Payment Date;

 

(e)           Investments consisting of extensions
of credit in the nature of accounts receivable or notes receivable arising from
the grant of trade credit in the ordinary course of business, and Investments
received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss;

 

(f)            the Borrower’s Investment in the
Trust Subsidiary, and ordinary course of business contributions, loans or
advances to, or Investments in, (a) a direct or indirect Subsidiary of the
Borrower, or (b) the Borrower;

 

(g)           so long as there exists no Default
both before and after giving effect to any such transaction, Investments not
covered by clauses (a) through (f) above in an aggregate amount not to
exceed at any time $3,500,000;

 

(h)           Investments in or by any perpetual
care trust, merchandise trust, preneed trust, preconstruction trust or other
trust arrangements established by the Borrower or any of its Subsidiaries in
accordance with applicable Laws, regulations and interpretations;

 

(i)            Investments in less than 50% of the
outstanding Voting Shares of corporations or other business entities that own
or operate funeral homes or cemeteries in jurisdictions which prohibit
ownership of 50% or more of such Voting Shares by the Borrower or a Subsidiary
of the Borrower and in which the cost of each such Investment does not exceed
$10,000; and

 

(j)            Investments in Unrestricted
Subsidiaries, provided that (a) the business and activities thereof are
directly or indirectly reasonably related in whole or in material part to the
death care industry, and (b) the aggregate amount of Investments by the
Borrower and its Subsidiaries in Unrestricted Subsidiaries shall not exceed
$5,000,000.

 

7.03        Debt.  Create,
incur, assume or suffer to exist any Debt, except:

 

(a)           Debt under the Loan Documents;

 

(b)           Debt outstanding on the date hereof
and listed on Schedule 7.03 and any refinancings, refundings,
renewals or extensions thereof; provided that the amount of such Debt is
not increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized
thereunder;

 

51

 

(c)           intercompany Debt owed between any
Subsidiary of the Borrower and the Borrower, provided that the payment
of such Debt is subordinate to the payment of the Obligations pursuant to
Section 3.2 of the Guaranty or otherwise in a manner satisfactory to the
Administrative Agent;

 

(d)           the Trust Notes and the Senior Notes;

 

(e)           Subordinated Debt;

 

(f)            obligations in respect of any trade
payables or other current operating liabilities more than 90 days past due,
except for such trade payables or other current operating liabilities which
(i) are being contested in good faith by appropriate proceedings and
adequate reserves therefor have been established and reflected in the financial
statements of such Person in accordance with GAAP, or (ii) do not exceed
$200,000 in the aggregate outstanding at any time;

 

(g)           so long as there exists no Default
both before and after giving effect to any such transaction, obligations
(contingent or otherwise) of the Borrower or any Subsidiary existing or arising
under any Swap Contract, provided that (i) such obligations are (or
were) entered into by such Person in the ordinary course of business for the
purpose of directly mitigating risks associated with liabilities, commitments,
investments, assets, or property held or reasonably anticipated by such Person,
or changes in the value of securities issued by such Person, and not for
purposes of speculation or taking a “market view;” and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

 

(h)           (i) Guaranty Obligations of the
Borrower or any Guarantor in respect of Debt otherwise permitted hereunder of
the Borrower or any other Guarantor, including the Senior Notes and
(ii) Guaranty Obligations of the Borrower in respect of the Trust
Guaranties; and

 

(i)            so long as there exists no Default
before or after giving effect thereto, Debt not otherwise permitted pursuant to
clauses (a) through (h) above in an aggregate principal amount not in
excess of five percent (5%) of the Borrower’s Net Worth at any time
outstanding.

 

7.04        Fundamental Changes.  Merge, dissolve, liquidate, consolidate
with or into another Person, or Dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except that, so long
as there exists no Default both before and after giving effect to any such
transaction:

 

(a)           any Subsidiary may merge with
(i) the Borrower, provided that the Borrower shall be the
continuing or surviving Person, or (ii) any one or more other
Subsidiaries, provided that when any Guarantor is merging with another
Subsidiary, the Guarantor shall be the continuing or surviving Person;

 

(b)           any Subsidiary may Dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
the Borrower or to another Subsidiary; provided that if the transferor
in such a transaction is a Guarantor, then the transferee must either be the
Borrower or a Guarantor; and

 

(c)           a Subsidiary may make a Disposition
permitted under Section 7.05(e).

 

7.05        Dispositions.  Make
any Disposition or enter into any agreement to make any Disposition, except:

 

(a)           Dispositions of obsolete or worn out
property, whether now owned or hereafter acquired, in the ordinary course of
business;

 

(b)           Dispositions of funeral merchandise,
cemetery property, mausoleum spaces and related merchandise and other inventory
in the ordinary course of business;

 

52

 

(c)           so long as there exists no Default
both before and after giving effect to any such transaction, Dispositions of
property by any Subsidiary to the Borrower or to a wholly-owned Subsidiary; provided
that if the transferor of such property is a Guarantor, the transferee thereof
must either be the Borrower or a Guarantor;

 

(d)           so long as there exists no Default
both before and after giving effect to any such transaction, Dispositions permitted
by Section 7.04; and

 

(e)           so long as there exists no Default
both before and after giving effect to any such transaction, Dispositions of
assets not otherwise permitted pursuant to clauses (a) through (d) above,
to the extent such Dispositions could not reasonably be expected to have a
Material Adverse Effect;

 

provided, however, that any Disposition
pursuant to clauses (b) and (e) shall be for fair market value.

 

7.06        Restricted Payments; Issuance of
Preferred Stock.

 

(a)           Declare or make (or in the case of
the Trust Preferred Stock, permit any making or payment of), directly or
indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except that:

 

(i)            each Subsidiary may make Restricted
Payments to the Borrower and to wholly-owned Subsidiaries (and, in the case of
a Restricted Payment by a non-wholly-owned Subsidiary, to the Borrower and any
Subsidiary and to each other owner of Capital Stock or other equity interests
of such Subsidiary on a pro rata basis based on their relative ownership
interests);

 

(ii)           so long as there exists no Default
both before and after giving effect to any such transaction, with respect to
shares of Capital Stock purchased from the Borrower by employees or former
employees of the Borrower or any of its Subsidiaries in connection with the
exercise of stock options granted by the Borrower, the Borrower may purchase a
number of such shares, in an aggregate amount not to exceed $5,000,000 in any
fiscal year of the Borrower;

 

(iii)          so long as there exists no Default
both before and after giving effect to any such transaction,  the
Borrower may make (A) payments of Dividends on and redemptions of Existing
Preferred Stock, other than Trust Preferred Stock, (B) payments of
Dividends on Qualified Preferred Stock, and (C) distribution of the Trust
Notes to the holders of the Trust Preferred Stock in connection with the
dissolution of the Trust Subsidiary; and

 

(iv)          so long as there exists no Default
both before and after giving effect to any such transaction, the Borrower may
make regularly scheduled payments of principal, interest, premium or penalty on
Subordinated Debt within the terms specified in the definition of Subordinated
Debt as set forth in this Agreement.

 

Without
limiting the generality of the foregoing, during the term of this Agreement,
the Borrower shall not cause or permit the Trust Subsidiary to declare, make or
pay any Dividends in respect of the Trust Preferred Stock, but instead shall
cause all Dividends otherwise becoming due during the term hereof to be duly
deferred in accordance with the provisions governing such Trust Preferred
Stock.

 

(b)           Issue or have outstanding any
Redeemable Preferred Stock, other than (i) Existing Preferred Stock or
(ii) Qualified Preferred Stock.

 

7.07        Change in Nature of Business.  Engage in any
material line of business substantially different from those lines of business
conducted by the Borrower and its Subsidiaries on the date hereof or any
business substantially related or incidental thereto.

 

53

 

7.08        Transactions with Affiliates.  Enter into any
transaction of any kind with any Affiliate of the Borrower, whether or not in
the ordinary course of business, other than on fair and reasonable terms substantially
as favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm’s length
transaction with a Person other than an Affiliate.

 

7.09        Burdensome Agreements.  Enter into any
Contractual Obligation (other than this Agreement or any other Loan Document)
that (a) limits the ability (i) of any Subsidiary to make Restricted
Payments to the Borrower or any Guarantor or to otherwise transfer property to
the Borrower or any Guarantor, (ii) of any Subsidiary to Guarantee the
Debt of the Borrower or (iii) of the Borrower or any Subsidiary to create,
incur, assume or suffer to exist Liens on property of such Person; provided,
however, that this clause (iii) shall not prohibit any negative
pledge incurred or provided (A) with respect to specific Property
encumbered to secure payment of Debt related to such Property or (B) as
provided in the documents governing the Senior Notes; or (b) requires the
grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person, except as provided in the documents
governing the Senior Notes.

 

7.10        Use of Proceeds. 
Use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of
Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally
incurred for such purpose.

 

7.11        Financial Covenants.

 

(a)           Maximum Leverage Ratio.  Permit the Leverage Ratio at any time during
any period of four fiscal quarters of the Borrower set forth below in which the
last fiscal quarter ends after the Closing Date to be greater than the ratio
set forth below opposite such period:

 

	
  Four Fiscal Quarters Ending

  	
   

  	
  Maximum Leverage

  Ratio

  	
   

  
	
  Closing Date
  through March 30, 2004

  	
   

  	
  3.75 to 1.00

  	
   

  
	
  March 31,
  2004 through December 31, 2004

  	
   

  	
  3.50 to 1.00

  	
   

  
	
  January 1,
  2005 through September 29, 2005

  	
   

  	
  3.25 to 1.00

  	
   

  
	
  September 30,
  2005 and each fiscal quarter thereafter

  	
   

  	
  3.00 to 1.00

  	
   

  

 

(b)           Minimum Fixed Charge Coverage
Ratio.  Permit the Fixed Charge Coverage
Ratio as of the end of any period of four consecutive fiscal quarters in which
the last fiscal quarter ends after the Closing Date to be less than 2.00 to
1.00.

 

(c)           Minimum EBITDA.   Permit
EBITDA for any period of four consecutive fiscal quarters in which the last
fiscal quarter ends after the Closing Date during each of the periods set forth
below to be less than amount set forth below opposite each such period:

 

	
  Four Fiscal Quarters Ending

  	
   

  	
  Minimum EBITDA

  	
   

  
	
  The last day
  of each fiscal quarter through and including the fiscal quarter in which the
  Series A Note Payment Date occurs

  	
   

  	
  $

  	
  36,000,000

  	
   

  
	
  The last day
  of each fiscal quarter thereafter

  	
   

  	
  $

  	
  35,000,000

  	
   

  

 

7.12        Maintenance of Ownership of
Subsidiaries.  Except as permitted by Sections 7.04
and 7.06(a)(iii)(C), the Borrower will not, and will not permit any of
its Subsidiaries to, sell or otherwise dispose of any shares of Capital Stock
of any of its Subsidiaries or permit any of its Subsidiaries to issue, sell or
otherwise dispose of any shares of its Capital Stock or the Capital Stock of
any of its Subsidiaries, except (a) where required by

 

54

 

Applicable Law, up to 20% of the outstanding
Capital Stock of any of the Borrower’s Subsidiaries may be issued to and held
by employees or consultants of the Borrower or any such Subsidiary who are licensed
funeral directors, (b) the Trust Subsidiary may issue the Trust Preferred
Stock, (c) in connection with Carriage Business Development Program not
more than ten Subsidiaries may issue preferred securities to not more than 20
individuals in the aggregate, and (d) Dispositions permitted under Section 7.05(e).

 

7.13        Trust Funds.   Without the prior written consent of the
Required Lenders or as otherwise required by Applicable Law, the Borrower will
not withdraw or otherwise remove, and will cause all of its Subsidiaries not to
withdraw or otherwise remove, any monies or other assets (whether principal,
interest or other earnings) from any merchandise, service or other trust fund
or trust account except (a) for the purpose of providing the merchandise
or services which are intended to be provided out of such trust fund or trust
account and (b) withdrawals permitted by Law where, after giving effect to
any such withdrawal, the Borrower or any Subsidiary is in compliance with Section 6.14.

 

7.14        Settlement of Litigation.  Without prior written notice to the Lenders,
the Borrower will not, and will cause all of its Subsidiaries not to, settle or
compromise, during any fiscal year of the Borrower, any threatened action or
proceeding affecting the Borrower or any of its Subsidiaries before any court,
Governmental Authority or arbitrator, if the amount of the proposed settlement
or compromise required to be paid by the Borrower or any of its Subsidiaries
(excluding any amounts to be paid or to be reimbursed to the Borrower or any of
its Subsidiaries from any insurance proceeds), together with the amount of all
settlements and compromises (excluding any amounts paid or to be reimbursed to
the Borrower or any of its Subsidiaries from any insurance proceeds) previously
paid by the Borrower or any of its Subsidiaries during such fiscal year of the
Borrower, exceeds $2,000,000.

 

7.15        Modification of Senior Notes.  Without the prior written consent of the
Required Lenders, make any amendment or modification to the Senior Notes which
renders the economic terms of the Senior Notes materially more favorable to the
holders of the Senior Notes or materially less favorable to the Borrower or the
applicable Subsidiary.

 

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

 

8.01        Events of Default. 
Any of the following shall constitute an Event
of Default:

 

(a)           Non-Payment.  The Borrower or any other Loan Party fails
to pay (i) when and as required to be paid herein, any amount of principal
of any Loan or any L/C Obligation, or (ii) within three days after the
same becomes due, any interest on any Loan or on any L/C Obligation, or any
commitment or other fee due hereunder, or (iii) within five days after the
same becomes due, any other amount payable hereunder or under any other Loan Document;
or

 

(b)           Specific Covenants.  The Borrower fails to perform or observe any
term, covenant or agreement contained in any of Section 6.03, 6.05,
6.10, 6.11 or 6.12 or Article VII; or

 

(c)           Other Defaults.  Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in subsection (a) or (b)
above) contained in any Loan Document on its part to be performed or observed
and such failure continues for 30 days; or

 

(d)           Representations and Warranties.  Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower or any
other Loan Party herein, in any other Loan Document, or in any document
delivered pursuant hereto or thereto shall be incorrect or misleading when made
or deemed made; or

 

(e)           Cross-Default.  (i) The Borrower or any Subsidiary or
Unrestricted Subsidiary (A) fails to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand,

 

55

 

or otherwise) in respect of any Debt or
Guaranty Obligation (other than Debt hereunder and Debt under Swap Contracts)
having an aggregate principal amount (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $5,000,000, after the giving of any
required notice and the expiration of any applicable grace period, or
(B) fails to observe or perform any other agreement or condition relating
to any such Debt or Guaranty Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Debt or the beneficiary or beneficiaries of such Guaranty
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, after the giving of any required notice
and the expiration of any applicable grace period, such Debt to be demanded or
to become due or to be repurchased, prepaid, defeased or redeemed
(automatically or otherwise), or an offer to repurchase, prepay, defease or
redeem such Debt to be made, prior to its stated maturity, or such Guaranty
Obligation to become payable, or cash collateral of more than $5,000,000 in
respect thereof to be (and is entitled to be) demanded; or (ii) there
occurs under any Swap Contract an Early Termination Date (as defined in such
Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so
defined) under such Swap Contract as to which the Borrower or any Subsidiary is
an Affected Party (as so defined) and, in either event, the Swap Termination
Value owed by the Borrower or such Subsidiary as a result thereof is greater
than $5,000,000; or

 

(f)            Insolvency Proceedings, Etc.  Any Loan Party or any of its
Subsidiaries  or Unrestricted Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under any
Debtor Relief Law relating to any such Person or to all or any material part of
its property is instituted without the consent of such Person and continues undismissed
or unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding; or

 

(g)           Inability to Pay Debts; Attachment.  (i) The Borrower or any Subsidiary  or Unrestricted Subsidiary becomes unable or
admits in writing its inability or fails generally to pay its debts as they
become due, or (ii) any writ or warrant of attachment or execution or
similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
30 days after its issue or levy; or

 

(h)           Judgments.  There is entered against the Borrower or any
Subsidiary (i) a final judgment or order for the payment of money in an
aggregate amount exceeding $2,000,000 (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order, or (B) there is a
period of 60 consecutive days during which a stay of enforcement of such
judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(i)            ERISA.  (i) An ERISA Event occurs with respect
to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of the Borrower under Title IV of ERISA
to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
excess of $1,000,000, or (ii) the Borrower or any ERISA Affiliate fails to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$1,000,000; or

 

(j)            Invalidity of Loan Documents.  Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted hereunder
or satisfaction in full of all the Obligations, ceases to be in full force and
effect; or any Loan Party or any other Person contests in any

 

56

 

manner the validity or enforceability of any
Loan Document; or any Loan Party denies that it has any or further liability or
obligation under any Loan Document, or purports to revoke, terminate or rescind
any Loan Document; or

 

(k)           Change of Control.  There occurs any Change of Control with
respect to the Borrower; or

 

(l)            Other Obligations.  The Borrower shall fail to duly and validly
defer, in accordance with the instruments governing the Trust Preferred Stock,
any Dividend coming due during the term of this Agreement in respect of the
Trust Preferred Stock, (ii) any event shall occur or condition shall exist
under the Trust Preferred Stock, Trust Notes or Trust Guaranties (collectively,
the “Debt Documents”), after the applicable grace period, if any,
specified in such Debt Document, if the effect of such event or condition is to
accelerate the maturity of the Trust Preferred Stock or Trust Notes, as
applicable; (iii) without the prior written consent of the Required
Lenders, any modification shall be made to any Debt Document which
(a) renders the subordination provisions thereof more favorable to the
holders of the Trust Preferred Stock or Trust Notes, as applicable, or less
favorable to the Lenders, or (b) renders the economic terms of the Trust
Preferred Stock or Trust Notes, as applicable, materially more favorable to the
holders of the Trust Preferred Stock or Trust Notes, as applicable, or
materially less favorable to the Borrower or the applicable Subsidiary, or
(iv) any event shall occur under any Debt Document that would permit the
holders thereof to require the redemption or mandatory prepayment thereof.

 

8.02        Remedies Upon Event of Default.  If any Event of
Default occurs and is continuing, the Administrative Agent may in its
discretion, or shall, at the request of the Required Lenders, take any or all
of the following actions:

 

(a)           declare the commitment of each Lender
to make Loans and/or any obligation of the L/C Issuer to make L/C Credit
Extensions to be terminated, whereupon such commitments and/or obligations
shall be terminated, as applicable;

 

(b)           declare the unpaid principal amount
of all outstanding Loans, all interest accrued and unpaid thereon, and all
other amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;

 

(c)           require that the Borrower Cash
Collateralize the L/C Obligations (in an amount equal to the then Outstanding
Amount thereof); and

 

(d)           exercise on behalf of itself and the
Lenders all rights and remedies available to it and the Lenders under the Loan
Documents or applicable law;

 

provided, however, that upon the
occurrence of an actual or deemed entry of an order for relief with respect to
the Borrower under the Bankruptcy Code of the United States, the obligation of
each Lender to make Loans and any obligation of the L/C Issuer to make L/C
Credit Extensions shall automatically terminate, the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and the obligation of the Borrower to
Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any
Lender.

 

8.03        Application of Funds.  After the exercise of remedies provided
for in Section 8.02 (or after the Loans have automatically become
immediately due and payable and the L/C Obligations have automatically been
required to be Cash Collateralized as set forth in the proviso to Section 8.02),
any amounts received on account of the Obligations shall be applied by the
Administrative Agent in the following order:

 

First,
to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (including Attorney Costs and amounts payable under Article III)
payable to the Administrative Agent in its capacity as such;

 

57

 

Second,
to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than principal and interest) payable to the Lenders
(including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;

 

Third,
to payment of that portion of the Obligations constituting accrued and unpaid
interest on the Loans and L/C Borrowings, ratably among the Lenders in
proportion to the respective amounts described in this clause Third
payable to them;

 

Fourth,
to payment of that portion of the Obligations constituting unpaid principal of
the Loans and L/C Borrowings, ratably among the Lenders in proportion to the
respective amounts described in this clause Fourth held by them;

 

Fifth,
to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate
undrawn amount of Letters of Credit; and

 

Sixth,
to any remaining outstanding and unpaid Obligations, ratably among the Lenders
(and any Affiliates of such Lenders) in proportion to the respective amounts
described in this clause Sixth held by them; and

 

Last,
the balance, if any, after all of the Obligations have been indefeasibly paid
in full, to the Borrower or as otherwise required by Law.

 

Subject to Section 2.03(c),
amounts used to Cash Collateralize the aggregate undrawn amount of Letters of
Credit pursuant to clause Fifth above shall be applied to satisfy
drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash Collateral after all
Letters of Credit have either been fully drawn or expired, such remaining
amount shall be applied to the other Obligations, if any, in the order set
forth above.

 

ARTICLE IX.

ADMINISTRATIVE AGENT

 

9.01        Appointment and Authorization of
Administrative Agent.

 

(a)           Each Lender hereby irrevocably
appoints, designates and authorizes the Administrative Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the
contrary contained elsewhere herein or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Administrative Agent have or be
deemed to have any fiduciary relationship with any Lender or participant, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.  Without limiting the generality of the foregoing sentence, the
use of the term “agent” herein and in the other Loan Documents with reference
to the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable Law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting parties.

 

(b)           The L/C Issuer shall act on behalf of
the Lenders with respect to any Letters of Credit issued by it and the
documents associated therewith, and the L/C Issuer shall have all of the
benefits and immunities (i) provided to the Administrative Agent in this Article IX
with respect to any acts taken or omissions suffered by the L/C Issuer in
connection with Letters of Credit issued by it or proposed to be issued by it
and the applications and agreements for letters of credit pertaining to such
Letters of Credit as fully as if the term “Administrative Agent” as used
in this Article IX and in the definition of “Agent-Related
Person” included the L/C Issuer with respect to such acts or omissions, and
(ii) as additionally provided herein with respect to the L/C Issuer.

 

58

 

9.02        Delegation of Duties.  The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties.  The Administrative Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects in the absence of gross negligence or willful
misconduct.

 

9.03        Liability of Administrative Agent.  No Agent-Related Person shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by any Loan Party or any officer
thereof, contained herein or in any other Loan Document, 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 Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of any Loan Party or any other party to any Loan Document to
perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any obligation to any
Lender or participant to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party or any Affiliate thereof.

 

9.04        Reliance by Administrative Agent.

 

(a)           The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
communication, signature, resolution, representation, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, electronic mail message, statement or other document or conversation
believed by it 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 counsel to any Loan Party), independent accountants and
other experts selected by the Administrative Agent.  The Administrative Agent shall be fully justified in failing or
refusing to take any action under any Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such
action.  The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request or
consent of the Required Lenders (or such greater number of Lenders as may be
expressly required hereby in any instance) and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders.

 

(b)           For purposes of determining
compliance with the conditions specified in Section 4.01, each
Lender that has signed this 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 unless the Administrative Agent shall have received notice from such
Lender prior to the proposed Closing Date specifying its objection thereto.

 

9.05        Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default and stating that
such notice is a “notice of default.” 
The Administrative Agent will notify the Lenders of its receipt of any
such notice.  The Administrative Agent
shall take such action with respect to such Default as may be directed by the
Required Lenders in accordance with Article VIII; provided, however,
that unless and until the Administrative Agent has received any such direction,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable or in the best interest of the Lenders.

 

59

 

9.06        Credit Decision; Disclosure of
Information by Administrative Agent.  Each Lender acknowledges that no
Agent-Related Person has made any representation or warranty to it, and that no
act by the Administrative Agent hereafter taken, including any consent to and
acceptance of any assignment or review of the affairs of any Loan Party or any
Affiliate thereof, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their
possession.  Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Borrower and the other Loan Parties hereunder.  Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person 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 Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and the other Loan Parties.  Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent herein, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any of the Loan Parties or any of their
respective Affiliates which may come into the possession of any Agent-Related
Person.

 

9.07        Indemnification of Administrative
Agent. 
WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, THE
LENDERS SHALL INDEMNIFY UPON DEMAND EACH AGENT-RELATED PERSON (TO THE EXTENT
NOT REIMBURSED BY OR ON BEHALF OF ANY LOAN PARTY AND WITHOUT LIMITING THE
OBLIGATION OF ANY LOAN PARTY TO DO SO), PRO RATA, AND HOLD HARMLESS EACH
AGENT-RELATED PERSON FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES
INCURRED BY IT (WHETHER OR NOT ARISING OUT OF THE NEGLIGENCE OF SUCH AGENT-RELATED
PERSON); PROVIDED, HOWEVER, THAT NO LENDER SHALL BE
LIABLE FOR THE PAYMENT TO ANY AGENT-RELATED PERSON OF ANY PORTION OF SUCH
INDEMNIFIED LIABILITIES TO THE EXTENT DETERMINED IN A FINAL, NONAPPEALABLE
JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH
AGENT-RELATED PERSON’S OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED,
HOWEVER, THAT NO ACTION TAKEN IN ACCORDANCE WITH THE DIRECTIONS OF THE
REQUIRED LENDERS SHALL BE DEEMED TO CONSTITUTE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT FOR PURPOSES OF THIS SECTION. 
WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER SHALL REIMBURSE THE
ADMINISTRATIVE AGENT UPON DEMAND FOR ITS RATABLE SHARE OF ANY COSTS OR
OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEY COSTS) INCURRED BY THE
ADMINISTRATIVE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY,
ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF
RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR
ANY DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, TO THE EXTENT THAT THE
ADMINISTRATIVE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY OR ON BEHALF OF THE
BORROWER.  THE UNDERTAKING IN THIS
SECTION SHALL SURVIVE TERMINATION OF THE COMMITMENTS, THE PAYMENT OF ALL
OTHER OBLIGATIONS AND THE RESIGNATION OF THE ADMINISTRATIVE AGENT.

 

9.08        Administrative Agent in its
Individual Capacity.  Bank of America and its Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with each of the Loan Parties and
their respective Affiliates as though Bank of America were not the
Administrative Agent or the L/C Issuer hereunder and without notice to or
consent of the Lenders.  The Lenders
acknowledge that, pursuant to such activities, Bank of America or its
Affiliates may receive information regarding any Loan Party or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of such Loan Party or such

 

60

 

Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information
to them.  With respect to its Loans,
Bank of America shall have the same rights and powers under this Agreement as
any other Lender and may exercise such rights and powers as though it were not
the Administrative Agent or the L/C Issuer, and the terms “Lender” and “Lenders”
include Bank of America in its individual capacity.

 

9.09        Successor Administrative Agent.  The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Lenders; provided that any
such resignation by Bank of America shall also constitute its resignation as
L/C Issuer and Swing Line Lender.  If
the Administrative Agent resigns under this Agreement, the Required Lenders
shall appoint from among the Lenders a successor administrative agent for the
Lenders, which successor administrative agent shall be consented to by the
Borrower at all times other than during the existence of an Event of Default (which
consent of the Borrower shall not be unreasonably withheld or delayed).  If no successor administrative agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Lenders
and the Borrower, a successor administrative agent from among the Lenders.  Upon the acceptance of its appointment as
successor administrative agent hereunder, the Person acting as such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent, L/C Issuer and Swing Line Lender and the
respective terms “Administrative Agent,” “L/C Issuer” and “Swing
Line Lender” shall mean such successor administrative agent, Letter of
Credit issuer and swing line lender, and the retiring Administrative Agent’s
appointment, powers and duties as Administrative Agent shall be terminated and
the retiring L/C Issuer’s and Swing Line Lender’s rights, powers and duties as
such shall be terminated, without any other or further act or deed on the part
of such retiring L/C Issuer or Swing Line Lender or any other Lender, other
than the obligation of the successor L/C Issuer to issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or to make other arrangements satisfactory to the retiring L/C
Issuer to effectively assume the obligations of the retiring L/C Issuer with
respect to such Letters of Credit.  After
any retiring Administrative Agent’s resignation hereunder as Administrative
Agent, the provisions of this Article IX and Sections 10.04
and 10.05 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement.  If no successor administrative agent has
accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above.

 

9.10        Administrative Agent May File Proofs
of Claim. 
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Loan or L/C Obligation shall then
be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise

 

(a)           to file and prove a claim for the
whole amount of the principal and interest owing and unpaid in respect of the
Loans, L/C Obligations and all other Obligations that are owing and unpaid and
to file such other documents as may be necessary or advisable in order to have
the claims of the Lenders and the Administrative Agent (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Lenders and the Administrative Agent and their respective agents and counsel
and all other amounts due the Lenders and the Administrative Agent under Sections 2.03(i)
and (j), 2.09 and 10.04) allowed in such judicial
proceeding; and

 

(b)           to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same;

 

and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the Administrative
Agent and its agents and counsel, and any other amounts due the Administrative
Agent under Sections 2.09 and 10.04.

 

61

 

Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

 

9.11        Guaranty Matters.  The Lenders irrevocably authorize the
Administrative Agent, at its option and in its discretion, to release any
Guarantor from its obligations under the Guaranty if such Person ceases to be a
Subsidiary as a result of a transaction permitted hereunder.  Upon request by the Administrative Agent at
any time, the Required Lenders will confirm in writing the Administrative
Agent’s authority to release any Guarantor from its obligations under the
Guaranty pursuant to this Section 9.11.

 

9.12        Other Agents; Arrangers and Managers.  None of the Lenders or other Persons
identified on the facing page or signature pages of this Agreement as a
“syndication agent,” “documentation agent,” “co-agent,” “book manager,” “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 X.

MISCELLANEOUS

 

10.01      Amendments, Etc.  No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan
Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however,
that no such amendment, waiver or consent shall:

 

(a)           waive any condition set forth in Section 4.01(a)
without the written consent of each Lender;

 

(b)           extend or increase the Commitment of
any Lender (or reinstate any Commitment terminated pursuant to Section 8.02)
without the written consent of such Lender;

 

(c)           postpone any date fixed by this
Agreement or any other Loan Document for any payment (excluding mandatory
prepayments) of principal, interest, fees or other amounts due to the Lenders
(or any of them) hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby;

 

(d)           reduce the principal of, or the rate
of interest specified herein on, any Loan or L/C Borrowing, or (subject to
clause (iv) of the second proviso to this Section 10.01) any
fees or other amounts payable hereunder or under any other Loan Document,
without the written consent of each Lender directly affected thereby; provided,
however, that only the consent of the Required Lenders shall be
necessary (i) to amend the definition of “Default Rate” or to waive
any obligation of the Borrower to pay interest at the Default Rate or
(ii) to amend any financial covenant hereunder (or any defined term used
therein) even if the effect of such amendment would be to reduce the rate of
interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;

 

(e)           change Section 2.13 or Section 8.03
in a manner that would alter the pro rata sharing of payments required thereby
without the written consent of each Lender;

 

62

 

(f)            change any provision of this Section
or the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to amend, waive or
otherwise modify any rights hereunder or make any determination or grant any
consent hereunder, without the written consent of each Lender; or

 

(g)           release all or substantially all of
the Guarantors from the Guaranty without the written consent of each Lender;

 

and, provided
further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any
Letter of Credit Application relating to any Letter of Credit issued or to be
issued by it; (ii) no amendment, waiver or consent shall, unless in
writing and signed by the Swing Line Lender in addition to the Lenders required
above, affect the rights or duties of the Swing Line Lender under this
Agreement; (iii) no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Lenders required
above, affect the rights or duties of the Administrative Agent under this
Agreement or any other Loan Document; and (iv) the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the parties thereto.  Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
the Commitments of such Lender may not be increased or extended without the
consent of such Lender.

 

10.02      Notices and Other Communications;
Facsimile Copies.

 

(a)           General.  Unless otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission). 
All such written notices shall be mailed, faxed or delivered to the
applicable address, facsimile number or (subject to subsection (c) below)
electronic mail address, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable
telephone number, as follows:

 

(i)            if to the Borrower, the
Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address,
facsimile number, electronic mail address or telephone number specified for
such Person on Schedule 10.02 or to such other address, facsimile
number, electronic mail address or telephone number as shall be designated by
such party in a notice to the other parties; and

 

(ii)           if to any other Lender, to the
address, facsimile number, electronic mail address or telephone number
specified in its Administrative Questionnaire or to such other address,
facsimile number, electronic mail address or telephone number as shall be
designated by such party in a notice to the Borrower, the Administrative Agent,
the L/C Issuer and the Swing Line Lender.

 

All such
notices and other communications shall be deemed to be given or made upon the
earlier to occur of (i) actual receipt by the relevant party hereto and
(ii)(A) if delivered by hand or by courier, when signed for by or on
behalf of the relevant party hereto; (B) if delivered by mail, four
Business Days after deposit in the mails, postage prepaid; (C) if
delivered by facsimile, when sent and receipt has been confirmed by telephone;
and (D) if delivered by electronic mail (which form of delivery is subject
to the provisions of subsection (c) below), when delivered; provided,
however, that notices and other communications to the Administrative
Agent, the L/C Issuer and the Swing Line Lender pursuant to Article II
shall not be effective until actually received by such Person.  In no event shall a voicemail message be
effective as a notice, communication or confirmation hereunder.

 

(b)           Effectiveness of Facsimile
Documents and Signatures.  Loan
Documents may be transmitted and/or signed by facsimile.  The effectiveness of any such documents and
signatures shall, subject to applicable Law, have the same force and effect as
manually-signed originals and shall be binding on all Loan Parties, the
Administrative Agent and the Lenders. 
The Administrative Agent may also require

 

63

 

that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however,
that the failure to request or deliver the same shall not limit the
effectiveness of any facsimile document or signature.

 

(c)           Limited Use of Electronic Mail.  Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, such
as financial statements and other information as provided in Section 6.02,
and to distribute Loan Documents for execution by the parties thereto, and may
not be used for any other purpose.

 

(d)           Reliance by Administrative Agent
and Lenders.  The Administrative
Agent and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Revolving Loan Notices and Swing Line Loan Notices)
purportedly given by or on behalf of the Borrower even if (i) such notices
were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof.  The Borrower
shall indemnify each Agent-Related Person and each Lender from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of the Borrower.  All telephonic notices to and other
communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

10.03      No Waiver; Cumulative Remedies.  No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in
exercising, 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.

 

10.04      Attorney Costs, Expenses and Taxes.  The Borrower agrees (a) to pay or
reimburse the Administrative Agent and Arranger for all reasonable costs and
expenses incurred in connection with the preparation, negotiation and execution
of this Agreement and the other Loan Documents and any amendment, waiver,
consent or other modification of the provisions hereof and thereof (whether or
not the transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs, and (b) to pay or reimburse the
Administrative Agent and each Lender for all costs and expenses incurred in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Loan Documents (including
all such costs and expenses incurred during any “workout” or restructuring in
respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs.  The foregoing costs and expenses shall
include all search, filing, recording, title insurance and appraisal charges
and fees and taxes related thereto, and other out-of-pocket expenses incurred
by the Administrative Agent and the cost of independent public accountants and
other outside experts retained by the Administrative Agent or any Lender.  All amounts due under this Section 10.04
shall be payable within ten Business Days after demand therefor.  The agreements in this Section shall
survive the termination of the Commitments and repayment of all other
Obligations.

 

10.05      Indemnification by the Borrower.  WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED
HEREBY ARE CONSUMMATED, THE BORROWER SHALL INDEMNIFY AND HOLD HARMLESS EACH
AGENT-RELATED PERSON, EACH LENDER AND THEIR RESPECTIVE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, COUNSEL, AGENTS AND ATTORNEYS-IN-FACT (COLLECTIVELY THE “INDEMNITEES”)
FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, CLAIMS, DEMANDS, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND
DISBURSEMENTS (INCLUDING ATTORNEY COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH
MAY AT ANY TIME BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY SUCH
INDEMNITEE IN ANY WAY RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
(A) THE EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE OR ADMINISTRATION OF
ANY LOAN DOCUMENT OR ANY OTHER AGREEMENT, LETTER OR

 

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INSTRUMENT DELIVERED IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED THEREBY OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED THEREBY, (B) ANY COMMITMENT, LOAN OR LETTER OF CREDIT OR THE
USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE L/C
ISSUER TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS
PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS
OF SUCH LETTER OF CREDIT), (C) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE
OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY CURRENTLY OR FORMERLY OWNED OR
OPERATED BY THE BORROWER, ANY SUBSIDIARY OR ANY OTHER LOAN PARTY, OR ANY
ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER, ANY SUBSIDIARY OR
ANY OTHER LOAN PARTY, OR (D) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY (INCLUDING ANY INVESTIGATION OF, PREPARATION
FOR, SETTLEMENT OF, OR DEFENSE OF ANY PENDING OR THREATENED CLAIM,
INVESTIGATION, LITIGATION OR PROCEEDING) AND REGARDLESS OF WHETHER ANY
INDEMNITEE IS A PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY, THE “INDEMNIFIED
LIABILITIES”), IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART,
OUT OF THE NEGLIGENCE OF THE INDEMNITEE; PROVIDED THAT SUCH
INDEMNITY SHALL NOT, AS TO (1) ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT
THAT SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS,
DEMANDS, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS ARE
DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE
JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH INDEMNITEE OR (2) ANY COUNSEL FOR THE ADMINISTRATIVE AGENT OR FOR ANY
LENDER, BE AVAILABLE TO THE EXTENT SUCH LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, CLAIMS, DEMANDS, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES
OR DISBURSEMENTS ARE THE RESULT OF ANY ACTION OR CLAIM BY THE ADMINISTRATIVE
AGENT OR ANY LENDER AGAINST SUCH COUNSEL. 
NO INDEMNITEE SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY
OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR
OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS
AGREEMENT, NOR SHALL ANY INDEMNITEE HAVE ANY LIABILITY FOR ANY INDIRECT OR
CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER
BEFORE OR AFTER THE CLOSING DATE).  ALL
AMOUNTS DUE UNDER THIS SECTION 10.05 SHALL BE PAYABLE WITHIN TEN
BUSINESS DAYS AFTER DEMAND THEREFOR. 
THE AGREEMENTS IN THIS SECTION SHALL SURVIVE THE RESIGNATION OF THE
ADMINISTRATIVE AGENT, THE REPLACEMENT OF ANY LENDER, THE TERMINATION OF THE
COMMITMENTS AND THE REPAYMENT, SATISFACTION OR DISCHARGE OF ALL THE OTHER
OBLIGATIONS.

 

10.06      Payments Set Aside.  To the extent that any payment by or on
behalf of the Borrower is made to the Administrative Agent or any Lender, or
the Administrative Agent or any Lender exercises its right of set-off, and such
payment or the proceeds of such set-off or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Law or
otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such set-off had
not occurred, and (b) each Lender severally agrees to pay to the
Administrative Agent upon demand its applicable share of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon
from the date of such demand to the date such payment is made at a rate per
annum equal to the Federal Funds Rate from time to time in effect.

 

10.07      Successors and Assigns.

 

(a)           The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower
may

 

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not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each
Lender and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder except (i) to an Eligible Assignee in accordance
with the provisions of subsection (b) of this Section, (ii) by
way of participation in accordance with the provisions of subsection (d)
of this Section, or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of subsection (f) or (h) of this
Section, (and any other attempted assignment or transfer by any party hereto
shall be null and void).  Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of
this Section and, to the extent expressly contemplated hereby, the Indemnitees)
any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           Any Lender may at any time assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans (including for purposes of this subsection (b), participations in
L/C Obligations and in Swing Line Loans) at the time owing to it); provided
that (i) except in the case of an assignment of the entire remaining
amount of the assigning Lender’s Commitment and the Loans at the time owing to
it or in the case of an assignment to a Lender or an Affiliate of a Lender or
an Approved Fund (as defined in subsection (g) of this Section) with
respect to a Lender, the aggregate amount of the Commitments (which for this
purpose includes Loans outstanding thereunder) subject to each such assignment,
determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date, shall not be
less than $1,000,000  unless each of the Administrative Agent
and, so long as no Event of Default has occurred and is continuing, the
Borrower otherwise consents (each such consent not to be unreasonably withheld
or delayed); (ii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement with respect to the Loans or the Commitment assigned,
except that this clause (ii) shall not apply to rights in respect of Swing
Line Loans; (iii) any assignment of a Commitment must be approved by the
Administrative Agent, the L/C Issuer and the Swing Line Lender unless the
Person that is the proposed assignee is itself a Lender (whether or not the
proposed assignee would otherwise qualify as an Eligible Assignee); and
(iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500.  Subject
to acceptance and recording thereof by the Administrative Agent pursuant to
subsection (c) of this Section, from and after the effective date
specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05,
10.04 and 10.05 with respect to facts and circumstances occurring
prior to the effective date of such assignment).  Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. 
Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this subsection shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with subsection (d) of this
Section.

 

(c)           The Administrative Agent, acting
solely for this purpose as an agent of the Borrower, shall maintain at the
Administrative Agent’s Office a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitments of, and principal amounts of the Loans and
L/C Obligations owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”).  The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

66

 

(d)           Any Lender may at any time, without
the consent of, or notice to, the Borrower or the Administrative Agent, sell
participations to any Person (other than a natural person or the Borrower or
any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitments and/or the Loans
(including such Lender’s participations in L/C Obligations and/or Swing Line
Loans) owing to it); provided that (i) such Lender’s obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any  provision
of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant,
agree to any amendment, waiver or other modification described in the first
proviso to Section 10.01 that directly affects such
Participant.  Subject to
subsection (e) of this Section, the Borrower agrees that each Participant
shall be entitled to the benefits of Sections 3.01, 3.04 and
3.05to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.09  as
though it were a Lender, provided such Participant agrees to be subject
to Section 2.13 as though it were a Lender.

 

(e)           A Participant shall not be entitled
to receive any greater payment under Section 3.01, 3.04 or 3.05  than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 3.01
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 10.15
as though it were a Lender.

 

(f)            Any Lender may at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement (including under its Note, if any) to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment shall release
such Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender as a party hereto.

 

(g)           As used herein, the following terms
have the following meanings:

 

“Eligible
Assignee” means (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund; and (d) any other Person (other than a natural
person) approved by (i) the Administrative Agent, the L/C Issuer and the Swing
Line Lender, and (ii) unless an Event of Default has occurred and is
continuing, the Borrower (each such approval not to be unreasonably withheld or
delayed); provided that notwithstanding the foregoing, “Eligible
Assignee” shall not include the Borrower or any of the Borrower’s
Affiliates or Subsidiaries.

 

“Fund”
means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and
similar extensions of credit in the ordinary course of its business.

 

“Approved
Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.

 

(h)           Notwithstanding anything to the
contrary contained herein, any Lender that is a Fund may create a security
interest in all or any portion of the Loans owing to it and the Note, if any,
held by it to the trustee for holders of obligations owed, or securities
issued, by such Fund as security for such obligations or securities, provided
that unless and until such trustee actually becomes a Lender in

 

67

 

compliance with the other provisions of this Section 10.07,
(i) no such pledge shall release the pledging Lender from any of its
obligations under the Loan Documents and (ii) such trustee shall not be
entitled to exercise any of the rights of a Lender under the Loan Documents
even though such trustee may have acquired ownership rights with respect to the
pledged interest through foreclosure or otherwise.

 

(i)            Notwithstanding anything to the
contrary contained herein, if at any time Bank of America assigns all of its
Commitments and Loans pursuant to subsection (b) above, Bank of America may,
(i) upon 30 days’ notice to the Borrower and the Lenders, resign as L/C
Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as Swing
Line Lender.  In the event of any such
resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled
to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender
hereunder; provided, however, that no failure by the Borrower to
appoint any such successor shall affect the resignation of Bank of America as
L/C Issuer or Swing Line Lender, as the case may be.  If Bank of America resigns as L/C Issuer, it shall retain all the
rights and obligations of the L/C Issuer hereunder with respect to all Letters
of Credit outstanding as of the effective date of its resignation as L/C Issuer
and all L/C Obligations with respect thereto (including the right to require
the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed
Amounts pursuant to Section 2.03(c)).  If Bank of America resigns as Swing Line Lender, it shall retain
all the rights of the Swing Line Lender provided for hereunder with respect to
Swing Line Loans made by it and outstanding as of the effective date of such
resignation, including the right to require the Lenders to make Base Rate Loans
or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c).

 

10.08      Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority (including any self-regulatory
authority, such as the National Association of Insurance Commissioners),
(c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party hereto,
(e) in connection with the exercise of any remedies hereunder or under any
other Loan Document or any action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same
as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the Borrower
and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source other
than the Borrower.  For purposes of this
Section, “Information” means all information received from any Loan
Party relating to any Loan Party or any of their respective businesses, other
than any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis prior to disclosure by any Loan Party, provided
that, in the case of information received from a Loan Party after the date
hereof, such information is clearly identified at the time of delivery as
confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

Notwithstanding
anything to the contrary, “Information” shall not include, and the
Administrative Agent and each Lender may disclose without limitation of any
kind, any information with respect to the “tax treatment” and “tax structure”
(in each case, within the meaning of Treasury Regulation Section 1.6011-4)
of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that are provided to the Administrative
Agent or such Lender relating to such tax treatment and tax structure; provided
that with respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transaction as
well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to the tax treatment or tax structure
of the Loans, Letters of Credit and transactions contemplated hereby.

 

68

 

10.09      Set-off.  In addition to any rights and remedies of the Lenders provided by
law, upon the occurrence and during the continuance of any Event of Default,
each Lender is authorized at any time and from time to time, without prior
notice to the Borrower or any other Loan Party, any such notice being waived by
the Borrower (on its own behalf and on behalf of each Loan Party) to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender to or for the credit
or the account of the respective Loan Parties against any and all Obligations
owing to such Lender hereunder or under any other Loan Document, now or
hereafter existing, irrespective of whether or not the Administrative Agent or
such Lender shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured or denominated
in a currency different from that of the applicable deposit or
indebtedness.  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.

 

10.10      Interest Rate Limitation.  Notwithstanding
anything to the contrary contained in any Loan Document, the interest paid or
agreed to be paid under the Loan Documents shall not exceed the Highest Lawful
Rate.  If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Highest Lawful
Rate, the excess interest shall be applied to the principal of the Loans or, if
it exceeds such unpaid principal, refunded to the Borrower.  In determining whether the interest
contracted for, charged, or received by the Administrative Agent or a Lender
exceeds the Highest Lawful Rate, such Person may, to the extent permitted by
Applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate,
and spread in equal or unequal parts the total amount of interest throughout
the contemplated term of the Obligations hereunder.

 

10.11      Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

10.12      Integration.  This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on
the subject matter hereof and thereof and supersedes all prior agreements,
written or oral, on such subject matter. 
In the event of any conflict between the provisions of this Agreement
and those of any other Loan Document, the provisions of this Agreement shall
control; provided that the inclusion of supplemental rights or remedies
in favor of the Administrative Agent or the Lenders in any other Loan Document
shall not be deemed a conflict with this Agreement.  Each Loan Document was drafted with the joint participation of
the respective parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.

 

10.13      Survival of Representations and
Warranties. 
All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery
hereof and thereof.  Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

10.14      Severability.  If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable,
(a) the legality, validity and enforceability of the remaining provisions
of this Agreement and the other Loan Documents shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

69

 

10.15      Tax Forms.

 

(a)           (i) Each Lender that is not a
“United States person” within the meaning of Section 7701(a)(30) of the
Code (a “Foreign Lender”) shall deliver to the Administrative Agent,
prior to receipt of any payment subject to withholding under the Code (or upon
accepting an assignment of an interest herein), two duly signed completed
copies of either IRS Form W-8BEN or any successor thereto (relating to
such Foreign Lender and entitling it to an exemption from, or reduction of,
withholding tax on all payments to be made to such Foreign Lender by the
Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor
thereto (relating to all payments to be made to such Foreign Lender by the
Borrower pursuant to this Agreement) or such other evidence satisfactory to the
Borrower and the Administrative Agent that such Foreign Lender is entitled to
an exemption from, or reduction of, U.S. withholding tax, including any
exemption pursuant to Section 881(c) of the Code.  Thereafter and from time to time, each such
Foreign Lender shall (A) promptly submit to the Administrative Agent such
additional duly completed and signed copies of one of such forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may then be available under then current United
States laws and regulations to avoid, or such evidence as is satisfactory to
the Borrower and the Administrative Agent of any available exemption from or
reduction of, United States withholding taxes in respect of all payments to be
made to such Foreign Lender by the Borrower pursuant to this Agreement,
(B) promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction, and (C) take such steps as shall not be materially
disadvantageous to it, in the reasonable judgment of such Lender, and as may be
reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable Laws that the Borrower make any deduction
or withholding for taxes from amounts payable to such Foreign Lender.

 

(ii)           Each Foreign Lender, to the extent it
does not act or ceases to act for its own account with respect to any portion
of any sums paid or payable to such Lender under any of the Loan Documents (for
example, in the case of a typical participation by such Lender), shall deliver
to the Administrative Agent on the date when such Foreign Lender ceases to act
for its own account with respect to any portion of any such sums paid or
payable, and at such other times as may be necessary in the determination of
the Administrative Agent (in the reasonable exercise of its discretion),
(A) two duly signed completed copies of the forms or statements required
to be provided by such Lender as set forth above, to establish the portion of
any such sums paid or payable with respect to which such Lender acts for its
own account that is not subject to U.S. withholding tax, and (B) two duly
signed completed copies of IRS Form W-8IMY (or any successor thereto),
together with any information such Lender chooses to transmit with such form,
and any other certificate or statement of exemption required under the Code, to
establish that such Lender is not acting for its own account with respect to a
portion of any such sums payable to such Lender.

 

(iii)          The Borrower shall not be required to
pay any additional amount to any Foreign Lender under Section 3.01
(A) with respect to any Taxes required to be deducted or withheld on the
basis of the information, certificates or statements of exemption such Lender
transmits with an IRS Form W-8IMY pursuant to this Section 10.15(a)
or (B) if such Lender shall have failed to satisfy the foregoing
provisions of this Section 10.15(a); provided that if such
Lender shall have satisfied the requirement of this Section 10.15(a)
on the date such Lender became a Lender or ceased to act for its own account
with respect to any payment under any of the Loan Documents, nothing in this Section 10.15(a)
shall relieve the Borrower of its obligation to pay any amounts pursuant to Section 3.01
in the event that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender or other Person for the account of which
such Lender receives any sums payable under any of the Loan Documents is not
subject to withholding or is subject to withholding at a reduced rate.

 

(iv)          The Administrative Agent may, without
reduction, withhold any Taxes required to be deducted and withheld from any
payment under any of the Loan Documents with respect to which the Borrower is
not required to pay additional amounts under this Section 10.15(a).

 

70

 

(b)           Upon the request of the
Administrative Agent, each Lender that is a “United States person” within the
meaning of Section 7701(a)(30) of the Code shall deliver to the
Administrative Agent two duly signed completed copies of IRS
Form W-9.  If such Lender fails to
deliver such forms, then the Administrative Agent may withhold from any
interest payment to such Lender an amount equivalent to the applicable back-up
withholding tax imposed by the Code, without reduction.

 

(c)           If any Governmental Authority asserts
that the Administrative Agent did not properly withhold or backup withhold, as
the case may be, any tax or other amount from payments made to or for the
account of any Lender, such Lender shall indemnify the Administrative Agent
therefor, including all penalties and interest, any taxes imposed by any
jurisdiction on the amounts payable to the Administrative Agent under this
Section, and costs and expenses (including Attorney Costs) of the
Administrative Agent.  The obligation of
the Lenders under this Section shall survive the termination of the
Commitments, repayment of all other Obligations hereunder and the resignation
of the Administrative Agent.

 

10.16      Replacement of Lenders.  Under any
circumstances set forth herein providing that the Borrower shall have the right
to replace a Lender as a party to this Agreement, the Borrower may, upon notice
to such Lender and the Administrative Agent, replace such Lender by causing
such Lender to assign its Commitments (with the assignment fee to be paid by
the Borrower in such instance) pursuant to Section 10.07(b) to one
or more other Lenders or Eligible Assignees procured by the Borrower; provided,
however, that if the Borrower elects to exercise such right with respect
to any Lender pursuant to Section 3.06(b), it shall be obligated to
replace all Lenders that have made similar requests for compensation pursuant
to Section 3.01 or 3.04. 
The Borrower shall (x) pay in full all principal, interest, fees
and other amounts owing to such Lender through the date of replacement
(including any amounts payable pursuant to Section 3.05),
(y) provide appropriate assurances and indemnities (which may include
letters of credit) to the L/C Issuer and the Swing Line Lender as each may
reasonably require with respect to any continuing obligation to fund
participation interests in any L/C Obligations or any Swing Line Loans then
outstanding, and (z) release such Lender from its obligations under the
Loan Documents.  Any Lender being
replaced shall execute and deliver an Assignment and Assumption with respect to
such Lender’s Commitment and outstanding Loans and participations in L/C
Obligations and Swing Line Loans.

 

10.17      Governing Law.

 

(a)           THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE;
PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)           The parties hereto agree that
Chapter 346 (other than 346.004) of the Texas Finance Code (which
regulates certain revolving credit accounts and revolving tri-party accounts)
shall not apply to Loans under this Agreement.

 

(c)           ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF TEXAS SITTING IN DALLAS COUNTY OR OF THE UNITED STATES
FOR THE NORTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS.  THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT
OR OTHER DOCUMENT RELATED THERETO.  THE
BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES

 

71

 

PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF
SUCH STATE.

 

10.18      Waiver of Right to Trial by Jury.  EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

10.19      Replacement. 
This Agreement represents a full and complete replacement of the Credit
Agreement dated June 14, 1999 (as amended, the “Existing Credit
Agreement”), among the Borrower, NationsBank, N.A. predecessor in interest
to Bank of America, N.A., as administrative agent and the Lenders named
therein, which amended and restated the Credit Agreement dated as of
September 9, 1997, among the Borrower, NationsBank of Texas, N.A.,
predecessor in interest to the Administrative Agent, as administrative agent,
and the Lenders named therein, which amended and restated the Credit Agreement
dated as of August 13, 1996, among the Borrower, NationsBank of Texas,
N.A., as administrative agent, Provident Services, Inc., as documentation
agent, and the Lenders named therein. The Existing Credit Agreement is deemed
replaced hereby as of the effectiveness of this Agreement.  The indebtedness under such prior version of
this Agreement continues under this Agreement (as reallocated among the Lenders
in connection with the effectiveness of this Agreement) and the execution of
this Agreement does not indicate a payment, satisfaction, novation, or
discharge thereof.  All support for the
indebtedness under the prior version of this Agreement continues to support the
indebtedness hereunder.  Upon the
effectiveness of this Agreement, all outstanding Advances shall be reallocated
among the Lenders ratably in accordance with their Commitments.  Amounts payable under the prior version of
this Agreement shall accrue thereunder until the effectiveness of this
Agreement and the Administrative Agent shall arrange with the Borrower and the
Lenders to prorate and ratably distribute to the Administrative Agent and the
Lenders all amounts payable under the prior version of this Agreement for the
periods prior to the effectiveness of this Agreement.

 

10.20      Entire Agreement. 
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.

 

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

 

72

 

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

 

	
   

  	
  CARRIAGE SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

Signature Page to Credit Agreement

 

S-1

 

	
   

  	
  BANK OF AMERICA, N.A., as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

Signature Page to Credit Agreement

 

S-2

 

	
   

  	
  BANK OF AMERICA, N.A., as
  a Lender, L/C Issuer and Swing Line Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

Signature Page to Credit Agreement

 

S-3

 

	
   

  	
  WELLS FARGO BANK TEXAS, NATIONAL
  ASSOCIATION,  as Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature Page to Credit Agreement

 

S-4

 

	
   

  	
  WELLS FARGO BANK TEXAS, NATIONAL
  ASSOCIATION,  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

Signature Page to Credit Agreement

 

S-5Exhibit 10.1

 

 

COMMON STOCK AND WARRANT PURCHASE AGREEMENT

 

by and among

 

BioSante
Pharmaceuticals, Inc.

 

and

 

the parties
named herein on Schedule 1, as Purchasers

 

 

August 4, 2003

 

 

 

This COMMON STOCK
AND WARRANT PURCHASE AGREEMENT (this “Agreement”) is dated as of
August 4, 2003, among BioSante Pharmaceuticals, Inc., a Delaware corporation
(the “Company”),
and the purchasers identified on Schedule 1 hereto (each a “Purchaser”
and collectively the “Purchasers”).

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated
thereunder, the Company desires to issue and sell to the Purchasers, and the
Purchasers, severally and not jointly, desire to purchase from the Company in
the aggregate, 4,791,982 shares of Common Stock and Warrants to purchase
2,395,993shares of Common Stock.

 

NOW,
THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1          Definitions.

 

In addition to
the terms defined elsewhere in this Agreement, for all purposes of this Agreement,
the following terms have the meanings indicated in this Section 1.1:

 

“Action”
shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144. With respect to
a Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser.

 

“Agreement”
shall have the meaning ascribed to such term in the Preamble.

 

“Business Day”
means any day except Saturday, Sunday and any day which shall be a federal
legal holiday or a day on which banking institutions in the State of Illinois
are authorized or required by law or other governmental action to close.

 

“Closing”
shall have the meaning ascribed to such term in Section 2.1(a).

 

“Closing Date”
shall have the meaning ascribed to such term in Section 2.1(a).

 

“Closing
Price” means on any particular date (a) the last reported closing
bid price per share of Common Stock on such date on the Trading Market (as
reported by Bloomberg L.P. at 4:15 PM (New York time) as the last reported closing
bid price for regular session trading on such day), or (b) if there is no such
price on such date, then the closing bid price on the Trading Market on the
date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New
York time) as the closing bid price for regular session trading on such day),
or (c) if the Common Stock is not then listed or quoted on the Trading Market
and if prices for the Common Stock are

 

2

 

then reported on the OTC
Bulletin Board or in the “pink sheets “ published by the National Quotation
Bureau Incorporated (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent closing bid price per share of
the Common Stock so reported, or (d) if the shares of Common Stock are not then
publicly traded the fair market value of a share of Common Stock as determined
by an appraiser selected in good faith by the Purchasers of a majority in
interest of the Shares then outstanding.

 

“Commission”
means the Securities and Exchange Commission.

 

“Common Stock”
means the common stock of the Company, $0.0001 par value per share, and any
securities into which such common stock may hereafter be reclassified.

 

“Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

“Company”
shall have the meaning ascribed to such term in the Preamble.

 

“Disclosure
Schedules” means the Disclosure Schedules concurrently delivered
herewith.

 

“Effective
Date” means the date that the Registration Statement is first
declared effective by the Commission.

 

“Environmental
Laws” shall have the meaning ascribed to such term in Section
3.1(y).

 

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

 

“FDC Act”
shall have the meaning ascribed to such term in Section 3.1(m).

 

“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).

 

“Governmental
Authorizations” shall have the meaning ascribed to such term in
Section 3.1(m).

 

“Hazardous
Substances” shall have the meaning ascribed to such term in Section
3.1(y).

 

“Indemnified
Party” shall have the meaning ascribed to such term in Section 5.3.

 

“Indemnifying
Party” shall have the meaning ascribed to such term in Section 5.3.

 

“Intellectual
Property” shall have the meaning ascribed to such term in Section
3.1(o).

 

“Investor
Rights Agreement” means the Investor Rights Agreement, dated as of
the date of this Agreement, among the Company and each of the Purchasers, in
the form of Exhibit B hereto.

 

3

 

“Lien”
means a lien, charge, security interest, encumbrance, right of first refusal or
other restriction, except for a lien for current taxes not yet due and payable
and a minor imperfection of title, if any, not material in nature or amount and
not materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company.

 

“Material
Adverse Effect” shall have the meaning ascribed to such term in
Section 3.1(b).

 

“Per Share
Purchase Price” equals $2.15, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement
and prior to Closing.

 

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

 

“Premises”
shall have the meaning ascribed to such term in Section 3.1(y).

 

“Purchaser”
shall have the meaning ascribed to such term in the Preamble.

 

“Registration
Statement” means a registration statement meeting the requirements
set forth in the Investor Rights Agreement and covering the resale by the
Purchasers of the Shares and the Warrant Shares.

 

“Rights”
shall have the meaning ascribed to such term in Section 3.1(o).

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.

 

“SEC Reports”
shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities”
means the Shares, the Warrants and the Warrant Shares.

 

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

 

“Shares”
means the shares of Common Stock issued to each Purchaser pursuant to this
Agreement.

 

“Subscription
Amount” means, as to each Purchaser, the amount set forth beside
such Purchaser’s name on Schedule 1 hereto, in United States dollars and
in immediately available funds.

 

“Subsidiary”
means, with respect to any entity, any corporation or other organization of
which securities or other ownership interest having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions, are directly or indirectly owned by such entity or of which such
entity is a partner or is, directly or indirectly, the

 

4

 

beneficial owner of 50% or more
of any class of equity securities or equivalent profit participation interests.

 

“Trading Day”
means (i) a day on which the Common Stock is traded on a Trading Market, or
(ii) if the Common Stock is not listed on a Trading Market, a day on which the
Common Stock is traded on the over-the-counter market, as reported by the OTC
Bulletin Board, or (iii) if the Common Stock is not quoted on the OTC Bulletin
Board, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices);
provided, that in the event that the Common Stock is not listed or quoted as
set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business
Day.

 

“Trading
Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American
Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the
Nasdaq SmallCap Market.

 

“Transaction
Documents” means this Agreement, the Investor Rights Agreement, the
Warrants and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

 

“Warrants”
means the Common Stock Purchase Warrants, in the form of Exhibit C
hereto. SCO Securities LLC and/or its designees are receiving warrants as
compensation for services rendered in connection with the transaction set forth
herein as provided on Schedule 1 attached hereto, which warrants shall
also be in the form of Exhibit C hereto.  Such warrants shall constitute “Warrants” for all purposes
hereunder and SCO Securities LLC and/or its designees and such other persons or
entities shall constitute “Purchasers” for all purposes hereunder.

 

“Warrant
Shares” means the shares of Common Stock issuable upon exercise of
the Warrants.

 

ARTICLE II

 

PURCHASE AND SALE

 

2.1          Closing.

 

(a)           The closing of the transactions
contemplated under this Agreement (the “Closing”) will take place as promptly as
practicable, but no later than five (5) Business Days following satisfaction or
waiver of the conditions set forth in Sections 2.2 and 2.3 (other than those
conditions which by their terms are not to be satisfied or waived until the
Closing), at the offices of Wiggin & Dana LLP, 400 Atlantic Street,
Stamford, CT 06901 (or remotely via exchange of documents and signatures) or at
such other place or day as may be mutually acceptable to the Purchasers and the
Company.  The date on which the Closing
occurs in the “Closing Date”.

 

(b)           At the Closing, the Purchasers shall
purchase, severally and not jointly, and the Company shall issue and sell, in
the aggregate, 4,791,982 shares of Common Stock and Warrants to purchase
2,395,993shares of Common Stock on the Closing Date. Each Purchaser shall

 

5

 

purchase from the Company, and
the Company shall issue and sell to each Purchaser, a number of Shares equal to
such Purchaser’s Subscription Amount divided by the Per Share Purchase Price
and a Warrant to purchase 50% of the number of Shares purchased by such Purchaser.  The Purchase Price paid by each Purchaser
for which SCO Securities LLC is entitled to a fee as placement agent shall be
placed in escrow pending the Closing pursuant to a Closing Escrow Agreement
among the Company, SCO Securities LLC and Wiggin & Dana LLP (the “Escrow Agent”),
which agreement shall be in the form attached hereto as Exhibit D (the “Closing
Escrow Agreement”).

 

2.2          Conditions to Obligations of
Purchasers to Effect the Closing.

 

The
obligations of each Purchaser to effect the Closing and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, by such Purchaser:

 

(a)           At the Closing (unless otherwise
specified below) the Company shall deliver or cause to be delivered to each
Purchaser the following:

 

(i) this
Agreement, duly executed by the Company;

 

(ii) a
certificate evidencing a number of Shares equal to such Purchaser’s
Subscription Amount divided by the Per Share Purchase Price as set forth on Schedule
1 hereto, registered in the name of such Purchaser;

 

(iii) a
Warrant, registered in the name of such Purchaser, pursuant to which such
Purchaser shall have the right to acquire up to the number of shares of Common
Stock equal to 50% of the Shares to be issued to such Purchaser at such
Closing, as set forth on Schedule 1 hereto;

 

(iv) the
Investor Rights Agreement, duly executed by the Company;

 

(v) a legal
opinion of Oppenheimer Wolff & Donnelly LLP, securities counsel to the
Company, in the form of Exhibit A hereto; and

 

(vi) a
certificate of the Secretary of the Seller (the “Secretary’s Certificate”),
attaching a true copy of the Certificate of Incorporation and Bylaws of the
Seller, as amended to the Closing Date, and attaching true and complete copies
of the resolutions of the Board of Directors of the Seller authorizing the
execution, delivery and performance of this Agreement and the other Transaction
Documents.

 

(b)           All representations and warranties of
the Company contained herein shall remain true and correct as of the Closing
Date as though such representations and warranties were made on such date
(except those representations and warranties that address matters only as of a
particular date will remain true and correct as of such date), except for any
inaccuracies that have not had, and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.  For purposes of this Section 2.2(b), all
representations and warranties contained in Section 3.1 qualified by “Material
Adverse Effect” or reference to “material” or “in all material respects” or
like variations will not be deemed so qualified.

 

6

 

(c)           As of the Closing Date, there shall
have been no Material Adverse Effect with respect to the Company since the date
hereof.

 

(d)           From the date hereof to the Closing
Date, trading in the Common Stock shall not have been suspended by the
Commission (except for any suspension of trading of limited duration agreed to
by the Company, which suspension shall be terminated prior to the Closing),
and, at any time prior to the Closing Date, trading in securities generally as
reported by Bloomberg Financial Markets shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities.

 

2.3.         Conditions to Obligations of the
Company to Effect the Closing.

 

(a)           The obligations of the Company to
effect the Closing and the transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, by the Company.  At the Closing, each Purchaser shall deliver
or cause to be delivered to the Company the following:

 

(i) this
Agreement, duly executed by such Purchaser;

 

(ii) such
Purchaser’s Subscription Amount, by wire transfer of immediately available
funds to the account of the Company and, in the case of each Purchaser for
which SCO Securities LLC is entitled to a fee as placement agent, as provided
in the Closing Escrow Agreement; and

 

(iii) the
Investor Rights Agreement, duly executed by such Purchaser.

 

(b)           All representations and warranties of
each of the Purchasers contained herein shall remain true and correct as of the
Closing Date as though such representations and warranties were made on such
date.

 

ARTICLE III

 

REPRESENTATIONS AND
WARRANTIES

 

3.1          Representations and Warranties of
the Company.

 

Except as set
forth under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser:

 

(a)           Subsidiaries.
The Company has no direct or indirect Subsidiaries. Any references in the
Transaction Documents to Subsidiaries existing as of the date hereof shall be
disregarded.

 

(b)           Organization and Qualification.
Each of the Company and the Subsidiaries is an entity duly incorporated or
otherwise organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization (as applicable), with the
requisite corporate power and authority to own and use its properties and
assets and to carry on its

 

7

 

business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws
or other organizational or charter documents. 
Each of the Company and the Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would not have or
reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the business or financial condition of the Company
and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on
the Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material
Adverse Effect”).

 

(c)           Authorization; Enforceability.
The Company has the requisite corporate power and authority to enter into and
to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution
and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further action
is required by the Company in connection therewith.  Each Transaction Document has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to laws
of general application relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and rules
of law governing specific performance, injunctive relief, or other equitable
remedies.

 

(d)           No Conflicts.
The execution, delivery and performance of the Transaction Documents by the
Company and the consummation by the Company of the transactions contemplated
thereby do not and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding
to which the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (iii) result in
a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected, except, in the cases of clause (ii), where
such conflict, default or violation would not have or reasonably be expected to
result in a Material Adverse Effect.

 

(e)           Filings, Consents and Approvals.
The Company is not required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (a) the filing with the
Commission of the Registration Statement, the

 

8

 

application(s) to each Trading
Market for the listing of the Shares and Warrant Shares for trading thereon in
the time and manner required thereby, Form D and applicable Blue Sky filings
and (b) such as have already been obtained or such exemptive filings as are
required to be made under applicable securities laws.

 

(f)            Issuance of the Securities.
The Securities are duly authorized and, when issued and paid for in accordance
with the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens, other than any Liens created by or
imposed on the holders thereof through no action of the Company; and provided,
however, that the Securities will be subject to restrictions on transfer and
state and federal securities laws as provided herein.  The Company has reserved from its duly authorized capital stock
the maximum number of shares of Common Stock issuable pursuant to this
Agreement and the Warrants.

 

(g)           Capitalization.

 

(i)            The authorized and outstanding
capitalization of the Company is as described in the Company’s most recent
periodic report filed with the Commission. The Company has not issued any
capital stock since such filing, other than pursuant to the exercise of
employee stock options under the Company’s stock option plans and pursuant to
the conversion or exercise of Common Stock Equivalents outstanding on the date
thereof.  All shares of the Company’s
issued and outstanding capital stock have been duly authorized, are validly
issued and outstanding, and are fully paid and nonassessable. No securities
issued by the Company from the date of its incorporation to the date hereof
were issued in violation of any statutory or common law preemptive rights.  There are no dividends which have accrued or
been declared but are unpaid on the capital stock of the Company.  All taxes required to be paid by the Company
in connection with the issuance and any transfers of the Company’s capital
stock have been paid.  All securities of
the Company have been issued in all material respects in accordance with the
provisions of all applicable securities and other laws.

 

(ii)           No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as a result of the purchase and sale of the Securities and except for
employee and director stock options under the Company’s equity compensation
plans, outstanding warrants to purchase 1,643,750 shares of Common Stock and
466,602 outstanding shares of class C special stock, there are no outstanding
options, warrants, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or securities or rights convertible or exchangeable into shares of Common
Stock. The issue and sale of the Securities will not obligate the Company to
issue shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities.

 

9

 

(h)           SEC Reports; Financial Statements;
Liabilities.

 

(i)            The Company has filed all reports
required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) of the Exchange Act, for the 12
months preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials, including the
exhibits thereto, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective
filing dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations of the Commission promulgated thereunder, as
applicable, and none of the SEC Reports, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

 

(ii)           The financial statements of the
Company included in the SEC Reports comply with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States, applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, subject to normal year-end audit adjustments.  Such financial statements fairly present in
all material respects the financial position of the Company and its
consolidated subsidiaries, if any,  as
of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal
year-end audit adjustments.

 

(iii)          Except as set forth in the SEC
Reports, and except for liabilities and obligations incurred since March 31,
2003 in the ordinary course of business, consistent with past practice, as of the
date hereof: (i) the Company and its Subsidiaries do not have any material
liabilities or obligations (absolute, accrued, contingent or otherwise) and
(ii) there has not been any aspect of the prior or current conduct of the
business of the Company or its Subsidiaries which may form the basis for any
material claim by any third party which if asserted could result in a Material
Adverse Effect.

 

(i)            Material Changes.  Since March 31, 2003, the Company has
conducted its business only in the ordinary course, consistent with past
practice, and there has not occurred:

 

(i)            any event that could reasonably be
expected to have a Material Adverse Effect on the Company or any of its
Subsidiaries;

 

(ii)           any amendments or changes in the
charter documents of the Company and its Subsidiaries;

 

(iii)          any damage, destruction or loss,
whether or not covered by insurance, that would, individually or in the
aggregate, have or would be reasonably likely to have, a Material Adverse
Effect on the Company and its Subsidiaries;

 

10

 

(iv)          any:

 

(A)
incurrence, assumption or guarantee by the Company or its Subsidiaries of any
debt for borrowed money other than (i) equipment leases made in the ordinary
course of business, consistent with past practice and (ii) any such incurrence,
assumption or guarantee with respect to an amount of $25,000 or less that has
been disclosed in the SEC Reports;

 

(B) issuance
or sale of any securities convertible into or exchangeable for securities of
the Company other than to directors, employees and consultants pursuant to
existing equity compensation or stock purchase plans of the Company;

 

(C) issuance
or sale of options or other rights to acquire from the Company or its
Subsidiaries, directly or indirectly, securities of the Company or any
securities convertible into or exchangeable for any such securities, other than
options issued to directors, employees and consultants in the ordinary course
of business, consistent with past practice;

 

(D) issuance or
sale of any stock, bond or other corporate security other than to directors,
employees and consultants pursuant to existing equity compensation or stock
purchase plans of the Company;

 

(E) discharge
or satisfaction of any material Lien;

 

(F)
declaration or making any payment or distribution to stockholders or purchase
or redemption of any share of its capital stock or other security other than to
directors, officers and employees of the Company or its Subsidiaries as
compensation for services rendered to the Company or its Subsidiary (as
applicable) or for reimbursement of expenses incurred on behalf of the Company
or its Subsidiary (as applicable);

 

(G) sale,
assignment or transfer of any of its intangible assets except in the ordinary
course of business, consistent with past practice, or cancellation of any debt
or claim except in the ordinary course of business, consistent with past
practice;

 

(H) waiver of
any right of substantial value whether or not in the ordinary course of
business;

 

(I) material
change in officer compensation, except in the ordinary course of business and
consistent with past practice; or

 

(J) other
commitment (contingent or otherwise) to do any of the foregoing.

 

(v)           any creation, sufferance or
assumption by the Company or any of its Subsidiaries of any Lien on any asset
or any making of any loan, advance or capital contribution to or investment in
any Person, in an aggregate amount which exceeds $25,000 outstanding at any
time;

 

(vi)          any entry into, amendment of,
relinquishment, termination or non-renewal by the Company or its Subsidiaries
of any material contract, license, lease, transaction, commitment or other
right or obligation, other than in the ordinary course of business, consistent
with past practice; or

 

11

 

(vii)         any transfer or grant of a right with
respect to the patents, trademarks, trade names, service marks, trade secrets,
copyrights or other intellectual property rights owned or licensed by the
Company or its Subsidiaries, except as among the Company and its Subsidiaries.

 

(j)            Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company, any Subsidiary or any of their respective properties before or by
any court, arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any Subsidiary,
nor, to the knowledge of the Company, any director or officer thereof, is or
has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty.  To the knowledge of the
Company, there has not been and there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.

 

(k)           Labor Relations.
No material labor dispute exists or, to the knowledge of the Company, is
imminent with respect to any of the employees of the Company which could
reasonably be expected to result in a Material Adverse Effect.

 

(l)            Compliance.
Neither the Company nor any Subsidiary (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is or has been in violation of
any statute, rule or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws applicable to its
business, except in the case of clauses (i) and (iii) as would not have or
reasonably be expected to result in a Material Adverse Effect.

 

(m)          Licenses; Compliance With FDA and
Other Regulatory Requirements.

 

(i)            The Company holds all material
authorizations, consents, approvals, franchises, licenses and permits required
under applicable law or regulation for the operation of the business of the
Company and its Subsidiaries as presently operated (the “Governmental Authorizations”).
All the Governmental Authorizations have been duly issued or obtained and are
in full force and effect, and the Company and its Subsidiaries are in material
compliance with the terms of all the Governmental Authorizations. The Company
and its Subsidiaries have not engaged in any activity that, to their knowledge,
would cause revocation or suspension of any such Governmental Authorizations.
The Company has no knowledge of any facts which could reasonably be expected to
cause the Company to believe that the Governmental Authorizations will not be
renewed by the appropriate governmental authorities in the ordinary course.
Neither

 

12

 

the execution, delivery nor
performance of this Agreement shall adversely affect the status of any of the
Governmental Authorizations.

 

(ii)           Without limiting the generality of
the representations and warranties made in sub-paragraph (i) above, the Company
represents and warrants that (i) the Company and each of its Subsidiaries is in
material compliance with all applicable provisions of the United States Federal
Food, Drug, and Cosmetic Act and the rules and regulations promulgated
thereunder (the “FDC Act”) and equivalent laws, rules and regulations in
jurisdictions outside the United States in which the Company or its
Subsidiaries do business, (ii) its products and those of each of its
Subsidiaries that are in the Company’s control are not adulterated or
misbranded and are in lawful distribution, (iii) all of the products marketed
by and within the control of the Company comply in all material respects with
any conditions of approval and the terms of the application by the Company to
the appropriate Regulatory Authorities, (iv) no Regulatory Authority has
initiated legal action with respect to the manufacturing of the Company’s
products, such as seizures or required recalls, and the Company uses
commercially reasonable efforts to comply with applicable good manufacturing
practice regulations, (v) its products are labeled and promoted by the Company
and its representatives in substantial compliance with the applicable terms of
the marketing applications submitted by the Company to the Regulatory
Authorities and the provisions of the FDC Act and foreign equivalents, (vi) all
adverse events that were known to and required to be reported by Company to the
Regulatory Authorities have been reported to the Regulatory Authorities in a
timely manner, (vii) neither the Company nor any of its Subsidiaries is, to
their knowledge, employing or utilizing the services of any individual who has
been debarred under the FDC Act or foreign equivalents, (viii) all stability
studies required to be performed for products distributed by the Company or any
of its Subsidiaries have been completed or are ongoing in material compliance
with the applicable Regulatory Authority requirements, (ix) any products
exported by the Company or any of its Subsidiaries have been exported in
compliance with the FDC Act and (x) the Company and its Subsidiaries are in
compliance in all material respects with all applicable provisions of the
Controlled Substances Act.  For purposes
of this Section 3.1(m), “Regulatory Authority” means any
governmental authority in a country or region that regulates the manufacture or
sale of Company’s products, including, but not limited to, the United States
Food and Drug Administration.

 

(n)           Title to Assets.
The Company and the Subsidiaries do not own any real property, and have good
and marketable title to all personal property owned by them that is material to
the business of the Company and the Subsidiaries, taken as a whole, in each
case free and clear of all Liens, except those, if any, reflected in the
Company’s financial statements.  Any
real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
(subject to laws of general application relating to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally and rules of law governing specific performance, injunctive relief,
or other equitable remedies) with which the Company and the Subsidiaries are in
material compliance.

 

(o)           Intellectual Property.

 

(i)            The Company or a Subsidiary thereof
has the right to use or is the sole and exclusive owner of all right, title and
interest in and to all foreign and domestic patents, patent rights, trademarks,
service marks, trade names, brands and copyrights (whether or not registered
and, if applicable, including pending applications for registration) owned,
used or controlled by

 

13

 

the Company and its
Subsidiaries (collectively, the “Rights”) and in and to each material
invention, software, trade secret, technology, product, composition, formula
and method of process used by the Company or its Subsidiaries (the Rights and
such other items, the “Intellectual Property”), and, to the
Company’s knowledge, has the right to use the same, free and clear of any claim
or conflict with the rights of others;

 

(ii)           other than as set forth in the SEC
Reports, no royalties or fees (license or otherwise) are payable by the Company
or its Subsidiaries to any Person by reason of the ownership or use of any of
the Intellectual Property;

 

(iii)          there have been no claims made against
the Company or its Subsidiaries asserting the invalidity, abuse, misuse, or
unenforceability of any of the Intellectual Property, and, to the best of the
Company’s knowledge, there are no reasonable grounds for any such claims;

 

(iv)          neither the Company nor its
Subsidiaries have made any claim of any violation or infringement by others of
its rights in the Intellectual Property, and to the best of the Company’s
knowledge, no reasonable grounds for such claims exist; and

 

(v)           neither the Company nor its
Subsidiaries have received notice that it is in conflict with or infringing
upon the asserted rights of others in connection with the Intellectual
Property.

 

(p)           Insurance.
The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company and the
Subsidiaries are engaged.  All of the
insurance policies of the Company and its Subsidiaries are in full force and
effect and are valid and enforceable in accordance with their terms, and the
Company and its Subsidiaries have complied with all material terms and
conditions thereof.  Neither the Company
nor any Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.

 

(q)           Transactions With Affiliates and
Employees. 
None of the officers or directors of the Company and, to the knowledge
of the Company, none of the employees of the Company is presently a party to
any transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner, other than
(a) for payment of salary or consulting fees for services rendered, (b)
reimbursement for expenses incurred on behalf of the Company and (c) for other
employee benefits, including stock option agreements and other stock awards
under any equity compensation plan of the Company.

 

(r)           Internal Accounting Controls.
The Company and each of the Subsidiaries maintains a system of internal
accounting controls sufficient in the judgment of the Company’s management to
provide reasonable assurance that (i) transactions are executed in accordance

 

14

 

with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s Form 10-KSB or 10-QSB, as the case may be, is being
prepared. The Company’s certifying officers have evaluated the effectiveness of
the Company’s controls and procedures as of a date within 90 days prior to the
filing date of the Form 10-QSB for the quarter ended March 31, 2003.  The Company presented in its Form 10-QSB for
the quarter ended March 31, 2003, the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the March 31, 2003. 
Since March 31, 2003, there have been no significant changes in the
Company’s internal controls (as such term is defined in Item 307(b) of
Regulation S-K under the Exchange Act) or, to the Company’s knowledge, in other
factors that could significantly affect the Company’s internal controls.

 

(s)           Certain Fees.
Except for fees payable to SCO Securities LLC, no brokerage or finder’s fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this Agreement.
The Purchasers shall have no obligation with respect to any fees or with
respect to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement.

 

(t)            Private Placement; Integrated
Offering. Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market.  Neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of the Securities Act and would as a result require registration
under the Securities Act or trigger any applicable shareholder approval
provisions, including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the securities of
the Company are listed or designated.

 

(u)           Charter, Bylaws and Corporate
Records. The minute books of the Company and its
Subsidiaries contain in all material respects complete and accurate records of
all meetings and other corporate actions of the board of directors, committees
of the board of directors, incorporators and stockholders of the Company and
its Subsidiaries from the date of incorporation of each such entity to the date
hereof. All material corporate decisions and actions have been validly made or
taken. All corporate books, including without limitation the share

 

15

 

transfer register, comply in
all material respects with applicable laws and regulations and have been
regularly updated.

 

(v)            Registration Rights.
Other than the parties to that certain Registration Rights Agreement dated May
6, 1999 among the Company and the parties thereto and those certain
Subscription Agreements between the Company and the subscribers thereto
executed in connection with the Company’s April 2001 private placement, no
Person has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company.

 

(w)           Listing and Maintenance Requirements.
The Company has not, in the 12 months preceding the date hereof, received
notice from any Trading Market on which the Common Stock is or has been listed
or quoted to the effect that the Company is not in compliance with the listing
or maintenance requirements of such Trading Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

 

(x)           Taxes. All
tax returns and tax reports required to be filed with respect to the income,
operations, business or assets of the Company and its Subsidiaries have been
timely filed (or appropriate extensions have been obtained) with the
appropriate governmental agencies in all jurisdictions in which such returns
and reports are required to be filed, and all of the foregoing as filed are, in
all material respects, correct and complete and, in all material respects,
reflect accurately all liability for taxes of the Company and its Subsidiaries
for the periods to which such returns relate, and all amounts shown as owing
thereon have been paid. All income, profits, franchise, sales, use, value
added, occupancy, property, excise, payroll, withholding, FICA, FUTA and other
taxes (including interest and penalties), if any, collectible or payable by the
Company and its Subsidiaries or relating to or chargeable against any of its
material assets, revenues or income or relating to any employee, independent
contractor, creditor, stockholder or other third party through the Closing
Date, were fully collected and paid by such date if due by such date or
provided for by adequate reserves in the financial statements contained in the
SEC Reports as of and for the periods ended March 31, 2003 (other than taxes
accruing after such date) and all similar items due through the Closing Date
will have been fully paid by that date or provided for by adequate reserves,
whether or not any such taxes were reported or reflected in any tax returns or
filings. No taxation authority has sought to audit the records of the Company
or any of its Subsidiaries for the purpose of verifying or disputing any tax
returns, reports or related information and disclosures provided to such
taxation authority, or for the Company’s or any of its Subsidiaries’ alleged
failure to provide any such tax returns, reports or related information and
disclosure. No material claims or deficiencies have been asserted against or
inquiries raised with the Company or any of its Subsidiaries with respect to
any taxes or other governmental charges or levies which have not been paid or
otherwise satisfied, including claims that, or inquiries whether, the Company
or any of its Subsidiaries has not filed a tax return that it was required to
file, and, to the best of the Company’s knowledge, there exists no reasonable
basis for the making of any such claims or inquiries. Neither the Company nor
any of its Subsidiaries has waived any restrictions on assessment or collection
of taxes or consented to the extension of any statute of limitations relating
to taxation.

 

(y)           Environmental Matters. None
of the premises or any properties owned, occupied or leased by the Company or
its Subsidiaries (the “Premises”) has been used by the Company or
the Subsidiaries or, to the Company’s knowledge, by any other Person, to

 

16

 

manufacture, treat, store, or
dispose of any substance that has been designated to be a “hazardous substance”
under applicable Environmental Laws (hereinafter defined) (“Hazardous
Substances”) in violation of any applicable Environmental Laws. To
its knowledge, the Company has not disposed of, discharged, emitted or released
any Hazardous Substances which would require, under applicable Environmental
Laws, remediation, investigation or similar response activity. No Hazardous
Substances are present as a result of the actions of the Company or, to the
Company’s knowledge, any other Person, in, on or under the Premises which would
give rise to any liability or clean-up obligations of the Company under
applicable Environmental Laws. The Company and, to the Company’s knowledge, any
other Person for whose conduct it may be responsible pursuant to an agreement
or by operation of law, are in compliance with all laws, regulations and other
federal, state or local governmental requirements, and all applicable
judgments, orders, writs, notices, decrees, permits, licenses, approvals,
consents or injunctions in effect on the date of this Agreement relating to the
generation, management, handling, transportation, treatment, disposal, storage,
delivery, discharge, release or emission of any Hazardous Substance (the “Environmental
Laws”). Neither the Company nor, to the Company’s knowledge, any
other Person for whose conduct it may be responsible pursuant to an agreement
or by operation of law has received any written complaint, notice, order, or
citation of any actual, threatened or alleged noncompliance with any of the
Environmental Laws, and there is no proceeding, suit or investigation pending
or, to the Company’s knowledge, threatened against the Company or, to the
Company’s knowledge, any such Person with respect to any violation or alleged
violation of the Environmental Laws, and, to the knowledge of the Company,
there is no basis for the institution of any such proceeding, suit or
investigation.

 

(z)           Disclosure.
The Company confirms that neither the Company nor any other Person acting on
its behalf and at the direction of the Company, has provided any of the
Purchasers or their agents or counsel with any information that in the
Company’s reasonable judgment, at the time such information was furnished,
constitutes material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representations and
covenants in effecting transactions in securities of the Company. All
disclosure provided to the Purchasers regarding the Company, its business and
the transactions contemplated hereby, including the Disclosure Schedules to
this Agreement, furnished by or on behalf of the Company are true and correct
and do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.

 

3.2          Representations and Warranties of
the Purchasers.

 

Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of
the date hereof and as of the Closing Date to the Company as follows:

 

(a)           Organization; Authority;
Enforceability. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full power and authority to enter into
and to consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery and
performance by such Purchaser of the transactions contemplated by this
Agreement has been duly authorized by all necessary corporate or similar action
on the part of such Purchaser. Each Transaction Document to which it is a party
has been

 

17

 

duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, subject to laws
of general application relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and
rules of law governing specific performance, injunctive relief, or other
equitable remedies.

 

(b)           General Solicitation.
Such Purchaser is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.

 

(c)           No Public Sale or Distribution.
Such Purchaser is (i) acquiring the Shares and Warrants and (ii) upon exercise
of the Warrants will acquire the Warrant Shares, for its own account and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted under the
Securities Act; provided, however, that by making the representations
herein, such Purchaser does not agree to hold any of the Securities for any
minimum or other specific term and reserves the right to dispose of the Securities
at any time in accordance with or pursuant to a registration statement or an
exemption under the Securities Act. Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. Such Purchaser does not have
any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.

 

(d)           Accredited Investor Status.
Such Purchaser is an “accredited investor” as that term is defined in Rule
501(a) of Regulation D.

 

(e)           Residency.  Such Purchaser is a resident of
the jurisdiction set forth below such Purchaser’s name on Schedule 1
attached hereto.

 

(f)            Reliance on Exemptions.
Such Purchaser understands that the Shares and Warrants are being offered and
sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to
acquire the Common Stock and Warrants.

 

(g)           Information.
Such Purchaser and its advisors, if any, have been furnished with all publicly
available materials relating to the business, finances and operations of the
Company and such other publicly available materials relating to the offer and
sale of the Shares and Warrants as have been requested by such Purchaser. Such
Purchaser and its advisors, if any, have been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other due diligence
investigations conducted by such Purchaser or its advisors, if any, or its
representatives shall modify, amend or affect such Purchaser’s right to rely on
the Company’s representations and warranties contained herein. Such Purchaser
understands that its investment in the Shares and Warrants involves a high
degree of risk.

 

18

 

(h)           No Governmental Review.
Such Purchaser understands that no United States federal or state agency or any
other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares and Warrants or the fairness or
suitability of the investment in the Shares and Warrants, nor have such
authorities passed upon or endorsed the merits of the offering of the Shares
and Warrants.

 

(i)            Experience of Such Purchaser.
Such Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters,
including investing in companies engaged in the business in which the Company
is engaged, so as to be capable of evaluating the merits and risks of the
prospective investment in the Shares and Warrants, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the
economic risk of an investment in the Shares and Warrants and, at the present
time, is able to afford a complete loss of such investment.

 

The Company
acknowledges and agrees that each Purchaser does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.

 

ARTICLE IV

 

OTHER AGREEMENTS OF
THE PARTIES

 

4.1          Transfer Restrictions.

 

(a)           The Securities may only be disposed
of in compliance with state and federal securities laws.  In connection with any transfer of
Securities other than pursuant to an effective registration statement, to the
Company, to an Affiliate of a Purchaser (who is an accredited investor and
executes a customary representation letter) or in connection with a pledge as
contemplated in Section 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act, provided, however, that in
the case of a transfer pursuant to Rule 144, no opinion shall be required if
the transferor provides the Company with a customary seller’s representation
letter, and if such sale is not pursuant to subsection (k) of Rule 144, a
customary broker’s representation letter and a Form 144.   As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and the Investor Rights
Agreement, and shall have the rights of a Purchaser under this Agreement and
the Investor Rights Agreement.  Except
as required by federal securities laws and the securities law of any state or
other jurisdiction within the United States, the Securities may be transferred,
in whole or in part, by any of the Purchasers at any time.  The Company shall reissue certificates
evidencing the Securities upon surrender of certificates evidencing the
Securities being transferred in accordance with this Section 4.1(a).

 

(b)           The Purchasers agree to the
imprinting, so long as is required by this Section 4.1(b), of a legend on any
of the Securities in the following form:

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE

 

19

 

IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT.

 

The Company
acknowledges and agrees that a Purchaser may from time to time pledge pursuant
to a bona fide margin agreement with a registered broker-dealer or grant a
security interest in some or all of the Securities to a financial institution
that is an “accredited investor” as defined in Rule 501(a) under the Securities
Act and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties.  Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of legal counsel of the
pledgee, secured party or pledgor shall be required in connection therewith;
provided, however, that such Purchaser shall provide the Company with such
documentation as is reasonably requested by the Company to ensure that the
pledge is pursuant to a bona fide margin agreement with a registered broker-dealer
or a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under
the Securities Act.  At the appropriate
Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably
request in connection with a pledge or transfer of the Securities, including
the preparation and filing of any required prospectus supplement under Rule
424(b)(3) under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of selling stockholders
thereunder.

 

(c)           Certificates evidencing the Shares
and Warrant Shares shall not contain any legend (including the legend set forth
in Section 4.1(b)), (i) following any sale of such Shares or Warrant Shares
pursuant to Rule 144, or (ii) if such Shares or Warrant Shares are eligible for
sale under Rule 144(k), or (iii) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission). The
Company shall cause its counsel to issue a legal opinion to the Company’s
transfer agent promptly upon the occurrence of any of the events in clauses
(i), (ii) or (iii) above to effect the removal of the legend hereunder and
shall also cause its counsel to issue a “blanket” legal opinion to the
Company’s transfer agent promptly after the Effective Date, if required by the
Company’s transfer agent, to allow sales pursuant to an effective Registration
Statement. The Company agrees that at such time as such legend is no longer
required under this Section 4.1(c), it will, no later than three Trading Days
following the delivery by a Purchaser to the Company or the Company’s transfer
agent of a certificate representing Shares or Warrant Shares, as the case may
be, issued with a restrictive legend, deliver or cause to be delivered to such
Purchaser a certificate representing such Securities that is free from all
restrictive and other legends. The

 

20

 

Company may not make any
notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this Section.

 

(d)           Each Purchaser, severally and not
jointly, agrees that the removal of the restrictive legend from certificates
representing Securities as set forth in this Section 4.1 is predicated upon the
Company’s reliance on, and the Purchaser’s agreement that, and each Purchaser
hereby agrees that, the Purchaser will not sell any Securities except pursuant
to either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom.

 

4.2          Furnishing of Information.

 

As long as any
Purchaser owns Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. Upon the request of any such holder of Securities, the
Company shall deliver to such holder a written certification of a duly
authorized officer as to whether it has complied with the preceding sentence.
As long as any Purchaser owns Securities, if the Company is not required to
file reports pursuant to the Exchange Act, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c), such
information as is required for the Purchasers to sell the Securities under Rule
144. The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell such Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144.

 

4.3          Integration.

 

The Company
shall not sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that
would require the registration under the Securities Act of the sale of the
Securities to the Purchasers or that would be integrated with the offer or sale
of the Securities for purposes of the rules and regulations of any Trading
Market.

 

4.4          Limitation on Future Financing.

 

From the date
hereof until the earlier of 120 calendar days after the Closing Date or 15
calendar days after the Effective Date, the Company shall not effect an
issuance of its Common Stock or Common Stock Equivalents.  Notwithstanding anything to the contrary
herein, this Section 4.4 shall not apply to the following: (a) the granting of
options or other equity compensation awards or the issuance of Common Stock or
Common Stock Equivalents to employees, independent contractors, officers and
directors of the Company pursuant to any equity compensation plan duly adopted
by a majority of the non-employee members of the Board of Directors of the
Company or a majority of the members of a committee of non-employee directors
established for such purpose (and the exercise of such options or Common Stock
Equivalents), or (b) the exercise of any security issued by the Company in
connection with the offer and sale of the Company’s securities pursuant to this
Agreement, or (c) the exercise of or conversion of any convertible securities,
options or warrants issued and outstanding on the date hereof, or (d) the issuance
of Common Stock or Common Stock Equivalents in connection with

 

21

 

acquisitions or strategic
investments, partnerships, business relationship or joint venture, the primary
purpose of which is not to raise capital, or (e) the issuance of securities
pursuant to a stock split or stock dividend or similar capital modification, or
(f) the issuance of securities upon the authorization of the Company’s Board of
Directors in connection with business conducted by the Company with vendors,
lessors or financial institutions in connection with financing transactions.

 

4.5          Publicity.

 

The Company
shall, within five Business Days following the Closing Date, file a Current
Report on Form 8-K, disclosing the transactions contemplated hereby and make
such other filings and notices in the manner and time required by the
Commission.  The Company and SCO
Securities LLC shall consult with each other in issuing any press releases with
respect to the transactions contemplated hereby, and neither the Company nor
any Purchaser nor SCO Securities LLC shall issue any such press release or
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Purchaser or SCO Securities
LLC, or without the prior consent of SCO Securities LLC, with respect to any
press release of the Company, which consent shall not unreasonably be withheld
or delayed, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.

 

4.6          Shareholders Rights Plan.

 

No claim will
be made or enforced by the Company or any other Person that any Purchaser is an
“acquiring person” under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Purchasers.

 

4.7          Non-Public Information.

 

The Company
covenants and agrees that neither it nor any other Person acting on its behalf
will provide any Purchaser or its agents or counsel with any information that
the Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and confirms
that each Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company.

 

4.8          Use of Proceeds.

 

The Company
covenants and agrees that the proceeds from the sale of the Common Stock and
Warrants shall be used by the Company for working capital and general corporate
purposes; under no circumstances shall any portion of the proceeds be applied
to:

 

(i)                                   accelerated
repayment of debt existing on the date hereof;

 

(ii)                                the payment of
dividends or other distributions on any capital stock of the Company;

 

22

 

(iii)                             increased executive
compensation (other than in the ordinary course of business) or loans to
officers, employees, stockholders or directors, unless approved by a majority
of the disinterested members of the Board of Directors;

 

(iv)                            the purchase of debt or
equity securities of any Person, including the Company and its Subsidiaries,
except in connection  with investment of
excess cash in high quality (A1/P1 or better) money market instruments having
maturities of one year or less; or

 

(v)                               any expenditure not
directly related to the business of the Company.

 

4.9          Reservation of Common Stock.

 

As of the date
hereof, the Company has reserved and the Company shall continue to reserve and
keep available at all times, free of preemptive rights, a sufficient number of
shares of Common Stock for the purpose of enabling the Company to issue Shares
pursuant to this Agreement and Warrant Shares pursuant to the Warrants.

 

4.10        Listing of Common Stock.

 

The Company
hereby agrees to use commercially reasonable efforts to maintain the listing of
the Common Stock on the OTC Bulletin Board or any applicable Trading Market,
and, if required, as soon as reasonably practicable following the Closing to
list the applicable Shares and Warrant Shares on the OTC Bulletin Board or any
applicable Trading Market. The Company further agrees, if the Company applies
to have the Common Stock traded on any other Trading Market, it will include in
such application the Shares and the Warrant Shares, and will take such other
action as is necessary to cause the Shares and Warrant Shares to be listed on
such other Trading Market as promptly as possible.

 

4.11        Intentionally Omitted.

 

4.12        Business
Operations. Until the earlier of:  (i) the third year anniversary of the
Closing Date and (ii) the date that the Purchasers own less than 50% of the
Shares originally issued pursuant to this Agreement, the Company shall comply
with the following covenants:

 

(a)           Insurance.
The Company and its Subsidiaries shall maintain insurance policies such that
the representations contained in the first sentence of Section 3.1(p) hereof
continue to be true and correct and shall, from time to time upon the written
request of the Purchasers, promptly furnish or cause to be furnished to the
Purchasers evidence, in form and substance reasonably satisfactory to the
Purchasers, of the maintenance of all insurance maintained by it.

 

(b)           Corporate
Existence; Licenses. 
So long as a Purchaser owns Securities, the Company shall preserve and
maintain and cause its Subsidiaries to preserve and maintain their corporate
existence and good standing in the jurisdiction of their incorporation and the
rights, privileges and franchises of the Company and its Subsidiaries (except,
in each case, in the event of a merger or consolidation in which the Company or
its Subsidiaries, as applicable, is not the surviving entity) in each case
where the failure to so preserve or maintain could have a Material Adverse
Effect on the financial condition, business or operations of the Company and
its

 

23

 

Subsidiaries taken as a whole.  The Company shall, and shall cause its
Subsidiaries to, maintain at all times all material licenses or permits
necessary to the conduct of its business and as required by any governmental
agency or instrumentality thereof, including without limitation all FDA
clearances and approvals.

 

(c)           Taxes
and Claims. 
The Company and its Subsidiaries shall duly pay and discharge (a) all
taxes, assessments and governmental charges upon or against the Company or its
properties or assets prior to the date on which penalties attach thereto,
unless and to the extent that such taxes are being diligently contested in good
faith and by appropriate proceedings, and appropriate reserves therefor have
been established, and (b) all lawful claims, whether for labor, materials,
supplies, services or anything else which might or could, if unpaid, become a lien
or charge upon the properties or assets of the Company or its Subsidiaries,
unless and to the extent only that the same are being contested in good faith
and by appropriate proceedings and appropriate reserves therefor have been
established.

 

(d)           Affiliate
Transactions. 
Except for transactions approved by a majority of the disinterested
members of the board of directors of the Company, neither the Company nor any
of its Subsidiaries shall enter into any transaction with any (i) director,
officer, employee or holder of more than 5% of the outstanding capital stock of
any class or series of capital stock of the Company or any of its Subsidiaries,
(ii) member of the immediate family of any such person, or (iii) corporation,
partnership, trust or other entity in which any such person, or member of the
immediate family of any such person, is a director, officer, trustee, partner
or holder of more than 5% of the outstanding capital stock thereof.

 

4.13        Securities
Law Compliance.

 

(a)           Securities
Act.  The Company
shall timely prepare and file with the Securities and Exchange Commission the
form of notice of the sale of securities pursuant to the requirements of
Regulation D regarding the sale of the Common Stock and Warrants under this
Agreement.

 

(b)           State
Securities Law Compliance — Sale.  The Company shall timely prepare and file
such applications, consents to service of process (but not including a general
consent to service of process) and similar documents and take such other steps
and perform such further acts as shall be required by the state securities law
requirements of each jurisdiction where a Purchaser resides, as indicated on Schedule
1, with respect to the sale of the Common Stock and Warrants under this
Agreement.

 

(c)           State
Securities Law Compliance —Resale.  Beginning no later than 30 days following
the date of this Agreement and continuing until either (i) the purchasers have
sold all of their Common Stock under a registration statement pursuant to the
Investor Rights Agreement or (ii) the Common Stock becomes a “covered security”
under Section 18(b)(1)(A) of the Securities Act, the Company shall maintain
within either Moody’s Industrial Manual or Standard and Poor’s Standard
Corporation Descriptions (or any successors to these manuals which are similarly
qualified as “recognized securities manuals” under state Blue Sky laws) an
updated listing containing (i) the names of the officers and directors of the
Company, (ii) a balance sheet of the Company as of a date that is at no time
older than eighteen months and (iii) a profit and

 

24

 

loss statement of the Company for either the
preceding fiscal year or the most recent year of operations.

 

ARTICLE V

 

INDEMNIFICATION,
TERMINATION AND DAMAGES

 

5.1          Survival of Representations.

 

Except as
otherwise provided herein, the representations and warranties of the Company
and the Purchasers contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing Date and
shall continue in full force and effect for a period of two (2) years from the
Closing Date; provided, however, that the Company’s warranties and
representations under Sections 3.1(a) (Subsidiaries), 3.1(g) (Capitalization),
3,1(x) (Taxes) and 3.1(y) (Environmental Matters) shall survive the Closing
Date and continue in full force and effect until the expiration of all
applicable statutes of limitation.  The
Company’s and the Purchasers’ warranties and representations shall in no way be
affected or diminished in any way by any investigation of (or failure to
investigate) the subject matter thereof made by or on behalf of the Company or
the Purchasers.

 

5.2          Indemnification.

 

(a)           The Company agrees to indemnify and
hold harmless the Purchasers, their Affiliates, each of their officers,
directors, employees and agents and their respective successors and assigns,
from and against any losses, damages, or expenses which are caused by or arise
out of (i) any breach or default in the performance by the Company of any
covenant or agreement made by the Company in this Agreement or in any of the
Transaction Documents; (ii) any breach of warranty or representation made by
the Company in this Agreement or in any of the Transaction Documents; and/or
(iii) any and all third party actions, suits, proceedings, claims, demands,
judgments, costs and expenses (including reasonable legal fees and expenses)
incident to any of the foregoing.

 

(b)           The Purchasers, severally and not
jointly, agree to indemnify and hold harmless the Company, its Affiliates, each
of their officers, directors, employees and agents and their respective
successors and assigns, from and against any losses, damages, or expenses which
are caused by or arise out of (A) any breach or default in the performance by
the Purchasers of any covenant or agreement made by the Purchasers in this
Agreement or in any of the Transaction Documents; (B) any breach of warranty or
representation made by the Purchasers in this Agreement or in any of the
Transaction Documents; and (C) any and all third party actions, suits,
proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) incident to any of the foregoing; provided,
however, that a Purchaser’s liability under this Section 5.2(b)
shall not exceed the Purchase Price paid by such Purchaser hereunder.

 

5.3          Indemnity Procedure.

 

A party or
parties hereto agreeing to be responsible for or to indemnify against any
matter pursuant to this Agreement is referred to herein as the “Indemnifying
Party” and the other party or parties claiming indemnity is referred
to as the “Indemnified
Party”.  An Indemnified

 

25

 

Party under this Agreement
shall, with respect to claims asserted against such party by any third party,
give written notice to the Indemnifying Party of any liability which might give
rise to a claim for indemnity under this Agreement within sixty (60) Business
Days of the receipt of any written claim from any such third party, but not
later than twenty (20) days prior to the date any answer or responsive pleading
is due, and with respect to other matters for which the Indemnified Party may
seek indemnification, give prompt written notice to the Indemnifying Party of
any liability which might give rise to a claim for indemnity; provided,
however, that any failure to give such notice will not waive any
rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are materially prejudiced.

 

The Indemnifying
Party shall have the right, at its election, to take over the defense or
settlement of such claim by giving written notice to the Indemnified Party at
least fifteen (15) days prior to the time when an answer or other responsive
pleading or notice with respect thereto is required. If the Indemnifying Party
makes such election, it may conduct the defense of such claim through counsel
of its choosing (subject to the Indemnified Party’s approval of such counsel,
which approval shall not be unreasonably withheld), shall be solely responsible
for the expenses of such defense and shall be bound by the results of its
defense or settlement of the claim. The Indemnifying Party shall not settle any
such claim without prior notice to and consultation with the Indemnified Party,
and no such settlement involving any equitable relief or which might have an
adverse effect on the Indemnified Party may be agreed to without the written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld). So long as the Indemnifying Party is diligently contesting any such
claim in good faith, the Indemnified Party may pay or settle such claim only at
its own expense and the Indemnifying Party will not be responsible for the fees
of separate legal counsel to the Indemnified Party, unless the named parties to
any proceeding include both parties or representation of both parties by the
same counsel would be inappropriate in the reasonable opinion of the
Indemnified Party, due to conflicts of interest or otherwise. If the
Indemnifying Party does not make such election, or having made such election
does not, in the reasonable opinion of the Indemnified Party proceed diligently
to defend such claim, then the Indemnified Party may (after written notice to
the Indemnifying Party), at the expense of the Indemnifying Party, elect to
take over the defense of and proceed to handle such claim in its discretion and
the Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make in good faith with respect to such claim. In
connection therewith, the Indemnifying Party will fully cooperate with the
Indemnified Party should the Indemnified Party elect to take over the defense
of any such claim. The parties agree to cooperate in defending such third party
claims and the Indemnified Party shall provide such cooperation and such access
to its books, records and properties as the Indemnifying Party shall reasonably
request with respect to any matter for which indemnification is sought
hereunder; and the parties hereto agree to cooperate with each other in order
to ensure the proper and adequate defense thereof.

 

With regard to
claims of third parties for which indemnification is payable hereunder, such
indemnification shall be paid by the Indemnifying Party upon the earlier to
occur of: (i) the entry of a judgment against the Indemnified Party and the
expiration of any applicable appeal period, or if earlier, five (5) days prior
to the date that the judgment creditor has the right to execute the judgment;
(ii) the entry of an unappealable judgment or final appellate decision against
the Indemnified Party; or (iii) a settlement of the claim. Notwithstanding the
foregoing, the reasonable expenses of counsel to the Indemnified Party shall be
reimbursed on a current basis by the Indemnifying Party. With regard to other
claims for which indemnification is

 

26

 

payable hereunder, such
indemnification shall be paid promptly by the Indemnifying Party upon demand by
the Indemnified Party.

 

ARTICLE
VI

 

MISCELLANEOUS

 

6.1          Fees and Expenses.

 

The Company
shall be responsible for the payment of the Purchasers’ reasonable and
documented legal fees and other third-party expenses relating to the
preparation, negotiation and execution of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated herein, and
therein, in an amount not to exceed $50,000.

 

6.2          Entire Agreement.

 

The
Transaction Documents, together with the exhibits and schedules thereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules.

 

6.3          Notices.

 

Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified on
the signature pages attached hereto prior to 5:00 p.m. (New York City time) on
a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number on
the signature pages attached hereto on a day that is not a Trading Day or later
than 5:00 p.m. (New York City time) on any Trading Day, (c) the Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as follows:

 

If to the
Purchasers, at each Purchaser’s address set forth under its name on Schedule
1 attached hereto, or with respect to the Company, addressed to:

 

BioSante
Pharmaceuticals, Inc.

111 Barclay Boulevard

Lincolnshire, Illinois 60069

Attention:  Stephen M. Simes, President
and Chief Executive Officer

Facsimile No. (847) 478-9260

 

or to such other address or
addresses or facsimile number or numbers as any such party may most recently
have designated in writing to the other parties hereto by such notice. Copies
of notices to the Company shall be sent to:

 

27

 

Oppenheimer
Wolff & Donnelly LLP

Plaza VII Building, Suite 3300

45 South Seventh Street

Minneapolis, Minnesota 55402

Attention:  Amy E. Culbert, Esq.

Facsimile No.: (612) 607-7100

 

Copies of notices to any
Purchaser shall be sent to the addresses, if any, listed on Schedule 1
attached hereto.

 

6.4          Amendments; Waivers.

 

No provision
of this Agreement may be waived or amended except in a written instrument
signed, in the case of an amendment, by the Company and each Purchaser or, in
the case of a waiver, by the party against whom enforcement of any such waiver
is sought. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right.

 

6.5          Construction.

 

The headings
herein are for convenience only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions hereof. The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction
will be applied against any party.

 

6.6          Successors and Assigns.

 

This Agreement
shall be binding upon and inure to the benefit of the parties and their
successors and permitted assigns. The Company may not assign this Agreement or
any rights or obligations hereunder without the prior written consent of each
Purchaser. Any Purchaser may assign any or all of its rights under this Agreement
to any Person, provided such transferee agrees in writing to be bound, with
respect to the transferred Securities, by the provisions hereof that apply to
the Purchasers.

 

6.7          No Third-Party Beneficiaries.

 

This Agreement
is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth in Article V.

 

6.8          Governing Law.

 

All questions
concerning the construction, validity, enforcement and interpretation of the
Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof.

 

28

 

6.9          Jurisdiction; Venue; Service of
Process.

 

This Agreement
shall be subject to the exclusive jurisdiction of the Federal District Court,
Southern District of New York and if such court does not have proper
jurisdiction, the State Courts of New York County, New York. The parties to
this Agreement agree that any breach of any term or condition of this Agreement
shall be deemed to be a breach occurring in the State of New York by virtue of
a failure to perform an act required to be performed in the State of New York
and irrevocably and expressly agree to submit to the jurisdiction of the
Federal District Court, Southern District of New York and if such court does
not have proper jurisdiction, the State Courts of New York County, New York for
the purpose of resolving any disputes among the parties relating to this
Agreement or the transactions contemplated hereby. The parties irrevocably
waive, to the fullest extent permitted by law, any objection which they may now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, or any judgment entered by any
court in respect hereof brought in New York County, New York, and further
irrevocably waive any claim that any suit, action or proceeding brought in
Federal District Court, Southern District of New York and if such court does
not have proper jurisdiction, the State Courts of New York County, New York has
been brought in an inconvenient forum. Each of the parties hereto consents to
process being served in any such suit, action or proceeding, by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. 
Nothing in this Section 6.9 shall affect or limit any right to serve
process in any other manner permitted by law.

 

6.10        Execution.

 

This Agreement
may be executed in two or more counterparts, all of which when taken together
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party,
it being understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect
as if such facsimile signature page were an original thereof.

 

6.11        Severability.

 

If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

 

6.12        Replacement of Securities.

 

If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested by the Company.  The

 

29

 

applicants for a new
certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such replacement
Securities.

 

6.13        Remedies.

 

In addition to
being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, each of the Purchasers and the Company will be
entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.

 

6.14        Payment Set Aside.

 

To the extent
that the Company makes a payment or payments to any Purchaser pursuant to any
Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall, to the extent
permissible under applicable law, be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.

 

6.15        Independent Nature of Purchasers’
Obligations and Rights.

 

The
obligations of each Purchaser under any Transaction Document are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out
of the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through Wiggin & Dana LLP, but such
counsel does not represent any of the Purchasers in this transaction other than
SCO Securities LLC. The Company has elected to provide all Purchasers with the
same terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by the Purchasers.

 

30

 

6.16        Waiver of Trial by Jury.

 

THE PARTIES
HERETO IRREVOCABLY WAIVE TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

6.17        Further Assurances.

 

Each party
agrees to cooperate fully with the other parties and to execute such further
instruments, documents and agreements and to give such further written assurances
as may be reasonably requested by any other party to better evidence and
reflect the transactions described herein and contemplated hereby and to carry
into effect the intents and purposes of this Agreement, and further agrees to
take promptly, or cause to be taken, all actions, and to do promptly, or cause
to be done, all things necessary, proper or advisable under applicable law to
consummate and make effective the transactions contemplated hereby, to obtain
all necessary waivers, consents and approvals, to effect all necessary
registrations and filings, and to remove any injunctions or other impediments
or delays, legal or otherwise, in order to consummate and make effective the
transactions contemplated by this Agreement for the purpose of securing to the
parties hereto the benefits contemplated by this Agreement.

 

[Signature
Page Follows]

 

31

 

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

 

	
   

  	
  COMPANY:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BIOSANTE PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen
  M. Simes

  	
   

  
	
   

  	
  Name: 
  Stephen M. Simes

  	
   

  
	
   

  	
  Title: President and Chief Executive
  Officer

  	
   

  
				

 

32

 

	
   

  	
  PURCHASERS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Exact Name:

  	
    SCO Capital Partners LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Steven H. Rouhandeh

  	
   

  
	
   

  	
  Name:

  	
  Steven H. Rouhandeh

  	
   

  
	
   

  	
  Title:

  	
  Chairman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  537,500.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  SDS Merchant Fund, LP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Scott E. Derby

  	
   

  
	
   

  	
  Name:

  	
  Scott E. Derby

  	
   

  
	
   

  	
  Title:

  	
  General Counsel

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  999,999.40

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  North Sound Legacy Fund LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Andrew Wilder

  	
   

  
	
   

  	
  Name:

  	
  Andrew Wilder

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  44,999.50

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  North Sound Legacy Institutional Fund LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Andrew Wilder

  	
   

  
	
   

  	
  Name:

  	
  Andrew Wilder

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  455,000.20

  	
   

  
							

 

[Omnibus
BioSante Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement
Signature Page]

 

33

 

	
   

  	
  Print Exact Name:

  	
   
  North Sound Legacy International Ltd.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Andrew Wilder

  	
   

  
	
   

  	
  Name:

  	
  Andrew Wilder

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  499,999.70

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Perceptive Life Sciences Master Fund, Ltd.  

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Andrew C. Sankin

  	
   

  
	
   

  	
  Name:

  	
  Andrew C. Sankin

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  2,365,000.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Joseph Edelman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Joseph Edelman

  	
   

  
	
   

  	
  Name:

  	
  Joseph Edelman

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  483,750.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Multi-National Consulting Services, IV, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Andrew Sankin

  	
   

  
	
   

  	
  Name:

  	
  Andrew C. Sankin

  	
   

  
	
   

  	
  Title:

  	
  Executive Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  49,450.00

  	
   

  
							

 

[Omnibus
BioSante Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement
Signature Page]

 

34

 

	
   

  	
  Print Exact Name:

  	
   
  Daniel B. Heller

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Daniel B. Heller

  	
   

  
	
   

  	
  Name:

  	
  Daniel B. Heller

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  24,725.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Paul Scharfer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Paul Scharfer

  	
   

  
	
   

  	
  Name:

  	
  Paul Scharfer

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  357,975.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
    Quogue
  Capital LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Wayne Philip Rothbaum

  	
   

  
	
   

  	
  Name:

  	
  Wayne Philip Rothbaum

  	
   

  
	
   

  	
  Title:

  	
  Principal

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  623,500.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Orion Biomedical Offshore Fund, LP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Lindsay A. Rosenwald, MD

  	
   

  
	
   

  	
  Name:

  	
  Lindsay A. Rosenwald, MD

  	
   

  
	
   

  	
  Title:

  	
  Managing Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  178,456.45

  	
   

  
							

 

[Omnibus
BioSante Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement
Signature Page]

 

35

 

	
   

  	
  Print Exact Name:

  	
   
  Orion Biomedical Fund, LP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Lindsay A. Rosenwald, MD

  	
   

  
	
   

  	
  Name:

  	
  Lindsay A. Rosenwald, MD

  	
   

  
	
   

  	
  Title:

  	
  Managing Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  821,293.55

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Richard Stone

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Richard Stone

  	
   

  
	
   

  	
  Name:

  	
  Richard Stone

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  43,000.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   Steven M. Oliveira 1998 Charitable

  	
   

  
	
   

  	
     Remainder Unitrust

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Steven M. Oliveira

  	
   

  
	
   

  	
  Name:

  	
  Steven M. Oliveira

  	
   

  
	
   

  	
  Title:

  	
  Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  499,875.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Morningstar Trust

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Fay Morgenstern

  	
   

  
	
   

  	
  Name:

  	
  Fay Morgenstern

  	
   

  
	
   

  	
  Title:

  	
  Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  301,000.00

  	
   

  
							

 

[Omnibus
BioSante Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement
Signature Page]

 

36

 

	
   

  	
  Print Exact Name:

  	
   
  Victor A. Morgenstern

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Victor A. Morgenstern

  	
   

  
	
   

  	
  Name:

  	
  Victor A. Morgenstern

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  328,950.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Panacea Fund, LLC,

  	
   

  
	
   

  	
  By: William Harris Investors,
  Inc. as Manager

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jack Polsky

  	
   

  
	
   

  	
  Name:

  	
  Jack Polsky

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  322,500.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Irving B. Harris Revocable Trust

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Irving B. Harris

  	
   

  
	
   

  	
  Name:

  	
  Irving B. Harris

  	
   

  
	
   

  	
  Title:

  	
  Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  124,700.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Virginia H. Polsky Trust

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jack R. Polsky

  	
   

  
	
   

  	
  Name:

  	
  Jack R. Polsky, By Delegation of Authority
  dated 6/6/96

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  62,350.00

  	
   

  
							

 

[Omnibus
BioSante Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement
Signature Page]

 

37

 

	
   

  	
  Print Exact Name:

  	
   
  Roxanne H. Frank Trust

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jack R. Polsky

  	
   

  
	
   

  	
  Name:

  	
  Jack R. Polsky, By Delegation of Authority
  dated 12/3/99

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Kahn, Jr.

  	
   

  
	
   

  	
  Name:

  	
  Jerome Kahn, Jr., By Delegation of
  Authority dated 12/3/99

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  82,775.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Couderay Partners

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael S. Resnick

  	
   

  
	
   

  	
  Name:

  	
  Michael S. Resnick

  	
   

  
	
   

  	
  Title:

  	
  Managing Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jerome Kahn, Jr.

  	
   

  
	
   

  	
  Name:

  	
  Jerome Kahn, Jr.

  	
   

  
	
   

  	
  Title:

  	
  Co-Managing Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  82,775.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
    JO
  & Co

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ross J. Mangano

  	
   

  
	
   

  	
  Name:

  	
  Ross J. Mangano

  	
   

  
	
   

  	
  Title:

  	
  Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  630,000.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Crestview Capital Fund II, LP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Richard Levy

  	
   

  
	
   

  	
  Name:

  	
  Richard Levy

  	
   

  
	
   

  	
  Title:

  	
  Managing Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  200,000.00

  	
   

  
							

 

[Omnibus
BioSante Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement
Signature Page]

 

38

 

	
   

  	
  Print Exact Name:

  	
   
  James S. Levy Living Trust

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ James S. Levy

  	
   

  
	
   

  	
  Name:

  	
  James S. Levy

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  34,400.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Mitchell I. Dolins as Trustee of the

  	
   

  
	
   

  	
   Mitchell I. Dolins Revocable Trust U/A/D 12/24/91

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Mitchell Dolins

  	
   

  
	
   

  	
  Name:

  	
  Mitchell Dolins

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  20,000.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Bradley S. Glaser and Amy E. Glaser,

  	
   

  
	
   

  	
   as Tenant by the Entirety

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Bradley S. Glaser and Amy E. Glaser

  	
   

  
	
   

  	
  Name:

  	
  Bradley S. Glaser and Amy E. Glaser

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  20,000.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Dr. Hermann S. Graf Zu Munster

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Dr. Hermann S. Graf Zu Munster

  	
   

  
	
   

  	
  Name:

  	
  Dr. Hermann S. Graf Zu Munster

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  17,200.00

  	
   

  
							

 

[Omnibus
BioSante Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement
Signature Page]

 

39

 

	
   

  	
  Print Exact Name:

  	
   
  Richard Sheiner  

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Richard Sheiner

  	
   

  
	
   

  	
  Name:

  	
  Richard Sheiner

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  17,200.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Roscoe F. Nicholson II for Roscoe F.

  	
   

  
	
   

  	
   Nicholson II Profit Sharing Plan (Mesirow Financial Inc.)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Roscoe F. Nicholson

  	
   

  
	
   

  	
  Name:

  	
  Roscoe F. Nicholson

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  12,040.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Shirley M. Nicholson for IRA Shirley

  	
   

  
	
   

  	
  M. Nicholson at Mesirow
  Financial

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Shirley M. Nicholson

  	
   

  
	
   

  	
  Name:

  	
  Shirley M. Nicholson

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  4,300.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Dr. Terry L. Lazarus

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Dr. Terry L. Lazarus

  	
   

  
	
   

  	
  Name:

  	
  Dr. Terry L. Lazarus

  	
   

  
	
   

  	
  Title:

  	
  Private Investor

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  17,200.00

  	
   

  
							

 

[Omnibus
BioSante Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement
Signature Page]

 

40

 

	
   

  	
  Print Exact Name:

  	
   
  Charles Burns

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Charles Burns

  	
   

  
	
   

  	
  Name:

  	
  Charles Burns

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  17,200.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  John E. Urheim

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ John E. Urheim

  	
   

  
	
   

  	
  Name:

  	
  John E. Urheim

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  17,200.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Stephen M. Simes, Rev. Trust U/A/D 7/6/98

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Stephen M. Simes

  	
   

  
	
   

  	
  Name:

  	
  Stephen M. Simes

  	
   

  
	
   

  	
  Title:

  	
  Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  2,150.00

  	
   

  
							

 

 

	
   

  	
  Print Exact Name:

  	
   
  Leah M. Lehman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Leah M. Lehman

  	
   

  
	
   

  	
  Name:

  	
  Leah M. Lehman

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  2,150.00

  	
   

  
							

 

[Omnibus
BioSante Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement
Signature Page]

 

41

 

	
   

  	
  Print Exact Name:

  	
   
  Phillip B. Donenberg

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Phillip B. Donenberg

  	
   

  
	
   

  	
  Name:

  	
  Phillip B. Donenberg

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Amount of Investment:$

  	
  2,150.00

  	
   

  
							

 

[Omnibus BioSante
Pharmaceuticals, Inc. Common Stock and Warrant Purchase Agreement Signature
Page]

 

42

 

Schedule 1

 

to Common Stock and Warrant Purchase
Agreement

 

Purchasers and Shares of Common Stock and
Warrants

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
  SCO Capital
  Partners LLC

  1285 Avenue of the Americas, 35th Floor

  New York, NY 10019

  Steven H. Rouhandeh

  T: 212-554-4158

  F: 212-554-4058

  Srouhandeh@SCOGroup.com

  	
   

  	
  Michael
  Grundei, Esq.

  Wiggin & Dana LLP
400 Atlantic Street

  Stamford, CT  06901

  Tel: 203-363-7630

  Fax: 203-363-7676

  Email: mgrundei@wiggin.com

  	
   

  	
  250,000

  	
   

  	
  125,000

  	
   

  	
  $

  	
  537,500.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SDS Merchant Fund, LP

  53 Forest Ave., 2nd Floor

  Old Greenwich, CT 06870

  Attn: Scott Derby

  T: 203-967-5880

  F: 203-967-5851

  scott@sdscapital.com

  	
   

  	
   

  	
   

  	
  465,116

  	
   

  	
  232,558

  	
   

  	
  $

  	
  999,999.40

  

 

43

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North Sound
  Legacy Fund LLC

  53 Forest Avenue

  Suite 202

  Old Greenwich, CT 06870

  Attn: Andrew Wilder

  T: 203-967-5700

  F: 203-967-5701

  Andrew@northsound.com

  	
   

  	
   

  	
   

  	
  20,930

  	
   

  	
  10,465

  	
   

  	
  $

  	
  44,999.50

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North Sound
  Legacy Institutional Fund LLC

  53 Forest Avenue

  Suite 202

  Old Greenwich, CT 06870

  Attn: Andrew Wilder

  T: 203-967-5700

  F: 203-967-5701

  Andrew@northsound.com

  	
   

  	
   

  	
   

  	
  211,628

  	
   

  	
  105,814

  	
   

  	
  $

  	
  455,000.20

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North Sound
  Legacy International Ltd.

  53 Forest Avenue

  Suite 202

  Old Greenwich, CT 06870

  Attn: Andrew Wilder

  T: 203-967-5700

  F: 203-967-5701

  Andrew@northsound.com

  	
   

  	
   

  	
   

  	
  232,558

  	
   

  	
  116,279

  	
   

  	
  $

  	
  499,999.70

  

 

44

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Perceptive Life Sciences Master Fund, Ltd.

  5437 Connecticut Ave., NW

  Suite 100

  Washington, DC  20015

  Attn: Andrew Sankin

  P: 202-537-0029

  F: 202-537-0030

  sankin@hedgesource.org

  	
   

  	
   

  	
   

  	
  1,100,000

  	
   

  	
  550,000

  	
   

  	
  $

  	
  2,365,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Deliver Securities to:

  

  Perceptive Life Sciences Master Fund, Ltd.

  c/o First New York Securities

  850 Third Ave, 17th Floor

  New York, NY 10022

  Attn: Kenny Kountouras

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

45

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joseph
  Edelman

  300 Central Park West

  Apt. 25-G

  New York, NY 10024

  T: 202-537-0029

  F: 202-537-0030

  sankin@hedgesource.org

  	
   

  	
   

  	
   

  	
  225,000

  	
   

  	
  112,500

  	
   

  	
  $

  	
  483,750.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Deliver
  Securities to:

  

  Northeast Securities

  2425 Post Road

  Southport, CT 06890

  Attn: Nick DiFalco

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Multi-National Consulting Services, IV, LLC

  5437 Connecticut Ave., NW

  Suite 100

  Washington, DC  20015

  Attn: Andrew Sankin

  P: 202-537-0029

  F: 202-537-0030

  sankin@hedgesource.org

  	
   

  	
   

  	
   

  	
  23,000

  	
   

  	
  11,500

  	
   

  	
  $

  	
  49,450.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Deliver Securities to:

  Multi-National Consulting Services, IV, LLC

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

46

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c/o Punk Ziegel

  520 Madison Avenue

  7th Floor

  New York, NY  10022

  Attn: John Bligh

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Daniel B. Heller

  48 CardinalFlower Lane

  West Windsor, NJ 08550

  T: 609-448-8760

  F: 212-331-6777

  d.heller@fnysllc.com

  	
   

  	
   

  	
   

  	
  11,500

  	
   

  	
  5,750

  	
   

  	
  $

  	
  24,725.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Paul Scharfer

  265 East 66th Street, Apt. 6C

  New York, NY 10021

  T: 917-763-2015

  F:

  PSCHARFER@aol.com

  	
   

  	
   

  	
   

  	
  166,500

  	
   

  	
  83,250

  	
   

  	
  $

  	
  357,975.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quogue Capital LLC

  1285 Avenue of the Americas, 35th Floor

  New York, NY 10019

  Attn: Wayne Philip Rothbaum

  T: 212-554-4475

  F: 212-554-4450

  	
   

  	
   

  	
   

  	
  290,000

  	
   

  	
  145,000

  	
   

  	
  $

  	
  623,500.00

  

 

47

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  wrothbaum@quoguecapital.com

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Orion
  Biomedical Offshore Fund, LP

  787 Seventh Avenue, 48th Floor

  New York, NY 10019

  Attn: Lindsay A. Rosenwald, MD

  T: 212-554-4284

  F: 212-554-4314

  jkazam@paramountcapital.com

  	
   

  	
   

  	
   

  	
  83,003

  	
   

  	
  41,502

  	
   

  	
  $

  	
  178,456.45

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Orion
  Biomedical Fund, LP

  787 Seventh Avenue, 48th Floor

  New York, NY 10019

  Attn: Lindsay A. Rosenwald, MD

  T: 212-554-4284

  F: 212-554-4314

  jkazam@paramountcapital.com

  	
   

  	
   

  	
   

  	
  381,997

  	
   

  	
  190,999

  	
   

  	
  $

  	
  821,293.55

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Richard Stone

  44 West 77th Street

  New York, NY 10024

  T: 917-502-2809

  F: 212-750-7277

  	
   

  	
   

  	
   

  	
  20,000

  	
   

  	
  10,000

  	
   

  	
  $

  	
  43,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Steven M. Oliveira 1998 Charitable
  Remainder Unitrust

  	
   

  	
   

  	
   

  	
  232,500

  	
   

  	
  116,250

  	
   

  	
  $

  	
  499,875.00

  

 

48

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18 Fieldstone Court

  New City, NY 10956

  T: 845-634-5620

  F:

  Steve_oliveira@yahoo.com

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Morningstar Trust

  By Fay Morgenstern, Trustee

  106 Vine Avenue

  Highland Park, IL  60035

  T: 847-432-8632

  F:

  vmstar@msn.com

  	
   

  	
   

  	
   

  	
  140,000

  	
   

  	
  70,000

  	
   

  	
  $

  	
  301,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Victor A. Morgenstern

  106 Vine Avenue

  Highland Park, IL  60035

  T: 847-432-8632

  F:

  vmstar@msn.com

  	
   

  	
   

  	
   

  	
  153,000

  	
   

  	
  76,500

  	
   

  	
  $

  	
  328,950.00

  

 

49

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Panacea Fund, LLC

  c/o William Harris Investors, Inc.

  2 North LaSalle Street, Suite 400

  Chicago, IL  60602

  T: 312-621-0590

  F: 312-621-0984

  	
   

  	
   

  	
   

  	
  150,000

  	
   

  	
  75,000

  	
   

  	
  $

  	
  322,500.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Irving B. Harris Revocable Trust

  c/o William Harris Investors, Inc.

  2 N. LaSalle Street, Suite 400

  Chicago, IL  60602

  T: 312-621-0590

  F: 312-621-0984

  	
   

  	
   

  	
   

  	
  58,000

  	
   

  	
  29,000

  	
   

  	
  $

  	
  124,700.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Virginia H. Polsky Trust

  c/o William Harris Investors, Inc.

  2 N. LaSalle Street, Suite 400

  Chicago, IL  60602

  T: 312-621-0590

  F: 312-621-0984

  	
   

  	
   

  	
   

  	
  29,000

  	
   

  	
  14,500

  	
   

  	
  $

  	
  62,350.00

  

 

50

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Roxanne H. Frank Trust

  c/o William Harris Investors, Inc.

  2 N. LaSalle Street, Suite 400

  Chicago, IL  60602

  T: 312-621-0590

  F: 312-621-0984

  	
   

  	
   

  	
   

  	
  38,500

  	
   

  	
  19,250

  	
   

  	
  $

  	
  82,775.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Couderay Partners

  c/o William Harris Investors, Inc.

  2 N. LaSalle Street, Suite 400

  Chicago, IL  60602

  T: 312-621-0590

  F: 312-621-0984

  	
   

  	
   

  	
   

  	
  38,500

  	
   

  	
  19,250

  	
   

  	
  $

  	
  82,775.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JO & Co

  P.O. Box 1655

  South Bend, IN  46634

  Attn: Ross Mangano

  T: 574-232-8213

  F: 574-232-8223

  	
   

  	
   

  	
   

  	
  293,023

  	
   

  	
  146,512

  	
   

  	
  $

  	
  630,000.00

  

 

51

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Crestview Capital Fund II, LP

  95 Revere Drive, Suite F

  Northbrook, IL 60062

  Attn: Richard Levy

  T: 847-559-0060

  F: 847-559-5807

  Richard@crestviewcap.com

  	
   

  	
   

  	
   

  	
  93,023

  	
   

  	
  46,512

  	
   

  	
  $

  	
  200,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  James S. Levy Living Trust

  1349 N. Thatcher Avenue

  River Forest, IL  60305

  Attn: James S. Levy

  T: 312-595-6475

  F: 312-595-6139  jlevy@mesirowfinancial.com

  	
   

  	
   

  	
   

  	
  16,000

  	
   

  	
  8,000

  	
   

  	
  $

  	
  34,400.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mitchell I. Dolins as Trustee of the

  Mitchell I. Dolins Revocable Trust

  U/A/D 12/24/91

  427 Brierhill Road

  Deerfield, IL  60015

  T: 847-940-1228

  F: 847-940-1253

  mickydd24@aol.com

  	
   

  	
   

  	
   

  	
  9,302

  	
   

  	
  4,651

  	
   

  	
  $

  	
  20,000.00

  

 

52

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bradley S. Glaser and Amy E. Glaser,

  as Tenant by the Entirety  

  204 Berans Road

  Owings Mills, MD  21117

  T: 410-252-2766

  F: 410-296-0973

  bglaser@vanguardequities.com

  	
   

  	
   

  	
   

  	
  9,302

  	
   

  	
  4,651

  	
   

  	
  $

  	
  20,000.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dr. Hermann S. Graf Zu Munster

  Umweger Str. 66

  D-76488 Baden-Baden

  Germany

  T: 011-49 7223 60014

  F: 011-49 7223 60016

  hs.muenster@t-online.de

  	
   

  	
   

  	
   

  	
  8,000

  	
   

  	
  4,000

  	
   

  	
  $

  	
  17,200.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Richard Sheiner

  4771 Trenton Court

  Long Grove, IL  60047

  T: 312-364-8752

  F: 847-913-9256

  deployant@aol.com

  	
   

  	
   

  	
   

  	
  8,000

  	
   

  	
  4,000

  	
   

  	
  $

  	
  17,200.00

  

 

53

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Roscoe F. Nicholson II for Roscoe F. Nicholson II Profit Sharing Plan
  (Mesirow Financial Inc.)

  1222 Forest Hill Drive

  Hendersonville, NC  28791

  T: 828-692-4433

  F: 828-693-9032

  roscoeii@ioa.com

  	
   

  	
   

  	
   

  	
  5,600

  	
   

  	
  2,800

  	
   

  	
  $

  	
  12,040.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Shirley M. Nicholson

  for IRA Shirley M. Nicholson at Mesirow Financial

  1222 Forest Hill Drive

  Hendersonville, NC  28791

  T: 828-692-4433

  F: 828-693-9032

  roscoeii@ioa.com

  	
   

  	
   

  	
   

  	
  2,000

  	
   

  	
  1,000

  	
   

  	
  $

  	
  4,300.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dr. Terry L. Lazarus

  1951-A Weston Road

  Weston, Ontario  M9N 1W8

  Canada

  T: 416-241-3472

  F:

  tllaz@rogers.com

  	
   

  	
   

  	
   

  	
  8,000

  	
   

  	
  4,000

  	
   

  	
  $

  	
  17,200.00

  

 

54

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Charles Burns

  245 Waterloo Avenue

  Toronto, Ontario  M3H 3Z5

  Canada

  T: 416-398-5995

  F: 905-762-2386

  caburns@rogers.com

  	
   

  	
   

  	
   

  	
  8,000

  	
   

  	
  4,000

  	
   

  	
  $

  	
  17,200.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  John E. Urheim

  5417 Taylor Lane

  Fort Collins, CO  80528

  T: 970-282-8108

  F: 970-282-8384

  jeurheim@aol.com

  	
   

  	
   

  	
   

  	
  8,000

  	
   

  	
  4,000

  	
   

  	
  $

  	
  17,200.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stephen M. Simes, Rev. Trust U/A/D 7/6/98

  Stephen M. Simes, Trustee

  111 Barclay Blvd, Suite 280

  Lincolnshire, IL  60069

  T: 847-478-0500 x100

  F: 847-478-9260

  ssimes@biosantepharma.com

  	
   

  	
   

  	
   

  	
  1,000

  	
   

  	
  500

  	
   

  	
  $

  	
  2,150.00

  

 

55

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leah M. Lehman

  14308 W. Braemore Close

  Libertyville, IL  60048

  T: 847-816-8921

  F: 847-478-9263

  llehman@biosantepharma.com

  	
   

  	
   

  	
   

  	
  1,000

  	
   

  	
  500

  	
   

  	
  $

  	
  2,150.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phillip B. Donenberg

  2090 Sheridan Road

  Buffalo Grove, IL  60089

  T: 847-821-0922

  F: 847-478-9263

  donenber@biosantepharma.com

  	
   

  	
   

  	
   

  	
  1,000

  	
   

  	
  500

  	
   

  	
  $

  	
  2,150.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Totals:

  	
   

  	
   

  	
   

  	
  4,791,982

  	
   

  	
  2,395,993

  	
   

  	
  $

  	
  10,302,763.80

  

 

56

 

	
  Name, Address and Fax Number of

  Purchaser

  	
   

  	
  Copies of
  Notices to

  	
   

  	
  Shares of

  Common Stock

  Purchased

  	
   

  	
  Common
  Stock

  Underlying

  Warrants

  	
   

  	
  Purchase
  Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Placement Agent Warrants

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCO Securities LLC

  1285 Avenue of the Americas, 35th Floor

  New York, NY 10019

  Steven H. Rouhandeh

  T: 212-554-4158

  F: 212-554-4058

  Srouhandeh@SCOGroup.com

  	
   

  	
  Michael Grundei, Esq.

  Wiggin & Dana LLP
400 Atlantic Street

  Stamford, CT  06901

  Tel: 203-363-7630

  Fax: 203-363-7676

  Email: mgrundei@wiggin.com

  	
   

  	
  0

  	
   

  	
  371,373

  	
   

  	
  0

  

 

57

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