Document:

EXHIBIT 10.9

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

         THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"),
dated as of May 1, 2003, between Celgene Corporation, a Delaware corporation
with offices at 7 Powder Horn Drive, Warren, New Jersey 07059 (the "Company"),
and Robert J. Hugin, a resident of New Jersey ("Employee").

                          W I T N E S S E T H

         WHEREAS, the Company and Employee have entered into an employment
agreement, originally effective as of January 1, 2000 (the "Employment
Agreement");

         WHEREAS, Employee is currently employed as the Chief Financial Officer
of the Company, and served as a member of the Board of Directors of the
Company(the Board);

         WHEREAS, the parties hereto desire to amend and restate the Employment
Agreement to modify certain terms of the Employment Agreement, effective as of
the date set forth above.

         NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:

         1. Term. The Company agrees to employ Employee, and Employee agrees to
serve, on the terms and conditions of this Agreement for a period commencing on
the date hereof and ending three years from the date hereof, or such other
period as may be provided for in Section 10 or 11. The period during which
Employee is employed hereunder is hereinafter referred to as the "Employment
Period." The Employment Period shall be automatically renewed for successive
one-year terms unless either party gives written notice to the other at least
six (6) months prior to the expiration of the then Employment Period, of such
party's intention to terminate Employee's employment hereunder at the end of the
then current Employment Period.

         2. Duties and Services. During the Employment Period, Employee shall be
employed in the business of the Company as Senior Vice President and Chief
Financial Officer of the Company. In addition, Employee shall serve as a member
of the Board. Employee shall perform such duties and services, within his
expertise and experience, as may be assigned to him by, and subject to the
direction of, the Chief Executive Officer and the Board. Employee agrees to his
employment as described in this Section 2 and agrees to devote all of his
working time and efforts to the performance of his duties under this Agreement,
excepting disabilities, illness and vacation time as provided by Section 3(e).
In performing his duties hereunder, Employee shall be available for reasonable
travel as the needs of the business require. Except as provided in Section 6
hereof, the foregoing shall not be construed as preventing Employee from: (i)
making
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investments in other businesses and managing his and his family's personal
investments; and (ii) participating in charitable, civic, educational,
professional, community or industry affairs or serving on the board of directors
of other companies ("Professional Activities"), provided that these Professional
Activities are approved by the Company's Board.

         3. Compensation and Other Benefits.

         (a) As compensation for his services hereunder, the Company shall pay
Employee, during the Employment Period, a base salary payable in equal
semi-monthly installments at an annual rate of $525,000, provided that such
salary shall be reviewed annually by the Company's Board, or a committee
thereof, which may, in its sole discretion, increase (but not decrease) such
salary.

         (b) The Company shall also pay Employee, during the Employment Period,
an annual target bonus, payable in January of each year for the preceding year,
in an amount equal to sixty percent (60%) of Employee's base salary (payable
under Section 3(a) of this Agreement) measured against objective criteria to be
determined by the Company's Board, or a committee thereof, after good faith
consultation with Employee.

         (c) Employee shall be entitled to participate in all group health and
insurance programs and all other fringe benefit or retirement plans which the
Company may, in its sole and absolute discretion, elect to make available to its
employees generally, provided Employee meets the qualifications therefor.

         (d) Employee shall be eligible to participate in the Company's 1998
Stock Incentive Plan (the "Plan") and any other incentive plans of the Company.
Upon the Employee's Disability (as defined in the Plan), termination of
employment with the Company due to Retirement (as defined in the Plan) or death,
Employee (or the legal representative of his estate, in the case of Employee's
death) shall be entitled to: (i) full vesting and immediate exercisability of
any outstanding stock options and other equity awards (and lapse of any
forfeiture provisions) granted to Employee at any time; and (ii) with respect to
stock options granted to Employee on or after January 1, 2000, Employee (or the
legal representative of his estate, in the case of Employee's death) shall be
entitled to exercise such stock options at any time during the three (3) year
period from the date of Employee's Disability, Retirement or death.

         (e) Employee shall be entitled to paid vacation in accordance with the
Company's policy applicable to senior executives, but in no event less than four
(4) weeks per calendar year.

         4. Expenses. Employee shall be entitled to reimbursement for all
reasonable travel and other out-of-pocket expenses necessarily incurred in the
performance of his duties hereunder, upon submission and approval of written
statements and bills in accordance with the then regular procedures of the
Company.

         5. Representations and Warranties of Employee. Employee represents and
warrants to the Company that Employee is under no contractual or other
restriction or obligation which is inconsistent with the execution of this
Agreement, the performance of his duties hereunder or the other rights of the
Company hereunder.

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         6. Non-Competition.

         (a) In view of the unique and valuable services that Employee has
rendered or is expected to render to the Company, Employee's knowledge of the
customers, trade secrets and other proprietary information relating to the
business of the Company and its customers and suppliers and similar knowledge
regarding the Company which Employee has obtained or is expected to obtain, and
in consideration of the compensation to be received hereunder, Employee agrees
that:

                  (i) during the period he is employed by the Company under this
         Agreement or otherwise, he will not Participate In (as hereinafter
         defined in this Section 6) any other business or organization, whether
         or not such business or organization now is or shall then be competing
         with or of a nature similar to the business of the Company, without
         obtaining the prior written consent of the Chief Executive Officer of
         the Company;

                  (ii) until the first anniversary of the date of the
         termination of Employee's employment under this Agreement or otherwise,
         he will not Participate In any business which is engaged, directly or
         indirectly, in the same business as the Company with respect to any
         specific product or specific service sold or activity in which the
         Company engages up to the time of termination of employment in any
         geographical area in which at the time of termination such product or
         service is sold or activity is engaged in by the Company;

                  (iii) if a Change in Control occurs and Employee's employment
         with the Company is terminated under this Agreement without Cause (as
         hereinafter defined) or by Employee for Good Reason (as hereinafter
         defined) at any time during the period beginning on the date of a
         Change in Control and ending one (1) year after the date of such Change
         in Control or within ninety (90) days prior to a Change in Control,
         then beginning on the later of the date Employee's employment
         terminates (as described under this Section 6(a)(iii)) and the date of
         a Change in Control and ending on the second anniversary of such date,
         he will not Participate In any activity or business in the United
         States involved in the research, development, commercialization of a
         small molecule which is: (A) the generic equivalent of THALOMID (i.e.,
         the same chemical structure); (B) an anti-angiogenic agent for oncology
         use; (C) a substantially specific TNFalpha inhibitor (via inhibition of
         synthesis of TNFalpha, including via inhibition of PDE4) for the
         treatment of Crohn's disease, rheumatoid arthritis, dermatological and
         auto-immune conditions having excess levels of TNFalpha as the prime
         causative factor, cachexia (AIDS or cancer), or any other indication
         for which the Company has been granted orphan drug status; or (D) a
         formulation of d- or dl-methylphenidate for the treatment of ADD/ADHD.

         (b) For purposes of this Section 6 the term "Participate In" shall
mean: "directly or indirectly, for his own benefit or for, with or through any
other person, firm or corporation, own, manage, operate, control, loan money to
or participate in the ownership, management, operation or control of, or be
connected as a director, officer, employee, partner,

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consultant, agent, independent contractor or otherwise with, or acquiesce in the
use of his name in."

         (c) Employee further agrees that, during the period he is employed by
the Company under this Agreement or otherwise and until the first anniversary of
the date of the termination of Employee's employment under this Agreement or
otherwise, he will not directly or indirectly reveal the name of, solicit or
interfere with, or endeavor to entice away from the Company, any of its
suppliers, customers or employees.

         7. Patents, etc. Any interest in patents, patent applications,
inventions, technological innovations, copyrights, copyrightable works,
developments, discoveries, designs and processes ("Inventions") which Employee
during the period he is employed by the Company under this Agreement or
otherwise, and for six months thereafter, may conceive of or develop and either
relating to the specific fields in which the Company may then be engaged or
conceived of or developed utilizing the time, material, facilities or
information of the Company shall belong to the Company; as soon as Employee
conceives of or develops any Invention, he agrees immediately to communicate
such fact in writing to the Secretary of the Company, and without further
compensation, but at the Company's expense (except as noted in clause (a) of
this Section 7), forthwith upon request of the Company, Employee shall execute
all such assignments and other documents (including applications for patents,
copyrights, trademarks and assignments thereof) and take all such other action
as the Company may reasonably request in order (a) to vest in the Company all
Employee's right, title and interest in and to the Inventions, free and clear of
liens, mortgages, security interests, pledges, charges and encumbrances arising
from the acts of Employee ("Liens") (Employee to take such action, at his
expense, as is necessary to remove all such Liens) and (b) if patentable or
copyrightable, to obtain patents or copyrights (including extensions and
renewals) therefor in any and all countries in such name as the Company shall
determine.

         8. Confidential Information. All confidential information which
Employee may now possess, may obtain during or after the Employment Period, or
may create prior to the end of the period he is employed by the Company under
this Agreement or otherwise relating to the business of the Company or of any
customer or supplier of the Company shall not be published, disclosed or made
accessible by him to any other person, firm or corporation either during or
after the termination of his employment or used by him except during the
Employment Period in the business and for the benefit of the Company, in each
case without the prior written permission of the Company. Employee shall return
all tangible evidence of such confidential information to the Company prior to
or at the termination of his employment. As used in this Section 8,
"confidential information" shall mean any information except that information
which is or comes into the public domain through no fault of Employee or which
Employee obtains after the termination of his employment by the Company under
this Agreement or otherwise from a third party who has the right to disclose
such information.

         9. Life Insurance. If requested by the Company, Employee shall submit
to such physical examinations and otherwise take such actions and execute and
deliver such documents as may be reasonably necessary to enable the Company, at
its expense and for its own benefit, to obtain life insurance on the life of
Employee. Subject to its ability to do so under the terms of such policy, if
any, insuring the life of Employee, upon the termination of Employee's

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employment hereunder, the Company will assign to Employee its rights under such
insurance policy, provided that, concurrently with such assignment, Employee
shall reimburse the Company for any premium payments made by the Company in
respect of time periods subsequent to such date of termination. Nothing herein
contained shall obligate the Company to obtain such insurance.

         10. Termination.

         (a) Employee's employment and the Employment Period shall terminate on
the first of the following to occur:

                  (i) the Company provides written notice to Employee of a
         termination for Cause; such written notice shall be provided to
         Employee not less than ten (10) days prior to the date of termination.
         "Cause" shall mean: (A) Employee's conviction of a crime involving
         moral turpitude or a felony, (B) Employee's acts or omissions taken in
         bad faith and to the detriment of the Company after a written demand
         for cessation of such conduct is delivered to Employee by the Company,
         which demand specifically identifies the manner in which the Company
         believes that Employee has engaged in such conduct and the injury to
         the Company, and after Employee's failure to correct such act or
         omission within ten (10) days following such written demand, or (C)
         Employee's breach of any material term of this Agreement after written
         demand for substantial performance is delivered to Employee by the
         Company, which demand specifically identifies the manner in which the
         Company believes Employee has breached this Agreement, and after
         Employee's failure to correct such breach within ten (10) days
         following such written demand.

                  (ii) Employee's death, in which case, this Agreement shall
         terminate on the date of Employee's death, whereupon Employee or his
         estate, as the case may be, shall be entitled to receive a lump sum
         payment in an amount equal to Employee's annual base salary (at the
         rate in effect, or required to be in effect, immediately prior to the
         date of Employee's death) and the portion of Employee's annual target
         bonus (as provided in Section 3(b)) pro-rated up to Employee's date of
         death (assuming the target has been met).

                  (iii) Nothing contained in this Section 10(a) shall be deemed
         to limit any other right the Company may have to terminate Employee's
         employment hereunder upon any ground permitted by law.

                  (iv) If Employee's employment is terminated by the Company as
         a result of the disability or incapacitation of Employee or for any
         reason other than pursuant to the provisions of paragraphs (i) or (ii)
         of this Section 10(a) or the provisions of Section 10(b), upon
         termination by the Company of Employee's employment, whether during the
         Employment Period or thereafter, Employee shall be entitled to receive
         a lump sum payment in an amount equal to Employee's annual base salary
         (at the rate in effect, or required to be in effect, immediately prior
         to the date of Employee's termination) and the portion of Employee's
         annual target bonus (as provided in Section

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         3(b)) pro-rated up to Employee's date of disability, incapacitation or
         termination (assuming the target has been met).

                  (v) In the event of the Employee's termination for any reason
         under this Agreement or otherwise, the Company shall pay and provide to
         Employee (in addition to any other payments or benefits payable under
         this Agreement): (A) any incurred but reimbursed business expenses for
         the period prior to the termination payable in accordance with the
         Company's policies; (B) any base salary, bonus, vacation pay or other
         deferred compensation accrued or earned under law or in accordance with
         the Company's policies applicable to Employee but not yet paid; and (C)
         any other amounts or benefits due under the terms of the then
         applicable employee benefit, equity or incentive plans of the Company
         applicable to Employee (the "Accrued Benefits").

                  (vi) Payments of any amounts or benefits hereunder shall be
         made no later than ten (10) days after Employee's termination date,
         other than benefits under a plan with the terms which do not require or
         permit payment within such ten (10) day period.

         (b) During the ninety (90) day period prior to Change in Control or
during the one (1) year period following a Change in Control, Employee may
terminate his employment by written notice to the Company within thirty (30)
calendar days after he has obtained actual knowledge of the occurrence of a Good
Reason event. For purposes of this Agreement, Good Reason shall mean the
occurrence of any of the following events without Employee's express written
consent:

                  (i) failure to elect or appoint, or reelect or reappoint,
         Employee to, or removal of Employee from, his position with the Company
         as Senior Vice President and Chief Financial Officer or as Secretary to
         the Board, except in connection with the termination of Employee's
         employment pursuant to Section 10(a);

                  (ii) a significant change in the nature or scope of the
         authorities, powers, functions, duties or responsibilities normally
         attached to Employee's position as Senior Vice President and Chief
         Financial Officer or as Secretary to the Board, except in each case in
         connection with the termination of Employee's employment for Cause or
         as a result of Employee's death, or temporarily as a result of
         Employee's illness or other absence;

                  (iii) a determination by Employee made in good faith that, as
         a result of a Change in Control, he is unable effectively to carry out
         the authorities, powers, functions, duties or responsibilities attached
         to his position as Senior Vice President and Chief Financial Officer or
         as Secretary to the Board and the situation is not remedied within 30
         calendar days after receipt by the Company of written notice from
         Employee of such determination;

                  (iv) a breach by the Company of any material provision of this
         Agreement (not covered by clause (i), (ii) or (iii) of this Section
         10(b)) or of any other

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         agreement, which is not remedied within 30 calendar days after receipt
         by the Company of written notice from Employee of such breach;

                  (v) a reduction in Employee's annual base salary;

                  (vi) a fifty (50) mile or greater relocation of the Company's
         principal office;

                  (vii) failure of the Company to continue in effect any health
         or welfare plan, employee benefit plan, pension plan, fringe benefit
         plan or compensation plan in which Employee (and eligible dependents)
         are participating immediately prior to a Change in Control, unless
         Employee (and eligible dependents) are permitted to participate in
         other plans providing Employee (and eligible dependents) with
         substantially comparable benefits at no greater after-tax cost to
         Employee (and eligible dependents), or the taking of any action by the
         Company which would adversely affect the Employee's (and eligible
         dependents) participation in or reduce Employee's (and eligible
         dependents) benefits under any such plan; or

                  (viii) failure of a successor to assume this Agreement.

         An election by Employee to terminate his employment under the
provisions of this Section 10(b) shall not constitute a breach by Employee of
this Agreement and shall not be deemed a voluntary termination of employment by
Employee for the purpose of interpreting the provisions of any of the Company's
employee benefit plans, programs or policies.

         (c) Upon the occurrence of a Change in Control and thereafter: (A) if
Employee's employment with the Company is terminated by the Company without
Cause or as a result of the disability or incapacitation of Employee, or by
Employee with Good Reason at any time during the period beginning on the date of
the Change in Control and ending one (1) year after the date of such Change in
Control, or (B) if Employee's employment with the Company is terminated by the
Company without Cause or by Employee for Good Reason within ninety (90) days
prior to the occurrence of a Change in Control, then Employee shall be entitled
to receive from the Company:

                  (i) a lump sum amount, payable within ten (10) days after such
         termination (or, if such termination occurred prior to a Change in
         Control, within ten (10) days after the Change in Control) equal to (A)
         three (3) times Employee's base salary in effect, or required to be in
         effect, immediately prior to the Change in Control, and (B) three (3)
         times the highest annual bonus paid or payable to Employee within three
         (3) years prior to the Change in Control;

                  (ii) within ten (10) days after such termination (or, if such
         termination occurred prior to a Change in Control, within ten (10) days
         after the Change in Control) equal to the Accrued Benefits;

                  (iii) payment by the Company of the premiums for Employee
         (except in the case of Employee's death) and Employee's and dependents'
         health and welfare coverage (including, without limitation, medical,
         dental, life insurance and disability

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         coverage) for three (3) years from the later of the occurrence of a
         Change in Control or the date of termination of Employee's employment,
         under the Company's health and welfare plans which cover the senior
         executives of the Company or materially similar benefits ("Continuation
         Coverage"), subject to Employee's payment of customary premiums (if
         any) in effect prior to the Change in Control;

                  (iv) upon the occurrence of a Change in Control, full and
         immediate vesting of all stock options and equity awards held by
         Employee.

         Payments under (iii) above may, at the discretion of the Company, be
made by continuing Employee's participation in the plan as a terminee or by
covering Employee and Employee's dependents under substitute arrangements,
provided that, notwithstanding anything herein to the contrary, to the extent
Employee incurs tax that Employee would not have incurred as an active employee
as a result of the aforementioned coverage or the benefits provided thereunder,
Employee shall receive from the Company an additional grossed up payment in the
amount necessary so that Employee will have no additional cost for receiving
such items or any additional payment. Notwithstanding anything herein to the
contrary, Employee (and his eligible dependents) shall retain all rights under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA")
and such COBRA continuation coverage shall be available to Employee (and his
eligible dependents) at the expiration of the Continuation Coverage described
herein.

         (d) For purposes of this Agreement, a Change in Control shall mean the
occurrence of the following:

                  (i) any person (as defined in Section 3(a)(9) of the
         Securities Exchange Act of 1934, as amended (the "Exchange Act") and as
         used in Sections 13(d) and 14(d) thereof), excluding the Company, any
         subsidiary of the Company and any employee benefit plan sponsored or
         maintained by the Company or any subsidiary of the Company (including
         any trustee of any such plan acting in his capacity as trustee),
         becoming the "beneficial owner" (as defined in Rule 13d-3 under the
         Exchange Act) of securities of the Company representing thirty percent
         (30%) of the total combined voting power of the Company's then
         outstanding securities;

                  (ii) the merger, consolidation or other business combination
         of the Company (a "Transaction"), other than (A) a Transaction
         involving only the Company and one or more of its subsidiaries, or (B)
         a Transaction immediately following which the stockholders of the
         Company immediately prior to the Transaction continue to have a
         majority of the voting power in the resulting entity and no person
         (other than those covered by the exceptions in (a) above) becomes the
         beneficial owner of securities of the resulting entity representing
         more than twenty-five percent (25%) of the voting power in the
         resulting entity;

                  (iii) during any period of two (2) consecutive years beginning
         on or after the date hereof, the persons who were members of the Board
         immediately before the beginning of such period (the "Incumbent
         Directors") ceasing (for any reason other than death) to constitute at
         least a majority of the Board or the board of directors of any

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         successor to the Company, provided that, any director who was not a
         director as of the date hereof shall be deemed to be an Incumbent
         Director if such director was elected to the board of directors by, or
         on the recommendation of or with the approval of, at least two-thirds
         of the directors who then qualified as Incumbent Directors either
         actually or by prior operation of the foregoing unless such election,
         recommendation or approval occurs as a result of an actual or
         threatened election contest (as such terms are used in Rule 14a-11 of
         Regulation 14A promulgated under the Exchange Act or any successor
         provision) or other actual or threatened solicitation of proxies or
         contests by or on behalf of a person other than a member of the Board;
         or

                  (iv) the approval by the stockholders of the Company of any
         plan of complete liquidation of the Company or an agreement for the
         sale of all or substantially all of the Company's assets other than the
         sale of all or substantially all of the assets of the Company to a
         person or persons who beneficially own, directly or indirectly, at
         least fifty percent (50%) or more of the combined voting power of the
         outstanding voting securities of the Company at the time of such sale.

                  (v) To the extent that Employee is entitled to payment under
         Section 10(c) upon a Change in Control due to Employee's termination
         without Cause or for Good Reason within ninety (90) days prior to a
         Change in Control, any such payments under Section 10(c) shall be
         reduced by any payments made to Employee prior to a Change in Control
         under Sections 10(a)(iv) and 10(a)(v).

         11. Limitation on Payments.

         (a) In the event that Employee shall become entitled to the payments
and/or benefits provided by Section 10(c) or any other amounts (whether pursuant
to the terms of this Agreement or any other plan, arrangement or agreement with
the Company, any person whose actions result in a change of ownership covered by
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")
or any person affiliated with the Company or such person) as a result of a
Change of Control (collectively the "Company Payments"), and such Company
Payments will be subject to the tax (the "Excise Tax") imposed by Section 4999
of the Code (and any similar tax that may hereafter be imposed) the Company
shall pay to Employee at the time specified in subsection (d) below an
additional amount (the "Gross-up Payment") such that the net amount retained by
Employee, after deduction of any Excise Tax on the Company Payments and any
federal, state, and local income or payroll tax upon the Gross-up Payment
provided for by this paragraph (a), but before deduction for any federal, state,
and local income or payroll tax on the Company Payments, shall be equal to the
Company Payments. Notwithstanding the foregoing provisions of this Section 11 to
the contrary, if it shall be determined that Employee is entitled to a Gross-up
Payment, but the Company Payments do not exceed one hundred five percent (105%)
of the greatest amount that could be paid to Employee such that the receipt of
Company Payments would not give rise to any Excise Tax (the "Reduced Amount"),
then no Gross-up Payment shall be made to Employee and the Company Payments, in
the aggregate, shall be reduced to the Reduced Amount.

         (b) For purposes of determining whether any of the Company Payments and
Gross-up Payments (collectively the "Total Payments") will be subject to the
Excise Tax and

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determining the amount of such Excise Tax: (i) the Total Payments shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all "parachute payments" in excess of the "base amount" (as defined
under Code Section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that, in the opinion of the
Company's independent certified public accountants appointed prior to any change
in ownership (as defined under Code Section 280G(b)(2)) or tax counsel selected
by such accountants (the "Accountants") such Total Payments (in whole or in
part), (A) do not constitute "parachute payments," (B) represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code or (C) are otherwise not subject to the Excise Tax; and
(ii) the value of any non-cash benefits or any deferred payment or benefit shall
be determined by the Accountants in accordance with the principles of Section
280G of the Code.

         (c) For purposes of determining the amount of the Gross-up Payment,
Employee shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Employee's residence for the
calendar year in which the Company Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes if paid in such year. In the event that the Excise Tax is
subsequently determined by the Accountants to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, Employee shall repay
to the Company, at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the prior Gross-up Payment attributable to
such reduction (plus the portion of the Gross-up Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the portion of the
Gross-up Payment being repaid by Employee if such repayment results in a
reduction in Excise Tax or a federal, state and local income tax deduction),
plus interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any
portion of the Gross-up Payment to be refunded to the Company has been paid to
any federal, state and local tax authority, repayment thereof (and related
amounts) shall not be required until actual refund or credit of such portion has
been made to Employee, and interest payable to the Company shall not exceed the
interest received or credited to Employee by such tax authority for the period
it held such portion. Employee and the Company shall mutually agree upon the
course of action to be pursued (and the method of allocating the expense
thereof) if Employee's claim for refund or credit is denied.

         In the event that the Excise Tax is later determined by the Accountants
or the Internal Revenue Service to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest or penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.

         (d) The Gross-up Payment or portion thereof provided for in subsection
(c) above shall be paid not later than the thirtieth (30th) day following an
event occurring which subjects Employee to the Excise Tax; provided, however,
that if the amount of such Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay to Employee on such day
an estimate, as determined in good faith by the Accountants,

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of the minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Code Section
1274(b)(2)(B) of the Code), subject to further payments pursuant to subsection
(c) hereof, as soon as the amount thereof can reasonably be determined, but in
no event later than the ninetieth (90th) day after the occurrence of the event
subjecting Employee to the Excise Tax. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to Employee, payable on the
fifth (5th) day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).

         (e) In the event of any controversy with the Internal Revenue Service
(or other taxing authority) under this Section 11, Employee shall permit the
Company to control issues related to this Section 11 (at its expense), provided
that such issues do not potentially materially adversely affect Employee, but
Employee shall control any other issues. In the event the issues are
interrelated, Employee and the Company shall in good faith cooperate so as not
to jeopardize resolution of either issue, but if the parties cannot agree,
Employee shall make the final determination with regard to the issues. In the
event of any conference with any taxing authority as to the Excise Tax or
associated income taxes, Employee shall permit the representative of the Company
to accompany him, and Employee and his representative shall cooperate with the
Company and its representative.

         (f) The Company shall be responsible for all charges of the
Accountants.

         12. Successors. In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree in writing to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.

         13. Survival. The covenants, agreements, representations and warranties
contained in or made pursuant to this Agreement shall survive Employee's
termination of employment.

         14. Entire Agreement; Modification. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements between them concerning such subject matter
(including, without limitation, the employment agreement in effect prior to the
date hereof) and may be modified only by a written instrument duly executed by
each party.

         15. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given at the address of such party set forth in the preamble to this
Agreement (or to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 15). Notice to the estate of
Employee shall be sufficient if addressed to Employee as provided in this
Section 15. Any notice or other communication given by certified mail shall be
deemed given three days

                                       11
<PAGE>

after the time of certification thereof, except for a notice changing a party's
address which shall be deemed given at the time of receipt thereof.

         16. Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing,
signed by the party giving such waiver.

         17. Binding Effect. Employee's rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, such rights
shall not be subject to commutation, encumbrance or the claims of Employee's
creditors, and any attempt to do any of the foregoing shall be void. The
provisions of this Agreement shall be binding upon and inure to the benefit of
Employee and his heirs and personal representatives, and shall be binding upon
and inure to the benefit of the Company and its successors and its assigns under
Section 12.

         18. No Third Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement (except as provided in Sections 12 and 17).

         19. Legal Fees. To the fullest extent permitted by law, the Company
shall promptly pay upon submission of statements all legal and other
professional fees, costs of litigation, prejudgment interest, and other expenses
incurred in connection with any dispute concerning payments, benefits and other
entitlements to which Employee may have under this Agreement; provided, however,
the Company shall be reimbursed by Employee for the fees and expenses advanced
in the event Employee's claim is, in a material manner, in bad faith or
frivolous and the arbitrator or court, as applicable, determines that the
reimbursement of such fees and expenses is appropriate.

         20. No Duty to Mitigate/No Offset. The Company agrees that if
Employee's employment with the Company is terminated pursuant to this Agreement
during the term of this Agreement, Employee shall not be required to seek other
employment or to attempt in any way to reduce any amounts payable to Employee by
the Company pursuant to this Agreement. Further, the amount of any payment or
benefit provided for in this Agreement shall not be reduced by any compensation
earned by Employee or benefit provided to Employee as the result of employment
by another employer or otherwise. The Company's obligations to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against Employee. Notwithstanding the foregoing, payments
and benefits under the Agreement will cease to be paid and may be recouped by
the Company in the event Employee breaches any of the terms of Section 6, 7 or 8
hereunder.

         21. Counterparts; Governing Law. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together

                                       12
<PAGE>

shall constitute one and the same instrument. It shall be governed by and
construed in accordance with the laws of the State of New Jersey, without giving
effect to the conflict of laws.

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

                                                     CELGENE CORPORATION

                                                     By: /s/ John W. Jackson
                                                         -----------------------
                                                         John W. Jackson
                                                         Chief Executive Officer

                                                         /s/ Robert J. Hugin
                                                         -----------------------
                                                         Robert J. Hugin

                                       13Exhibit 4.13

Exhibit 4.13 

SCHEDULE 

to the 

MASTER AGREEMENT 

dated as of ____________, 2003 

between 

	
JPMORGAN CHASE BANK 

("Party A") 
	
and 
	
MATRIA HEALTHCARE INC. 

("Party B") 

PART 1 

Termination Provisions and Certain Other Matters 

(1)  " Specified Entity " means, in relation to Party A, for the purpose of: 

Section 5(a)(v) , any Affiliate of Party A; 

Section 5(a)(vi) , none; 

Section 5(a)(vii) , none; and 

Section 5(b)(iv) , none; 

and, in relation to Party B, for the purpose of: 

Section 5(a)(v) , any Affiliate of Party B; 

Section 5(a)(vi) , any Affiliate of Party B; 

Section 5(a)(vii) , any Affiliate of Party B; and 

Section 5(b)(iv) , any Affiliate of Party B. 

 

(2)  "Specified Transaction " will have the meaning specified in Section 14. 

(3)  The "Cross-Default " provisions of Section 5(a)(vi) will apply to Party A, Party B and any applicable Specified Entity of Party B , and for such purpose: 

(a)   "Specified Indebtedness" will have the meaning specified in Section 14, except that such term shall not include obligations in respect of deposits received in the ordinary course of a party's banking business. 

(b)   "Threshold Amount" means, with respect to Party A, an amount equal to three percent of the shareholders' equity of Party A; and with respect to Party B and any applicable Specified Entity of Party B, USD5,000,000. 

(c)  Section 5(a)(vi) of this Agreement will be deemed to be amended to include the following Clause "(3)": 

"or (3) a default, event of default, or other similar condition or event (however described) occurs and is continuing which entitles any person or entity to terminate its commitment under any agreement to lend or advance or make available funds to a party (or any applicable Specified Entity) in respect of an aggregate amount in excess of the Threshold Amount." 

(4)  The " Credit Event Upon Merger " provisions of Section 5(b)(iv) will not apply to Party A. The " Credit Event Upon Merger " provisions of Section 5(b)(iv) will apply to Party B and any applicable Specified Entity of Party B. 

(5)  The " Automatic Early Termination " provision of Section 6(a) will not apply to Party A or Party B. 

(6)  Payments on Early Termination . For the purpose of Section 6(e): 

(i)  Loss will apply. 

(ii)  The Second Method will apply. 

(7)  "Termination Currency" means United States Dollars. 

(8)  Additional Termination Event . It shall constitute an Additional Termination Event, in respect of which Party B will be the Affected Party and all Transactions will be Affected Transactions, if the Credit Rating of Party B falls below B as assigned by S&P or below B2 as assigned by Moody’s. For purposes of this provision, (i) "Credit Rating" means the rating assigned by either S&P or Moody's to the long term, unsecured and unsubordinated indebtedness of Party B; (ii) "S&P" means Standard & Poor’s Ratings Group, or its successor; and (iii) "Moody’s" means Moody's Investors Service, Inc., or its successor. 

PART 2 

Tax Representations 

(A)  Payer Tax Representations . For the purpose of Section 3(e) of this Agreement, Party A and Party B each hereby make the following representation: 

It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on (i) the accuracy of any representation made by the other party pursuant to Section 3(f), (ii) the satisfaction of the agreement of the other party contained in Section 4(a)(i) or 4(a)(iii) and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position. 

(B)  Payee Tax Representations . For the purpose of Section 3(f) of this Agreement, Party A and Party B each hereby make the following representations: 

It is the beneficial owner of each payment made or to be made under this Agreement and is a United States Person for U.S. federal income tax purposes. 

PART 3 

Agreement to Deliver Documents 

For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following documents: 

    (a)  Tax forms, documents or certificates to be delivered are: 

 

For the purpose of Sections 4(a)(i) and (ii) of this Agreement, Party B agrees to deliver two complete and accurate United States Internal Revenue Service Forms W-9 (or any successor applicable forms), in a manner reasonably satisfactory to Party A, (I) upon execution of this Agreement; (II) promptly upon reasonable demand of Party A, and (III) promptly upon learning that any such form previously delivered by Party B has become obsolete or incorrect. 

    (b)  Other documents to be delivered are: 

	
Party required 

to deliver 

document 
	
 

Form/Document/ 

Certificate 
	
 

Date by which 

to be delivered 
	
Covered by 

Section 3(d) 

Representation 

	

	

	

	

	
. 
	
 
	
 
	
 

	
Party B 
	
Annual Report of Party B containing consolidated financial statements certified by independent certified public accountants and prepared in accordance with accounting principles that are generally accepted in the United States of America ("GAAP") 
	
Upon request 
	
Yes 

	
. 
	
 
	
 
	
 

	
Party B 
	
Unaudited consolidated financial statements of Party B for a fiscal quarter prepared in accordance with GAAP 
	
Upon request 
	
Yes 

	
. 
	
 
	
 
	
 

	
Party B 
	
Opinion of counsel satisfactory to Party A substantially in the form of Exhibit I hereto 
	
Upon execution and delivery of this Agreement 
	
No 

	
. 
	
 
	
 
	
 

	
Party B 
	
Certified copies of all corporate authorizations and any other documents with respect to the execution, delivery and performance of this Agreement 
	
Upon execution and delivery of this Agreement 
	
Yes 

	
. 
	
 
	
 
	
 

	
Party B 
	
Certificate of authority and specimen signatures of individuals executing this Agreement, Confirmations and each Credit Support Document (as applicable) 
	
Upon execution and delivery of this Agreement and thereafter upon request of Party A 
	
Yes 

PART 4 

Miscellaneous 

(1)  Address for Notices . For the purpose of Section 12(a) of this Agreement: 

Address for notice or communications to Party A: 

Any notice relating to a particular Transaction shall be delivered to the address or facsimile number specified in the Confirmation of such Transaction. Any notice delivered for purposes of Sections 5 and 6 of this Agreement shall be delivered to the following address: 

JPMorgan Chase Bank 

Attention: Legal Department-Capital Markets Group 

270 Park Avenue, 40th Floor 

New York, New York 10017-2070 

Facsimile No.: (212) 270-7468 

Address for notice or communications to Party B: 

Matria Healthcare Inc. 

Attention: [ please provide ] 

Facsimile No.: 

(2)  Process Agent . For the purpose of Section 13(c): 

Party A appoints as its Process Agent: Not applicable. 

Party B appoints as its Process Agent: Not applicable. 

(3)  Offices . The provisions of Section 10(a) will apply to this Agreement. 

(4)  Multibranch Party . For the purpose of Section 10 of this Agreement: 

Party A is not a Multibranch Party. 

Party B is not a Multibranch Party. 

(5)  Calculation Agent . The Calculation Agent is Party A, unless otherwise specified in a Confirmation in relation to the relevant Transaction. 

(6)  Credit Support Documents . The ISDA Credit Support Annex and supplementary "Paragraph 13 - Elections & Variables" in the form appended hereto shall constitute a "Credit Support Document" in relation to Party B with respect to all of the obligations of Party B and for all purposes of this Agreement. 

(7)  Credit Support Provider . Not Applicable. 

(8)  Governing Law . This Agreement will be governed by and construed in accordance with the laws of the State of New York (without reference to choice of law doctrine). 

(9)  Netting of Payments . Section 2(c)(ii) of this Agreement will not apply to any Transaction unless specified in the relevant Confirmation. 

(10)  "Affiliate" will have the meaning specified in Section 14 of this Agreement. 

PART 5 

Other Provisions 

(1)  Set-off . (i) Any amount (the "Early Termination Amount") payable to one party (the "Payee") by the other party (the "Payer") under Section 6(e), in circumstances where there is a Defaulting Party or one Affected Party in the case where a Termination Event under Section 5(b)(iv) has occurred, will, at the option of the party ("X") other than the Defaulting Party or the Affected Party (and without prior notice to the Defaulting Party or the Affected Party), be reduced by its set-off against any Other Payment Amount (as hereinafter defined). As used herein, "Other Payment Amount" shall mean any payment obligation of any description whatsoever (whether arising at such time or in the future or upon the occurrence of a contingency) by the Payee to the Payer (irrespective of the currency, place of payment or booking office of the obligation or whether the relevant party is legally or beneficially the holder of the obligation) arising under any other agreement between the Payee and the Payer or any instrument or undertaking issued or executed or guaranteed by the Payee to, or in favor of, the Payer or any bond, note, or other debt instrument issued or guaranteed by the Payee and owned or held beneficially by the Payer as a result of the purchase thereof by or on behalf of the Payer, whether directly from the issuer or in the secondary market (and the Other Payment Amount will be discharged promptly and in all respects to the extent it is so set-off). X will give notice to the other party of any set-off effected under this section. 

For this purpose, either the Early Termination Amount or the Other Payment Amount (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency. 

If an obligation is unascertained, X may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained. 

Nothing in this section shall be effective to create a charge or other security interest. This section shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise). 

(ii) Notwithstanding anything to the contrary set forth in this Agreement, a party (the "Delivering Party") may, in its discretion, satisfy, in whole or in part, any payment obligation arising under Section 6 in respect of any Early Termination Date which is designated or occurs as a result of an Event of Default in respect of which the other party is the Defaulting Party or which is designated as a result of a Termination Event in respect of which the other party is the sole Affected Party by delivering to such other party (the "Receiving Party"), or for the account of the Receiving Party, bond(s), note(s), or other debt instrument(s) issued or guaranteed by the Receiving Party and owned or held legally or beneficially by or on behalf of the Delivering Party in a face amount equal to the entirety or relevant part, as the case may be, of the amount of such payment obligation. Any bond, note, or other debt instrument denominated in a currency other than the Termination Currency shall, for this purpose, be valued in an amount of Termination Currency determined by the Delivering Party based upon a currency exchange rate determined in a commercially reasonable manner. Any delivery by a Delivering Party shall be made in the manner customary for the relevant bond, note, or debt instrument (including, without limitation, through a depository institution or clearance system) or, if the Delivering Party deems such delivery to be impractical, in a commercially reasonable manner determined by the Delivering Party. 

(2)  Exchange of Confirmations . For each Transaction entered into hereunder, Party A shall promptly send to Party B a Confirmation via facsimile transmission. Party B agrees to respond to such Confirmation within 10 Local Business Days, either confirming agreement thereto or requesting a correction of any error(s) contained therein. Failure by Party B to respond within such period shall not affect the validity or enforceability of such Transaction and shall be deemed to be an affirmation of the terms contained in such Confirmation, absent manifest error. The parties agree that any such exchange of facsimile transmissions shall constitute a Confirmation for all purposes hereunder. 

(3)  Waiver of Jury Trial . Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Agreement or any Credit Support Document. Each party (i) certifies that no representative, agent or attorney of the other party or any Credit Support Provider has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into this Agreement and provide for any Credit Support Document, as applicable, by, among other things, the mutual waivers and certifications in this Section. 

(4)  Telephonic Recording . Each party (i) consents to the recording of the telephone conversations of trading, marketing and operations personnel of the parties and their Affiliates in connection with this Agreement or any potential Transaction and (ii) agrees to obtain any necessary consent of, and give notice of such recording to, such personnel of it and its Affiliates. 

(5)      Further Representations . Party B represents to Party A (which representations will be deemed to be repeated by Party B on each date on which a Transaction is entered into) that: 

(a)  Generally Accepted Accounting Principles . The financial information delivered by it pursuant to paragraph (b) of Part 3 of this Schedule, including the related schedules and notes thereto, has been prepared in accordance with GAAP, applied consistently throughout the periods involved (except as disclosed therein). 

(b)  No Material Contingent Obligation(s) . Neither Party B nor any of its subsidiaries has any material contingent obligation, contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment, which is not reflected in the financial statements delivered to Party A pursuant to this Schedule or in the notes thereto. 

(6)       Eligible Contract Participant . Each party represents to the other party (which representation will be deemed to be repeated by each party on each date on which a Transaction is entered into) that it is an "eligible contract participant", as defined in the Commodity Futures Modernization Act of 2000. 

(7)        Relationship Between Parties . The following representation shall be inserted as a new Section 3(g) of this Agreement: 

"(g)  Relationship Between Parties . Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction): 

(i)  Non-Reliance . It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction. 

(ii)  Assessment and Understanding . It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction. 

(iii)  Status of Parties . The other party is not acting as a fiduciary for or an adviser to it in respect of that Transaction." 

(8)        ISDA Definitions . Reference is hereby made to the 2000 ISDA Definitions (the "2000 Definitions") and the 1998 FX and Currency Option Definitions (the "FX Definitions") (collectively the "ISDA Definitions") each as published by the International Swaps and Derivatives Association, Inc., which are hereby incorporated by reference herein. Any terms used and not otherwise defined herein which are contained in the ISDA Definitions shall have the meaning set forth therein. 

(9)       Scope of Agreement . Notwithstanding anything contained in this Agreement to the contrary, any transaction which may otherwise constitute a "Specified Transaction" for purposes of this Agreement which has been or will be entered into between the parties shall constitute a "Transaction" which is subject to, governed by, and construed in accordance with the terms of this Agreement, unless any Confirmation with respect to a Transaction entered into after the execution of this Agreement expressly provides otherwise. 

(10)     Inconsistency . In the event of any inconsistency between any of the following documents, the relevant document first listed below shall govern: (i) a Confirmation; (ii) the Schedule and an ISDA Credit Support Annex (as applicable); (iii) the ISDA Definitions; and (iv) the printed form of ISDA Master Agreement and ISDA Credit Support Annex (as applicable). In the event of any inconsistency between provisions contained in the 2000 Definitions and the FX Definitions , the FX Definitions shall prevail. 

(11)      Compliance with SEC Order Requiring Sworn Certification of Financial Statements . Party B represents to Party A that Party B has complied in all material respects with the Order of the Securities and Exchange Commission (the "SEC") dated June 27, 2002 (No. 4-460) requiring the filing of sworn statements pursuant to Section 21(a)(1) of the Securities Exchange Act of 1934, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, and the rules of the SEC promulgated thereunder. This representation shall be deemed to be repeated at all times until the termination of this Agreement. 

Please confirm your agreement to the terms of the foregoing Schedule by signing below. 

 

	
JPMORGAN CHASE BANK 

 

By: _______________________ 

Name: 

Title: 
	
MATRIA HEALTHCARE INC. 

 

By: _______________________ 

Name: 

Title: 

	 
	 	 	 
	

	 

EXHIBIT I 

FORM OF OPINION OF COUNSEL TO PARTY B 

Date: 

JPMorgan Chase Bank 

270 Park Avenue 

New York, New York 10017-2070 

Ladies and Gentlemen: 

We are counsel to Matria Healthcare Inc. , a _______________ corporation (the "Counterparty"), and we are delivering this opinion in connection with the Master Agreement, dated as of ___________, 2002 (as supplemented by the Confirmations relating to the Transactions entered into pursuant thereto, the "Agreement"), between the Counterparty and JPMorgan Chase Bank (the "Bank"). Terms defined in the Agreement are used herein as therein defined. 

In that connection, we have examined the originals, or copies certified to our satisfaction, of the Agreement and such corporate records of the Counterparty, certificates of public officials and of officers of the Counterparty, and agreements, instruments, and documents, as we have deemed necessary as a basis for the opinions hereinafter expressed. As to questions of fact material to such opinions, we have, when relevant facts were not independently established by us, relied upon certificates of the Counterparty, or its officers or of public officials. We have assumed the due execution and delivery of the Agreement by the Bank. 

Based upon the foregoing, we are of the following opinion: 

1.    The Counterparty is a corporation duly organized, validly existing and in good standing under the laws of ___________________. 

2.    The Counterparty has the power to execute and deliver the Agreement and to perform its obligations under the Agreement and has taken all necessary action to authorize such execution and delivery and performance of such obligations. 

3.    The execution and delivery of the Agreement by the Counterparty and the Counterparty's performance of its obligations under the Agreement do not violate or conflict with any law, rule or regulation applicable to it, any provision of its charter or by-laws (or comparable constitutional documents), any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting the Counterparty or any of its assets. 

4.    All authorizations of and exemptions, actions or approvals by, and all notices to or filings with, any governmental or other authority that are required to have been obtained or made by the Counterparty with respect to the Agreement have been obtained or made and are in full force and effect and all conditions of any such authorizations, exemptions, actions or approvals have been complied with. 

5.    The Agreement constitutes the Counterparty's legal, valid and binding obligation enforceable against the Counterparty in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). 

6.    To the best of our knowledge, after due inquiry, there is not pending or threatened against the Counterparty or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, government body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against the Counterparty of the Agreement or its ability to perform its obligations thereunder. 

We are qualified to practice law in the State of _________________ and do not purport to be expert on, or to express any opinion herein concerning, any law other than the laws of the State of _______________[, the Delaware General Corporation Law] and the federal laws of the United States of America. 

Very truly yours, 

	 
	 	 	 
	

	 

 

DRAFT 1/27/03 

Paragraph 13 to the CREDIT SUPPORT ANNEX 

to the Schedule to the 

Master Agreement 

dated as of __________________, 2003 

between 

	
JPMORGAN CHASE BANK 

("Party A") 
	
and 
	
MATRIA HEALTHCARE INC. 

("Party B") 

Paragraph 13. Elections and Variables 

(a)    Security Interest for "Obligations" . The term "Obligations" as used in this Annex includes no additional obligations with respect to either party. 

(b)    Credit Support Obligations . 

(i)    Delivery Amount, Return Amount and Credit Support Amount . 

(A)     "Delivery Amount" has the meaning specified in Paragraph 3(a). 

(B)    "Return Amount" has the meaning specified in Paragraph 3(b). 

(C)    "Credit Support Amount" has the meaning specified in Paragraph 3(b). 

(ii)    Eligible Collateral . The following items will qualify as "Eligible Collateral" for Party B: 

	
 
	
 
	
Party B 
	
"Valuation Percentage" 

	
(A) 
	
USD Cash 
	
[ X ] 
	
[ 100 ]% 

(iii)   Other Eligible Support . There shall be no "Other Eligible Support" for Party B for purposes of this Annex, unless agreed in writing between the parties. 

(iv)   Thresholds . 

 

(A)    "Independent Amount" means, with respect to Party B, U.S.$1,500,000. 

 

(B)    "Threshold" means, with respect to B, U.S.$500,000. 

(C)    "Minimum Transfer Amount" means U.S.$250,000, provided , however , that if an Event of Default has occurred and is continuing with respect to a party, the Minimum Transfer Amount with respect to such party shall be U.S.$0. 

(D)    Rounding. The Delivery Amount and the Return Amount will be rounded up and down to the nearest integral multiple of U.S.$10,000, respectively. 

(c)   Valuation and Timing . 

(i) "Valuation Agent" means, for all purposes, the Secured Party. 

(ii) "Valuation Date" means any Local Business Day. 

(iii) "Valuation Time" means the close of business in the city of the Valuation Agent on the Valuation Date or date of calculation, as applicable; 

provided that the calculations of Value and Exposure will be made as of approximately the same time on the same date. 

(iv) "Notification Time" means by 12:00 noon, New York time, on a Local Business Day. 

(d)   Conditions Precedent . With respect to Party B, any Additional Termination Event (if Party B is the Affected Party with respect to such Termination Event) will be a "Specified Condition". 

(e)   Substitution . 

(i) "Substitution Date" has the meaning specified in Paragraph 4(d)(ii). 

(ii) Consent . Inapplicable. 

(f)   Dispute Resolution . 

(i) "Resolution Time" means 12:00 noon, New York time, on the Local Business Day following the date on which notice is given that gives rise to a dispute under Paragraph 5. 

(ii) Value . For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of Posted Credit Support other than Cash will be calculated as follows: 

 

(A) with respect to any Eligible Collateral except Cash, the sum of (I) (x) the mean of the high bid and low asked prices quoted on such date by any principal market maker for such Eligible Collateral chosen by the Disputing Party, or (y) if no quotations are available from a principal market maker for such date, the mean of such high bid and low asked prices as of the first day prior to such date on which such quotations were available, plus (II) the accrued interest on such Eligible Collateral (except to the extent Transferred to a party pursuant to any applicable provision of this Agreement or included in the applicable price referred to in (I) of this clause (A)) as of such date; multiplied by the applicable Valuation Percentage. 

(iii) The provisions of Paragraph 5 will apply. 

(g)  Holding and Using Posted Collateral . 

(i) Eligibility to Hold Posted Collateral; Custodians . 

Party A will be entitled to hold Posted Collateral itself or through a Custodian pursuant to Paragraph 6(b), provided that the following conditions applicable to it are satisfied: 

(1)     Party A is not a Defaulting Party. 

(2) The Custodian is a Bank (as defined in the Federal Deposit Insurance Act) whose rating with respect to its long term unsecured, unsubordinated indebtedness is at least BBB+ by S&P or Baa1 by Moody's. 

(ii) Use of Posted Collateral . The provisions of Paragraph 6(c) will apply. 

 

(h)  Distributions and Interest Amount . 

 

(i) Interest Rate . The Interest Rate for any day means the Federal Funds Overnight Rate. For the purposes hereof, "Federal Funds Overnight Rate" means, for any day, an interest rate per annum equal to the rate published as the Federal Funds Effective Rate that appears on Telerate Page 118 for such day. 

 

 (ii)  Transfer of Interest Amount . The transfer of the Interest Amount will be made monthly on the second Local Business Day of each calendar month. 

  (iii)   Alternative to Interest Amount . The provisions of Paragraph 6(d)(ii) will apply. 

(i)    Additional Representations . None. 

 

(j)    Other Eligible Support and Other Posted Support . 

 

(i) "Value" shall have no meaning with respect to either party with respect to Other Eligible Support and Other Posted Support. 

(ii) "Transfer" shall have no meaning with respect to either party with respect to Other Eligible Support and Other Posted Support. 

(k)  Demands and Notices . 

All demands, specifications and notices made by a party to this Annex will be made pursuant to the Notices Section of this Agreement, unless otherwise specified here: 

With respect to Party A: 

JPMorgan Chase Bank 

Collateral Middle Office Americas 3/OPS2 

500 Stanton Christiana Road 

Newark, Delaware 19713 

Telephone No.: (302) 634-3191 

Facsimile No.: (302) 634-3270 

With respect to Party B: 

[Please provide address for notices if different from address in Schedule] 

(l)    Other Provisions . 

(i)    Modification to Paragraph 1 . The following subparagraph (b) is substituted for subparagraph (b) of this Annex: 

(b)    Secured Party and Pledgor . All references in this Annex to the "Secured Party" will be to Party A and all corresponding references to the "Pledgor" will be to Party B. 

(ii)    Modification to Paragraph 2 . The following Paragraph 2 is substituted for Paragraph 2 of this Annex: 

Paragraph 2. Security Interest . The Pledgor hereby pledges to the Secured Party, as security for its Obligations, and grants to the Secured Party a first priority continuing security interest in, lien on and right of Set-Off against all Posted Collateral Transferred to or received by the Secured Party hereunder. Upon the Transfer by the Secured Party to the Pledgor of Posted Collateral, the security interest and lien granted herein on that Posted Collateral will be released immediately and, to the extent possible, without any further action by either party. 

(iii)    Modification to Paragraph 9 . The following first clause of Paragraph 9 is substituted for the first clause of Paragraph 9 of this Annex: 

Paragraph 9. Representations. The Pledgor represents to the Secured Party (which representations will be deemed to be repeated as of each date on which is Transfers Eligible Collateral) that: 

(iv)    Modification to Paragraph 12 . The following definitions of "Pledgor" and "Secured Party" are substituted for the definitions of those terms contained in Paragraph 12 of this Annex: 

"Pledgor" means Party B, when that party (i) receives a demand for or is required to Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has Transferred Eligible Credit Support under Paragraph 3(a). 

"Secured Party" means Party A, when that party (i) makes a demand for or is entitled to receive Eligible Credit Support under Paragraph 3(a) or (ii) holds or is deemed to hold Posted Credit Support. 

Please confirm your agreement to the terms of the forego­ing Paragraph 13 by signing below. 

	
JPMORGAN CHASE BANK 

 

By: _______________________ 

Name: 

Title: 
	
MATRIA HEALTHCARE INC. 

 

By: _________________________ 

 

Name: 

Title:

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