Bergen Brunswig Corporation

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BmcrOENzgIZyUmVYMgVI31I3V5AuuRbG//XfN+hSApe+Gl1qRoPUjKPWp9PEw3fG OOTLn6Z97EU3F212cfr6Ww== 0000011454-00-000007.txt : 20000516 0000011454-00-000007.hdr.sgml : 20000516 ACCESSION NUMBER: 0000011454-00-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERGEN BRUNSWIG CORP CENTRAL INDEX KEY: 0000011454 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 221444512 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05110 FILM NUMBER: 634637 BUSINESS ADDRESS: STREET 1: 4000 METROPOLITAN DR CITY: ORANGE STATE: CA ZIP: 92668 BUSINESS PHONE: 7143854000 MAIL ADDRESS: STREET 1: 4000 METROPOLITAN DRIVE CITY: ORANGE STATE: CA ZIP: 92668 FORMER COMPANY: FORMER CONFORMED NAME: BERGEN DRUG CO INC DATE OF NAME CHANGE: 19690409 10-Q 1 Bergen Brunswig Corporation

[ TABLE OF CONTENTS ]

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

______________________

FORM 10-Q

[ X ]		QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the fiscal quarter ended March 31, 2000

[	]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from ________________ to ________________

Commission file number 1-5110

BERGEN BRUNSWIG CORPORATION

(Exact name of registrant as specified in its charter)

New Jersey	22-1444512
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4000 Metropolitan Drive, Orange, California	92868-3510
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code	(714) 385-4000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Title of each class of
Common Stock

Number of Shares Outstanding
April 30, 2000

Class A Common Stock -

par value $1.50 per share

134,506,696

[ COVER ]

BERGEN BRUNSWIG CORPORATION

INDEX

				Page No.

Part I.	Financial Information

	Item 1.	Financial Statements

		Consolidated Balance Sheets, March 31, 2000			3
			and September 30, 1999

		Statements of Consolidated Earnings for the three			5
			and six months ended March 31, 2000 and 1999

		Statements of Consolidated Cash Flows for the six			6
			months ended March 31, 2000 and 1999

		Notes to Consolidated Financial Statements			7

	Item 2.	Management's Discussion and Analysis of Financial			16
			Condition and Results of Operations

	Item 3.	Quantitative and Qualitative Disclosures			29
			About Market Risk

Part II.	Other Information

	Item 1.	Legal Proceedings			30

	Item 4.	Submission of Matters to a Vote of Security Holders			35

	Item 6.	Exhibits and Reports on Form 8-K			36

Signatures					37

Index to Exhibits					38

[ COVER ] | [ TABLE OF CONTENTS ]

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

BERGEN BRUNSWIG CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND SEPTEMBER 30, 1999
(dollars in thousands)
(Unaudited)


				March 31,			September 30,
- - ASSETS - -				2000			1999


CURRENT ASSETS:
	Cash and cash equivalents ........................................................			$	14,163	$	116,356
	Accounts and notes receivable, less allowance
		for doubtful receivables: $153,064 at March 31,
		2000 and $135,655 at September 30, 1999 ......................			1,311,919		1,478,990
	Inventories ....................................................................................				2,234,779		1,813,716
	Income taxes receivable ............................................................				11,655		40,178
	Prepaid expenses ......................................................................				21,600		18,668

			Total current assets ..........................................................		3,594,116		3,467,908


PROPERTY - at cost:
	Land ............................................................................................				18,935		11,265
	Buildings and leasehold improvements ...................................				141,541		129,818
	Equipment and fixtures ..............................................................				256,181		263,635

			Total property ...................................................................		416,657		404,718
	Less accumulated depreciation and amortization .................				147,794		164,273

			Property - net ....................................................................		268,863		240,445


OTHER ASSETS:
	Goodwill - net .............................................................................				1,615,536		1,642,424
	Investments ................................................................................				18,429		11,177
	Noncurrent receivables .............................................................				28,241		24,092
	Deferred income taxes .............................................................				15,842		15,504
	Deferred charges and other assets ........................................				135,328		133,871

			Total other assets ...........................................................		1,813,376		1,827,068

TOTAL ASSETS ...........................................................................				$	5,676,355	$	5,535,421



See accompanying Notes to Consolidated Financial Statements.

[ COVER ] | [ TABLE OF CONTENTS ]

BERGEN BRUNSWIG CORPORATION
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND SEPTEMBER 30, 1999
(dollars in thousands)
(Unaudited)


				March 31,				September 30,
- - LIABILITIES AND SHAREOWNERS' EQUITY - -				2000				1999


CURRENT LIABILITIES:
	Accounts payable ........................................................................			$	2,120,701		$	1,693,690
	Accrued liabilities ........................................................................				228,849			229,432
	Customer credit balances ..........................................................				168,158			172,106
	Deferred income taxes ...............................................................				61,374			56,797
	Current portion of long-term debt ...............................................				3,535			544,557
	Current portion of other long-term obligations ..........................				1,365			1,366

			Total current liabilities ......................................................		2,583,982			2,697,948


Long-term debt, net of current portion ...........................................					1,248,470			993,344
Other long-term obligations, net of current portion .......................					34,312			48,639


			Total long-term obligations ..........................................		1,282,782			1,041,983


COMPANY-OBLIGATED MANDATORILY REDEEMABLE
PREFERRED SECURITIES OF SUBSIDIARY TRUST
HOLDING SOLELY DEBT SECURITIES OF THE COMPANY...					300,000			300,000


SHAREOWNERS' EQUITY:
	Capital stock:
		Preferred - authorized: 3,000,000 shares; issued: none.....			-			-
		Class A Common - authorized: 300,000,000 shares;
		issued: 137,617,369 shares at March 31, 2000
		and 137,316,182 shares at September 30, 1999 ..............			206,426			205,974
	Paid-in capital ..............................................................................				820,260			818,564
	Accumulated other comprehensive income .............................				396			235
	Retained earnings .......................................................................				507,722			495,930

			Total ...................................................................................		1,534,804			1,520,703
	Treasury shares at cost: 3,110,673 shares at March 31,
		2000 and 3,110,671 shares at September 30, 1999 .......			(25,213	)		(25,213	)

			Total shareowners' equity.................................................		1,509,591			1,495,490

TOTAL LIABILITIES AND SHAREOWNERS' EQUITY ..............				$	5,676,355		$	5,535,421



See accompanying Notes to Consolidated Financial Statements.

[ COVER ] | [ TABLE OF CONTENTS ]

BERGEN BRUNSWIG CORPORATION

STATEMENTS OF CONSOLIDATED EARNINGS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
MARCH 31, 2000 AND 1999
(in thousands except per share amounts)
(Unaudited)

				THREE MONTHS						SIX MONTHS

				2000				1999		2000			1999


Consolidated earnings:
Net sales and other revenues:
	Excluding bulk shipments to
		customers' warehouses		$		4,885,854		$	4,301,945	$	9,719,034		$	8,262,051
	Bulk shipments to customers'
		warehouses				977,041			706,516		2,072,823			1,766,728

			Total net sales and other revenues		5,862,895				5,008,461		11,791,857			10,028,779

Costs and expenses:
	Cost of sales					5,488,529			4,754,824		11,063,004			9,576,514
	Distribution, selling, general
		and administrative expenses				302,412			171,885		595,260			314,933

			Total costs and expenses			5,790,941			4,926,709		11,658,264			9,891,447

Operating earnings						71,954			81,752		133,593			137,332
Net interest expense						29,913			17,144		59,256			25,862

Earnings before taxes on income						42,041			64,608		74,337			111,470
Taxes on income						21,221			26,166		35,340			45,145

Earnings before distributions on preferred
	securities of subsidiary trust					20,820			38,442		38,997			66,325
Distributions on preferred securities of
	subsidiary trust, net of income tax benefit
	of $2,324 and $4,648, respectively					(3,526	)		-		(7,052	)		-

			Net earnings	$		17,294		$	38,442	$	31,945		$	66,325


Earnings per share:

		Basic		$		.13		$	.36	$	.24		$	.63


		Diluted		$		.13		$	.35	$	.24		$	.62


Weighted average number of
	shares outstanding:

	Basic					134,498			108,027		134,372			105,598


	Diluted					134,594			109,625		134,476			107,296


Cash dividends declared per share
	of Class A Common Stock			$		.075		$	.075	$	.150		$	.075



See accompanying Notes to Consolidated Financial Statements.

[ COVER ] | [ TABLE OF CONTENTS ]

BERGEN BRUNSWIG CORPORATION
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE SIX MONTHS ENDED
MARCH 31, 2000 AND 1999
(in thousands)
(Unaudited)


					2000			1999


Operating Activities
	Net earnings				$	31,945		$	66,325
	Adjustments to reconcile net earnings to net cash
		flows from operating activities:
			Provision for doubtful receivables			42,906			9,870
			Depreciation and amortization of property			28,281			12,653
			Loss on dispositions of property			261			675
			Amortization of intangible assets			29,323			7,182
			Deferred compensation			2,701			1,884
			Deferred income taxes			4,137			8,091
	Effects of changes on:
			Receivables			(144,488	)		(148,671	)
			Inventories			(421,063	)		(622,112	)
			Income taxes receivable/payable			28,523			35,157
			Prepaid expenses and other assets			(11,324	)		(29,095	)
			Accounts payable			427,011			402,089
			Accrued liabilities			16,172			7,737
			Customer credit balances			(3,948	)		17,364

				Net cash flows from operating activities		30,437			(230,851	)


Investing Activities
	Property acquisitions					(64,592	)		(13,856	)
	Net proceeds from sale of accounts receivable					259,998			-
	Acquisition of businesses, less cash acquired					-			(230,104	)
	Other					(6,893	)		3,695

				Net cash flows from investing activities		188,513			(240,265	)


Financing Activities
	Net revolving bank loan activity					412,483			587,500
	Net commercial paper activity					(692,891	)		-
	Repayment of other obligations					(11,030	)		(127,455	)
	Distributions paid on trust preferred securities					(11,700	)		-
	Shareowners' equity transactions:
			Exercise of stock options and issuance of restricted shares			860			5,194
			Employee stock purchase plan			1,288			-
			Cash dividends paid on Common Stock			(20,153	)		(15,915	)

				Net cash flows from financing activities		(321,143	)		449,324

Net decrease in cash and cash equivalents						(102,193	)		(21,792	)
Cash and cash equivalents at beginning of period						116,356			79,004

Cash and cash equivalents at end of period					$	14,163		$	57,212


Supplemental Cash Flow Disclosures
	Cash paid during the period for:
			Interest		$	54,641		$	22,695
			Income taxes - net of refunds			11,762			2,490


See accompanying Notes to Consolidated Financial Statements.

[ COVER ] | [ TABLE OF CONTENTS ]

BERGEN BRUNSWIG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Basis Of Presentation

Bergen Brunswig Corporation, a New Jersey corporation formed in 1956, and its subsidiaries (collectively, the "Company") is a diversified drug and healthcare distribution organization. The Company is one of the nation's largest wholesalers of pharmaceuticals, medical-surgical supplies, and specialty healthcare products to the managed care and retail pharmacy markets, and also distributes pharmaceuticals to long-term care and seriously ill patients. The Company provides product distribution, logistics, pharmacy management programs, consulting services, and Internet fulfillment services designed to reduce costs and improve patient outcomes across the entire healthcare spectrum.

The consolidated financial statements include the accounts of the Company, after elimination of the effect of intercompany transactions and balances.

The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for reporting on Form 10-Q and do not include all of the information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited Consolidated Financial Statements and Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1999. Certain reclassifications have been made in the consolidated financial statements and notes to conform to fiscal 2000 presentations.

The preparation of the Company's consolidated financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense during the reporting periods. Actual results could differ from these estimates and assumptions.

In the opinion of management of the Company, the accompanying unaudited interim consolidated financial statements reflect all adjustments necessary for a fair statement of the results of the Company and its subsidiaries for the periods shown and such adjustments are of a normal recurring nature. Results of operations for the first six months of fiscal 2000 are not necessarily indicative of results to be expected for the full fiscal year or any other fiscal period.

Comprehensive Income

The Company has adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income", which establishes standards for the reporting and display of comprehensive income and its components in financial statements. This statement defines comprehensive income as all changes in equity during a period from non-owner sources. The Company has no reported material differences between net earnings and comprehensive income. Therefore, statements of comprehensive income have not been presented.

Impairment of Long-lived Assets

The Company assesses the impairment of long-lived assets used in operations when indicators of impairment are present and the undiscounted future cash flows are not sufficient to recover the assets' carrying amounts. An impairment loss is measured by comparing the fair value of an asset to its carrying amount.

Revenue Recognition

The Company records revenues when product is shipped or services are provided to its customers. Along with other companies in its industry, the Company reports as revenues the gross dollar amount of bulk shipments to customers' warehouses and the related costs in cost of sales. Bulk shipment transactions are arranged by the Company with its suppliers at the express direction of the customer, and involve either shipments from the supplier directly to customers' warehouse sites or shipments from the supplier to Company warehouses for immediate shipment to customers' warehouse sites. Gross profit earned by the Company on bulk shipments was not material in any period presented.

Accounts Receivable Securitization

On December 17, 1999, the Company entered into an accounts receivable securitization program with a bank which provides additional borrowing capacity for the Company (the "Receivables Securitization Program"). Through the Receivables Securitization Program, the Company's Bergen Brunswig Drug Company subsidiary sells, on an ongoing basis, certain of its accounts receivable to Blue Hill, Inc. ("Blue Hill"), a 100%-owned special purpose subsidiary. Blue Hill, in turn, sells an undivided percentage ownership interest in such receivables to financial institutions. The program qualifies for treatment as a sale of assets under SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". Sales are recorded at the estimated fair value of the receivables sold, reflecting discounts for the time value of money based on specified interest rates; the weighted average rate for the program was approximately 6.03% at March 31, 2000.

As of March 31, 2000, the Company had received net proceeds of $260.0 million from the sale of such receivables under the Receivables Securitization Program, and this amount is reflected as a reduction of accounts receivable in the accompanying consolidated balance sheets. As sold receivables are collected, additional receivables may be sold under the program. The discount and fees of approximately $4.5 million and $5.1 million on the sold receivables were included in net interest expense in the accompanying statements of consolidated earnings for the three and six-month periods ended March 31, 2000, respectively.

The Company maintains an allowance for doubtful receivables based upon the expected bad debt losses of all consolidated accounts receivable, including receivables sold by Blue Hill.

On February 29, 2000, the Receivables Securitization Program was amended to, among other things, increase the funding limit to $350 million, and to provide for additional purchaser financial institutions.

Long-Term Debt

Long-term debt at March 31, 2000 and September 30, 1999 consisted of the following:

March 31,

September 30,

Dollars in thousands

2000

1999

7 3/8% senior notes due 2003

$

149,688

$

149,633

7 1/4% senior notes due 2005

99,819

99,802

8 3/8% senior subordinated notes due 2008

308,119

308,119

Revolving credit facilities averaging 7.32% and

6.00%, respectively

662,200

249,717

Commercial paper averaging 5.72%

-

692,891

7% convertible subordinated debentures due 2006

20,609

20,609

6 7/8% exchangeable subordinated

debentures due 2011

8,425

8,425

10% unsecured promissory note

-

4,500

Other

3,145

4,205

Total

1,252,005

1,537,901

Less current portion

3,535

544,557

Total

$

1,248,470

$

993,344

On April 20, 2000, the Company replaced both its unsecured credit agreement (the "Credit Facility") and its unsecured credit agreement (the "Credit Agreement") with a new $1.5 billion senior secured credit agreement (the "Senior Credit Agreement") to be used to refinance existing indebtedness as well as fund general corporate purposes and working capital needs. The Senior Credit Agreement consists of an $800 million revolving facility maturing in April 2003, a $200 million interim term loan maturing in October 2001, a $300 million term loan maturing in March 2005 and a $200 million term loan maturing in March 2006. Borrowings under the Senior Credit Agreement are secured by substantially all of the Company's assets. The availability of revolving loans under the Senior Credit Agreement is tied to a borrowing base formula and certain covenants; the maximum amount of revolving loans outstanding may not exceed specified percentages of the Company's eligible accounts receivable and eligible inventory. Interest accrues at specified rates based on the Company's debt ratings; initially, such rates range from 2.5% to 3.5% over LIBOR or 1.5% to 2.5% over prime, with a weighted average rate of approximately 9.1% at April 30, 2000. The Senior Credit Agreement has loan covenants which require the Company to maintain certain financial statement ratios and places certain limitations on, among other things, dividend payments and capital expenditures (see Exhibit 10(a) under Item 6 of this quarterly report).

The Company's Credit Facility, which expired in April 2000, allowed borrowings of up to $600 million under a revolving line of credit and also allowed borrowings under discretionary credit lines ("discretionary lines"), as available, outside of the Credit Facility.

The Company's Credit Agreement, which was effective through March 2001, allowed borrowings of up to $400 million and also allowed borrowings under discretionary lines, as available, outside of the Credit Agreement.

The Company's unsecured commercial paper dealer agreements (the "Commercial Paper Agreements") provided for the private placement of short-term commercial paper notes of the Company (the "Notes"), as available, up to a maximum of $1 billion outstanding. The Commercial Paper Agreements expired on April 11, 2000. During the second quarter of fiscal 2000 and through April 11, 2000, the Company was not able to access the Commercial Paper market due to downgrades in the Company's credit rating which occurred in November and December 1999 and February 2000.

Aggregate borrowings under the Credit Facility, Credit Agreement, discretionary lines and the Commercial Paper Agreements amounted to approximately $662 million and $943 million at March 31, 2000 and September 30, 1999, respectively. An aggregate of $660 million of such outstanding borrowings at March 31, 2000 has been classified as long-term debt based on the Company's ability and intent to refinance as evidenced by the new Senior Credit Agreement described above.

During November 1999, a $4.5 million 10% unsecured promissory note, which the Company assumed in connection with the acquisition of PharMerica, was repaid when PharMerica agreed to offset the $4.5 million against the outstanding accounts receivable balance of the noteholder, who is a PharMerica customer.

The Company also filed a shelf registration statement with the SEC which became effective on March 27, 1996 (the "1996 Registration Statement"). The 1996 Registration Statement allows the Company to sell senior and subordinated debt or equity securities to the public from time to time up to an aggregate maximum principal amount of $400 million. The Company intends to use the net proceeds from any sale of such securities for general corporate purposes, which may include, without limitation, the repayment of indebtedness of the Company or of any of its subsidiaries, and entities which the Company may acquire in the future. Any offering of such securities shall be made only by means of a prospectus.

Preferred Securities of Trust

In May 1999, Bergen Capital I (the "Trust"), a wholly-owned subsidiary trust of the Company, issued 12,000,000 shares of 7.80% Trust Originated Preferred Securities (SM) (TOPrS(SM)) (the "Preferred Securities") at $25 per security. The proceeds of such issuances were invested by the Trust in $300 million aggregate principal amount of the Company's 7.80% Subordinated Deferrable Interest Notes due June 30, 2039 (the "Subordinated Notes"). The Subordinated Notes represent the sole assets of the Trust and bear interest at the annual rate of 7.80% per annum, payable quarterly, and are redeemable by the Company beginning in May 2004 at 100% of the principal amount thereof. The obligations of the Trust related to the Preferred Securities are fully and unconditionally guaranteed by the Company.

Holders of the Preferred Securities are entitled to cumulative cash distributions at an annual rate of 7.80% of the liquidation amount of $25 per security. The Preferred Securities will be redeemable upon any repayment of the Subordinated Notes at 100% of the liquidation amount beginning in May 2004.

The Subordinated Notes and the related Trust investment in the Subordinated Notes have been eliminated in consolidation and the Preferred Securities are reflected as outstanding in the accompanying consolidated financial statements.

Earnings Per Share

Basic earnings per share ("Basic") is computed by dividing net earnings (the numerator) by the weighted average number of shares of Class A Common Stock outstanding during each period (the denominator). Diluted earnings per share is similar to the computation for Basic, except that the denominator is increased by the dilutive effect of employees' stock options outstanding, computed using the treasury stock method.

Dividends

On February 15, 2000, the Company declared a quarterly cash dividend of $0.075 per share on the Company's Common Stock that was paid on March 6, 2000 to shareowners of record on February 25, 2000. On September 24, 1998, the Company declared a $0.075 per share quarterly cash dividend on the Company's Common Stock that was paid on December 1, 1998 to shareowners of record as of November 2, 1998. This $0.075 payment constituted the Company's dividend for the first quarter ended December 31, 1998. For accounting purposes, this cash dividend was recorded in the fourth fiscal quarter ended September 30, 1998, resulting in a larger than usual dividend in that quarter and no dividend during the quarter ended December 31, 1998. Quarterly cash dividends of $0.075 per share of Common Stock were paid on March 1, June 1, and September 1, 1999 and recorded in the second, third and fourth quarters, respectively, of fiscal 1999; and paid on December 1, 1999 and recorded in the first quarter of fiscal 2000.

On May 9, 2000, the Company declared a quarterly cash dividend of $0.01 per share on the Company's Common Stock, payable June 5, 2000 to shareowners of record on May 15, 2000. This cash dividend will be recorded in the third quarter of fiscal 2000.

10.

Business Acquisitions

On April 26, 1999, the Company acquired PharMerica, one of the nation's largest providers of pharmaceutical products and pharmacy management services to long-term care and alternate site settings, headquartered in Tampa, Florida. The Company issued approximately 24.7 million shares of Common Stock valued at approximately $665 million, acquired net assets (excluding debt) at fair value of approximately $315 million, assumed debt of approximately $600 million and incurred costs of approximately $10 million. The Company recorded goodwill of approximately $960 million in the transaction.

On January 21, 1999, the Company acquired Stadtlander Operating Company LLC ("Stadtlander"), a national leader in disease-specific pharmaceutical care delivery for transplant, HIV, infertility and serious mental illness patient populations and a leading provider of pharmaceutical care to the privatized corrections market, headquartered in Pittsburgh, Pennsylvania. The Company paid approximately $195 million in cash and issued approximately 5.7 million shares of Common Stock, previously held as Treasury shares, valued at approximately $140 million. The Company acquired net assets (excluding debt) at fair value of approximately $40 million, assumed debt of approximately $100 million and incurred costs of approximately $10 million. The Company recorded goodwill of approximately $405 million in the transaction.

If the acquisitions of PharMerica and Stadtlander had occurred as of the beginning of the six months ended March 31, 1999, unaudited pro forma net sales and other revenues, net earnings, and diluted earnings per share would have been as follows:

Six Months

Ended

March 31,

Dollars in millions, except per share amounts

1999

Net sales and other revenues

$

10,404.4

Net earnings

$

75.8

Diluted earnings per share

$

0.56

The pro forma operating results above include the results of operations for PharMerica and Stadtlander for the six months ended March 31, 1999 with increased goodwill amortization along with other relevant adjustments to reflect fair value of the acquired assets. Additionally, the pro forma operating results include pro forma interest expense on the assumed acquisition borrowings to finance the cash portion of the Stadtlander transaction; the effect of decreased interest expense attributable to PharMerica becoming a co-borrower under the Company's credit facilities; pro forma adjustments to the provision for taxes on income to reflect, primarily, higher non-deductible goodwill amortization; and pro forma issuance of the Company's Common Stock reflected in the weighted average number of shares outstanding for the computations of pro forma diluted earnings per share.

The results of operations reflected in the pro forma information above are not necessarily indicative of the results which would have been reported if the PharMerica and Stadtlander acquisitions had been effected at the beginning of the six-month period.

On February 10, 1999, the Company acquired J.M. Blanco, Inc. ("J.M. Blanco"), Puerto Rico's largest pharmaceutical distributor, headquartered in Guaynabo, Puerto Rico, for a cash purchase price of approximately $30 million. The Company acquired net assets (excluding debt) at fair value of approximately $24 million, assumed debt of approximately $22 million and incurred costs of approximately $1 million. The Company recorded goodwill of approximately $29 million in the transaction.

On December 31, 1998, the Company acquired Medical Initiatives, Inc. ("MII"), a pre-filler of pharmaceuticals for oncology centers, located in Tampa, Florida. The Company issued approximately 200,000 shares of Common Stock, previously held as Treasury shares, valued at approximately $6.0 million, acquired net assets at fair value of approximately $0.1 million and incurred costs of $0.2 million. The Company recorded goodwill of approximately $6.1 million in the transaction.

Had the acquisitions of J.M. Blanco and MII occurred at the beginning of fiscal 1999, the pro forma inclusion of their operating results would not have had a significant effect on the reported consolidated net sales and other revenues and net earnings for the three and six months ended March 31, 1999.

Each of the aforementioned acquisitions was accounted for as a purchase for financial reporting purposes. The Company is in disagreement with the seller and the seller's independent auditors regarding the valuation of the net assets of Stadtlander. Any amounts realized from the seller would be recorded as an adjustment to the purchase price. See Part II, Item 1 entitled "Legal Proceedings."

11.

Business Segment Information

The Company is organized based upon the products and services it provides to its customers. The Company's operating segments have been aggregated into four reportable segments: Pharmaceutical Distribution, PharMerica, Stadtlander, and Other Businesses.

The Pharmaceutical Distribution segment includes Bergen Brunswig Drug Company ("BBDC"), ASD Specialty Healthcare ("ASD") and a repackaging facility. This segment sells pharmaceuticals, over-the-counter medicines, health and beauty aids, and other health-related products to hospitals, managed care facilities, retail pharmacies, and food/drug combination stores. In addition, specialty pharmaceutical products are sold to physicians, clinics and other providers in the nephrology, oncology, plasma and vaccines sectors. This segment also provides promotional, inventory management and information services to its customers.

The PharMerica segment provides institutional pharmacy services to the elderly, chronically ill and disabled in long-term care and alternate site settings, including skilled nursing facilities, assisted living facilities, specialty hospitals, residential living communities and the home. PharMerica also provides mail order pharmacy services to workers' compensation patients and the catastrophically ill.

The Stadtlander segment provides disease-specific pharmaceutical care to people living with challenging health conditions such as HIV/AIDS, organ transplant, serious mental illness, and infertility. Stadtlander also provides pharmaceutical care to the privatized corrections market.

The Other Businesses segment principally consists of Bergen Brunswig Medical Corporation ("BBMC"), which distributes medical and surgical products to hospitals and alternate site facilities. This segment also includes four smaller entities: ICS, which provides commercial outsourcing to healthcare product manufacturers; The Lash Group, Inc., which provides healthcare reimbursement consulting services; Choice Medical, Inc., which provides software to healthcare providers; and Medi-Mail, a small mail service entity.

All of the Company's operations are located in the United States and the Commonwealth of Puerto Rico.

The following tables present segment information for the three and six months ended March 31, 2000 and 1999 (dollars in thousands):

Three Months Ended
March 31,

Six Months Ended
March 31,

Net Sales and Other Revenues

2000

1999

2000

1999

Pharmaceutical Distribution

$

4,415,412

$

4,025,786

$

8,779,825

$

7,763,449

PharMerica

320,056

-

629,500

-

Stadtlander

142,215

100,099

287,248

100,099

Other Businesses

223,150

219,767

456,498

444,025

Corporate

110

196

578

281

Intersegment Eliminations

(215,089

)

(43,903

)

(434,615

)

(45,803

)

Revenue excluding bulk shipments

4,885,854

4,301,945

9,719,034

8,262,051

Bulk shipments of pharmaceuticals

to customers' warehouses

977,041

706,516

2,072,823

1,766,728

Total net sales and other revenues

$

5,862,895

$

5,008,461

$

11,791,857

$

10,028,779

Management evaluates segment performance based on revenues excluding bulk shipments to customers' warehouses. For further information regarding the nature of bulk shipments, see Note 4.

Three Months Ended
March 31,

Six Months Ended
March 31,

Operating Earnings, LIFO Basis

2000

1999

2000

1999

Pharmaceutical Distribution

$

86,065

$

92,152

$

163,782

$

161,513

PharMerica

8,464

-

16,233

-

Stadtlander

(7,991

)

3,042

(14,938

)

3,042

Other Businesses

1,784

2,091

1,704

3,893

Corporate

(16,368

)

(15,533

)

(33,188

)

(31,116

)

Total operating earnings,

LIFO basis

71,954

81,752

133,593

137,332

Net interest expense

(29,913

)

(17,144

)

(59,256

)

(25,862

)

Earnings before taxes on income

and distributions on preferred

securities of subsidiary trust

$

42,041

$

64,608

$

74,337

$

111,470

Segment operating profit is evaluated on both a FIFO and LIFO basis. However, the consolidated LIFO charge was only $1.4 million in each the three-month periods ended March 31, 2000 and 1999, and $2.8 million in each of the six-month periods. Since the effect on the operating earnings of any segment or the consolidated total was immaterial, only the LIFO basis is presented herein. Certain corporate office expenses of a direct operational nature are charged to the segments, but general corporate overhead is not allocated. Also, interest expense is not allocated to the segments.

[ COVER ] | [ TABLE OF CONTENTS ]

ITEM 2.	Management's Discussion and Analysis of Financial Condition
	and Results of Operations

PORTIONS OF MANAGEMENT'S DISCUSSION AND ANALYSIS PRESENTED BELOW, CONSISTING OF THOSE STATEMENTS WHICH ARE NOT HISTORICAL IN NATURE (INCLUDING, WITHOUT LIMITATION, THE COMPANY'S EXPECTATIONS REGARDING ITS MARGINS AND THE COMPANY'S YEAR 2000 DISCLOSURES), CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER FROM THOSE PROJECTED OR IMPLIED. THE MOST SIGNIFICANT OF SUCH RISKS, UNCERTAINTIES AND OTHER FACTORS ARE DESCRIBED IN EXHIBIT 99(A) TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999. THE COMPANY DISCLAIMS ANY OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT.

RESULTS OF OPERATIONS

The Company reported a significant increase in revenues during the three and six months ended March 31, 2000 compared to the same periods in the prior fiscal year due to internal growth and acquisitions. However, operating earnings, net earnings and diluted earnings per share trends were negatively affected by lower earnings at Stadtlander, lower gross margins in Pharmaceutical Distribution and interest expense incurred during the current fiscal year related to certain business acquisitions consummated in fiscal 1999. The following table summarizes the Company's revenues, interest expense and earnings during these periods:

Three Months
Ended
March 31,

%

Six Months
Ended
March 31,

%

Dollars in millions

2000

1999

Change

2000

1999

Change

Net sales and other revenues

$

5,862.9

$

5,008.5

17

%

$

11,791.9

$

10,028.8

18

%

Operating earnings

$

72.0

$

81.8

(12

)

%

$

133.6

$

137.3

(3

)

%

Net interest expense*

$

29.9

$

17.1

74

%

$

59.3

$

25.9

129

%

Net earnings

$

17.3

$

38.4

(55

)

%

$

31.9

$

66.3

(52

)

%

Diluted earnings per share

$

0.13

$

0.35

(63

)

%

$

0.24

$

0.62

(61

)

%

* Excluding distributions on preferred securities of subsidiary trust.

Net earnings decreased 55% and 52% for the three and six- month periods, respectively, of fiscal 2000. Diluted earnings per share for the three and six- month periods of fiscal 2000 decreased 63% and 61%, respectively, compared to the same periods of fiscal 1999. The decline in net earnings, despite higher revenues, primarily relates to lower earnings at Stadtlander, lower gross margins in Pharmaceutical Distribution and higher interest expense associated with additional debt incurred or assumed in connection with certain of the fiscal 1999 acquisitions, as well as increased goodwill amortization associated with those acquisitions. Lower diluted earnings per share also reflects the effect of the Company's issuance of additional shares of Common Stock in connection with certain of those fiscal 1999 acquisitions.

Fluctuations in the Company's operating results are partially due to the results of entities which were acquired during the past year. Such acquisitions, which are described in more detail under the caption "Business Acquisitions" herein, are summarized as follows:

Acquisition Date

Acquired Entity

Segment

April 1999

PharMerica, Inc.

PharMerica

February 1999

J.M. Blanco, Inc.

Pharmaceutical Distribution

January 1999

Stadtlander Operating Company, LLC

Stadtlander

December 1998

Medical Initiatives, Inc.

Pharmaceutical Distribution

As described below, of the acquired entities, PharMerica and Stadtlander have had the most significant impact on the Company's results of operations. Each of the transactions listed above is reflected in the Company's consolidated financial statements only from the respective acquisition date.

Operating Earnings

The Company reported decreases in operating earnings of 12% and 3%, respectively, during the three and six months ended March 31, 2000. The following table provides a summarized statement of operations on a consolidated basis, including key line item growth rates and ratios. PharMerica and Stadtlander, due to the nature of their pharmaceutical service businesses, have significantly higher gross margins and operating expense ratios than the Company's principal pharmaceutical distribution businesses. Accordingly, certain ratios in the table have also been shown excluding PharMerica and Stadtlander in order to present a more meaningful comparison with historical results.

Three Months
Ended
March 31,

%

Six Months
Ended
March 31,

%

Dollars in millions

2000

1999

Change

2000

1999

Change

Revenues excluding bulk

shipments

$

4,885.9

$

4,302.0

14

%

$

9,719.0

$

8,262.1

18

%

Bulk shipments

977.0

706.5

38

2,072.8

1,766.7

17

Total net sales and other

revenues

$

5,862.9

$

5,008.5

17

%

$

11,791.8

$

10,028.8

18

%

Gross profit

$

374.4

$

253.7

48

%

$

728.9

$

452.2

61

%

Operating expenses

302.4

171.9

76

595.3

314.9

89

Operating earnings

$

72.0

$

81.8

(12

)

%

$

133.6

$

137.3

(3

)

%

Percentage of revenues excluding bulk shipments:

Gross profit

7.66

%

5.90

%

7.50

%

5.47

%

Operating expenses

6.19

%

4.00

%

6.13

%

3.81

%

Operating earnings

1.47

%

1.90

%

1.37

%

1.66

%

Percentage of revenues excluding bulk shipments; excluding PharMerica and Stadtlander in
fiscal 2000 and Stadtlander in fiscal 1999:

Gross profit

4.91

%

5.47

%

4.81

%

5.25

%

Operating expenses

3.37

%

3.62

%

3.38

%

3.61

%

Operating earnings

1.54

%

1.85

%

1.43

%

1.64

%

Revenues excluding bulk shipments increased 14% and 18% during the three and six months of fiscal 2000. Of this increase, 7% and 11%, respectively, represented internal growth while 7% represented the effect of acquired entities during both periods.

Along with other companies in its industry, the Company reports bulk shipments of pharmaceuticals in revenues and cost of sales. Bulk shipment transactions are arranged by the Company with its suppliers at the express direction of the customer, and involve either shipments from the supplier directly to customers' warehouse sites or shipments from the supplier to Company warehouses for immediate shipment to customers' warehouse sites. Bulk sales of pharmaceuticals do not impact the Company's inventory since the Company simply processes the orders that it receives from its suppliers directly to the customers' warehouses. The Company serves as an intermediary by paying the supplier and billing the customer for the goods. Due to the insignificant margins generated through bulk shipments, fluctuations in such revenues have an immaterial impact on the Company's operating earnings.

Gross profit as a percentage of revenues excluding bulk shipments ("gross margin") was 4.91% and 5.47% for the three months ended March 31, 2000 and 1999, respectively, and 4.81% and 5.25% for the six months then ended, respectively, excluding the effect of PharMerica and Stadtlander. Substantially all of the 56 basis point decline in the three months and approximately 35 of the 44 basis point decline during the six months reflects lower margins in the Pharmaceutical Distribution segment. Such margins declined mainly due to intense price competition within the industry as well as to a change in the sales mix, with a greater proportion of revenues coming from high-volume, low-margin customers. ASD's gross margins decreased slightly from the second quarter a year ago, but decreased approximately 47 basis points for the six months principally due to a strong prior year first quarter, in which ASD benefited from acute product shortages in the plasma and vaccine markets. In addition, gross margins were impacted by lower buy-side benefits as the Company did not fully participate in seasonal investment buying activity during the second quarter of fiscal 2000 due to limited availability of funds preceding the refinancing of the Company's revolving credit facility (see Note 6). Gross margins were also lower in the Other Businesses segment, primarily due to lower medical-surgical buy-side opportunities in the current quarter and six months.

In all of the Company's wholesale distribution businesses, it is customary to pass on manufacturers' price increases to customers. Investment buying enables distributors such as the Company to benefit by purchasing goods in advance of anticipated manufacturers' price increases. Consequently, the rate or frequency of future price increases by manufacturers, or the lack thereof, and the Company's ability to take advantage of investment buying opportunities, influences the profitability of the Company.

Management anticipates further downward pressure on gross margins in the distribution businesses in fiscal 2000 because of continued price competition influenced by high-volume customers. Management expects that these pressures may be offset to some extent by an increased sales mix of more profitable products and services and continued reduction of operating expenses as a percentage of revenues. However, no assurance can be given that such improved sales mix or expense reduction can be achieved since many of the factors that impact such results (e.g. the effect of group purchasing agreements, competitive inroads, market conditions, etc.) are outside the Company's control. Similarly, no assurance can be given that the Company will be able to offset such downward pressure through investment buying.

Operating expenses include distribution, selling, general and administrative expenses ("DSG&A"). Excluding PharMerica and Stadtlander, operating expenses as a percentage of revenues excluding bulk shipments were 3.37% and 3.62% for the three months ended March 31, 2000 and 1999, respectively, and 3.38% and 3.61% for the six-month periods, respectively. These reductions were primarily attributable to continued operating efficiencies and the spreading of costs over a larger revenue base. The Company's distribution infrastructure has been able to process increasing volume without a proportionate increase in operating expenses. Also, the aforementioned shift in the distribution businesses' mix towards high-volume customers reduced the operating expense ratio because these customers are generally less costly to service.

Segment Information

Following is a summary of revenues and operating earnings for the Company's segments:

Dollars in millions

Revenues Excluding

Three Months

Growth

Six Months

Growth

Bulk Shipments

Ended March 31,

Rate

Ended March 31,

Rate

2000

1999

2000

1999

Pharmaceutical Distribution

$

4,415.4

$

4,025.8

10

%

$

8,779.8

$

7,763.5

13

%

PharMerica

320.1

-

-

629.5

-

-

Stadtlander

142.2

100.1

-

287.2

100.1

-

Other Businesses

223.2

219.8

2

456.5

444.0

3

Corporate

.1

.2

-

.6

.3

-

Intersegment Eliminations

(215.1

)

(43.9

)

-

(434.6

)

(45.8

)

-

Total

$

4,885.9

$

4,302.0

14

%

$

9,719.0

$

8,262.1

18

%

Operating Earnings (Loss),

Three Months

Growth

Six Months

Growth

LIFO Basis

Ended March 31,

Rate

Ended March 31,

Rate

2000

1999

2000

1999

Pharmaceutical Distribution

$

86.1

$

92.2

(7

)%

$

163.8

$

161.5

1

%

PharMerica

8.5

-

-

16.2

-

-

Stadtlander

(8.0

)

3.0

-

(14.9

)

3.0

-

Other Businesses

1.8

2.1

(15

)

1.7

3.9

(56

)

Corporate

(16.4

)

(15.5

)

(5

)

(33.2

)

(31.1

)

(7

)

Total

$

72.0

$

81.8

(12

)%

$

133.6

$

137.3

(3

)%

Operating earnings (loss) as

a percentage of revenues

excluding bulk shipments:

Pharmaceutical Distribution

1.95

%

2.29

%

1.87

%

2.08

%

PharMerica

2.64

%

-

%

2.58

%

-

%

Stadtlander

(5.62

)

%

3.04

%

(5.20

)

%

3.04

%

Other Businesses

0.80

%

0.95

%

0.37

%

0.88

%

Total

1.47

%

1.90

%

1.37

%

1.66

%

Pharmaceutical Distribution.

Revenues increased 10% and 13% in the three and six months ended March 31, 2000, respectively, substantially all of which represented internal growth. BBDC's revenues increased 9% and 12%, for the three and six-month periods, respectively, reflecting increased volume across all geographic regions and in both the retail and health systems customer categories. ASD's revenues increased 19% and 22% for the three and six-month periods, respectively, representing continued growth in its oncology and dialysis markets. These increases were comprised of higher shipments to existing BBDC and ASD customers as well as shipments to a significant number of new customers. National industry economic conditions were also favorable, with increases in prescription drug usage and higher pharmaceutical prices contributing to this segment's revenue growth.

Operating earnings decreased 7% for the three months ended March 31, 2000, but increased 1% over the first six months of fiscal 1999. As a percentage of revenues, operating earnings were 1.95% and 2.29% for the second quarter of fiscal 2000 and 1999, respectively, and 1.87% and 2.08% for the six months ended March 31, 2000 and 1999, respectively. The 34 and 21 basis point reductions, respectively, in the operating earnings ratios are due to lower gross margins, partially offset by operating expense efficiencies (see "Operating Earnings" section above).

PharMerica.

PharMerica's revenues increased 12% and 8% from the quarter and six months ended March 31, 1999 (both not yet owned by the Company) and 3% from the quarter ended December 31, 1999, despite relatively flat admissions at its customers' facilities. PharMerica's operating earnings were lower than in the respective prior-year periods, but increased 9% from the quarter ended December 31, 1999 and were in line with the Company's expectations.

PharMerica's operations have been adversely affected by negative industry trends resulting from dramatically lower reimbursement to nursing homes for Medicare patients under the Prospective Payment System ("PPS"). A negative consequence of these trends has been bankruptcy reorganization filings by several long-term care providers, including the recent filing by a significant customer of PharMerica (see below). The adverse effects of PPS included (1) lower occupancy by Medicare-funded patients at nursing facilities serviced by PharMerica, (2) significantly diminished acuity levels among residents of these facilities, which reduced the overall utilization of drugs, and (3) increased customer pricing pressure, thereby reducing PharMerica's gross margins. While the Company did see further stabilization of these trends in the first six months of fiscal 2000, management expects that they will continue to affect PharMerica throughout fiscal 2000. PharMerica sees some indications that Medicare admissions to its customers' facilities may be increasing. Certain customers are also identifying new opportunities to expand their ability to service different acuity levels and the number of patient categories admitted to their facilities. Additional reimbursement that may be available as a result of recent legislative action may improve the number of high acuity admissions.

As disclosed in the Company's Form 10-Q for the quarter ended December 31, 1999, a significant customer of PharMerica filed for Chapter 11 bankruptcy protection on February 2, 2000. The Company has reviewed the relevant facts and circumstances available at this early stage and has provided an estimated reserve in the allowance for doubtful accounts for the portion of the receivable which management believes will ultimately be uncollectible from this customer. As the bankruptcy proceedings progress, management will continually monitor the adequacy of the reserve and make any adjustments, if necessary.

Management is continuing to implement its plan designed to improve PharMerica's earnings, including (1) strengthening of billing and collections management, (2) enabling PharMerica to participate in the Company's generic purchasing programs in order to reduce drug costs, (3) outsourcing of delivery services, (4) conversion of PharMerica's long-term care pharmacies to a common proprietary AS400 computer system and (5) consolidation of pharmacies to streamline operations.

Stadtlander.

Stadtlander has shown revenue growth from its pre-acquisition periods in all of its major markets. Stadtlander's revenues increased 10% from the quarter ended March 31, 1999 (not owned by Bergen during the full quarter). However, Stadtlander reported operating losses of $8 million and $15 million for the three and six-month periods of fiscal 2000, respectively, primarily due to continued high bad debt provisions, lower gross margins and restructuring costs of $1.2 million in the second quarter of fiscal 2000. Stadtlander has taken steps designed to improve receivables collection going forward; for example, Stadtlander has implemented new accounts receivable software, strengthened its billing controls and outsourced certain collection activities. Although no assurances can be given, management anticipates that days sales outstanding and bad debt losses will be lower by the end of fiscal 2000. Also, Stadtlander is working with payors and pharmaceutical companies on programs which, if successful, will improve gross margins. The Company's estimates regarding days sales outstanding and bad debt losses constitute forward-looking statements. Actual results could differ materially from such estimates as a result of numerous factors including the extent to which the Company is able to implement its controls and improvements.

Stadtlander is continuing to take additional steps to improve earnings. As a result of an operational review conducted by an independent consulting firm, the Company has commenced a major restructuring initiative at Stadtlander. The restructuring initiative includes a management reorganization; process re-engineering designed to affect a significant reduction in operating expense; the reorganization of the StadtSolutions joint venture; and the reorganization of the sales department. In addition, the Company is continuing to pursue other strategic opportunities for Stadtlander.

Other Businesses.

Revenues increased 2% and 3% in the three and six months ended March 31, 2000, respectively, principally related to a higher volume of medical-surgical shipments to both acute care and physician customers. Operating earnings decreased 15% and 56% in the three and six-month periods of fiscal 2000, primarily reflecting lower gross margins in BBMC's medical-surgical business due primarily to fewer buy-side opportunities in the current year, partially offset by operating expense efficiencies. In addition, Choice is incurring higher expenses in connection with the launch of a new software product.

Corporate.

Corporate expenses increased $.9 million, or 5%, in the three-month period of fiscal 2000, and increased $2.0 million, or 7%, in the current year six-month period, due to the incremental costs of operating the Company's expanded operations.

Interest Expense and Distributions on Preferred Securities

The Company's financing expenses are comprised of two line items on the statements of consolidated earnings:

Three Months Ended

Six Months Ended

March 31,

March 31,

Dollars in millions

2000

1999

2000

1999

Net interest expense (pre-tax)

$

29.9

$

17.1

$

59.3

$

25.9

Distributions on preferred securities of

subsidiary Trust ($5.8 and $11.7,

respectively, pre-tax less $2.3 and

$4.6, respectively, tax benefit)

$

3.5

$

-

$

7.1

$

-

Total financing expenses were $35.7 million and $71.0 million for the three and six months of fiscal 2000, including net interest expense of $29.9 million and $59.3 million, respectively, and $5.8 million and $11.7 million, respectively, of pre-tax distributions on the Company's Preferred Securities, representing increases of $18.6 million and $45.1 million, respectively, or 109% and 174%, respectively, over the three and six-month periods of the prior year. This increase was primarily due to higher borrowings under the Company's Credit Facility, Credit Agreement, Commercial Paper Agreements, debt assumed in connection with the fiscal 1999 acquisitions, and the issuance of the Preferred Securities. In addition, the Company has incurred higher interest rates on its borrowings due to both (a) increases in the prime lending rate; and (b) downgrading of the Company's credit ratings.

In both the three and six-months periods of fiscal 2000, a significant portion of the higher borrowings was related to the assumption of the debt of entities acquired in fiscal 1999 and the financing of a portion of the purchase price of certain of those entities.

Taxes on Income

Taxes on income, excluding the tax benefit on distributions of the Company's Preferred Securities, were 50.5% and 40.5% of pre-tax earnings in the three-month periods ended March 31, 2000 and 1999, respectively, and 47.5% and 40.5% of pre-tax earnings in the six-month periods ended March 31, 2000 and 1999, respectively. The 10.0% and 7.0% increases in the effective rates in the second quarter and six months of fiscal 2000, respectively, primarily reflect the nondeductible goodwill amortization associated with the PharMerica and Blanco acquisitions. All of the goodwill amortization of Stadtlander is tax-deductible. The Company's total goodwill amortization in the first six months of fiscal 2000 was $21.3 million (of which approximately $11.2 million was non-deductible) and its goodwill amortization in the first six months of fiscal 1999 was $5.7 million (of which approximately $3.6 million was non-deductible).

Earnings per Share

Earnings per share fluctuations result primarily from changes in the Company's net earnings. However, during the second quarter and first six months of fiscal 2000, diluted earnings per share were also impacted by increases of 23% and 25%, respectively, in the weighted average number of common shares outstanding, to 134. 6 million shares from 109.6 million shares in the second quarter of fiscal 2000 and 134.5 million shares from 107.3 million shares in the current six-month period. The increases were primarily related to the issuance of 24.7 million shares in connection with the acquisition of PharMerica in April 1999 and the issuance of 5.7 million shares in connection with the acquisition of Stadtlander in January 1999. There were 134.5 million shares of the Company's common stock outstanding at March 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

Following is a summary of the Company's capitalization at the end of the most recent quarter and fiscal year.

March 31,
2000

September 30,
1999

Debt, net of cash

39%

43%

Equity, including the Preferred Securities

61%

57%

The decrease in the debt percentage is mainly due to a decrease in aggregate borrowings under the Company's Credit Facility, Credit Agreement, discretionary bank lines, and Commercial Paper Agreements to $662 million at March 31, 2000 from $943 million at September 30, 1999.

On April 20, 2000, the Company replaced both its Credit Facility and Credit Agreement with the new $1.5 billion Senior Credit Agreement to be used to refinance existing indebtedness as well as fund general corporate purposes and working capital needs. The Senior Credit Agreement consists of an $800 million revolving facility maturing in April 2003, a $200 million interim term loan maturing in October 2001, a $300 million term loan maturing in March 2005 and a $200 million term loan maturing in March 2006. Borrowings under the Senior Credit Agreement are secured by substantially all of the Company's assets. The availability of revolving loans under the Senior Credit Agreement is tied to a borrowing base formula and certain covenants; the maximum amount of revolving loans outstanding may not exceed specified percentages of the Company's eligible accounts receivable and eligible inventory. Interest accrues at specified rates based on the Company's debt ratings; initially, such rates range from 2.5% to 3.5% over LIBOR or 1.5% to 2.5% over prime, with a weighted average rate of approximately 9.1% at April 30, 2000. The Senior Credit Agreement has loan covenants which require the Company to maintain certain financial statement ratios and places certain limitations on, among other things, dividend payments and capital expenditures.

The Company's unsecured Commercial Paper Agreements provided for the private placement of short-term commercial paper Notes of the Company, as available, up to a maximum of $1 billion outstanding. The Commercial Paper Agreements expired on April 11, 2000. During the second quarter of fiscal 2000 and through April 11, 2000, the Company was not able to access the Commercial Paper market due to downgrades in the Company's credit rating which occurred in November and December 1999 and February 2000.

Aggregate outstanding borrowings under the aforementioned Credit Facility and Credit Agreement at March 31, 2000 totaled approximately $662 million.

On December 17, 1999, the Company entered into the Receivables Securitization Program with a bank which provides additional borrowing capacity for the Company. Through the Receivables Securitization Program, BBDC sells, on an ongoing basis, certain of its accounts receivable to Blue Hill, a 100%-owned special purpose subsidiary. Blue Hill, in turn, sells an undivided percentage ownership interest in such receivables to financial institutions. The program qualifies for treatment as a sale of assets under SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities".

As of March 31, 2000, the Company had received net proceeds of $260 million from the sale of such receivables under the Receivables Securitization Program, and this amount is reflected as a reduction of accounts receivable in the accompanying consolidated balance sheets. During February 2000, the Receivables Securitization Program was amended to increase the funding limit to $350 million.

On May 26, 1999, the Company's Trust issued 12,000,000 shares of its Preferred Securities at $25 per security. The proceeds of such issuances were invested by the Trust in $300 million aggregate principal amount of the Company's Subordinated Notes. The Subordinated Notes represent the sole assets of the Trust and bear interest at the rate of 7.80% per annum, payable quarterly, and are redeemable by the Company beginning in May 2004 at 100% of the principal amount thereof. The obligations of the Trust related to the Preferred Securities are guaranteed by the Company.

The Company's 1996 Registration Statement, which became effective on March 27, 1996, allows the Company to sell senior and subordinated debt or equity securities to the public from time to time up to an aggregate maximum principal amount of $400 million.

See Notes 5, 6 and 7 of the accompanying Notes to Consolidated Financial Statements for further information regarding the Receivable Securitization Program, The Senior Credit Agreement, Credit Agreement, the Credit Facility, the Commercial Paper Agreements, the Preferred Securities and the 1996 Registration Statement.

On February 15, 2000, the Company declared a quarterly cash dividend of $0.075 per share on the Company's Common Stock that was paid on March 6, 2000 to shareowners of record on February 25, 2000. On September 24, 1998, the Company declared a $0.075 per share quarterly cash dividend on the Company's Common Stock that was paid on \December 1, 1998 to shareowners of record as of November 2, 1998. This $0.075 payment constituted the Company's dividend for the first quarter ended December 31, 1998. For accounting purposes, this cash dividend was recorded in the fourth fiscal quarter ended September 30, 1998, resulting in a larger than usual dividend in that quarter and no dividend during the quarter ended December 31, 1998. Quarterly cash dividends of $0.075 per share of Common Stock were paid on March 1, June 1, and September 1, 1999 and recorded in the second, third and fourth quarters, respectively, of fiscal 1999; and paid on December 1, 1999 and recorded in the first quarter of fiscal 2000.

The Company's cash flows during the first six months of fiscal 2000 and 1999 are summarized in the following table:

Six Months Ended

March 31,

Dollars in millions

2000

1999

Net earnings excluding non-cash charges

$

139.6

$

106.7

Increases in operating assets and liabilities

(109.2

)

(337.6

)

Cash flows from operations

30.4

(230.9

)

Acquisition of businesses, less cash acquired

-

(230.1

)

Property acquisitions

(64.6

)

(13.9

)

Net proceeds from sale of accounts receivable

260.0

-

Proceeds of debt

412.5

587.5

Repayment of debt and other obligations

(703.9

)

(127.5

)

Cash dividends

(20.2

)

(15.9

)

Other - net

(16.4

)

9.0

Net decrease in cash and cash equivalents

$

(102.2

)

$

(21.8

)

For the six months ended March 31, 2000, the Company generated $30.4 million of positive cash flows from operations, compared with $230.9 million negative cash flows from operations in the comparable fiscal 1999 period. The negative cash flows from operations in fiscal 1999 were primarily associated with the Pharmaceutical Distribution segment, which had higher receivables and inventory in connection with higher sales levels, largely offset by a significant benefit from accounts payable.

The Company believes that internally-generated cash flows, funds available under the Senior Credit Agreement, the Receivables Securitization Program, and funds potentially available in the private and public capital markets will be sufficient to meet anticipated cash and capital requirements. However, actual results could differ from this forward-looking statement as a result of unanticipated capital requirements or an inability to access capital on acceptable terms when, and if, necessary. Such access to capital may be more difficult and/or expensive in the future due to the downgrading of the Company's credit ratings in November and December 1999 and February 2000.

Working capital increased to $1,010 million at March 31, 2000 from $770 million at September 30, 1999. The increase primarily reflects lower current portion of long-term debt (due to the refinancing of the Credit Facility and Credit Agreement) and higher inventory balances, partially offset by lower accounts receivable balances (due to the Receivables Securitization Program) and higher accounts payable balances. The current ratio increased to 1.39 at March 31, 2000 from 1.29 at September 30, 1999.

Property acquisitions relate principally to the purchase of the Company's previously-leased Corporate headquarters building; warehouse and pharmacy equipment, and data processing equipment.

BUSINESS ACQUISITIONS

On February 10, 1999, the Company acquired J.M. Blanco, Puerto Rico's largest pharmaceutical distributor, headquartered in Guaynabo, Puerto Rico, for a cash purchase price of approximately $30 million. The Company acquired net assets (excluding debt) at fair value of approximately $24 million, assumed debt of approximately $22 million and incurred costs of approximately $1 million. The Company recorded goodwill of approximately $29 million in the transaction.

On January 21, 1999, the Company acquired Stadtlander, a national leader in disease-specific pharmaceutical care delivery for transplant, HIV, infertility and serious mental illness patient populations and a leading provider of pharmaceutical care to the privatized corrections market, headquartered in Pittsburgh, Pennsylvania. The Company paid approximately $195 million in cash and issued approximately 5.7 million shares of Common Stock, previously held as Treasury shares, valued at approximately $140 million. The Company acquired net assets (excluding debt) at fair value of approximately $40 million, assumed debt of approximately $100 million and incurred costs of approximately $10 million. The Company recorded goodwill of approximately $405 million in the transaction.

On December 31, 1998, the Company acquired MII, a pre-filler of pharmaceuticals for oncology centers, located in Tampa, Florida. The Company issued approximately 200,000 shares of Common Stock, previously held as Treasury shares, valued at approximately $6.0 million, acquired net assets at fair value of approximately $0.1 million and incurred costs of $0.2 million. The Company recorded goodwill of approximately $6.1 million in the transaction.

[ COVER ] | [ TABLE OF CONTENTS ]

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

The Company's most significant "market risk" exposure is the effect of changing interest rates. The Company manages its interest expense by using a combination of fixed and variable-rate debt. At March 31, 2000, the Company's debt consisted of approximately $591.4 million of fixed-rate debt with a weighted average interest rate of 7.87% and $662.2 million of variable-rate debt (consisting of borrowings under the bank Credit Facility, Credit Agreement and discretionary lines) with a weighted average interest rate of 7.32%. The amount of the variable-rate debt fluctuates during the year based on the Company's cash requirements. As discussed in Note 6, the Company has subsequently replaced the aforementioned variable-rate debt with borrowings under a new variable Senior Credit Agreement which had a weighted average interest rate of 9.10% as of April 30, 2000. If the Company had incurred this higher interest rate during the second quarter of fiscal 2000, assuming $662.2 million of outstanding borrowings, the impact on pre-tax earnings would have been approximately $2.9 million. If interest rates on the Senior Credit Agreement were to increase by 91 basis points (one-tenth of the rate of April 30, 2000), the impact on pre-tax earnings during a comparable quarter would be approximately $1.5 million.

The Company is evaluating various financial instruments which would mitigate a portion of its exposure to variable interest rates.

The Company also believes that its interest rate exposure may be somewhat mitigated due to the favorable effect which inflation may have on the Company, specifically, manufacturers' price inflation which may accelerate concurrent with a general increase in interest rates, to the extent that the Company can take advantage of such inflation in purchasing and selling inventory.

[ COVER ] | [ TABLE OF CONTENTS ]

BERGEN BRUNSWIG CORPORATION

PART II.OTHER INFORMATION

ITEM 1

LEGAL PROCEEDINGS

There have been no new material matters in the legal proceedings as previously reported in Part II, Item 1 of the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1999 filed with the Securities and Exchange Commission on February 14, 2000 except as otherwise might be set forth below.

Section 1.

Federal, State and Opt-Out Antitrust Actions

As previously reported, between August 3, 1993 and February 14, 1994, the Company, along with various other pharmaceutical industry-related companies, was named as a defendant in eight separate state antitrust actions in three courts in California. These lawsuits are more fully detailed in "Item 1 - Legal Proceedings" of Part II of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 as filed with the Securities and Exchange Commission and is incorporated herein by reference. In April 1994, these California state actions were all coordinated as Pharmaceutical Cases I, II and III, and assigned to a single judge in San Francisco Superior Court. On August 22, 1994, a Consolidated Amended Complaint ("California Complaint"), which supersedes and amends the eight prior complaints, was filed in these actions.

The California Complaint alleges that the Company and 35 other pharmaceutical industry-related companies violated California's Cartwright Act, Unfair Practices Act, and the Business and Professions Code unfair competition statute. The California Complaint alleges that defendants jointly and separately engaged in secret rebating, price fixing and price discrimination between plaintiffs and plaintiffs' alleged competitors who sell pharmaceuticals to patients or retail customers. Plaintiffs seek, on behalf of themselves and a class of similarly situated California pharmacies, injunctive relief and treble damages in an amount to be determined at trial. The judge struck the class allegations from the Unfair Practices Act claims.

Between August 12, 1993 and November 29, 1993, the Company was also named in 11 separate Federal antitrust actions. All 11 actions were consolidated into one multidistrict action in the Northern District of Illinois entitled, In Re Brand-Name Prescription Drugs Antitrust Litigation, No. 94 C. 897 (MDL 997). On March 7, 1994, plaintiffs in these 11 actions filed a consolidated amended class action complaint ("Federal Complaint") which amended and superseded all previously filed Federal complaints against the Company. The Federal Complaint names as defendants the Company and 30 other pharmaceutical industry-related companies. The Federal Complaint alleges, on behalf of a nationwide class of retail pharmacies, that the Company conspired with other wholesalers and manufacturers to discriminatorily fix prices in violation of Section 1 of the Sherman Act. The Federal Complaint seeks injunctive relief and treble damages. On November 15, 1994, the Federal court certified the class defined in the Federal Complaint for the time period October 15, 1989 to the present. These lawsuits are more fully detailed in "Item 1 - Legal Proceedings" of Part II of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 as filed with the Securities and Exchange Commission and is incorporated herein by reference.

\ On May 2, 1994, the Company and Durr Drug Company were named as defendants, along with 25 other pharmaceutical related-industry companies, in a state antitrust class action in the Circuit Court of Greene County, Alabama entitled Durrett v. UpJohn Company, et al., No. 94-029 ("Alabama Complaint"). The Alabama Complaint alleges on behalf of a class of Alabama retail pharmacies and a class of Alabama consumers that the defendants conspired to discriminatorily fix prices to plaintiffs at artificially high levels. The Alabama Complaint seeks injunctive relief and treble damages. On June 25, 1999, the Alabama Supreme Court held that plaintiffs' claims are not valid under the Alabama antitrust statute. On November 29, 1999 the trial court dismissed the entire action in accordance with the mandate of the Alabama Supreme Court. Similar actions were also filed against the Company and other wholesalers and manufacturers in Mississippi, Montgomery Drug v. UpJohn, et. al., No. 97-0103, and in Tennessee, Graves v. Abbott, et. al., No. 25,109-II. The various state actions have not yet been set for trial.

On October 21, 1994, the Company entered into a sharing agreement with five other wholesalers and 26 pharmaceutical manufacturers. Among other things, the agreement provides that: (a) if a judgment is entered against both the manufacturer and wholesaler defendants, the total exposure for joint and several liability of the Company is limited to $1.0 million; (b) if a settlement is entered into by, between, and among the manufacturer and wholesaler defendants, the Company has no monetary exposure for such settlement amount; (c) the six wholesaler defendants will be reimbursed by the 26 pharmaceutical defendants for related legal fees and expenses up to $9.0 million total (of which the Company will receive a proportionate share); and (d) the Company is to release certain claims which it might have had against the manufacturer defendants for the claims presented by the plaintiffs in these cases. The agreement covers the Federal court litigation, as well as the cases which have been filed in various state courts. In December 1994, plaintiffs in the Federal action had moved to set aside the agreement, but plaintiffs' motion was denied on April 25, 1995. In 1996, the class plaintiffs filed a motion for approval of a settlement with 12 of the manufacturer defendants, which would result in dismissal of claims against those manufacturers and a reduction of the potential claims against the remaining defendants, including those against the Company. The Court granted approval for the settlement. In 1998, an additional four of the manufacturer defendants settled. The effect of the settlements on the sharing agreement is that the Company's maximum potential loss would be $1.0 million, regardless of the outcome of the lawsuits, plus possible legal fee expenses in excess of the Company's proportionate share of the $9.0 million reimbursement of such fees or any additional amounts to be paid by the manufacturer defendants.

In September 1998, a jury trial of this action commenced in Federal Court. On November 30, 1998, the Court granted all remaining defendants a directed verdict, dismissing all class claims against the Company and other defendants. On July 13, 1999, the Court of Appeals for the Seventh Circuit affirmed the dismissal of the Company and the other wholesaler defendants from the class action litigation. Plaintiffs petition for rehearing on this issue was denied on August 9, 1999. On November 5, 1999 plaintiffs filed a petition for writ of certiorari in the United States Supreme Court. On February 22, 2000, the U.S. Supreme Court denied the writ of certiorari.

In addition to the above-mentioned Federal class action and state court actions, the Company and other wholesale defendants have been added as defendants in a series of related antitrust lawsuits brought by certain independent pharmacies who have opted out of the class action cases. After a successful motion by the Company and other wholesalers, the damage period in these cases has been limited to October 1993 to the present. These lawsuits are also covered by the sharing agreement described above. The parties are currently engaged in expert discovery, which will be followed by motions for summary judgment by the wholesaler defendants. Plaintiffs in these suits have requested remand to various federal courts nationwide for purposes of trial. No remand order has been issued and no trial dates have been set.

The Company is subject to these and various other claims and litigation. While the outcome of such matters is difficult to predict, the Company believes, based on information currently available to it, that the ultimate disposition of such claims will not have material adverse effect on the Company's consolidated financial position or operating results.

Section 2.

Bergen vs. Counsel

As previously reported, on October 14, 1999, the Company and certain of its subsidiaries commenced an action in the Los Angeles County Superior Court of the State of California against Counsel Corporation, Stadt Holdings, Inc., and certain of their officers and directors (the "Counsel defendants") in connection with the Company's acquisition of Stadtlander Drug Co., Inc. and its subsidiaries ("Stadtlander") on January 21, 1999. In the Counsel action, the Company alleges that the defendants devised and perpetrated a joint venture scheme with the common purpose of selling Stadtlander at a grossly inflated price. The Company contends that, by means of fraudulent adjusting journal entries and related misrepresentations and omissions, the Counsel defendants provided inaccurate financial statements and other false and misleading information to the Company in order to fraudulently induce it to consummate the Stadtlander acquisition for an excessive sales price.

In its complaint, the Company asserts causes of action against the defendants under California's securities and unfair competition laws, as well as common law and statutory claims for fraud. The Company requests the imposition of a constructive trust, an accounting, restitution and disgorgement of the defendants' ill-gotten profits and other damages, as well as other relief permitted under law, in addition to pre-judgment and post-judgment interest, costs and attorneys' fees.

Certain of the defendants made a motion to compel arbitration of the Company's claims against them, which the Court denied in January 2000. The same defendants then made a renewed motion to compel arbitration, which the Court was tentatively inclined to deny on April 28, 2000. However, at the request of the parties, the Court subsequently continued the hearing until June 8, 2000, in order to permit the parties time to attempt to negotiate a stipulation providing for an independent accounting firm to resolve the disputed GAAP accounting issues uncovered by Bergen in connection with the Stadtlander acquisition. It is contemplated that Bergen's fraud and securities claims against the Counsel defendants would not be arbitrated. Apart from the Counsel defendants' arbitration motion, no other motions have been filed or served by any party to date. No discovery has been commenced by any party to date. A status conference is scheduled to take place on June 8, 2000. No trial date has been set yet. In the event that the parties are unable to reach a stipulation regarding the arbitration of the disputed GAAP accounting issues by June 8, 2000, the Court has indicated that it intends to set a trial date in the Counsel action at that time.

The Company believes its claims against the Counsel defendants have substantial merit, and intends to prosecute its claims vigorously against the Counsel defendants. However, due to the incipient stage of the litigation, its ongoing status, and the necessary uncertainties involved in all litigation, the Company does not believe it is feasible at this time to assess the likely outcome of the litigation, the timing of its resolution, or its ultimate impact, if any, on the Company's financial condition, results of operations and cash flows.

Bergen Securities, Trust and Derivative Actions

As previously reported, following the Company's October 14, 1999 announcement that it would not meet analysts' consensus earnings estimates for its fourth quarter and fiscal year ended September 30, 1999, due to, in part, lower than expected results at Stadtlander and PharMerica, and following the Company's disclosures, in its complaint against the Counsel defendants, reported by the press on October 15, 1999, regarding the accounting irregularities involved in the Stadtlander acquisition, 10 purported shareholder class action lawsuits were commenced against the Company and certain of its officers and directors in federal court in California. By order of the Court, pursuant to the parties' stipulation, the 10 cases have been consolidated into a single action in the Southern Division of the United States District Court for the Central District of California (the "Bergen securities action"). On or about April 25, 2000, plaintiffs filed and served a consolidated amended complaint in the Bergen securities action. The Company's response to the plaintiffs' consolidated amended complaint currently is due on or before June 9, 2000.

The Bergen securities action is purportedly brought on behalf of a class of the Company's shareholders who purchased or otherwise acquired the Company's common stock from March 16, 1999 through October 14, 1999, and were allegedly damaged thereby. The Bergen securities action asserts, among other things, various similar claims under sections 11, 12 and 15 of the Securities Act 1933, and under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. In general, the Bergen securities action alleges that the Company and certain of its officers and directors \made material omissions and misrepresentations in their PharMerica Proxy Statement/ Prospectus, and in other public statements prior to October 14, 1999 by failing to disclose sooner certain accounting irregularities the Company uncovered at Stadtlander after its acquisition, and by allegedly failing to disclose sooner that the reserves for uncollectible accounts receivable at PharMerica were allegedly understated by approximately $35 million.

In addition to the Bergen securities action, two separate lawsuits alleging violations of certain federal securities laws were commenced in federal court in California, and another lawsuit was commenced in federal court in Delaware, that name as defendants, along with the Company and certain of its officers and directors, Bergen Capital Trust I (the "Trust"), a wholly-owned subsidiary of the Company, as well as various investment banks (the "Trust securities cases").

The Trust securities cases are purportedly brought on behalf of a class of persons who purchased shares of the Trust's Preferred Securities pursuant to the May 26, 1999 offering of such securities, including, in two of the cases, persons who thereafter acquired any such Preferred Securities on the open market prior to October 14, 1999.

The Trust securities action asserts, among other things, claims under sections 11, 12 and 15 of the Securities Act of 1933, including, in two of the cases, among other things, claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. In general, the Trust securities cases contend that the Trust and the Company failed to fulfill a purported duty to disclose in the Company's 1999 Registration Statement, and in related offering materials with respect to the issuance of the Trust's Preferred Securities, that the financial data provided by the Company was supposedly unreliable because Stadtlander was suffering from accounting irregularities as a result of the fraud of the Counsel defendants.

By order of the Court, pursuant to the parties' stipulation, the Trust securities cases also have been consolidated into a single action in the Southern Division of the United States District Court for the Central District of California, and have been coordinated with the Bergen securities action as related cases for pre-trial purposes. Plaintiffs have not yet filed and served their consolidated amended complaint in the Trust securities cases. The parties are endeavoring to negotiate a stipulation regarding the filing of the consolidated amended complaint and related scheduling matters.

The Plaintiffs in the Bergen securities action and the Trust securities cases seek damages in an unspecified amount, and/or rescission, as well as pre-judgment and post-judgment interest, costs and attorneys' fees.

Pursuant to court order, "lead plaintiffs" and "lead counsel" have been appointed in the Bergen securities action and the Trust securities cases under the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). No motions are currently pending in any of the actions. No discovery has been commenced by any party to date in any of the actions, except for two third-party subpoenas issued to preserve evidence pending resolution of the pleadings. Apart from a single telephonic status conference in one of the Trust securities action, no further status conferences have been noticed in any of the actions. No trial dates have been set in any of the actions.

On March 15, 2000, the Company accepted service on purported shareholder a derivative action pending in the Orange County Superior (the "Bergen derivative action"). The Bergen derivative action asserts several purported state law causes of action against the directors and certain senior officers of the Company (the "individual defendants"), and also against the Company (as a nominal defendant), alleging, in general terms, various alleged fiduciary breaches and related claims arising from the alleged failure of the individual defendants to conduct adequate due diligence before proceeding with the Stadtlander acquisition and causing Bergen to allegedly violate federal securities laws, as alleged in the Bergen securities action and Trust securities cases.

On Thursday, April 13, 2000, the Company and the individual defendants removed the Bergen derivative action to federal court, on the ground that the purported stated law causes of action asserted in the complaint all derive from, and depend upon the resolution of, substantial questions of federal securities law. The Company and the individual defendants have requested that the derivative complaint be consolidated and/or coordinated with the Bergen securities action and the Trust securities cases. To that end, the Bergen derivative action has been assigned to the same Court in which the Bergen securities action and the Trust securities cases are pending. It is possible that the plaintiff in the Bergen derivative action or the District Court may seek to remand the action to state court.

The Company intends to vigorously defend the claims asserted in the various purported shareholder class action lawsuits and the Bergen derivative action. However, due to the incipient stage of the litigation, its ongoing status, and the necessary uncertainties involved in all litigation, the Company does not believe it is feasible at this time to assess the likely outcome of the foregoing litigation, the timing of its resolution, or its ultimate impact, if any, on the Company's financial condition, results of operations and cash flows.

The proceedings referenced in Section 2 are in their early stages and discovery has not been completed. The Company does not believe it is currently feasible to predict or determine the outcome or resolution of these proceedings, or to estimate the amounts of, or potential range of, loss, if any, with respect to these proceedings.

[ COVER ] | [ TABLE OF CONTENTS ]

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Shareowners of the Company was held on February 15, 2000 in Orange, California and the following matter, as described in the Proxy Statement dated January 14, 2000, was voted upon:

(a) All of management's nominees for the Company's Board of Directors were elected (for a term ending in the year so indicated) with the following vote:

Nominee

For

Withheld

Rodney H. Brady (2003)

108,762,750

10,518,483

Brent R. Martini (2003)

108,859,218

10,422,015

James R. Mellor (2003)

108,761,268

10,519,965

Francis G. Rodgers (2003)

108,736,478

10,544,755

Charles C. Edwards, M.D. (2001)

108,739,586

10,544,647

Directors whose term of office continued after the Annual Meeting were: Jose E. Blanco, Sr., Neil F. Dimick, Charles J. Lee, George R. Liddle, Robert E. Martini and George E. Reinhardt, Jr.

[ COVER ] | [ TABLE OF CONTENTS ]

ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K

(a)	EXHIBITS

	10(a)	Credit Agreement dated as of April 20, 2000, among Bergen Brunswig Corporation; Bergen Brunswig Drug Company; PharMerica, Inc.; Wachovia Bank, N.A.; First Union National Bank and Fleet National Bank; CIT Financial Group; and The Chase Manhattan Bank.

	10(b)	Amended and Restated Receivables Sale Agreement dated as of February 29, 2000 among Blue Hill, Inc., Bergen Brunswig Drug Company and Wachovia Bank, N.A. and others.

	10(c)	First Amendment to Amended and Restated Receivables Sale Agreement dated April 19, 2000 among Blue Hill, Inc., Bergen Brunswig Drug Company and Wachovia Bank, N.A. and others. Such Amended and Restated Sale Agreement is referred to herein as Exhibit 10(b).

	27	Financial Data Schedule for the six months ended March 31, 2000.

	*99	Statement Regarding Forward-Looking Information is set forth as Exhibit 99(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1999.

	*	Document has heretofore been filed with the Securities and Exchange Commission and is incorporated herein by reference and made a part hereof.

(b)	REPORTS ON FORM 8-K:

	There were no reports filed on Form 8-K during the three months ended March 31, 2000.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BERGEN BRUNSWIG CORPORATION

By

/s/ Robert E. Martini

Robert E. Martini
Chairman of the Board and
Chief Executive Officer

By

/s/ Neil F. Dimick

Neil F. Dimick
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

May 12, 2000

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BERGEN BRUNSWIG CORPORATION

INDEX TO EXHIBITS

220

EXHIBIT NUMBER		PAGE NUMBER

10(a)	Credit Agreement dated as of April 20, 2000, among Bergen Brunswig Corporation; Bergen Brunswig Drug Company; PharMerica, Inc.; Wachovia Bank, N.A.; First Union National Bank and Fleet National Bank; CIT Financial Group; and The Chase Manhattan Bank.	39

10(b)	Amended and Restated Receivables Sale Agreement dated as of February 29, 2000 among Blue Hill, Inc., Bergen Brunswig Drug Company and Wachovia Bank, N.A. and others.	119

10(c)	First Amendment to Amended and Restated Receivables Sale Agreement dated April 19, 2000 among Blue Hill, Inc., Bergen Brunswig Drug Company and Wachovia Bank, N.A. and others. Such Amended and Restated Sale Agreement is referred to herein as Exhibit 10(b).	215

27	Financial Data Schedule for the six months ended March 31, 2000.

99*	Statement Regarding Forward-Looking Information is set forth as Exhibit 99(a) to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1999.



*	Document has heretofore been filed with the Securities and Exchange Commission and is incorporated herein by reference and made a part hereof.

EX-10.A 2 CREDIT AGREEMENT EXHIBIT 10(a) CREDIT AGREEMENT

Exhibit 10(a)

[CS&M # 6701-037]

TABLE OF CONTENTS

Page

ARTICLE I
Definitions

SECTION 1.01.1

Defined Terms .........................................................................................

1

SECTION 1.02.

Classification of Loans and Borrowings ............................................

24

SECTION 1.03.

Terms Generally .....................................................................................

24

SECTION 1.04.

Accounting Terms; GAAP .....................................................................

25

ARTICLE II
The Credits

SECTION 2.01.

Commitments .........................................................................................

25

SECTION 2.02.

Loans and Borrowings ........................................................................

25

SECTION 2.03.

Requests for Borrowings ....................................................................

26

SECTION 2.04.

Swingline Loans ..................................................................................

27

SECTION 2.05.

Letters of Credit ...................................................................................

28

SECTION 2.06.

Funding of Borrowings .....................................................................

31

SECTION 2.07.

Interest Elections .................................................................................

31

SECTION 2.08.

Termination and Reduction of Commitments ..................................

32

SECTION 2.09.33

Repayment of Loans; Evidence of Debt ...........................................

33

SECTION 2.10.34

Amortization of Term Loans ...............................................................

34

SECTION 2.11.

Prepayment of Loans. ..........................................................................

36

SECTION 2.12.

Fees ............................................................................ ............................

37

SECTION 2.13.

Interest ............................................................................ ......................

38

SECTION 2.14.

Alternate Rate of Interest ....................................................................

38

SECTION 2.15.39

Increased Costs ...................................................................................

39

SECTION 2.16.

Break Funding Payments ..................................................................

39

SECTION 2.17.

Taxes ......................................................................... ............................

40

SECTION 2.18.

Payments Generally; Pro Rata Treatment; Sharing of Set-offs ...

41

SECTION 2.19.

Mitigation Obligations; Replacement of Lenders .........................

42

SECTION 2.20.

Borrowing Subsidiaries .......................................................................

42

ARTICLE III
Representations and Warranties

SECTION 3.01.

Organization; Powers .........................................................................

43

SECTION 3.02.

Authorization; Enforceability ...........................................................

43

SECTION 3.03.

Governmental Approvals; No Conflicts ...........................................

43

SECTION 3.04.

Financial Condition; No Material Adverse Change ...................

43

SECTION 3.05.

Properties ........................................................................ ....................

44

SECTION 3.06.

Litigation and Environmental Matters ............................................

44

SECTION 3.07.

Compliance with Laws and Agreements .........................................

45

SECTION 3.08.

Investment and Holding Company Status .......................................

45

SECTION 3.09.

Taxes ....................................................................... ...............................

45

SECTION 3.10.

ERISA............................................. ........................................................

45

SECTION 3.11.

Disclosure .................................................................. ............................

45

SECTION 3.12.

Subsidiaries .................................................................. .........................

45

SECTION 3.13.

Insurance ................................................................... ............................

45

SECTION 3.14.

Labor Matters ................................................................... ....................

46

SECTION 3.15.

Solvency ..................................................................... .............................

46

SECTION 3.16.

Senior Indebtedness .............................................................................

46

SECTION 3.17.

Year 2000 .......................................................................... ....................

46

ARTICLE IV
Conditions

SECTION 4.01.

Effective Date ................................................................. .......................

46

SECTION 4.02.

Each Credit Event .................................................................................

48

SECTION 4.03.

Initial Credit Event for each Borrowing Subsidiary ......................

49

ARTICLE V
Affirmative Covenants

SECTION 5.01.

Financial Statements and Other Information ...................................

49

SECTION 5.02.

Notices of Material Events ..................................................................

51

SECTION 5.03.

Information Regarding Collateral .....................................................

51

SECTION 5.04.

Existence; Conduct of Business ..........................................................

52

SECTION 5.05.

Payment of Obligations .......................................................................

52

SECTION 5.06.

Maintenance of Properties .................................................................

52

SECTION 5.07.

Insurance .......................................................................... .....................

52

SECTION 5.08.

Casualty and Condemnation ..............................................................

53

SECTION 5.09.

Books and Records; Inspection and Audit Rights ..........................

52

SECTION 5.10.

Compliance with Laws .........................................................................

53

SECTION 5.11.

Use of Proceeds and Letters of Credit ................................................

53

SECTION 5.12.

Additional Subsidiaries .......................................................................

54

SECTION 5.13.

Further Assurances ..............................................................................

54

ARTICLE VI
Negative Covenants

SECTION 6.01.

Indebtedness; Certain Equity Securities ..........................................

54

SECTION 6.02.

Liens ................................................................. .......................................

56

SECTION 6.03.

Fundamental Changes ..........................................................................

56

SECTION 6.04.

Investments, Loans, Advances, Guarantees and Acquisitions .......

57

SECTION 6.05.

Asset Sales .......................................................................... ....................

58

SECTION 6.06.

Sale and Leaseback Transactions ......................................................

58

SECTION 6.07.

Hedging Agreements ..............................................................................

59

SECTION 6.08.

Restricted Payments; Certain Payments of Indebtedness ..............

59

SECTION 6.09.

Transactions with Affiliates ..................................................................

59

SECTION 6.10.

Restrictive Agreements ..........................................................................

59

SECTION 6.11.

Material Documents ..............................................................................

60

SECTION 6.12.

Fixed Charge Coverage Ratio .............................................................

60

SECTION 6.13.

Leverage Ratio .......................................................................................

61

SECTION 6.14.

Minimum Net Worth ...............................................................................

61

SECTION 6.15.

Capital Expenditures .............................................................................

61

SECTION 6.16.

Restricted Properties .............................................................................

61

SECTION 6.17.

Fiscal Quarters .......................................................................................

62

ARTICLE VII
Events of Default

ARTICLE VIII
The Administrative Agent

ARTICLE IX
Guarantee

ARTICLE X
Miscellaneous

SECTION 10.01.

Notices ........................................................................ .............................

66

SECTION 10.02.

Waivers; Amendments ............................................................................

67

SECTION 10.03.

Expenses; Indemnity; Damage Waiver ...............................................

68

SECTION 10.04.

Successors and Assigns .........................................................................

69

SECTION 10.05.

Survival .............................................................................. .....................

72

SECTION 10.06.

Counterparts; Integration; Effectiveness ...........................................

72

SECTION 10.07.

Severability ..................................................................... ........................

72

SECTION 10.08.

Right of Setoff .................................................................... .....................

72

SECTION 10.09.

Governing Law; Jurisdiction; Consent to Service of Process .........

73

SECTION 10.10.

WAIVER OF JURY TRIAL ......................................................................

73

SECTION 10.11.

Headings ............................................................................. .....................

73

SECTION 10.12.

Confidentiality ......................................................................... ................

73

SECTION 10.13.

Interest Rate Limitation ............................................................................

74

SCHEDULES:

Schedule 1.01

Pro Forma Amounts

Schedule 2.01

Commitments

Schedule 3.05

Properties

Schedule 3.12

Subsidiaries

Schedule 3.13

Insurance

Schedule 6.01

Existing Indebtedness and Preferred Stock

Schedule 6.02

Existing Liens

Schedule 6.04

Existing Investments

Schedule 6.10

Existing Restrictions

EXHIBITS:

Exhibit A

Form of Assignment and Acceptance

Exhibit B

Form of Borrowing Base Certificate

Exhibit C-1

Form of Borrowing Subsidiary Agreement

Exhibit C-2

Form of Borrowing Subsidiary Termination

Exhibit D

Form of Guarantee Agreement

Exhibit E

Form of Indemnity, Subrogation and Contribution Agreement

Exhibit F

Form of Intercreditor Agreement

Exhibit G

Form of Perfection Certificate

Exhibit H

Form of Pledge Agreement

Exhibit I

Form of Security Agreement

Exhibit J-1

Form of Opinion of Lowenstein Sandler PC, Counsel for the Company

Exhibit J-2

Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, Counsel for the Company

Exhibit J-3

Form of Opinion of Milan A. Sawdei, Executive Vice President and Chief Legal Officer of the Company

Exhibit J-4

Form of Borrowing Subsidiary Opinion

CREDIT AGREEMENT dated as of April 20, 2000, among BERGEN BRUNSWIG CORPORATION, BERGEN BRUNSWIG DRUG COMPANY, PHARMERICA, INC., THE OTHER BORROWING SUBSIDIARIES party hereto, the LENDERS party hereto, and THE CHASE MANHATTAN BANK, as Administrative Agent.

The Company and the initial Borrowing Subsidiaries have requested the Lenders to establish the credit facilities provided for herein. Such credit facilities will replace the Existing Credit Agreements and will refinance the loans outstanding thereunder to the Company, Bergen Drug and PharMerica. The Lenders are willing to establish such credit facilities upon the terms and subject to the conditions set forth herein.

The parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

"ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

"Account" shall mean any right to payment for goods sold or leased or for services rendered, whether or not earned by performance.

"Account Debtor" shall mean, with respect to any Account, the obligor with respect to such Account.

"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

"Administrative Agent" means The Chase Manhattan Bank, in its capacity as administrative agent for the Lenders hereunder.

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

"Affiliate" means, with respect to a specified 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.

"Agents" means the Administrative Agent and the Collateral Agent.

"Alternate Base Rate" means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.

"Applicable Percentage" means, with respect to any Revolving Lender, the percentage of the total Revolving Commitments represented by such Lender's Revolving Commitment. If the Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Revolving Commitments most recently in effect, giving effect to any assignments.

"Applicable Rate" means, for any day (a) with respect to any Tranche B Term Loan, (i) 2.50% per annum, in the case of an ABR Loan, or (ii) 3.50% per annum, in the case of a Eurodollar Loan, and (b) with respect to any ABR Loan or Eurodollar Loan that is a Revolving Loan, a Tranche A Term Loan or an Interim Term Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the case may be, based upon the ratings established by S&P and Moody's for the Index Debt as of the most recent determination date; provided that until the first anniversary of the Effective Date the "Applicable Rate" for purposes of clause (b) shall be the applicable rate per annum set forth below in Level IV, unless Level V or Level VI applies:

LEVEL I

LEVEL II

LEVEL III

LEVEL IV

LEVEL V

LEVEL VI

If the Index Debt is rated at least BBB by S&P and Baa2 by Moody= s.

If the Index Debt is rated at least BBB- by S&P and Baa3 by Moody= s.

If the Index Debt is rated at least BB+ by S&P and Ba1 by Moody= s.

If the Index Debt is rated at least BB by S&P and Ba2 by Moody= s.

If the Index Debt is rated at least BB- by S&P and Ba3 by Moody = s.

If no other Level is applicable.

Commitment Fee Rate

.375%

.375%

.500%

.500%

.500%

.500%

Eurodollar Spread

1.750

2.000

2.250

2.500

2.750

3.000

ABR Spread

0.750

1.000

1.250

1.500

1.750

2.000

For purposes of the foregoing, the applicable pricing Level shall change on the date of any relevant change in the rating by S&P or Moody=s of Index Debt. In the case of split ratings from S&P and Moody = s, the rating to be used to determine the applicable pricing level is the lower of the two (e.g., BBB-/Ba1 results in Level III pricing). If neither Moody's nor S&P shall have established ratings for the Index Debt, or if an Event of Default shall have occurred and be continuing, the ratings shall be deemed to be in Level VI. If the rating system of Moody's or S&P shall change, or if either of them shall cease rating the Index Debt (other than by reason of any action or nonaction by the Company following or in anticipation of a ratings downgrade), the parties hereto shall negotiate in good faith to amend the references to specific ratings in this definition to reflect such changed rating system or the nonavailability of ratings from such rating agency, and pending agreement on such amendment, the rating in effect immediately prior to such change or cessation will apply. If either rating agency shall not have a rating in effect by reason of any action or nonaction by the Company following or in anticipation of a ratings downgrade, then such rating agency shall be deemed to have established a rating in Level VI.

"ASD" means ASD Specialty Healthcare Inc., its subsidiaries and Medical Initiatives, Inc.

"Assessment Rate" means, for any day, the annual assessment rate in effect on such day that is payable by a member of the Bank Insurance Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a comparable successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any successor provision) to the Federal Deposit Insurance Corporation for insurance by such Corporation of time deposits made in dollars at the offices of such member in the United States; provided that if, as a result of any change in any law, rule or regulation, it is no longer possible to determine the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall be determined by the Administrative Agent to be representative of the cost of such insurance to the Lenders.

"Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.

"BBMC" means the Operating Unit consisting of Bergen Brunswig Medical Corporation, its subsidiaries, Ransdell Surgical, Inc., and such additional Persons as the Administrative Agent may from time to time agree to include therein based upon its review of a request by the Company for such inclusion and an audit of the relevant Accounts and inventory.

"Bergen Drug" means Bergen Brunswig Drug Company, a California corporation, and an indirect wholly owned Subsidiary.

"Board" means the Board of Governors of the Federal Reserve System of the United States of America.

"Borrower" means the Company or any Borrowing Subsidiary.

"Borrowing" means (a) Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan.

"Borrowing Base" means, at any time (subject to adjustment as provided in Section 5.09(c)), an amount equal to the sum, without duplication, of (a) the amount by which (i) the Receivables Advance Rate Percentage of the Receivables Amount exceeds (ii) the Securitization Reserve and (b) the sum for all the Operating Units of the amounts for each Operating Unit obtained by multiplying (1) the Inventory Advance Rate Percentage for such Operating Unit by (2) the amount by which (x) the Eligible Inventory Value of Eligible Inventory of such Operating Unit exceeds (y) the Inventory Valuation Reserve for such Operating Unit. In the event that the portion of the Borrowing Base attributable to PharMerica and its Subsidiaries is at any time in excess of $325,000,000, the Borrowing Base shall be reduced by the amount of such excess. The Borrowing Base at any time shall also be reduced by an amount equal to the maximum amount of Cash Management Obligations (as defined in the Security Agreement) secured at such time by the Security Documents. The Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent in accordance with Section 5.01(f), absent any error in such Borrowing Base Certificate and provided that within 5 Business Days after the disposition of any Subsidiary or Subsidiaries or line or lines of business involving in the aggregate assets in excess of 2% of the total consolidated assets of the Company and the Subsidiaries following the delivery of any Borrowing Base Certificate, the Company shall deliver to the Administrative Agent a good faith estimate of the reduction to the Borrowing Base resulting from such disposition or dispositions and the Borrowing Base shall be reduced by such amount until the delivery of a new Borrowing Base Certificate in accordance with Section 5.01(f).

"Borrowing Base Certificate" means a certificate in the form of Exhibit B or any other form approved by the Administrative Agent, together with all attachments contemplated thereby.

"Borrowing Request" means a request by the Borrower for a Borrowing in accordance with Section 2.03.

"Borrowing Subsidiary" means, at any time, Bergen Drug, PharMerica and each other wholly owned Subsidiary that has been designated as a Borrowing Subsidiary by the Company pursuant to Section 2.20 and that has not ceased to be a Borrowing Subsidiary as provided in such Section or Article VII.

"Borrowing Subsidiary Agreement" means a Borrowing Subsidiary Agreement substantially in the form of Exhibit C-1.

"Borrowing Subsidiary Termination" means a Borrowing Subsidiary Termination substantially in the form of Exhibit C-2.

"Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

"Capital Expenditures" means, for any period, (a) the additions to property, plant and equipment and other capital expenditures of the Company and its consolidated Subsidiaries that are (or would be) set forth in a consolidated statement of cash flows of the Company for such period prepared in accordance with GAAP and (b) Capital Lease Obligations incurred by the Company and its consolidated Subsidiaries during such period.

"Capital Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

"Change in Control" means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) other than Robert E. Martini (or his estate or heirs) or the estate of Emil P. Martini, Jr., of Equity Interests representing more than 20% of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Equity Interests in the Company; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Company by Persons who were neither (i) nominated by the board of directors of the Company nor (ii) appointed by directors so nominated; (c) the acquisition of direct or indirect Control of the Company by any Person or group other than Robert E. Martini (or his estate or heirs); or (d) the occurrence of a "Change of Control" (or other similar event or condition however denominated) under any Material Indebtedness.

"Change in Law" means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender's or such Issuing Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

"Class", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Tranche A Term Loans, Tranche B Term Loans, Interim Term Loans or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, Tranche A Commitment, Tranche B Commitment or Interim Commitment.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Collateral" means any and all "Collateral", as defined in any applicable Security Document.

"Collateral Agent" means The Chase Manhattan Bank, in its capacity as collateral agent for the Lenders hereunder and under the Security Documents, except that "Collateral Agent" means CIT Financing Group when used to refer to the Collateral Agent's duties to conduct monthly collateral services in monitoring and evaluating Borrowing Base compliance and Borrowing Base items as contemplated by Section 5.09(b).

"Collateral and Guarantee Requirement" means, at any time, the requirement that:

(a) the Administrative Agent shall have received from each Loan Party either (i) a counterpart of each of the Security Agreement, the Pledge Agreement, the Guarantee Agreement and the Indemnity, Subrogation and Contribution Agreement duly executed and delivered on behalf of such Loan Party or (ii) in the case of any Person that becomes a Loan Party after the Effective Date, a supplement to each of the Security Agreement, the Pledge Agreement, the Guarantee Agreement and the Indemnity, Subrogation and Contribution Agreement in the form specified therein, duly executed and delivered on behalf of such Loan Party;

(b) all outstanding Equity Interests of each Subsidiary or other Person directly owned by or on behalf of any Loan Party shall have been pledged pursuant to the Pledge Agreement (except that the Loan Parties shall not be required to pledge more than 65% of the outstanding voting Equity Interests of any Foreign Subsidiary) and the Administrative Agent shall have received all certificates or other instruments, if any, representing such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank;

(c) all Indebtedness of the Company and each Subsidiary that is owing to any Loan Party shall be evidenced by a promissory note and shall have been pledged pursuant to the Pledge Agreement and the Administrative Agent shall have received all such promissory notes, together with instruments of transfer with respect thereto endorsed in blank;

(d) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create the Liens intended to be created by the Security Agreement, the Pledge Agreement, and the Mortgages and to perfect such Liens to the extent required by, and with the priority required by, the Security Agreement, the Pledge Agreement, and the Mortgages shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording, and an Intercreditor Agreement shall be in full force and effect with respect to each outstanding Securitization;

(e) the Administrative Agent (i) shall have received counterparts of a Mortgage with respect to each Mortgaged Property duly executed and delivered by the record owner of such Mortgaged Property, (ii) shall have received, or shall be satisfied with the arrangements for a subsequent delivery of, a policy or policies of title insurance issued by a nationally recognized title insurance company insuring the Lien of each such Mortgage as a valid first Lien on the Mortgaged Property described therein, free of any other Liens except as expressly permitted by Section 6.02, together with such surveys, endorsements, coinsurance and reinsurance as the Administrative Agent or the Required Lenders may reasonably request, and (iii) shall have received such abstracts, appraisals, legal opinions and other documents as the Administrative Agent or the Required Lenders may reasonably request with respect to any such Mortgage or Mortgaged Property;

(f) the Administrative Agent shall have received, or shall be satisfied with arrangements for the subsequent delivery of, lockbox or depositary agreements from such providers of cash management services to the Company and the Subsidiaries as the Administrative Agent may reasonably request; and

(g) each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Security Documents to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens thereunder.

Notwithstanding the foregoing, a Subsidiary shall not be required to become a Guarantor under the Guarantee Agreement or pledge or grant any security interest in or Lien on any Collateral under the Pledge Agreement or Security Agreement or any Mortgage if the Company shall have advised the Administrative Agent that it would be a violation of applicable law for such Subsidiary to take such action or if, in the judgment of the Administrative Agent, in consultation with the Company, the expense, tax or regulatory consequences or difficulty of taking such action would not, in light of the benefits to accrue to the Lenders, justify taking such action. The Collateral Agent is expressly authorized upon the request of the Company to release any Collateral or Guarantee previously delivered that at the time of such request is not required in order for the Collateral and Guarantee Requirement to be satisfied.

"Commitment" means a Revolving Commitment, Tranche A Commitment, Tranche B Commitment or Interim Commitment, or any combination thereof (as the context requires).

"Company" means Bergen Brunswig Corporation, a New Jersey corporation.

"Consolidated Cash Interest Expense" means, for any period, the excess of (a) the sum of (i) the interest expense (including imputed interest expense in respect of Capital Lease Obligations and including all distributions in respect of the Trust Preferred) of the Company and the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, (ii) any interest accrued during such period in respect of Indebtedness of the Company or any Subsidiary that is required to be capitalized rather than included in consolidated interest expense for such period in accordance with GAAP, (iii) all discount, interest, fees, premiums and other charges in respect of all Securitizations for such period, plus (iv) any cash payments made during such period in respect of obligations referred to in clause (b)(B) below that were amortized or accrued in a previous period, minus (b) the sum, to the extent included in such consolidated interest expense for such period, of (A) non-cash amounts attributable to amortization of financing costs paid in a previous period, (B) non-cash amounts attributable to amortization of debt discounts or accrued interest payable in kind for such period, and (C) all fees incurred on or prior to the Effective Date in respect of the financing hereunder and all expenses incurred in connection with the closing hereunder on the Effective Date. For periods including fiscal quarters ending prior to the Effective Date, Consolidated Cash Interest Expense for such periods shall be deemed to be the amounts set forth on Schedule 1.01.

"Consolidated EBITDA" means, for any period, Consolidated Net Income for such period plus (a) without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (i) consolidated interest expense for such period, (ii) consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and amortization for such period, (iv) any special one-time or extraordinary non-cash charges for such period (except that such add back for charges against the receivables of PharMerica and Stadtlander Operating Company, L.L.C., and their subsidiaries for the quarter ended September 30, 1999, shall be limited to $40,596,000), and (v) any LIFO adjustment (if negative) or charge for such period, and minus (b) without duplication and to the extent included in determining such Consolidated Net Income, any extraordinary gains for such period and any LIFO adjustment (if positive) or credit, all determined on a consolidated basis in accordance with GAAP. In the event that the Company or any Subsidiary shall have completed an acquisition or disposition of any material Person, division or business unit since the beginning of the relevant period, Consolidated EBITDA shall be determined for such period on a pro forma basis as if such acquisition or disposition, and any related incurrence or repayment of Indebtedness, had occurred at the beginning of such period. For periods including fiscal quarters ending prior to the Effective Date, Consolidated EBITDA for such periods shall be deemed to be the amounts set forth on Schedule 1.01.

"Consolidated EBITDAR" means, for any period, Consolidated EBITDA for such period plus rental payments in respect of real property, delivery equipment and pharmacy equipment of the Company and the Subsidiaries for such period (other than under capital leases), determined on a consolidated basis in accordance with GAAP. For periods including fiscal quarters ending prior to the Effective Date, Consolidated EBITDAR shall be deemed to be the amounts set forth on Schedule 1.01.

"Consolidated Net Income" means, for any period, the net income or loss of the Company and the Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income or loss of any Person (other than the Company) that is not a Subsidiary, except to the extent of the amount of dividends or other distributions actually paid to the Company or any of the Subsidiaries during such period, and (b) the income or loss of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Company or any Subsidiary or the date that such Person's assets are acquired by the Company or any Subsidiary.

"Consolidated Net Worth" means, on any date, consolidated shareholders' equity of the Company and the Subsidiaries shown on the consolidated balance sheet of the Company and the Subsidiaries as of such date in accordance with GAAP.

"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.

"Default" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

"Dilution Factor" means, for each Operating Unit with respect to any period, the excess, if any, of (a) the fraction (expressed as a percentage) obtained by dividing (i) the aggregate amount of all deductions, negative contractual adjustments and other negative adjustments, credit memoranda, rebates, write-offs and other adjustments with respect to Accounts of such Operating Units during such period by (ii) the aggregate amount of gross sales attributable to Accounts of such Operating Unit during such period over (b) 3.00%.

"Dilution Reserve" means, at the time of any determination of the Borrowing Base, the sum for all the Operating Units of the amounts for each Operating Unit obtained by multiplying (a) the Dilution Factor for such Operating Unit for the three-month period ending as of the last day of the calendar month in respect of which the Borrowing Base is then being calculated (which last day shall be set forth on the applicable Borrowing Base Certificate) and (b) the amount of the Eligible Accounts Receivable of such Operating Unit at such time.

"dollars" or "$" refers to lawful money of the United States of America.

"Effective Date" means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 10.02).

"Eligible Accounts Receivable" shall mean, at the time of any determination thereof, all Accounts that satisfy the criteria set forth below at the time of such determination. In determining the amount of any Eligible Account Receivable, the face amount thereof shall be reduced by the aggregate amount of all cash received and credits posted in respect of such Account but not yet applied:

(a) such Account has been invoiced and not more than 90 days (or (i) 120 days in the case of Accounts of PharMerica and its Subsidiaries or (ii) 180 days in the case of Accounts created under dating programs in the ordinary course of business and consistent with past practice) has elapsed from the invoice date and not more than 60 days have elapsed from the due date;

(b) such Account arose in the ordinary course of business of the Company or a wholly owned Subsidiary Loan Party that is included in an Operating Unit and, to the best knowledge of the Company and the Subsidiaries, no event of death, bankruptcy, insolvency or inability to pay creditors generally of the Account Debtor thereunder has occurred, and no notice thereof has been received by the Company or such Subsidiary;

(c) in the case of Accounts other than those of PharMerica and its Subsidiaries, not more than 50% of the aggregate amount of Accounts owed by the Account Debtor with respect to such Account and any Affiliates thereof are, at the time of determination, Accounts that remain unpaid for more than 90 days from the invoice date (or 180 days from the invoice date in the case of Accounts created under dating programs in the ordinary course of business and consistent with past practice) or 60 days from the due date ("Over Due Accounts"), provided that, in determining the aggregate amount of Over Due Accounts of such Account Debtor, there shall be deducted the amount of any credit balances that relate to the Accounts of such Account Debtor;

(d) such Account does not arise out of a sale made by the Borrower or any wholly owned Subsidiary Loan Party to an employee, officer, agent, director, or Affiliate of the Company or any Subsidiary;

(e) such Account is denominated in dollars;

(f) such Account arose from a completed, outright and lawful sale of goods or from the completed performance and acceptance of services by the Company or a wholly owned Subsidiary Loan Party;

(g) such Account is owned solely by the Company or a wholly owned Subsidiary Loan Party, is subject to a valid perfected first priority security interest in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Documents (or, in the case of Accounts originated by Bergen Drug, either is (i) subject to a valid perfected second priority security interest in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Documents or (ii) owned by the Securitization Entity and all the Equity Interests in the Securitization Entity are subject to a valid perfected first priority security interest in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Documents) and is not subject to any other Lien (other than pursuant to the Securitization, in the case of Accounts originated by Bergen Drug);

(h) such Account complies in all material respects with the requirements of all applicable laws and regulations, whether Federal, State or local;

(i) with respect to such Account, the Account Debtor (i) is a United States person (excluding any person organized or domiciled in Puerto Rico), (ii) is not an Affiliate of the Company or any of the Subsidiaries and (iii) other than in the case of Accounts under the Medicare program and Medicaid program, is not the United States of America or any department, agency or instrumentality thereof;

(j) such Account constitutes an "account" or "chattel paper" within the meaning of the Uniform Commercial Code of the State in which the Account is located;

(k) such Account is in full force and effect and constitutes a legal, valid and binding obligation of the applicable Account Debtor enforceable in accordance with its terms;

(l) the Account Debtor with respect to such Account (i) is not a creditor (other than the United States of America with respect to taxes) of the owner of such Account and (ii) has not asserted that such Account is, and neither the Company nor any of the Subsidiaries is aware of any reasonable basis upon which such Account could be, subject to any defense or dispute;

(m) the goods sold in the sale giving rise to such Account have been shipped and title thereto has transferred to the Account Debtor with respect to such Account and such Account does not (except in the normal course of business consistent with past practice) represent a sale on a bill-and-hold, guaranteed sale, sale and return, ship and return, sale on approval or consignment (it being understood that this clause shall not exclude from Eligible Accounts Receivable any Account that arises from an inventory consignment arrangement in which Accounts are created only in respect of reductions in inventory) or a progress billing or otherwise fail for any reason to be a completed sale (for purposes hereof, the term "progress billing" means any invoice for goods sold or leased or services rendered under a contract or agreement pursuant to which the Account Debtor's obligation to pay such invoice is conditioned upon the Company's or any applicable wholly owned Subsidiary Loan Party's completion of any further performance under such contract or agreement); and

(n) in the case of Accounts of PharMerica and its subsidiaries, if the Account Debtor is the Medicare program or the Medicaid program, PharMerica reasonably believes the invoice in respect of such Account shall have been issued to such program for a patient who has been accepted by such program.

Notwithstanding the foregoing, all Accounts of any Operating Unit attributable to any single Account Debtor (unless otherwise agreed to by the Required Lenders) and its Affiliates that, in the aggregate (after deducting from the otherwise Eligible Accounts Receivable of such Account Debtor and its Affiliates all credit balances, offsets, deductions and other credits to which such Accounts are subject), exceed 15% of the total amount of all Eligible Accounts Receivable of such Operating Unit at the time of any determination, shall be deemed not to be Eligible Accounts Receivable to the extent of such excess. The percentage limitation set forth in the preceding sentence must be satisfied when applied to the amount of Eligible Accounts Receivable of an Operating Unit after excluding all Accounts required to be excluded by such percentage limitation.

"Eligible Inventory" means, at the time of any determination thereof, without duplication, all inventory, other than raw materials or work-in-process (exclusive of bulk inventory) owned by the Company or a wholly owned Subsidiary Loan Party that is included in an Operating Unit or inventory consisting of packaging materials or supplies owned for use by the Company or such a Subsidiary, to the extent that (a) the Company or a wholly owned Subsidiary Loan Party has good and unencumbered title thereto (subject to the Lien of the Security Documents), (b) the Collateral Agent on behalf of the Secured Parties possesses a valid perfected first priority security interest therein pursuant to the Security Documents and (c) such inventory is located at a facility owned or leased by the Company or a Subsidiary that is in a State of the United States of America or the District of Columbia, provided that inventory that is damaged or defective in any way shall not constitute Eligible Inventory.

"Eligible Inventory Value" means, at the time of any determination thereof with respect to any item of Eligible Inventory, the lower of cost based on FIFO accounting (less any profits accrued in connection with inter-company transfers, determined in accordance with GAAP and in a manner consistent with past accounting practices of the Company and the Subsidiaries) and the fair market value of such Eligible Inventory.

"Environmental Laws" means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

"Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Company or any Subsidiary 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, (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.

"Equity Interests" means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

"ERISA Affiliate" means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

"ERISA Event" means (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

"Eurodollar", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

"Event of Default" has the meaning assigned to such term in Article VII.

"Excluded Subsidiary" means (a) inactive Subsidiaries that do not directly or indirectly own any active Subsidiary, (b) Foreign Subsidiaries, (c) Securitization Entities and (d) other Subsidiaries in respect of which the Administrative Agent shall have determined, in consultation with the Company, that the cost or difficulty or tax or regulatory consequences of obtaining Guarantees or security interests from such Subsidiaries would be excessive in relation to their value to the Secured Parties.

"Excluded Taxes" means, with respect to the Administrative Agent, any Lender, any Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of a Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Company under Section 2.19(b)), any withholding tax imposed by the United States of America that (i) is in effect and would apply to amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrowers with respect to any such withholding tax pursuant to Section 2.17(a), or (ii) is attributable to such Foreign Lender's failure to comply with Section 2.17(e).

"Existing Credit Agreements" means the $400,000,000 Amended and Restated Credit Agreement dated as of September 30, 1994, as amended, among the Company, Bergen Drug, the lenders thereunder and Bank of America National Trust and Savings Association, as agent, and the $600,000,000 Credit Agreement dated as of April 23, 1999, among the Company, Bergen Drug, the lenders party thereto and Bank of America National Trust and Savings Association, as administrative agent.

"Federal Funds Effective Rate" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

"Financed Portion" means, at any time, with respect to a Securitization, the greatest amount of the claims of the parties providing financing, however evidenced, including debt or equity interests or securities (other than any seller's interests retained by Bergen Drug) of a purchasing entity, permitted to be outstanding at such time under such Securitization (assuming the satisfaction of all conditions to issuance) or, if greater, the maximum purchase limit, however denominated, under such Securitization.

"Financial Officer" means the chief financial officer, principal accounting officer, treasurer or controller of the Company or the applicable Borrower.

"Foreign Lender" means any Lender that is organized under the laws of a jurisdiction other than that in which the Company is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

"Foreign Subsidiary" means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

"GAAP" means generally accepted accounting principles in the United States of America.

"Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

"Guarantee" of or by any Person (the "guarantor") means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

"Guarantee Agreement" means the Guarantee Agreement among the Subsidiary Loan Parties and the Administrative Agent, substantially in the form of Exhibit D.

"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 regulated pursuant to any Environmental Law.

"Hedging Agreement" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

"Indebtedness" of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits (other than customer deposits in respect of Accounts maintained in the ordinary course of business consistent with past practices) or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid (excluding obligations to pay salary or benefits under deferred compensation, executive compensation or other benefit programs), (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations and Synthetic Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

"Indemnified Taxes" means Taxes other than Excluded Taxes.

"Indemnity, Subrogation and Contribution Agreement" means the Indemnity, Subrogation and Contribution Agreement among the Subsidiary Loan Parties and the Administrative Agent, substantially in the form of Exhibit E.

"Index Debt" means Loans under this Agreement.

"Information Memorandum" means the Confidential Information Memorandum dated March 2000 relating to the Company and the Transactions.

"Intercreditor Agreement" means each Intercreditor Agreement among the Company, Bergen Drug, the Administrative Agent and each other party required under each Securitization for the effectiveness of such Intercreditor Agreement, substantially in the form of Exhibit F, or such other form as the Administrative Agent may approve. Each Lender authorizes and directs each of the Administrative Agent and the Collateral Agent to enter into an Intercreditor Agreement in respect of each Securitization from time to time in effect and to take all actions it deems appropriate or necessary in connection with such Intercreditor Agreements.

"Interest Election Request" means a request by a Borrower to convert or continue a Revolving Borrowing or Term Borrowing in accordance with Section 2.07.

"Interest Payment Date" means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

"Interest Period" means, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Company or the applicable Borrower may elect; provided, that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

"Interim Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make Interim Term Loans hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Interim Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04. The initial amount of each Lender's Interim Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Interim Commitment, as applicable. The initial aggregate amount of the Lenders' Interim Commitments is $200,000,000.

"Interim Maturity Date" means October 22, 2001.

"Interim Term Lender" means a Lender with an Interim Commitment or an outstanding Interim Term Loan.

"Interim Term Loan" means a Loan made pursuant to clause (c) of Section 2.01.

"Issuing Bank" means The Chase Manhattan Bank and each other Person executing this Agreement as Issuing Bank, in its capacity as issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i). An Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

"Inventory Advance Rate Percentage" means (a) 50% with respect to Eligible Inventory of BBMC and (b) 65% with respect to Eligible Inventory of each other Operating Unit, unless a different percentage shall have been approved as provided in the following clauses (i) and (ii), in consultation with the Company based upon a change in circumstances, upon at least 5 Business Days' notice to the Company, in which case "Inventory Advance Rate Percentage" for any Operating Unit shall mean (i) any percentage lower than 50% or 65%, as the case may be, that may from time to time be approved by the Administrative Agent or the Required Lenders or (ii) any percentage greater than 50% or 65%, as the case may be, that may from time to time be approved by the Supermajority Lenders. Each change in the Inventory Advance Rate Percentage shall become effective for the applicable Operating Unit on the date approved by the Administrative Agent or the requisite Lenders and shall remain in effect until the next date on which such a change is approved by the Administrative Agent or the requisite Lenders.

"Inventory Valuation Reserve" means, at the time of any determination of the Borrowing Base, for each Operating Unit an amount equal to the sum for such Operating Unit of (a) the Shrink Reserve, (b) the Lease Reserve and (c) any additional amount, without duplication, determined (with such determination to be made at any time at the Company's request or otherwise from time to time in the reasonable discretion of the Administrative Agent), and notified to the Company prior to the date of determination, by the Administrative Agent in its reasonable discretion, to take account of aged, excess, obsolete and dated inventory and other inventory valuation and reconciliation issues, provided that, in making such determination, the Administrative Agent shall take into account such reasonable information as has been requested by the Administrative Agent or provided by the Collateral Agent or the Company.

"LC Disbursement" means a payment made by any Issuing Bank pursuant to a Letter of Credit.

"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrowers at such time. The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

"Lease Reserve" means, at the time of any determination of the Borrowing Base, for each Operating Unit an amount equal to the aggregate of the monthly rental payments for the six months immediately preceding the time of such determination for all leases of facilities (a) at which Eligible Inventory of such Operating Unit is stored and (b) in respect of which the Company has not obtained a waiver, in form and substance reasonably satisfactory to the Collateral Agent, from the lessor of such leased property of any statutory or common law landlord's lien with respect to such leased property.

"Lenders" means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. Unless the context otherwise requires, the term "Lenders" includes the Swingline Lender.

"Letter of Credit" means any letter of credit issued pursuant to this Agreement.

"Leverage Ratio" means, on any date, the ratio of (a) Total Indebtedness as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Company ended on such date (or, if such date is not the last day of a fiscal quarter, ended on the last day of the fiscal quarter of the Company most recently ended prior to such date).

"LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

"Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

"Loan Documents" means this Agreement, each note issued hereunder, each Borrowing Subsidiary Agreement, each Borrowing Subsidiary Termination, the Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement, the Security Agreement, the Pledge Agreement, the Intercreditor Agreement and the other Security Documents.

"Loan Parties" means the Company and the Subsidiary Loan Parties.

"Loans" means the loans made by the Lenders to the Borrowers pursuant to this Agreement.

"Long-Term Indebtedness" means any Indebtedness that, in accordance with GAAP, constitutes (or, when incurred, constituted) a long-term liability.

"Material Adverse Effect" means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Company and the Subsidiaries taken as a whole, (b) the ability of any Loan Party (other than any Subsidiaries that are not Significant Subsidiaries) to perform any of its obligations under any Loan Document or (c) the rights of or benefits available to the Lenders under any Loan Document.

"Material Indebtedness" means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Hedging Agreements, of any one or more of the Company and its Subsidiaries in an aggregate principal amount exceeding $10,000,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of the Company or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Company or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.

"Moody's" means Moody's Investors Service, Inc.

"Mortgage" means a mortgage, deed of trust, assignment of leases and rents, leasehold mortgage or other security document granting a Lien on any Mortgaged Property to secure the Obligations. Each Mortgage shall be satisfactory in form and substance to the Collateral Agent.

"Mortgaged Property" means each parcel of real property and the improvements thereto owned by a Loan Party, other than any such real property with respect to which a Mortgage is not required to be delivered under the last paragraph of the definition of Collateral and Guarantee Requirement. The Mortgaged Properties on the date hereof are identified on Schedule 3.05.

"Multiemployer Plan" means a multiemployer plan as defined in Section 4001 (a)(3) of ERISA.

"Net Proceeds" means, with respect to any event (a) the cash proceeds received in respect of such event, including (i) any cash received in respect of any non-cash proceeds, but only as and when received (except to the extent any prepayment was made in respect of such non-cash proceeds at the time received pursuant to Section 2.11(c)), (ii) in the case of a casualty, insurance proceeds, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by the Company and the Subsidiaries to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all payments required to be made by the Company and the Subsidiaries as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, and (iii) the amount of all taxes paid (or reasonably estimated to be payable) by the Company and the Subsidiaries, and the amount of any reserves established by the Company and the Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by the chief financial officer of the Company).

"Obligations" has the meaning assigned to such term in the Security Agreement.

"Operating Unit" means each of (a) Bergen Drug and its subsidiaries, (b) PharMerica and its subsidiaries, (c) Bergen Brunswig Specialty Company and its subsidiaries (other than Stadtlander), The Lash Group, Inc., and Medical Initiatives, Inc., and (d) BBMC, in each case taken as a group and including such additional Persons as the Administrative Agent may from time to time agree to include therein based upon its review of a request by the Company for such inclusion and an audit of the relevant Accounts and inventory.

"Other Taxes" means any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

"Perfection Certificate" means a certificate in the form of Exhibit G or any other form approved by the Collateral Agent.

"Permitted Acquisition" means any acquisition by the Company or any wholly owned Subsidiary of all or substantially all the assets of, or all the Equity Interests (other than Equity Interests to be owned by management of such Person that does not constitute more than 5% of the Equity Interests in such Person) in, a Person or division or line of business of a Person (including any such acquisition effected by a merger of a Person into the Company or a Subsidiary in which the Company or a wholly owned Subsidiary is the surviving Person) if, immediately after giving effect thereto, (a) no Default has occurred and is continuing or would result therefrom, (b) the principal business of such Person shall be reasonably related, ancillary or complementary to a business in which the Company and its Subsidiaries were engaged on the Effective Date, (c) each Subsidiary formed for the purpose of or resulting from such acquisition shall be a Subsidiary organized and existing under the laws of the United States and all the Equity Interests of each such Subsidiary shall be owned directly by the Company and/or a wholly owned Subsidiary organized and existing under the laws of the United States (other than Equity Interests permitted to be owned by management) and all actions required to be taken with respect to such acquired or newly formed Subsidiary under Sections 5.12 and 5.13 shall have been taken, (d) the Company and the Subsidiaries shall be in compliance, on a pro forma basis after giving effect to such acquisition (without giving effect to operating expense reductions other than cost savings permitted to be included under Regulation S-X), with the covenants contained in Sections 6.12 and 6.13 recomputed as at the last day of the most recently ended fiscal quarter of the Company for which financial statements are available, as if such acquisition had occurred on the first day of each relevant period for testing such compliance, and (e) if the consideration to be paid in respect of such acquisition is greater than $5,000,000, the Company shall have delivered to the Administrative Agent an officers' certificate to the effect set forth in clauses (a), (b), (c) and (d) above, together with all relevant financial information for the Person or assets to be acquired and reasonably detailed calculations demonstrating satisfaction of the requirement set forth in clause (d) above.

"Permitted Encumbrances" means:

(a) Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.05;

(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 60 days or are being contested in compliance with Section 5.05;

(c) pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or regulations;

(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(e) judgment liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII; and

(f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

provided that the term "Permitted Encumbrances" shall not include any Lien securing Indebtedness.

"Permitted Investments" means:

(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

(b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody's, and investments in master notes representing solely interests in such commercial paper;

(c) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

(d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

(e) money market funds investing solely in investments described under clauses (a) through (d).

"Permitted Other Acquisition" means any acquisition or investment (other than a Permitted Acquisition) by the Company or any Subsidiary of or in a Person or division or line of business of a Person (including any such acquisition or investment resulting from a merger of a Person into a Subsidiary) if, immediately after giving effect thereto, (a) no Default has occurred and is continuing or would result therefrom, (b) the principal business of such Person shall be reasonably related, ancillary or complementary to a business in which the Company and its Subsidiaries were engaged on the Effective Date, (c) the Company and the Subsidiaries shall be in compliance, on a pro forma basis after giving effect to such acquisition or investment (without giving effect to operating expense reductions other than cost savings permitted to be included under Regulation S-X), with the covenants contained in Sections 6.12 and 6.13 recomputed as at the last day of the most recently ended fiscal quarter of the Company for which financial statements are available, as if such acquisition or investment had occurred on the first day of each relevant period for testing such compliance, and (d) if the consideration to be paid in respect of such acquisition or investment is greater than $5,000,000, the Company shall have delivered to the Administrative Agent an officers' certificate to the effect set forth in clauses (a), (b) and (c) above, together with all relevant financial information for the Person or assets to be acquired and reasonably detailed calculations demonstrating satisfaction of the requirement set forth in clause (c) above.

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

"PharMerica" means PharMerica, Inc., a Delaware corporation and an indirect wholly owned Subsidiary of the Company.

"Plan" means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

"Pledge Agreement" means, collectively, the Pledge Agreement among the Loan Parties and the Administrative Agent, substantially in the form of Exhibit H, and in connection with the pledge of Equity Interests in non-U.S. Persons, other pledge agreements or similar agreements giving effect to the Collateral and Guarantee Requirement and in form and substance satisfactory to the Administrative Agent.

"Prepayment Event" means:

(a) any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of the Company or any Subsidiary, other than (i) dispositions described in clauses (a), (b) and (c) of Section 6.05, (ii) dispositions resulting (taken together with related dispositions) in aggregate Net Proceeds not exceeding $1,000,000 and (iii) other dispositions until each such time as the aggregate Net Proceeds of all such dispositions not resulting in a Prepayment Event shall not exceed $10,000,000, at which time a Prepayment Event shall exist with respect to all such other dispositions; or

(b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Subsidiary, but only to the extent that the Net Proceeds therefrom have not been applied or committed to repair, restore or replace such property or asset within 180 days after such event; or

(c) any increase in the aggregate amount of the Financed Portions of the outstanding Securitizations to an amount in excess of $358,000,000; or

(d) the incurrence by the Company or any Subsidiary of any Indebtedness, other than Indebtedness permitted under any of clauses (i) through (ix) of Section 6.01; or

(e) the issuance or sale by the Company or any Subsidiary (other than to the Company or another Subsidiary) of any preferred stock or other preferred Equity Interest.

"Prime Rate" means the rate of interest per annum publicly announced from time to time by The Chase Manhattan Bank as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

"Purchased Property" has the meaning assigned to such term in the form of Intercreditor Agreement attached as Exhibit F.

"Receivables Advance Rate Percentage" means 80%, unless a different percentage may have been approved as provided in the following clauses (a) and (b), in consultation with the Company based upon a change in circumstances, upon at least 5 Business Days' notice to the Company, in which case "Receivables Advance Rate Percentage" shall mean (a) any percentage lower than 80% that may from time to time be approved by the Administrative Agent or the Required Lenders or (b) any percentage greater than 80% that may from time to time be approved by the Supermajority Lenders. Each change in the Receivables Advance Rate Percentage shall become effective on the date approved by the Administrative Agent or the requisite Lenders and shall remain in effect until the next date on which such a change is approved by the Administrative Agent of the requisite Lenders.

"Receivables Amount" means, at the time of any determination of the Borrowing Base, Eligible Accounts Receivable, minus (a) the aggregate amount of credit balances, offsets, deductions and other credits outstanding for the benefit of the Account Debtors (net of any portion of such credit balances, offsets, deductions and other credits attributable to any Account Debtor that at the time of determination has any otherwise Eligible Account Receivable deemed not to be an Eligible Account Receivable because in excess of the applicable concentration limit), (b) the Dilution Reserve, (c) a reserve in respect of Eligible Accounts Receivable of PharMerica with respect to which the Account Debtor is not a commercial insurance provider, the Medicare program or the Medicaid program in an amount from time to time deemed appropriate by the Administrative Agent based upon a review of information obtained by the Administrative Agent or provided to it by the Company (which amount shall initially be 50% of such Accounts) and (d) such other adjustments or reconciling items as may from time to time be established in accordance with Section 5.09(c).

"Register" has the meaning set forth in Section 10.04.

"Related Fund" means, with respect to any Lender that is a fund or trust that makes, buys or invests in commercial loans, any other fund or trust that makes, buys or invests in commercial loans and is managed by the same investment advisor as such Lender.

"Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates.

"Required Lenders" means, at any time, Lenders having Revolving Exposures, Term Loans and unused Commitments representing more than 50% of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at such time, voting together as a single class.

"Restricted Payment" means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Company or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any Equity Interests in the Company or any Subsidiary or any option, warrant or other right to acquire any such Equity Interests in the Company or any Subsidiary; provided that no such dividend, distribution or payment shall constitute a "Restricted Payment" to the extent made solely with common stock of the Company.

"Revolving Availability Period" means the period from and including the Effective Date to but excluding the earlier of the Revolving Maturity Date and the date of termination of the Revolving Commitments.

"Revolving Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04. The initial amount of each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Revolving Commitment, as applicable. The initial aggregate amount of the Lenders' Revolving Commitments is $800,000,000.

"Revolving Exposure" means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's Revolving Loans and its LC Exposure and Swingline Exposure at such time.

"Revolving Lender" means a Lender with a Revolving Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving Exposure.

"Revolving Loan" means a Loan made pursuant to clause (d) of Section 2.01.

"Revolving Maturity Date" means April 21, 2003.

"S&P" means Standard & Poor's.

"Secured Parties" has the meaning assigned to such term in the Security Agreement.

"Securitization" means (a) the receivables sale facility of Bergen Drug in effect on the Effective Date, as such facility may be amended from time to time in accordance with Section 6.11, or (b) any other securitization of Purchased Property of Bergen Drug on terms taken as a whole no less favorable to Bergen Drug and the Lenders than those of the receivables sale facility described in clause (a).

"Securitization Entity" means Blue Hill, Inc., a Delaware corporation, or any other wholly owned Subsidiary of Bergen Drug that purchases Purchased Property of Bergen Drug pursuant to a Securitization; provided that such Subsidiary is organized under the laws of the United States, any State thereof or the District of Columbia and all the Equity Interests in such subsidiary shall be subject to a valid perfected first priority security interest in favor of the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Documents.

"Securitization Reserve" means, at any time, (a) the aggregate amount of the Financed Portions of all outstanding Securitizations at such time plus (b) the greater of (x) 1% of the aggregate amount of such Financed Portions at such time and (y) the aggregate amount under all outstanding Securitizations at such time of discounts in respect of outstanding investments in Accounts and accrued and unpaid, interest, fees, premiums and other charges.

"Security Agreement" means the Security Agreement among the Company, the Subsidiary Loan Parties and the Collateral Agent, substantially in the form of Exhibit I.

"Security Documents" means the Security Agreement, the Pledge Agreement, the Intercreditor Agreement, the Mortgages and each other security agreement or other instrument or document executed and delivered pursuant to Section 5.12 or 5.13 to secure any of the Obligations.

"Shrink Reserve" means, at the time of any determination of the Borrowing Base, for each Operating Unit, the amount for such Operating Unit obtained by multiplying (a) the highest percentage excess for such Operating Unit of book inventory over actual inventory determined as a result of any physical inventory during the 12 month period preceding such time and (b) total book inventory of such Operating Unit at such time.

"Significant Subsidiary" means (a) each Borrowing Subsidiary and (b) each other Subsidiary other than any Subsidiary or Subsidiaries (x) in respect of which an Event of Default under clause (h), (i) or (j) of Article VII or a Material Adverse Effect under clause (b) of the definition thereof would exist if such Subsidiary or Subsidiaries were Significant Subsidiaries and (y) that individually or in the aggregate did not account for more than 1% of the revenues of the Company and the Subsidiaries on a consolidated basis for the most recent four fiscal quarter period for which financial statements have most recently been delivered under Sections 5.01(a) or (b).

"Statutory Reserve Rate" means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over $100,000 with maturities approximately equal to three months, and (b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

"Stadtlander" means BBC Operating Sub, Inc., BBC Licensing Sub, Inc. and each of their subsidiaries

"subsidiary" means, with respect to any Person (the "parent") at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

"Subsidiary" means any subsidiary of the Company.

"Subsidiary Loan Party" means each Borrowing Subsidiary and each other Subsidiary that is not an Excluded Subsidiary.

"Supermajority Lenders" means, at any time, Lenders having Revolving Exposures, Term Loans and unused Commitments representing more than 75% of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at such time, voting together as a single class.

"Swingline Exposure" means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time.

"Swingline Lender" means The Chase Manhattan Bank, in its capacity as lender of Swingline Loans hereunder.

"Swingline Loan" means a Loan made pursuant to Section 2.04.

"Synthetic Lease" means a lease of property or assets designed to permit the lessees (i) to claim depreciation on such property or assets under U. S. tax law and (ii) to treat such lease as an operating lease or not to reflect the leased property or assets on the lessee's balance sheet under GAAP.

"Synthetic Lease Obligations" shall mean, with respect to any Synthetic Lease, at any time, an amount equal to the higher of (x) the aggregate termination value or purchase price or similar payments in the nature of principal payable thereunder and (y) the then aggregate outstanding principal amount of the notes or other instruments issued by, and the amount of the equity investment, if any, in the lessor under such Syntectic Lease.

"Taxes" means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

"Term Loans" means Tranche A Term Loans, Tranche B Term Loans and Interim Term Loans.

"Three-Month Secondary CD Rate" means, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day is not a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day) or, if such rate is not so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 a.m., New York City time, on such day (or, if such day is not a Business Day, on the next preceding Business Day) by the Administrative Agent from three negotiable certificate of deposit dealers of recognized standing selected by it.

"Total Indebtedness" means, as of any date, the sum, without duplication of (a) the aggregate principal amount of Indebtedness of the Company and the Subsidiaries outstanding as of such date, in the amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP, (b) the aggregate outstanding amount of the Trust Preferred, (c) the aggregate amount of the Financed Portions of the outstanding Securitizations in excess of $358,000,000, plus (d) the aggregate principal amount of Indebtedness of the Company and the Subsidiaries outstanding as of such date that is not required to be reflected on a balance sheet in accordance with GAAP, determined on a consolidated basis, less, to the extent included in (a) or (d), the aggregate amount of the Financed Portions of the outstanding Securitizations to the extent less than or equal to $358,000,000.

"Tranche A Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make Tranche A Term Loans hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Tranche A Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04. The initial amount of each Lender's Tranche A Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Tranche A Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche A Commitments is $300,000,000.

"Tranche A Lender" means a Lender with a Tranche A Commitment or an outstanding Tranche A Term Loan.

"Tranche A Maturity Date" means March 31, 2005

"Tranche A Term Loan" means a Loan made pursuant to clause (a) of Section 2.01.

"Tranche B Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make Tranche B Term Loans hereunder on the Effective Date, expressed as an amount representing the maximum principal amount of the Tranche B Term Loans to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04. The initial amount of each Lender's Tranche B Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Tranche B Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche B Commitments is $200,000,000.

"Tranche B Lender" means a Lender with a Tranche B Commitment or an outstanding Tranche B Term Loan.

"Tranche B Maturity Date" means March 31, 2006.

"Tranche B Term Loan" means a Loan made pursuant to clause (b) of Section 2.01.

"Transactions" means the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

"Trust Preferred" means the 12,000,000 shares of the 7.80% Trust Originated Preferred Securities issued by a trust that is a wholly owned Subsidiary on May 26, 1999.

"Type", when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

"wholly owned" means, as to any Subsidiary, that all the Equity Interests in such Subsidiary (other than directors' qualifying shares) are owned, directly or indirectly, by the Company.

"Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").

SECTION 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. References herein to the taking of any action hereunder of an administrative nature by any Borrower shall be deemed to include references to the Company taking such action on such Borrower's behalf and the Agents are expressly authorized to accept any such action taken by the Company as having the same effect as if taken by such Borrower. References to obligations to the "Borrowers" shall mean that such obligations are joint and several obligations of the Borrowers.

SECTION 1.04. Accounting Terms; GAAP. (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Company notifies the Administrative Agent that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Company that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

(b) All pro forma computations required to be made hereunder giving effect to any acquisition, investment, sale, disposition, merger or similar event shall reflect on a pro forma basis such event as if it occurred on the first day of the relevant period and, to the extent applicable, the historical earnings and cash flows associated with the assets acquired or disposed of for such relevant period and any related incurrence or reduction of Indebtedness for such relevant period, but shall not take into account any projected synergies or similar benefits expected to be realized as a result of such event other than cost savings permitted to be included under Regulation S-X.

ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees (a) to make Tranche A Term Loans to the Company and Bergen Drug on the Effective Date in an aggregate principal amount not exceeding its Tranche A Commitment and in an amount for each of the Company and Bergen Drug equal to such Lender's ratable percentage, based on its Tranche A Commitment, of the respective Tranche A Term Borrowings specified in the Borrowing Requests therefor, (b) to make Tranche B Term Loans to the Company and Bergen Drug on the Effective Date in an aggregate principal amount not exceeding its Tranche B Commitment and in an amount for each of the Company and Bergen Drug equal to such Lender's ratable percentage of the respective Tranche B Term Borrowings specified in the Borrowing Requests therefor, (c) to make Interim Term Loans to the Company and Bergen Drug on the Effective Date in an aggregate principal amount not exceeding its Interim Commitment and in an amount for each of the Company and Bergen Drug equal to such Lender's ratable percentage, based on its Interim Commitment, of the respective Interim Term Borrowings specified in the Borrowing Requests therefor, and (d) to make Revolving Loans to the Borrowers from time to time during the Revolving Availability Period in an aggregate principal amount that will not result in (i) such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment, (ii) the sum of the Revolving Exposures and the aggregate principal amount of the outstanding Term Loans exceeding the Borrowing Base then in effect or (iii) the aggregate principal amount of the Borrowings of PharMerica exceeding $325,000,000. If the aggregate amount of Revolving Loans made on the Effective Date is less than the aggregate amount of Loans to be borrowed by PharMerica on the Effective Date, PharMerica may borrow such excess amount as Term Loans (allocated among the Classes thereof at the Company's discretion) and may maintain such Loans as any combination of Term Loans and Revolving Loans as the Company shall determine in its discretion, provided that no amortization of Term Loans may in any circumstances be allocated to Term Loans of PharMerica. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans. Amounts repaid in respect of Term Loans may not be reborrowed.

SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required.

(b) Subject to Section 2.14, each Revolving Borrowing and Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $5,000,000 and not less than $10,000,000. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $5,000,000 and not less than $10,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Revolving Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $1,000,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of 12 Eurodollar Borrowings outstanding.

(d) Notwithstanding any other provision of this Agreement, no Borrower shall be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date, Tranche A Maturity Date, Tranche B Maturity Date or Interim Maturity Date, as applicable.

SECTION 2.03. Requests for Borrowings. To request a Revolving Borrowing or Term Borrowing, the Company or the applicable Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e) may be given not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Company or the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) whether the requested Borrowing is to be a Revolving Borrowing, Tranche A Term Borrowing, Tranche B Term Borrowing or Interim Term Borrowing;

(ii) the aggregate amount of such Borrowing;

(iii) the date of such Borrowing, which shall be a Business Day;

(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(v) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; and

(vi) the identity of the applicable Borrower and the location and number of the account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing.

SECTION 2.04. Swingline Loans. (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrowers from time to time during the Revolving Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $100,000,000, (ii) the sum of the Revolving Exposures exceeding the total Revolving Commitments or (iii) the sum of the Revolving Exposures and the aggregate principal amount of the outstanding Term Loans exceeding the Borrowing Base then in effect; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Swingline Loans.

(b) To request a Swingline Loan, the applicable Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy), not later than 12:00 noon, New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from a Borrower. The Swingline Lender shall make each Swingline Loan available to a Borrower by means of a credit to the general deposit account of such Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e), by remittance to the applicable Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.

(c) The Swingline Lender may by written notice given to the Administrative Agent not later than 12:00 noon, New York City time, on any Business Day require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall notify the Company of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from a Borrower (or other party on behalf of a Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the applicable Borrower of any default in the payment thereof.

SECTION 2.05. Letters of Credit. (a) General. Subject to the terms and conditions set forth herein, each Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Bank, at any time and from time to time during the Revolving Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by a Borrower to, or entered into by a Borrower with, an Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), a Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable Issuing Bank) to an Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by an Issuing Bank, such Borrower also shall submit a letter of credit application on such Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the applicable Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $100,000,000, (ii) the Revolving Exposures shall not exceed the total Revolving Commitments and (iii) the sum of the Revolving Exposures and the aggregate principal amount of the outstanding Term Loans shall not exceed the Borrowing Base then in effect.

(c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Revolving Maturity Date.

(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Lenders, each Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the applicable Issuing Bank, a participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of such Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the applicable Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the applicable Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Company or the applicable Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 2:00 p.m., New York City time, on the date that such LC Disbursement is made, if the Company shall have received notice of such LC Disbursement prior to 11:00 a.m., New York City time, on such date, or, if such notice has not been received by the Company prior to such time on such date, then not later than 2:00 p.m., New York City time, on (i) the Business Day that the Company receives such notice, if such notice is received prior to 11:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that the Company receives such notice, if such notice is not received prior to such time on the day of receipt; provided that ,if such LC Disbursement is not less than $1,000,000, the Company or the applicable Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan. If the Company or the applicable Borrower fails to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the applicable Borrower in respect thereof and such Lender's Applicable Percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Company or the applicable Borrower, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent of any payment from the Company or the applicable Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse an Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the applicable Borrower of its obligation to reimburse such LC Disbursement.

(f) Obligations Absolute. The Borrowers' obligations to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by an Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, any Borrower's obligations hereunder. Neither the Administrative Agent, the Lenders, the Issuing Banks, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the applicable Issuing Bank; provided that the foregoing shall not be construed to excuse the applicable Issuing Bank from liability to a Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrowers to the extent permitted by applicable law) suffered by such Borrower that are caused by an Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or wilful misconduct on the part of an Issuing Bank (as finally determined by a court of competent jurisdiction), an Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, an Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures. An Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. Such Issuing Bank shall promptly notify the Administrative Agent and the Company by telephone (confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Company or any Borrower of its obligation to reimburse such Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

(h) Interim Interest. If an Issuing Bank shall make any LC Disbursement, then, unless the Company or the applicable Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Company or the applicable Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Company or the applicable Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse an Issuing Bank shall be for the account of such Lender to the extent of such payment.

(i) Replacement of an Issuing Bank. An Issuing Bank may be replaced at any time by written agreement among the Company, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank, if any. The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued by such Issuing Bank thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Company receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposures representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrowers shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Company described in clause (h) or (i) of Article VII. The Borrowers also shall deposit cash collateral pursuant to this paragraph as and to the extent required by Section 2.11(b), and any such cash collateral so deposited and held by the Administrative Agent hereunder shall constitute part of the Borrowing Base for purposes of determining compliance with Section 2.11(b). Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrowers under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent (which will use reasonable efforts to obtain a return at market rates for such cash deposits) and at the Company's risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Banks for LC Disbursements for which they have not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrowers for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of the Borrowers under this Agreement. If the Borrowers are required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrowers within three Business Days after all Events of Default have been cured or waived. If the Borrowers are required to provide an amount of cash collateral hereunder pursuant to Section 2.11(b), such amount (to the extent not applied as aforesaid) shall be returned to the Borrowers as and to the extent that, after giving effect to such return, the Borrowers would remain in compliance with Section 2.11(b) and no Default shall have occurred and be continuing.

SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 2:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04. The Administrative Agent will make such Loans available to the applicable Borrower by promptly crediting the amounts so received, in like funds, to an account of the Company or the applicable Borrower maintained with the Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the applicable Issuing Bank.

(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the applicable Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the applicable Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in such Borrowing.

SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing and Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Company or the applicable Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The applicable Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

(b) To make an election pursuant to this Section, the Company or the applicable Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Company or the applicable Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

(c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 and paragraph (e) of this Section:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period".

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month's duration.

(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing.

(e) If the Company or the applicable Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Company, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

SECTION 2.08. Termination and Reduction of Commitments. (a) Unless previously terminated, (i) the Tranche A Commitments, Tranche B Commitments and Interim Commitments shall terminate at 5:00 p.m., New York City time, on the Effective Date and (ii) the Revolving Commitments shall terminate at 5:00 p.m., New York City time, on the Revolving Maturity Date.

(b) The Company may at any time terminate, or from time to time reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $5,000,000 and not less than $10,000,000 and (ii) the Company shall not terminate or reduce the Revolving Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.11, the sum of the Revolving Exposures would exceed the total Revolving Commitments.

(c) If any prepayment of Term Borrowings is required pursuant to Section 2.11 but cannot be made because there are no Term Borrowings outstanding, or because the amount of the required prepayment exceeds the outstanding amount of Term Borrowings, then, on the date that such prepayment is required, the Revolving Commitments shall be reduced by an aggregate amount equal to the amount of the required prepayment, or the excess of such amount over the outstanding amount of Term Borrowings, as the case may be.

(d) The Company shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section, or any required reduction of the Revolving Commitments under paragraph (c) of this Section, at least two Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Company pursuant to this Section shall be irrevocable; provided that a notice of termination of the Revolving Commitments delivered by the Company may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked or extended by the Company (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied or the effectiveness of such other credit facilities is delayed. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.

SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The Company and each applicable Borrower hereby unconditionally promise to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Maturity Date, (ii) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10 and (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Maturity Date and the seventh day after such Swingline Loan is made; provided that on each date that a Revolving Borrowing is made, the Borrowers shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrowers to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof.

(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of this Agreement.

(e) Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the Borrowers shall prepare, execute and deliver to such Lender one or more promissory notes payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory notes and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.10. Amortization of Term Loans. (a) Subject to adjustment pursuant to paragraph (d) of this Section, the Borrowers shall repay Tranche A Term Borrowings on each date set forth below in the aggregate principal amount set forth opposite such date:

Date

Amount

June 30, 2001

$11,250,000

September 30, 2001

$11,250,000

December 31, 2001

$11,250,000

March 31, 2002

$11,250,000

June 30, 2002

$15,000,000

September 30, 2002

$15,000,000

December 31, 2002

$15,000,000

March 31, 2003

$15,000,000

June 30, 2003

$22,500,000

September 30, 2003

$22,500,000

December 31, 2003

$22,500,000

March 31, 2004

$22,500,000

June 30, 2004

$26,250,000

September 30, 2004

$26,250,000

December 31, 2004

$26,250,000

March 31, 2005

$26,250,000

(b) Subject to adjustment pursuant to paragraph (d) of this Section, the Borrowers shall repay Tranche B Term Borrowings on each date set forth below in the aggregate principal amount set forth opposite such date:

Date

Amount

June 30, 2000

$500,000

September 30, 2000

$500,000

December 31, 2000

$500,000

March 31, 2001

$500,000

June 30, 2001

$500,000

September 30, 2001

$500,000

December 31, 2001

$500,000

March 31, 2002

$500,000

June 30, 2002

$500,000

September 30, 2002

$500,000

December 31, 2002

$500,000

March 31, 2003

$500,000

June 30, 2003

$500,000

September 30, 2003

$500,000

December 31, 2003

$500,000

March 31, 2004

$500,000

June 30, 2004

$500,000

September 30, 2004

$500,000

December 31, 2004

$500,000

March 31, 2005

$500,000

June 30, 2005

$47,500,000

September 30, 2005

$47,500,000

December 31, 2005

$47,500,000

March 31, 2006

$47,500,000

(c) To the extent not previously paid, (i) all Tranche A Term Loans shall be due and payable on the Tranche A Maturity Date, (ii) all Tranche B Term Loans shall be due and payable on the Tranche B Maturity Date and (iii) all Interim Term Loans shall be due and payable on the Interim Maturity Date.

(d) Any prepayment of a Tranche A Term Borrowing or a Tranche B Term Borrowing shall be applied to reduce the subsequent scheduled repayments of the Term Borrowings of such Class to be made pursuant to this Section ratably.

(e) Prior to any repayment of any Term Borrowings of any Class hereunder, the Company shall select the Borrowing or Borrowings of the applicable Class to be repaid and shall notify the Administrative Agent by telephone (confirmed by telecopy) of such selection not later than 11:00 a.m., New York City time, three Business Days before the scheduled date of such repayment. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by accrued interest on the amount repaid.

SECTION 2.11. Prepayment of Loans. (a) The Borrowers shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section.

(b) In the event and on such occasion that the sum of the Revolving Exposures exceeds the total Revolving Commitments or, when taken together with the aggregate outstanding principal amount of the Term Loans, exceeds the Borrowing Base then in effect, the Borrowers shall prepay Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.05(j)) in an aggregate amount equal to such excess.

(c) In the event and on each occasion that any Net Proceeds are received by or on behalf of the Company or any Subsidiary in respect of any Prepayment Event, the Borrowers shall, within three Business Days after such Net Proceeds are received, prepay Term Borrowings in an aggregate amount equal to such Net Proceeds; provided that at any time after the aggregate amount of Term Borrowings prepaid based upon events described under paragraph (a) or (b) of the definition of "Prepayment Event" is $200,000,000 or more, only 50% of the Net Proceeds received in respect of any event described under paragraph (a) or (b) of the definition of "Prepayment Event " shall be required to be applied to prepay Term Borrowings, except in the case of such a Prepayment Event in which greater than 10% of the aggregate consideration is received by the Company or any Subsidiary in a form other than cash, in which case the amount of Loans required to be prepaid in respect of such Prepayment Event shall be increased by the present value (based on reasonable assumptions) of the portion of such non-cash consideration in excess of 10% of the total value of all the consideration received in respect of such Prepayment Event, up to an amount not to exceed 50% of such total value.

(d) Prior to any optional or mandatory prepayment of Borrowings hereunder, the Company shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (e) of this Section. In the event of any optional or mandatory prepayment of Term Borrowings made at a time when Term Borrowings of more than one Class remain outstanding, the Borrowers shall first apply all such prepayments to Interim Term Borrowings until all Interim Term Borrowings have been paid in full and shall then select Term Borrowings to be prepaid so that the aggregate amount of such prepayment is allocated between the Tranche A Term Borrowings and Tranche B Term Borrowings pro rata based on the aggregate principal amount of outstanding Borrowings of each such Class; provided that, so long as Tranche A Term Loans are outstanding, any Tranche B Lender may elect, by notice to the Administrative Agent by telephone (confirmed by telecopy) at least one Business Day prior to the prepayment date, to decline all or any portion of any prepayment of its Tranche B Term Loans pursuant to this Section (other than an optional prepayment pursuant to paragraph (a) of this Section, which may not be declined), in which case the aggregate amount of the prepayment that would have been applied to prepay Tranche B Term Loans but was so declined shall be applied to prepay Tranche A Term Borrowings (and if the aggregate amount of declined payments is greater than the aggregate remaining amount of Tranche A Term Loans, declinations shall be allocated among the Tranche B Lenders on a pro rata basis based upon the respective amounts of their outstanding Tranche B Term Loans). Each voluntary prepayment of the Tranche B Term Loans of any Lender under paragraph (a) above, and each mandatory prepayment of the Tranche B Term Loans of any Lender under paragraph (c) above shall be accompanied by a premium payment in cash of (i) 2.00% of the aggregate principal amount of the Tranche B Term Borrowings being prepaid, if such payment is made on or prior to the first anniversary of the Effective Date and (ii) 1.00% of the aggregate principal amount of the Tranche B Term Borrowings being prepaid, if such payment is made thereafter but on or prior to the second anniversary of the Effective Date.

(e) The Company shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid, the premiums to be paid on any Tranche B Term Borrowings to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, if a notice of optional prepayment is given in connection with a conditional notice of termination of the Revolving Commitments as contemplated by Section 2.08, then such notice of prepayment may be revoked or extended if such notice of termination is revoked or extended in accordance with Section 2.08. Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13.

SECTION 2.12. Fees. (a) The Borrowers agree to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the Applicable Rate on the average daily unused amount of each Commitment of such Lender during the period from and including the date of this Agreement to but excluding the date on which such Commitment terminates. Accrued commitment fees shall be payable in arrears (i) in the case of commitment fees in respect of the Revolving Commitments, on the last day of March, June, September and December of each year and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the date hereof, and (ii) in the case of commitment fees in respect of the Tranche A Term Commitments, Tranche B Term Commitments and Interim Commitments, on the Effective Date or any earlier date on which such Commitments terminate. All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing commitment fees with respect to Revolving Commitments, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose).

(b) The Borrowers agree to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the Applicable Rate used to determine the interest rate applicable to Eurodollar Revolving Loans on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender's Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which shall accrue at the rate of 0.25 % per annum on the average daily amount of the LC Exposure attributable to Letters of Credit issued by such Issuing Bank (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as each Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Banks pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c) The Borrowers agree to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between any Borrower and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to an Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders entitled thereto. Fees paid shall not be refundable under any circumstances.

SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.

(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Revolving Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.14. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or

(b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Company and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Company and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.15. Increased Costs. (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank; or

(ii) impose on any Lender or any Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or such Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or such Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrowers will pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or any Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or such Issuing Bank's capital or on the capital of such Lender's or such Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or such Issuing Bank or such Lender's or such Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or such Issuing Bank's policies and the policies of such Lender's or such Issuing Bank's holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender's or such Issuing Bank's holding company for any such reduction suffered.

(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or such Issuing Bank or its holding company, as the case may be, and the manner in which such amount or amounts have been calculated, as specified in paragraph (a) or (b) of this Section shall be delivered to the Company and shall be conclusive absent manifest error. The Borrowers shall pay such Lender or such Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or such Issuing Bank's right to demand such compensation; provided that no Borrower shall be required to compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than six months prior to the date that such Lender or such Issuing Bank, as the case may be, notifies the Company of the Change in Law giving rise to such increased costs or reductions and of such Lender's or such Issuing Bank's intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six month period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.16. Break Funding Payments. In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked or extended under Section 2.11(e) and is revoked or extended in accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Company pursuant to Section 2.19, then, in any such event, the Borrowers shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

SECTION 2.17. Taxes. (a) Any and all payments by or on account of any obligation of any Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if a Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (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) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) In addition, the Borrowers shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) The Borrowers shall indemnify the Administrative Agent, each Lender and each Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or such Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of any Borrower hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Company by a Lender or an Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or an Issuing Bank, shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Borrower to a Governmental Authority, the Company shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Company (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Company as will permit such payments to be made without withholding or at a reduced rate, provided that such Foreign Lender has received written notice from the Company advising it of the availability of such exemption or reduction and supplying all applicable documentation.

SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) Each Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 1:00 p.m., New York City time), on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York, except payments to be made directly to the Issuing Banks or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 10.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars.

(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans, Term Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to any Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation.

(d) Unless the Administrative Agent shall have received notice from the Company prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or an Issuing Bank hereunder that a Borrower will not make such payment, the Administrative Agent may assume that the applicable Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or such Issuing Bank, as the case may be, the amount due. In such event, if the applicable Borrower has not in fact made such payment, then each of the Lenders or such Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or 10.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Each Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b) If any Lender requests compensation under Section 2.15, or if a Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender defaults in its obligation to fund Loans hereunder, then the Company may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 10.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Company shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Banks and Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

SECTION 2.20. Borrowing Subsidiaries. On or after the Effective Date, the Company may designate any wholly owned Subsidiary as a Borrowing Subsidiary by delivery to the Administrative Agent of a Borrowing Subsidiary Agreement executed by such Subsidiary and the Company, and upon such delivery such Subsidiary shall for all purposes of this Agreement be a Borrowing Subsidiary and a party to this Agreement until the Company shall have executed and delivered to the Administrative Agent a Borrowing Subsidiary Termination with respect to such Subsidiary, whereupon such Subsidiary shall cease to be a Borrowing Subsidiary and a party to this Agreement. Notwithstanding the preceding sentence, no Borrowing Subsidiary Termination will become effective as to any Borrowing Subsidiary at a time when any principal of or interest on any Loan to such Borrowing Subsidiary shall be outstanding hereunder; provided that such Borrowing Subsidiary Termination shall be effective to terminate such Borrowing Subsidiary's right to make further Borrowings or to request Letters of Credit under this Agreement. As soon as practicable upon receipt of a Borrowing Subsidiary Agreement, the Administrative Agent shall send a copy thereof to each Lender.

ARTICLE III

Representations and Warranties

Each of the Company and the Borrowing Subsidiaries represents and warrants to the Lenders that:

SECTION 3.01. Organization; Powers. Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

SECTION 3.02. Authorization; Enforceability. The Transactions to be entered into by each Loan Party are within such Loan Party's corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement has been duly executed and delivered by each of the Company and the Borrowing Subsidiaries and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of the Company, such Borrowing Subsidiary or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Company, the Borrowing Subsidiaries or any of the Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, material agreement or other material instrument binding upon the Company, any Borrowing Subsidiary or any of the Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Company, any Borrowing Subsidiary or any of the Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of the Company, any Borrowing Subsidiary or any of the Subsidiaries, except Liens created under the Loan Documents.

SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The Company has heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended September 30, 1999, reported on by Deloitte & Touche, independent public accountants, and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended December 31, 1999, certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.

(b) Except as disclosed in the financial statements referred to above or the notes thereto or in the Information Memorandum (including the Company's annual report on Form 10-K for its fiscal year ended September 30, 1999, and quarterly report on Form 10-Q for the quarter ended December 31, 1999 (the "December 10-Q"), each provided as part of the Information Memorandum) after giving effect to the Transactions, none of the Company or its Subsidiaries has, as of the Effective Date, any material contingent liabilities, unusual long-term commitments or unrealized losses.

(c) Since September 30, 1999, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Company and its Subsidiaries, taken as a whole. It is understood and agreed that the developments disclosed in the December 10-Q and the Information Memorandum do not, and will not without further development, constitute such a material adverse change.

SECTION 3.05. Properties. (a) Each of the Company and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business (including its Mortgaged Properties), except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

(b) Each of the Company and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Company and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(c) Schedule 3.05 sets forth the address of each real property that is owned or leased by the Company or any of its Subsidiaries as of the Effective Date after giving effect to the Transactions.

(d) As of the Effective Date, neither the Company nor any of its Subsidiaries has received notice of, or has knowledge of, any pending or contemplated condemnation proceeding affecting any material portion of any Mortgaged Property or any sale or disposition thereof in lieu of condemnation. Neither any Mortgaged Property nor any interest therein is subject to any right of first refusal, option or other contractual right to purchase such Mortgaged Property or interest therein.

SECTION 3.06. Litigation and Environmental Matters. (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Company or any Borrower, threatened against or affecting the Company or any of its Subsidiaries (i) as to which there is a reasonable likelihood of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve any of the Loan Documents or the Transactions.

(b) Except with respect to any matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Company nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

SECTION 3.07. Compliance with Laws and Agreements. Each of the Company and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.

SECTION 3.08. Investment and Holding Company Status. Neither the Company nor any of its Subsidiaries is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

SECTION 3.09. Taxes. Each of the Company and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) any Taxes that are being contested in good faith by appropriate proceedings and for which the Company or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $10,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $10,000,000 the fair market value of the assets of all such underfunded Plans.

SECTION 3.11. Disclosure. The Company has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which the Company or any of its Subsidiaries is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the Information Memorandum nor any of the other reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished), taken as a whole, 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 misleading; provided that, with respect to projected financial information, the Company and the Borrowing Subsidiaries represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and the ownership interest of the Company in, each Subsidiary of the Company and identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of the Effective Date.

SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of all insurance maintained by or on behalf of the Company and its Subsidiaries as of the Effective Date. As of the Effective Date, all premiums in respect of such insurance have been paid to the extent due. The company and the Borrowing Subsidiaries believe that the insurance maintained by or on behalf of the Company and its Subsidiaries is adequate.

SECTION 3.14. Labor Matters. As of the Effective Date, there are no strikes, lockouts or slowdowns against the Company or any Subsidiary pending or, to the knowledge of the Company or any Borrower, threatened. The hours worked by and payments made to employees of the Company and the Subsidiaries have not been in violation in any material respect of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All payments due from the Company or any Subsidiary, or for which any claim may be made against the Company or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of the Company or such Subsidiary. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Company or any Subsidiary is bound.

SECTION 3.15. Solvency. Immediately after the consummation of the Transactions to occur on the Effective Date and immediately following the making of each Loan made on the Effective Date and after giving effect to the application of the proceeds of such Loans, (a) the fair value of the assets of each Borrower, and of the Loan Parties taken as a whole, at a fair valuation, will exceed its and their respective debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Borrower, and of the Loan Parties taken as a whole, will be greater than the amount that will be required to pay the probable liability of its and their respective debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Borrower, and the Loan Parties taken as a whole, will be able to pay its and their respective debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Borrower, and the Loan Parties taken as a whole, will not have unreasonably small capital with which to conduct the business in which it is or they are engaged as such business is now conducted and is proposed to be conducted following the Effective Date.

SECTION 3.16. Senior Indebtedness. The Obligations constitute "Senior Indebtedness" however denominated, under and as defined in each document or instrument governing subordinated Indebtedness of the Company or any Subsidiary (including the intercompany subordinated Indebtedness related to the Trust Preferred).

SECTION 3.17. Year 2000. There has not occurred, and neither the Company nor any Borrower expects that there will occur, any material disruption in the operations or business systems of the Company and the Subsidiaries resulting from the inability of computer systems of the Company or the Subsidiaries or equipment of the Company or the Subsidiaries containing embedded microchips to recognize or properly process dates in or following the year 2000.

ARTICLE IV

Conditions

SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 10.02):

(a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

(b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of each of (i) Lowenstein Sandler PC, counsel for the Company, substantially in the form of Exhibit J-1, (ii) Paul, Weiss, Rifkind, Wharton & Garrison, counsel for the Company, substantially in the form of Exhibit J-2, (iii) Milan A. Sawdei, Executive Vice President and Chief Legal Officer for the Company, in substantially the form of Exhibit J-3, and (iv) local counsel in each jurisdiction where a Mortgaged Property is located, in each case in a form reasonably satisfactory to the Administrative Agent, and, in the case of each such opinion required by this paragraph, covering such other matters relating to the Loan Parties, the Loan Documents or the Transactions as the Required Lenders shall reasonably request. Each of the Company and the Borrowers hereby requests such counsel to deliver such opinions.

(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of each Loan Party, the authorization of the Transactions and any other legal matters relating to the Loan Parties, the Loan Documents or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.

(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Company, confirming compliance with the conditions set forth in paragraphs (a), (b), (c) and (d) of Section 4.02. Such certificate shall include all relevant calculations in detail satisfactory to the Administrative Agent and shall specify the maximum amount of Indebtedness under the Loan Documents that may be incurred by PharMerica. A true and complete certified copy of the approval by the disinterested directors of the Board of Directors of PharMerica of the Transactions involving PharMerica and its subsidiaries, including the satisfaction by PharMerica and its subsidiaries of the Collateral and Guarantee Requirement, or the opinion of an investment banking firm as to the fairness of such Transactions to PharMerica, as applicable shall be attached to such certificate.

(e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses (including fees, charges and disbursements of counsel) required to be reimbursed or paid by any Loan Party hereunder or under any other Loan Document.

(f) The Collateral and Guarantee Requirement shall have been satisfied and the Administrative Agent shall have received a completed Perfection Certificate dated the Effective Date and signed by an executive officer or Financial Officer of the Company, together with all attachments contemplated thereby, including the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Loan Parties in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are permitted by Section 6.02 or have been released.

(g) The Administrative Agent shall have received evidence that the Intercreditor Agreement shall have been executed and delivered by each required party and shall have become effective. Each Lender authorizes and directs the Administrative Agent to enter into the Intercreditor Agreement.

(h) The Administrative Agent shall be reasonably satisfied as to the amount and nature of any environmental and employee health and safety exposures to which the Company and the Subsidiaries may be subject after giving effect to the Transactions, and with their plans with respect thereto.

(i) There shall be no litigation or administrative action (including any investigation, proceeding or other action by the FDA) that could reasonably be expected to have a material adverse effect on the business, operations, properties, assets, liabilities or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, after giving effect to the Transactions.

(j) All consents and approvals required to be obtained from any Governmental Authority or other Person in connection with the Transactions shall have been obtained.

(k) The Existing Credit Agreements shall have been or shall be simultaneously repaid in full, and all agreements and instruments evidencing or governing Indebtedness thereunder and all lending or other commitments thereunder shall have been terminated and all liens securing such Indebtedness shall have been released and the Administrative Agent shall have received a payoff letter agreement or such other evidence as it shall have reasonably requested as to the satisfaction of such conditions. After giving effect to the Transactions, neither the Company nor any of its Subsidiaries shall have outstanding any shares of preferred stock or any Indebtedness, other than (i) Indebtedness incurred under the Loan Documents and (ii) the Indebtedness and preferred stock set forth on Schedule 6.01.

(l) The Administrative Agent shall have received a completed Borrowing Base Certificate for the month ended February 29, 2000, dated the Effective Date and signed by a Financial Officer of the Borrower.

(m) The Administrative Agent shall have received evidence that the insurance required by Section 5.07 and the Security Documents is in effect.

(n) The Administrative Agent shall have received and be satisfied with copies of each amendment of the documents relating to the Securitization outstanding on the Effective Date.

The Administrative Agent shall notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 10.02) at or prior to 5:00 p.m., New York City time, on April 22, 2000 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

SECTION 4.02. Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Banks to issue, amend, renew or extend any Letter of Credit, is subject to receipt of the request therefor in accordance herewith and to the satisfaction of the following conditions:

(a) The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable.

(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.

(c) After giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, the sum of the Revolving Exposures and the aggregate principal amount of the outstanding Term Loans shall not exceed the Borrowing Base then in effect.

(d) Such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, shall be permitted under the debt incurrence test specified under each indenture or other governing document then outstanding in respect of any Material Indebtedness, or there shall be another provision in such indenture or document expressly permitting such Borrowing or Letter of Credit.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Company on the date thereof as to the matters specified in paragraphs (a), (b), (c) and (d) of this Section.

SECTION 4.03. Initial Credit Event for each Borrowing Subsidiary. The obligation of each Lender to make Loans to or issue Letters of Credit for the account of any Borrowing Subsidiary is subject to the satisfaction of the following conditions:

(a) The Administrative Agent (or its counsel) shall have received such Borrowing Subsidiary's Borrowing Subsidiary Agreement duly executed by all parties thereto (or, in the case of Bergen Drug and PharMerica, counterparts of this Agreement duly executed by each of them).

(b) The Administrative Agent shall have received a favorable written opinion of counsel for such Borrowing Subsidiary, substantially in the form of Exhibit J-4 and covering such other matters relating to such Borrowing Subsidiary or its Borrowing Subsidiary Agreement as the Administrative Agent shall reasonably request.

(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of such Borrowing Subsidiary, the authorization of the Transactions insofar as they relate to such Borrowing Subsidiary and any other legal matters relating to such Borrowing Subsidiary, its Borrowing Subsidiary Agreement or such Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.

ARTICLE V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, each of the Company and the Borrowing Subsidiaries covenants and agrees with the Lenders that:

SECTION 5.01. Financial Statements and Other Information. The Company will furnish to the Administrative Agent and each Lender:

(a) within 90 days after the end of each fiscal year of the Company, its audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such year, and (if at such time PharMerica's 8-3/8% Senior Subordinated Notes due 2008 remain outstanding and the reporting obligations in respect thereof remain in effect ) within 120 days after the end of each fiscal year of the Company, such financial statements for PharMerica and its subsidiaries, in each case setting forth in comparative form the figures for the previous fiscal year, and presenting the results of each significant operating business segment in accordance with FASB Statement No. 131, all reported on by Deloitte & Touche or other independent public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company or PharMerica, as applicable, and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, and in the case of financial statements for the Company and its Subsidiaries, together with statements for the applicable period of Consolidated EBITDA and consolidated revenues (determined in each case on a basis consistent with the presentation of Consolidated EBITDA and consolidated revenues for such groups in the Information Memorandum) for each of Bergen Drug and its subsidiaries, PharMerica and its subsidiaries, BBMC, ASD and its subsidiaries, Stadtlander and the remaining Subsidiaries taken as a group;

(b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, and (if at such time PharMerica's 8-3/8% Senior Subordinated Notes due 2008 remain outstanding and the reporting obligations in respect thereof remain in effect) within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, such financial statements for PharMerica and its subsidiaries, in each case setting forth in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, and presenting the results of each significant operating business segment in accordance with FASB Statement No. 131, all certified by a Financial Officer as presenting fairly in all material respects the financial condition and results of operations of the Company or PharMerica, as applicable, and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, and in the case of financial statements for the Company and its Subsidiaries, together with statements for the applicable period of Consolidated EBITDA and consolidated revenues for each of Bergen Drug and its subsidiaries, PharMerica and its subsidiaries, BBMC, ASD and its subsidiaries, Stadtlander and the remaining Subsidiaries taken as a group;

(c) within 30 days after the end of each of the first two fiscal months of each fiscal quarter of the Company, its consolidated balance sheet and related statements of operations as of the end of and for such fiscal month and the then elapsed portion of the fiscal year, all certified by one of its Financial Officers as presenting in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(d) concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Company (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.12, 6.13, 6.14 and 6.15 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the Company's audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(e) concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines);

(f) within 30 days after the end of each calendar month, a completed Borrowing Base Certificate calculating and certifying the Borrowing Base as of the last day of such calendar month, signed on behalf of the Company by a Financial Officer;

(g) not more than 45 days after the commencement of each fiscal year of the Company, a detailed consolidated budget for such fiscal year presented on a quarterly basis (including a projected consolidated balance sheet and related statements of projected operations and cash flow as of the end of and for such fiscal year and setting forth the assumptions used for purposes of preparing such budget) and, promptly when available, any significant revisions of such budget;

(h) promptly after the same become publicly available, the Company will provide each Lender with electronic notice of the availability of copies of all periodic and other reports, proxy statements and other materials filed by the Company or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Company to its shareholders generally, as the case may be;

(i) promptly following receipt thereof, any communication from the Food and Drug Administration regarding any circumstance or development that could reasonably be expected to result in a Material Adverse Effect; and

(j) promptly following any request therefor, such other information regarding the operations, business affairs, Collateral and financial condition of the Company or any Subsidiary, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request, it being understood that the Company may require any Lender receiving such information to confirm in writing its confidentiality obligations under Section 10.12.

SECTION 5.02. Notices of Material Events. The Company and the Borrowing Subsidiaries will furnish to the Administrative Agent and each Lender prompt written notice of the following:

(a) the occurrence of any Default;

(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Company or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Company and its Subsidiaries in an aggregate amount exceeding $15,000,000; and

(d) the failure by the Company or any Subsidiary to make any rental or other required payment (which has not been cured) in respect of any facility at which Eligible Inventory is stored; and

(e) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Company setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

SECTION 5.03. Information Regarding Collateral. (a) The Company will furnish to the Administrative Agent prompt written notice of any change (i) in any Loan Party's corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of any Loan Party's chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in any Loan Party's identity or corporate structure or (iv) in any Loan Party's Federal Taxpayer Identification Number. The Company agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral. The Company also agrees promptly to notify the Administrative Agent if any material portion of the Collateral is damaged or destroyed.

(b) Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to clause (a) of Section 5.01, the Company shall deliver to the Administrative Agent a certificate of a Financial Officer and the chief legal officer of the Borrower (i) setting forth the information required pursuant to the Perfection Certificate or confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section and (ii) certifying that all Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) above to the extent necessary to protect and perfect the security interests under the Security Agreement, the Pledge Agreement and the Mortgages for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period). For purposes of the foregoing certificate, the Company may assume that all filings, recordings and registrations that it has delivered to the Collateral Agent have been properly filed with the proper Persons.

SECTION 5.04. Existence; Conduct of Business. Each of the Borrowers will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

SECTION 5.05. Payment of Obligations. Each of the Borrowers will, and will cause each of its Subsidiaries to, pay its Indebtedness and other obligations, including Tax liabilities, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Company or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.06. Maintenance of Properties. Each of the Borrowers will, and will cause each of its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.

SECTION 5.07. Insurance. Each of the Borrowers will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurance companies (a) insurance in such amounts (with no greater risk retention) and against such risks as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations, (b) flood insurance on any Mortgaged Property located in an area designated as a "special flood hazard area" in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), in such amount as is required to comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time, and (c) all insurance required to be maintained pursuant to the Security Documents. Each Borrower will, upon the request of the Administrative Agent (which will forward to the Company any such requests received from Lenders), provide information in reasonable detail as to the insurance so maintained.

SECTION 5.08. Casualty and Condemnation. The Company (a) will furnish to the Administrative Agent and the Lenders prompt written notice of any casualty or other insured damage to any material portion of any Collateral or the commencement of any action or proceeding for the taking of any Collateral or any part thereof or interest therein under power of eminent domain or by condemnation or similar proceeding and (b) will ensure that the Net Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with Section 2.11(c).

SECTION 5.09. Books and Records; Inspection and Audit Rights. (a) Each of the Borrowers will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Each of the Borrowers will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested, provided that the Company may use reasonable efforts to coordinate visits by Lenders.

(b) The Company will, and will cause each of its Subsidiaries to, cooperate in the conduct of the monthly collateral services performed by the Collateral Agent and from time to time, upon the request of the Administrative Agent or the Required Lenders, permit the Administrative Agent or professionals retained by the Administrative Agent (including consultants, accountants, lawyers and appraisers) to conduct evaluations and appraisals of the Company's practices in the computation of the Borrowing Base and the assets included in the Borrowing Base at such times as the Administrative Agent may elect or the Required Lenders may specify; provided, that such Persons shall not be entitled to conduct such evaluations and appraisals of assets more frequently than twice per year unless (i) a Default or Event of Default has occurred and is continuing or (ii) the Administrative Agent or the Required Lenders determine that any material event or material change has occurred with respect to the Loan Parties, their inventory or receivables practices or the performance of the Collateral and that as a result of such event or change more frequent evaluations or appraisals are required to effectively monitor the Borrowing Base, in which case the Company will, and will cause each of its Subsidiaries to, permit such persons to conduct such evaluations and appraisals at such reasonable times and as often as may be reasonably requested. The Administrative Agent will provide the Lenders with reports of the evaluations and appraisals it completes under this Section 5.09(b).

(c) From time to time at the direction of the Administrative Agent or the Required Lenders the computation of the Borrowing Base will be modified or adjusted to revise or establish eligibility criteria and reserves in respect of Eligible Accounts Receivable and Eligible Inventory and to make such other adjustments and reconciliations as the Administrative Agent or the Required Lenders may, in its or their reasonable discretion (it being understood that the Administrative Agent will not take any action inconsistent with any determination of the Required Lenders absent a subsequent change in the relevant facts or circumstances), from time to time deem appropriate, in consultation with the Company, based on the creditworthiness of Borrowing Base items or on the results of Collateral or Borrowing Base evaluations conducted by the Collateral Agent or professionals retained by the Collateral Agent, as contemplated by Section 5.09(b), provided that any such change shall be effective upon not less than 5 Business Days' notice.

SECTION 5.10. Compliance with Laws. Each of the Borrowers will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.11. Use of Proceeds and Letters of Credit. The proceeds of the Term Loans and of Revolving Loans made on the Effective Date will be used only for the repayment in full of the Indebtedness outstanding under the Existing Credit Agreements and the payment of fees and expenses payable in connection with the Transactions. The proceeds of the Revolving Loans and Swingline Loans made after the Effective Date will be used only for general corporate purposes, provided that such proceeds may not be used to repay or prepay Interim Term Loans. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations U and X. Letters of Credit will be issued only for general corporate purposes.

SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary is formed or acquired after the Effective Date, the Company will, within ten Business Days after such Subsidiary is formed or acquired, notify the Administrative Agent and the Lenders thereof and cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary (if it is not an Excluded Subsidiary) and with respect to any Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf of any Loan Party.

SECTION 5.13. Further Assurances. (a) Each of the Borrowers will, and will cause each Subsidiary Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), which may be required under any applicable law, or which the Administrative Agent or the Required Lenders may reasonably request, to cause the Collateral and Guarantee Requirement to be and remain satisfied at all times, all at the expense of the Loan Parties. Each of the Borrowers also agrees to provide to the Administrative Agent, from time to time upon request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.

(b) If any material assets (including any real property or improvements thereto or any interest therein) are acquired by the Company or any Subsidiary Loan Party after the Effective Date (other than assets constituting Collateral under the Security Documents that become subject to the Lien of the Security Documents upon acquisition thereof), the Company will notify the Administrative Agent and the Lenders thereof, and, if requested by the Administrative Agent or the Required Lenders, the Company will cause such assets to be subjected to a Lien securing the Obligations and will take, and cause the Subsidiary Loan Parties to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, including actions described in paragraph (a) of this Section, all at the expense of the Loan Parties.

ARTICLE VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, each of the Company and the Borrowing Subsidiaries covenants and agrees with the Lenders that:

SECTION 6.01. Indebtedness; Certain Equity Securities. (a) The Borrowers will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:

(i) Indebtedness created under the Loan Documents;

(ii) (A) Indebtedness of the Company under Hedging Agreements entered into in accordance with Section 6.07, or (B) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness incurred under this clause (B) is extinguished within two Business Days of its incurrence;

(iii) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and extensions, renewals and replacements of any such Indebtedness on terms taken as a whole no less favorable to the Company and the Subsidiaries or the Lenders than the terms of such Indebtedness in effect on the date hereof (other than interest rates, which shall be at market rates) and that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof or add any new obligor in respect thereof, provided that such existing Indebtedness of the Company's Puerto Rico Subsidiary in an aggregate principal amount not to exceed $55,000,000 may be refinanced in a transaction supported by a Letter of Credit and benefitting from a Guarantee by the Company;

(iv) Indebtedness of the Company to any Subsidiary and of any Subsidiary to the Company or any other Subsidiary; provided that Indebtedness of PharMerica or any of its subsidiaries or of any Subsidiary that is not a Loan Party to the Company or any Subsidiary Loan Party (other than Indebtedness among PharMerica and subsidiaries of PharMerica that are Subsidiary Loan Parties) shall be subject to Section 6.04;

(v) Guarantees by the Company of Indebtedness of any Subsidiary; provided that Guarantees by the Borrower or any Subsidiary Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall be subject to Section 6.04;

(vi) Indebtedness of the Company or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including any Capital Lease Obligations or other Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof; provided that (A) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (B) the aggregate principal amount of Indebtedness permitted by this clause (vi) shall not exceed $35,000,000 at any time outstanding;

(vii) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that (A) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary and (B) the aggregate principal amount of Indebtedness permitted by this clause (vii) shall not exceed $15,000,000 at any time outstanding;

(viii) Indebtedness of Bergen Drug or the Securitization Entity under any Securitization; provided that the aggregate amount of the Financed Portions of all outstanding Securitizations shall not at any time exceed the sum of (a) the Financed Portion as of the Effective Date, which as of the Effective Date is $358,000,000, and (b) $100,000,000;

(ix) other unsecured Indebtedness of the Company in an aggregate principal amount not exceeding $50,000,000 at any time outstanding; and

(x) Indebtedness of the Company that is subordinated to the Obligations; provided that (A) the terms of such Indebtedness (other than interest rates, which shall be at market rates) including subordination provisions, shall be satisfactory to the Required Lenders, (B) such Indebtedness shall mature not sooner than the date that is 90 days after the Tranche B Maturity Date, (C) the aggregate principal amount of such Indebtedness, when taken with the outstanding amount of all preferred stock issued under Section 6.01(b)(iii), is not at any time in excess of $200,000,000 and (D) all the Net Proceeds of such Indebtedness shall have been applied to prepay Loans in accordance with Section 2.11(c).

(b) Neither the Company nor any Borrowing Subsidiary will, nor will they permit any Subsidiary to, issue or permit to exist any preferred stock or other preferred Equity Interests, other than (i) that existing on the date hereof and set forth on Schedule 6.01, (ii) preferred stock that at all times prior to the date that is one year after the Tranche B Maturity Date is not redeemable in whole or part and pays distributions and dividends solely in kind or in common stock of the Company and (iii) other preferred stock of the Company (A) having terms (other than pricing, which shall be at market rates) satisfactory to the Required Lenders, (B) in an aggregate amount that when taken together with the outstanding principal amount of the Indebtedness outstanding under Section 6.01(a)(x) is not at any time in excess of $200,000,000 and (C) all the Net Proceeds of which have been applied to prepay Loans in accordance with Section 2.11(c).

SECTION 6.02. Liens. The Borrowers will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(a) Liens created under the Loan Documents;

(b) Permitted Encumbrances;

(c) any Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(d) any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof;

(e) Liens on fixed or capital assets acquired, constructed or improved by the Company or any Subsidiary; provided that (i) such Liens secure Indebtedness permitted by clause (vi) of Section 6.01(a), (ii) such security interests and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such security interests shall not apply to any other property or assets of the Company or any Subsidiary; and

(f) Liens under any Securitization on Purchased Property of Bergen Drug or any Securitization Entity.

SECTION 6.03. Fundamental Changes. (a) No Borrower will, or will permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Subsidiary may merge into a Borrower in a transaction in which such Borrower is the surviving corporation, (ii) any Subsidiary may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary and (if any party to such merger is a Subsidiary Loan Party) is a Subsidiary Loan Party and (iii) any Subsidiary (other than a Subsidiary Loan Party) may liquidate or dissolve if the Company determines in good faith that such liquidation or dissolution is in the best interests of the Company and is not materially disadvantageous to the Lenders; provided that any such merger involving a Person that is not a wholly owned Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Section 6.04.

(b) The Borrowers will not, and will not permit any of the Subsidiaries to, engage to any material extent in any business other than businesses of the type conducted by the Borrowers and the Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.

SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions. The Borrowers will not, and will not permit any of the Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any Equity Interests in or evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except:

(a) investments of the Company under Hedging Agreements entered into in accordance with Section 6.07;

(b) Permitted Investments;

(d) investments by the Company and its Subsidiaries in Equity Interests in their respective Subsidiaries; provided that (i) any such Equity Interests held by a Loan Party shall be pledged pursuant to the Pledge Agreement (subject to the limitations applicable to common stock of a Foreign Subsidiary referred to in paragraph (b) of the definition of Collateral and Guarantee Requirement) and (ii) the aggregate amount of investments by Loan Parties in, and loans and advances by Loan Parties to, and Guarantees by Loan Parties of Indebtedness of, PharMerica or any of its subsidiaries or of Subsidiaries that are not Loan Parties (other than such investments, loans, advances and Guarantees (i) to the extent solely among PharMerica and subsidiaries of PharMerica that are Subsidiary Loan Parties and (ii) in any Securitization Entity pursuant to a Securitization) shall not exceed $5,000,000 at any time outstanding;

(e) loans or advances made by the Company to any Subsidiary and made by any Subsidiary to the Company or any other Subsidiary; provided that (i) any such loans and advances made by a Loan Party shall be evidenced by a promissory note pledged pursuant to the Pledge Agreement and (ii) the amount of such loans and advances made by Loan Parties to Subsidiaries that are not Loan Parties shall be subject to the limitation set forth in clause (d) above;

(f) Guarantees constituting Indebtedness permitted by Section 6.01; provided that the aggregate principal amount of Indebtedness of Subsidiaries that are not Loan Parties that is Guaranteed by any Loan Party shall be subject to the limitation set forth in clause (d) above;

(g) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

(h) (i) loans and advances to employees of the Company and the Subsidiaries in an aggregate principal amount at any time outstanding not to exceed $10,000,000 and (ii) advances of payroll payments and expenses to employees in the ordinary course of business;

(i) loans and advances to customers of the Company and the Subsidiaries (other than any created under paragraph (g) above) in an aggregate principal amount at any time outstanding not to exceed $50,000,000 provided that no more than $10,000,000 in the aggregate of such loans and advances shall at any time be outstanding to a single customer;

(j) discounts paid to customers in advance of sales in connection with the commencement or renewal of distribution agreements in the ordinary course of business and consistent with past practice or with the then current practices of suppliers in the applicable market, in an aggregate unused amount for all such discounts at any time outstanding not to exceed $30,000,000;

(k) Permitted Acquisitions in respect of which the aggregate amount of consideration paid after the date hereof (whether cash or property, as valued at the time such investment is made) does not exceed (net of any return representing return of capital of (but not return on) any such Permitted Acquisition) at any time $75,000,000; and

(l) Permitted Other Acquisitions and Permitted Acquisitions in addition to those made under paragraph (k) above in respect of which the aggregate amount of consideration paid after the date hereof (whether cash or property, as valued at the time such investment is made) does not exceed (net of any return representing return of capital of (but not return on) any such Permitted Other Acquisition or Permitted Acquisition) at any time $75,000,000.

SECTION 6.05. Asset Sales. The Borrowers will not, and will not permit any of the Subsidiaries to, sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest owned by it, nor will any Borrower permit any of its Subsidiaries to issue any additional Equity Interest in such Subsidiary, except:

(a) sales of inventory, obsolete or surplus equipment and Permitted Investments in the ordinary course of business;

(b) sales, transfers and dispositions to a Borrower or a Subsidiary; provided that any such sales, transfers or dispositions involving PharMerica or any of its subsidiaries or a Subsidiary that is not a Loan Party (other than such transactions to the extent solely involving PharMerica and subsidiaries of PharMerica that are Subsidiary Loan Parties) shall be made in compliance with Section 6.09;

(d) the sale of all the Equity Interests in any Person included in Stadtlander, and sales, transfers and other dispositions of assets that are not permitted by any other clause of this Section; provided that the aggregate fair market value of all assets sold, transferred or otherwise disposed of in reliance upon this clause (d) shall not exceed $500,000,000 during the term of this Agreement and that any retained Equity Interests in any Subsidiary in which any Equity Interests have been sold, transferred or otherwise disposed of shall be deemed to be noncash consideration received in respect of such sale, transfer or other disposition.

provided that all sales, transfers, leases and other dispositions permitted hereby (other than those permitted by clauses (b) and (c) above) shall be made for fair value and (i) until such time as the aggregate amount of Term Borrowings prepaid based upon events described under paragraph (a) or (b) of the definition of "Prepayment Event" is $200,000,000 or more, for at least 90% cash consideration, and (ii) thereafter, for at least 80% cash consideration (it being understood that all noncash consideration constituting investments, and the retention of minority interests in sold Subsidiaries, shall be subject to Section 6.04(l), and that contingent payouts, earnouts and similar consideration will be valued based upon the maximum consideration permitted to be received on a present value basis based upon reasonable assumptions).

SECTION 6.06. Sale and Leaseback Transactions. The Borrowers will not, and will not permit any of the Subsidiaries to, enter into any arrangement, directly or indirectly, whereby any Borrower or Subsidiary shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereinafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, other than any such transaction (a) which involves a sale solely for cash consideration on an arm's length basis in an amount that when taken together with the aggregate amount of the consideration received in respect of all other such transactions after the date hereof is less than $50,000,000 and (b) the Net Proceeds of which are applied to prepay Term Borrowings in accordance with Section 2.11(c).

SECTION 6.07. Hedging Agreements. The Borrowers will not, and will not permit any of the Subsidiaries to, enter into any Hedging Agreement, other than Hedging Agreements entered into in the ordinary course of business to hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct of its business or the management of its liabilities and not for any speculative purpose.

SECTION 6.08. Restricted Payments; Certain Payments of Indebtedness. (a) The Borrowers will not, and will not permit any of the Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except (i) the Company may declare and pay dividends with respect to its capital stock payable solely in additional shares of its common stock, (ii) Subsidiaries may declare and pay dividends ratably with respect to their capital stock (except that no dividends, distributions or other Restricted Payments may be made in respect of the Trust Preferred other than interest paid on the related intercompany subordinated Indebtedness in accordance with Section 6.08(b)(ii)), (iii) the Company may make Restricted Payments, not exceeding $5,000,000 during any fiscal year, pursuant to and in accordance with stock option plans or other equity based benefit plans for management or employees of the Company and its Subsidiaries, and (iv) so long as no Default or Event of Default shall have occurred and be continuing at the time of such payment and no Default would occur as a result of making such payment, (A) the Company may pay dividends with respect to its common stock in cash (x) in an aggregate amount during each fiscal quarter not to exceed the lesser of $4,000,000 and Adjusted Consolidated Net Income for the immediately preceding fiscal quarter and (y) in any greater amount during any fiscal quarter ending on or after September 30, 2000, provided that at the time each such dividend is paid (1) if such dividend is paid in the fiscal quarter ended September 30, 2000, the aggregate amount of cash dividends paid in such fiscal quarter is not in excess of the lesser of $10,100,000 and 25% of Adjusted Consolidated Net Income for the fiscal quarter ended June 30, 2000, (2) if such dividend is paid in the fiscal quarter ended December 31, 2000, the aggregate amount of cash dividends paid in such fiscal quarter, taken together with the aggregate amount of cash dividends paid in the immediately preceding fiscal quarter, is not in excess of the lesser of $20,200,000 and 25% of Adjusted Consolidated Net Income for the two fiscal quarter period ended September 30, 2000, (3) if such dividend is paid in the fiscal quarter ended March 31, 2001, the aggregate amount of cash dividends paid in such fiscal quarter, taken together with the aggregate amount of cash dividends paid in the immediately preceding two fiscal quarters, is not in excess of the lesser of $30,300,000 and 25% of Adjusted Consolidated Net Income for the three fiscal quarter period ended December 31, 2000, and (4) if such dividend is paid thereafter, the aggregate amount of cash dividends paid in the fiscal quarter in which such dividend is paid, taken together with the aggregate amount of cash dividends paid in the three fiscal quarters immediately preceding such fiscal quarter, is not in excess of the lesser of (x) 25% of Adjusted Consolidated Net Income for the four fiscal quarter period ending most recently prior to the time such dividend is paid and (y) $40,400,000, and (B) the Company may pay regular dividends or distributions in respect of preferred stock issued after the date hereof in compliance with Section 6.01(b)(iii). For purposes of clause (iv) above, "Adjusted Consolidated Net Income" for any period shall mean the sum, without duplication, for such period of Consolidated Net Income plus any special one-time or extraordinary non-cash charges deducted in calculating such Consolidated Net Income plus the aggregate loss reflected in such period on the books of the Company and the Subsidiaries in respect of any sale of all or part of Stadtlander and any discontinuation of any part of Stadtlander.

(b) The Borrowers will not, and will not permit any of the Subsidiaries to, make or agree to pay or make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Indebtedness, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any Indebtedness, except:

(i) payment of Indebtedness created under the Loan Documents;

(ii) payment of regularly scheduled interest payments and scheduled or mandatory principal payments as and when due in respect of any Indebtedness, other than payments in respect of subordinated debt prohibited by the subordination provisions thereof, and payments made to Bergen Drug by Securitization Entities in respect of subordinated Indebtedness incurred pursuant to any Securitization;

(iii) refinancings of Indebtedness to the extent permitted by Section 6.01; and

(iv) payment of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness.

SECTION 6.09. Transactions with Affiliates. The Borrowers will not, and will not permit any of the Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any Affiliate of a Borrower or Subsidiary, except (a) transactions that are at prices and on terms and conditions not less favorable to such Borrower or Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (b) transactions between or among the Borrowers and the Subsidiary Loan Parties (other than PharMerica and its subsidiaries) not involving any other Affiliate, (c) transactions between or among PharMerica and subsidiaries of PharMerica that are Subsidiary Loan Parties, (d) transactions between Bergen Drug and any Securitization Entity pursuant to any Securitization and (e) any Restricted Payment permitted by Section 6.08.

SECTION 6.10. Restrictive Agreements. The Borrowers will not, and will not permit any of the Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of any Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to any Borrower or any other Subsidiary or to Guarantee Indebtedness of any Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document or any Securitization or any indenture, agreement or instrument evidencing or governing Indebtedness set forth on Schedule 6.01 as in effect on the date hereof or as modified in accordance herewith, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.10 (but shall apply to any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (v) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof.

SECTION 6.11. Material Documents. Neither the Company nor any Borrower will, nor will they permit any Subsidiary to, amend, modify or waive (a) in any manner adverse to the Lenders any of its rights under (i) any indenture, material agreement or material instrument evidencing or governing Indebtedness, the Trust Preferred or any Indebtedness set forth on Schedule 6.01 or (ii) its certificate of incorporation, by-laws or other organizational documents or (b) any provision of any agreement or instrument relating to any Securitization to (i) add any termination event or other similar event, however denominated, or to make any existing such event more onerous to Bergen Drug or any Securitization Entity, (ii) advance the stated date on which such Securitization terminates, (iii) reduce the Financed Portion of such Securitization or (iv) materially reduce the advance rate of such Securitization. The Company and the Borrowers will not permit the Obligations to fail to be "senior debt" (however denominated) for purposes of the Trust Preferred or any subordinated Indebtedness of the Company or any Subsidiary (other than any Securitization Entity).

SECTION 6.12. Fixed Charge Coverage Ratio. The Company will not permit the ratio of (a) Consolidated EBITDAR to (b) the sum, without duplication, of (i) Consolidated Cash Interest Expense, (ii) dividends on Equity Interests in the Company and (iii) rental payments of the Company and the Subsidiaries (other than under capital leases), determined on a consolidated basis in accordance with GAAP, in each case for any period of four consecutive fiscal quarters ending on any date during any period set forth below, to be less than the ratio set forth below opposite such period:

Period
Ratio

March 31, 2000 - March 30, 2001

1.25

March 31, 2001 - September 29, 2002

1.50

September 30, 2002 - September 29, 2003

1.75

September 30, 2003 - September 29, 2004

2.00

September 30, 2004 - September 29, 2005

2.25

thereafter

2.50

SECTION 6.13. Leverage Ratio. The Company will not permit the Leverage Ratio as of any date during any period set forth below to exceed the ratio set forth opposite such period:

Period

Ratio

March 31, 2000 - June 29, 2000

6.00

June 30, 2000 - December 30, 2000

5.75

December 31, 2000 - June 29, 2001

5.50

June 30, 2001 - September 29, 2001

4.50

September 30, 2001 - September 29, 2002

4.25

September 30, 2002 - September 29, 2003

3.75

September 30, 2003 - September 29, 2004

3.50

September 30, 2004 - September 29, 2005

3.25

thereafter

3.00

SECTION 6.14. Minimum Net Worth. The Company will not permit Consolidated Net Worth as of any date to be less than (a) $1,201,841,000 plus (b) the sum of (i) the net proceeds of issuances of Equity Interests by the Company after the Effective Date and (ii) 50% of cumulative (to the extent positive) Consolidated Net Income for each fiscal quarter ended after the Effective Date and for which the Company shall have delivered financial statements under Section 5.01(a) or (b), minus (c) the aggregate loss reflected on the books of the Company and the Subsidiaries in respect of any sale of all or part of Stadtlander and any discontinuation of any part of Stadtlander.

SECTION 6.15. Capital Expenditures. The Company will not permit the aggregate amount of Capital Expenditures (excluding Permitted Acquisitions) made by the Company and the Subsidiaries during any period set forth below to exceed the aggregate amount set forth below opposite such period:

Period

Amount

April 1, 2000 - September 30, 2000

$ 60,000,000

October 1, 2000 - September 30, 2001

$115,000,000

October 1, 2001 - September 30, 2002

$115,000,000

each fiscal year thereafter

$125,000,000

provided that to the extent that the Capital Expenditures made in any period set forth above are less than the amount set forth for such period, then after the available amount for the next succeeding fiscal year has been fully used the Borrower and the Subsidiaries may make, or commit to make, additional Capital Expenditures during such next succeeding fiscal year in an aggregate amount that at the time each such Capital Expenditure is made (or at the time a binding commitment was entered into to make such Capital Expenditure) is not in excess of (i) if the Leverage Ratio at such time is greater than 4.0 to 1.0, 25% of the unused amount from the prior period or (ii) if the Leverage Ratio is 4.0 to 1.0 or less, 50% of such unused amount.

SECTION 6.16. Restricted Properties. The Borrowers will not, and will not permit any Subsidiary to permit any property that is a "Restricted Property" for purposes of the Company's Senior Indenture dated as of December 1, 1992, to be owned by any Person other than a Subsidiary that has no assets other than Restricted Properties, no parent other than the Company and no activities other than the ownership of Restricted Properties.

SECTION 6.17. Fiscal Quarters. The Borrowers will not change, and will not permit any Subsidiary to change, the fiscal quarter ends of the Company or any Subsidiary to any date other than March 31, June 30, September 30 or December 31, respectively.

ARTICLE VII

Events of Default

If any of the following events ("Events of Default") shall occur:

(a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three Business Days;

(c) any representation or warranty made or deemed made by or on behalf of the Company or any Subsidiary in or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made;

(d) Any Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.04 (with respect to the existence of the Borrowers) or 5.11 or in Article VI;

(e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in clause (a), (b) or (d) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent to the Company (which notice will be given at the request of any Lender);

(f) the Company or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable prior to the expiration of any grace period applicable to such payment;

(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Company, any Borrower or any Significant Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company, any Borrower or any Significant Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(i) the Company, any Borrower or any Significant Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company, any Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(j) the Company, any Borrower or any Significant Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

(k) one or more judgments for the payment of money in an aggregate amount in excess of $25,000,000 shall be rendered against the Company, any Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Company, any Borrower or any Subsidiary to enforce any such judgment;

(l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Company and the Subsidiaries in an aggregate amount exceeding $25,000,000;

(m) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document, except (i) as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the Loan Documents or (ii) as a result of the Collateral Agent's failure to maintain possession of any stock certificates, promissory notes or other instruments delivered to it under the Pledge Agreement; or

(n) a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Company described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Company, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower; and in case of any event with respect to the Company described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower.

ARTICLE VIII

The Administrative Agent

Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative Agent and the Collateral Agent as its agent and authorizes each Agent to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.

Any bank serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Company or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder.

The Agents shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Agents shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Agents shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Agents are required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02), and (c) except as expressly set forth in the Loan Documents, the Agents shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company or any of its Subsidiaries that is communicated to or obtained by any bank serving as Agent or any of its Affiliates in any capacity. The Agents shall not be liable for any action taken or not taken by them with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02) or in the absence of its own gross negligence or wilful misconduct. The Agents shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Agents, by the Company or a Lender, and the Agents shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Agents.

The Agents shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by them to be genuine and to have been signed or sent by the proper Person. The Agents also may rely upon any statement made to them orally or by telephone and believed by them to be made by the proper Person, and shall not incur any liability for relying thereon. The Agents may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by them, and shall not be liable for any action taken or not taken by them in accordance with the advice of any such counsel, accountants or experts.

The Agents may perform any and all their duties and exercise their rights and powers by or through any one or more sub-agents appointed by the Agents. The Agents and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

Subject to the appointment and acceptance of a successor Agent as provided in this paragraph, an Agent may resign at any time by notifying the Lenders, the Issuing Banks and the Company. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Company, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Company to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor. After an Agent's resignation hereunder, the provisions of this Article and Section 10.03 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent.

Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder.

The parties agree that the Co-Documentation Agents shall have no obligations or liabilities whatsoever in their capacities as such.

ARTICLE IX

Guarantee

In order to induce the Lenders to extend credit hereunder, the Company hereby irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety, the Obligations. The Company further agrees that the due and punctual payment of the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its Guarantee hereunder notwithstanding any such extension or renewal of any Obligation. Each and every default in payment of the principal of and premium, if any, or interest on any Obligation shall give rise to a separate cause of action hereunder, and separate suits may be brought hereunder as each cause of action arises.

The Company waives presentment to, demand of payment from and protest to any Borrowing Subsidiary of any of the Obligations, and also waives notice of acceptance of its obligations and notice of protest for nonpayment. The obligations of the Company hereunder shall not be affected by (a) the failure of any Secured Party to assert any claim or demand or to enforce any right or remedy against any Loan Party under the provisions of this Agreement, any other Loan Document or otherwise; (b) any extension or renewal of any of the Obligations; (c) any rescission, waiver, amendment or modification of, or release from, any of the terms or provisions of this Agreement, any Borrowing Subsidiary Agreement or any other Loan Document or agreement; (d) the release of (or the failure to perfect a security interest in) any security held by any Secured Party for the performance of the Obligations or any of them; (e) the failure or delay of any Secured Party to exercise any right or remedy against any other guarantor of the Obligations; (f) the failure of any Secured Party to assert any claim or demand or to enforce any remedy under any Loan Document, any guarantee or any other agreement or instrument; (g) any default, failure or delay, wilful or otherwise, in the performance of the Obligations; or (h) any other act, omission or delay to do any other act which may or might in any manner or to any extent vary the risk of the Company or otherwise operate as a discharge of the Company as a matter of law or equity or which would impair or eliminate any right of the Company to subrogation.

The Company further agrees that its agreement hereunder constitutes a promise of payment when due (whether or not any bankruptcy or similar proceeding shall have stayed the accrual or collection of any of the Obligations or operated as a discharge thereof) and not merely of collection, and waives any right to require that any resort be had by any Secured Party to any balance of any deposit account or credit on the books of any Secured Party in favor of any Borrower or any other Person.

The obligations of the Company hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever, by reason of the invalidity, illegality or unenforceability of the Obligations, any impossibility in the performance of the Obligations or otherwise.

The Company further agrees that its obligations hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Secured Party upon the bankruptcy or reorganization of any Borrower or otherwise.

In furtherance of the foregoing and not in limitation of any other right which any Secured Party may have at law or in equity against the Company by virtue hereof, upon the failure of any Borrowing Subsidiary to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Company hereby promises to and will, upon receipt of written demand by any Lender, forthwith pay, or cause to be paid, to the Administrative Agent for distribution to the Secured Parties in cash an amount equal to the sum of (i) the unpaid principal amount of such Obligations then due, (ii) accrued and unpaid interest and fees on such Obligations and (iii) all other monetary Obligations then due.

Upon payment in full by the Company of any Obligation, each Lender shall, in a reasonable manner, assign the amount of such Obligation owed to it and so paid by the Company, such assignment to be pro tanto to the extent to which the Obligation in question was discharged by the Company, or make such disposition thereof as the Company shall direct (all without recourse to any Secured Party and without any representation or warranty by any Secured Party).

Upon payment by the Company of any sums as provided above, all rights of the Company against any Borrowing Subsidiary arising as a result thereof by way of right of subrogation or otherwise shall in all respects be subordinated and junior in right of payment to the prior indefeasible payment in full of all the Obligations owed by such Borrowing Subsidiary to the Secured Parties.

Nothing shall discharge or satisfy the liability of the Company hereunder except the full performance and payment of the Obligations.

Each reference herein to any Secured Party shall be deemed to include their or its successors and assigns, in whose favor the provisions of this Guarantee shall also inure.

ARTICLE X

Miscellaneous

SECTION 10.01. Notices. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a) if to the Company or any Borrowing Subsidiary, to the Company at 4000 Metropolitan Drive, Orange, CA 92868, Attention of Chief Financial Officer (Telecopy No. (714) 978-7415);

(b) if to the Administrative Agent, the Swingline Lender or The Chase Manhattan Bank, in its capacity as Collateral Agent, the Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Anne Bowles (Telecopy No. (212) 552-7500), with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention of Dawn Lee Lum (Telecopy No. (212) 270-3279);

(c) if to The Chase Manhattan Bank (Delaware), in its capacity as Issuing Bank, to it at The Chase Manhattan Bank (Delaware), 1201 Market Street, Wilmington, DE, 19801, Attention of Michael Handago (Telecopy No. (302) 428-3390);

(d) if CIT Financial Group, in its capacity as Collateral Agent, to CIT Financial Group,
[ ] (Telecopy No. ( )[ ]); and

(e) if to any other Issuing Bank or Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

SECTION 10.02. Waivers; Amendments. (a) No failure or delay by any Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agents, the Issuing Banks and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time.

(b) Neither this Agreement nor any Borrowing Subsidiary Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Company and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the maturity of any Loan, or any scheduled date of payment of the principal amount of any Term Loan under Section 2.10, or the required date of reimbursement of any LC Disbursement, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.18(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section or the percentage set forth in the definition of "Required Lenders" or "Supermajority Lenders" or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vi) release the Company or any Subsidiary Loan Party from its Guarantee hereunder or under the Guarantee Agreement (except as expressly provided in the Guarantee Agreement), or limit its liability in respect of such Guarantee, without the written consent of each Lender, (vii) release all or substantially all the Collateral from the Liens of the Security Documents, without the written consent of each Lender, (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments or prepayments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each affected Class or (ix) change the rights of the Tranche B Lenders to decline mandatory prepayments as provided in Section 2.11 without the written consent of Tranche B Lenders holding a majority of the outstanding Tranche B Loans; provided further that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, the Issuing Banks or the Swingline Lender without the prior written consent of the Administrative Agent, the Collateral Agent, each Issuing Bank or the Swingline Lender, as the case may be, and (B) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Revolving Lenders (but not the Tranche A Lenders, Tranche B Lenders or Interim Term Lenders), the Tranche A Lenders (but not the Revolving Lenders, Tranche B Lenders or Interim Term Lenders), the Tranche B Lenders (but not the Revolving Lenders, Tranche A Lenders or Interim Term Lenders) or the Interim Term Lenders (but not the Revolving Lenders, the Tranche A Lenders or the Tranche B Lenders) may be effected by an agreement or agreements in writing entered into by the Company and the requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Company, the Required Lenders and the Administrative Agent (and, if their rights or obligations are affected thereby, the Collateral Agent, the Issuing Banks and the Swingline Lender) if (i) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment and (ii) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal of and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement.

SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Company shall pay (i) all reasonable out-of-pocket expenses incurred by the Agents and their Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the monitoring and evaluation of the Borrowing Base and the Borrowing Base items, the preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Banks in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by any Agent, any Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for such Agent, any Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) The Company shall indemnify each Agent, each Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any other agreement or instrument contemplated hereby, the performance by the parties to the Loan Documents of their respective obligations thereunder, the monitoring and evaluation of the Borrowing Base and Borrowing Base items or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by an Issuing Bank 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), (iii) any actual or alleged presence or release of Hazardous Materials on or from any Mortgaged Property or any other property currently or formerly owned or operated by the Company or any of the Subsidiaries, or any Environmental Liability related in any way to the Company or any of the Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee and provided further that the Company, in connection with any indemnified matter, shall only be required to pay the fees and expenses of joint counsel engaged to represent all Indemnitees, except to the extent that the use of joint counsel could reasonably be expected to give rise to any conflict of interest for any such counsel or any Indemnitee shall have determined that it may have legal defenses available to it that are different from, additional to or in conflict with those available to any other Indemnitee.

(c) To the extent that the Company fails to pay any amount required to be paid by it to an Agent, an Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to such Agent, such Issuing Bank or the Swingline Lender, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against such Agent, such Issuing Bank or the Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at the time.

(d) To the extent permitted by applicable law, neither the Company nor any Borrowing Subsidiary shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

(e) All amounts due under this Section shall be payable promptly after written demand therefor.

SECTION 10.04. 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 (including any Affiliate of any Issuing Bank that issues any Letter of Credit), except that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder or under any Borrowing Subsidiary Agreement without the prior written consent of each Lender (and any attempted assignment or transfer by any Borrower without such consent 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 (including any Affiliate of any Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or Related Fund of a Lender, each of the Company and the Administrative Agent (and, in the case of an assignment of all or a portion of a Revolving Commitment or any Lender's obligations in respect of its LC Exposure or Swingline Exposure, each Issuing Bank and the Swingline Lender) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld), (ii) except in the case of an assignment to a Lender, an Affiliate of a Lender, or a Related Fund of a Lender, or an assignment of the entire remaining amount of the assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 in the case of an assignment of Tranche B Loans or $5,000,000 in the case of an assignment of other Loans or Commitments, unless each of the Company and the Administrative Agent otherwise consent, (iii) 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, except that this clause (iii) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender's rights and obligations in respect of one Class of Commitments or Loans, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and provided further that any consent of the Company otherwise required under this paragraph shall not be required if an Event of Default under clause (h) or (i) of Article VII has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, 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 Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance 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 2.15, 2.16, 2.17 and 10.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph 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 paragraph (e) of this Section.

(c) The Administrative Agent, acting for this purpose as an agent of the Company, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements 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 Company, the Agents, the Issuing Banks 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 any Borrower, any Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(e) Any Lender may, without the consent of the Company, the Administrative Agent, the Issuing Banks or the Swingline Lender, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the 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 Company, the Agents, the Issuing Banks 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 the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 10.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Company agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as though it were a Lender.

(f) A Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.17 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 Company'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 2.17 unless the Company is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Company, to comply with Section 2.17(e) as though it were a Lender.

(g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(h) Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Bank") may grant to a special purpose funding vehicle (an "SPC") of such Granting Bank, identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Borrowers, the option to provide to the Borrowers all or any part of any Loan that such Granting Bank would otherwise be obligated to make to the Borrowers pursuant to Section 2.01, provided that (i) nothing herein shall constitute a commitment to make any Loan by any SPC, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Bank shall be obligated to make such Loan pursuant to the terms hereof, (iii) all amounts payable by the Borrowers to any SPC hereunder in respect of any Loan and the applicability of the cost protection provisions contained in Section 2.15, 2.16 and 2.17 shall be determined as if the Granting Lender had made such Loan and (iv) any notices given by the Agents, the Borrowers and the other Lenders with respect to any Loan provided by an SPC may be given to the Granting Lender and the Granting Lender shall have the authority to act on behalf of the SPC with respect to such Loans and/or notices. The making of a Loan by an SPC hereunder shall be deemed to utilize the Commitment of the, Granting Bank to the same extent, and as if, such Loan were made by the Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any payment under this Agreement for which a Lender would otherwise be liable, for so long as, and to the extent, the related Granting Bank makes such payment. In furtherance of the foregoing, each party hereto hereby agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or similar proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 10.04, any SPC may assign all or a portion of its interests in any Loans to its Granting Bank or to any financial institutions providing liquidity and/or credit facilities to or for the account of such SPC to fund the Loans made by such SPC or to support the securities (if any) issued by such SPC to fund such Loans.

SECTION 10.05. Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that any Agent, any Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 10.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 10.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 10.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of any Borrower against any of and all the obligations of the Borrowers now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b) Each Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Borrower or its properties in the courts of any jurisdiction.

(c) Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it 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 other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 10.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 10.12. Confidentiality. Each of the Agents, the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as defined below), and will not use such confidential Information for any purpose or in any matter except in connection with this Agreement, 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 (it being understood that it will to the extent reasonably practicable provide the Company with an opportunity to request confidential treatment from such regulatory authority), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, 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 any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Company or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or any other confidentiality agreement to which it is party with the Company or any Subsidiary or (ii) becomes available to any Agent, any Issuing Bank or any Lender on a nonconfidential basis from a source other than a Borrower. For the purposes of this Section, "Information" means all information received from the Borrowers relating to the Borrowers or their businesses, other than any such information that is available to any Agent, any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by any Borrower; provided that, in the case of information received from a Borrower 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.

SECTION 10.13. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

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

BERGEN BRUNSWIG CORPORATION,

by

Name:

Title:

BERGEN BRUNSWIG DRUG COMPANY,

by

Name:

Title:

PHARMERICA, INC.,

by

Name:

Title:

THE CHASE MANHATTAN BANK, individually and as Administrative Agent, Collateral Agent, Issuing Bank and Swingline Lender,

by

Name:

Title:

[OTHER BANKS],

by

Name:

Title:

EX-10.B 3 AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT EXHIBIT 10(b) AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT

Exhibit 10(b)

Amended and Restated Receivables Sale Agreement

Dated as of February 29, 2000

among

Blue Hill, Inc.,
as the Seller,

Bergen Brunswig Drug Company,
as the Initial Collection Agent,

Wachovia Bank, N.A.,
as the Agent and as
the Blue Ridge Purchaser Agent,

The Bank of Nova Scotia, as the
Liberty Street Purchaser Agent,

General Electric Capital Corporation, as
the GECC Purchaser Agent

The Related Bank Purchasers
from time to time party hereto,

Blue Ridge Asset Funding Corporation,
as a Conduit Purchaser,

Liberty Street Funding Corp.,
as a Conduit Purchaser,

General Electric Capital Corporation,
as a Conduit Purchaser

and

the other Conduit Purchasers
from time to time party hereto

Table of Contents

			Page

ARTICLE I		Purchases from Seller and Settlements ................................................	1

	Section 1.1.	Sales....................................................... ...........................................	1
	Section 1.2.	Interim Liquidations ...........................................................................	3
	Section 1.3.	Selection of Discount Rates and Tranche Periods for each Purchaser Group ....................................................................... ........................	4
	Section 1.4.	Fees and Other Costs and Expenses ...................................................	5
	Section 1.5. 5	Maintenance of Sold Interest; Deemed Collection ...............................	5
	Section 1.6.	Reduction in Commitments .................................................................	6
	Section 1.7.	Optional Repurchases ........................................................................	6
	Section 1.8.	Assignment of Purchase Agreement and Seller Collateral ....................	7

ARTICLE II		Sales to and from Conduit Purchasers; Allocations .............................	7

	Section 2.1.	Purchases from a Conduit Purchaser ..................................................	7
	Section 2.2.	Purchases by a Conduit Purchaser .....................................................	8
	Section 2.3.	Allocations and Distributions ..............................................................	8

Article III		Administration and Collections ...........................................................	9

	Section 3.1.	Appointment of Collection Agent .......................................................	9
	Section 3.2.	Duties of Collection Agent .................................................................	10
	Section 3.3.	Reports ..................................................................... ........................	11
	Section 3.4.	Lock-Box and Depositary Account Arrangements ..............................	11
	Section 3.5.	Enforcement Rights ............................................................................	12
	Section 3.6.	Collection Agent Fee .........................................................................	12
	Section 3.7.	Responsibilities of the Seller ...............................................................	13
	Section 3.8.	Actions by Seller ...............................................................................	13
	Section 3.9.	Indemnities by the Collection Agent ...................................................	13

Article IV		Representations and Warranties .........................................................	14

	Section 4.1.	Representations and Warranties of the Seller ......................................	14
	Section 4.2.	Representations and Warranties of the Collection Agent .....................	18

Article V		Covenants ........................................................................................	19

	Section 5.1.	Covenants of the Seller .....................................................................	19

Article VI		Indemnification ................................................................................	25

	Section 6.1.	Indemnities by the Seller ..................................................................	25
	Section 6.2.	Increased Cost and Reduced Return ...............................................	26
	Section 6.3.	Other Costs and Expenses ..............................................................	27
	Section 6.4.	Withholding Taxes ..........................................................................	28
	Section 6.5.	Payments and Allocations ...............................................................	28

Article VII		Conditions Precedent .....................................................................	29

	Section 7.1.	Conditions to Closing .....................................................................	29
	Section 7.2.	Conditions to Each Purchase ..........................................................	30

Article VIII		The Agent ......................................................................................	30

	Section 8.1.	Appointment and Authorization ......................................................	30
	Section 8.2.	Delegation of Duties ......................................................................	31
	Section 8.3.	Exculpatory Provisions ..................................................................	31
	Section 8.4.	Reliance by Agent .........................................................................	32
	Section 8.5.	Assumed Payments .......................................................................	33
	Section 8.6.	Notice of Termination Events ........................................................	33
	Section 8.7.	Non-Reliance on Agent, Purchaser Agents and Other Purchasers...	33
	Section 8.8.	Agent and Affiliates .......................................................................	34
	Section 8.9.	Indemnification ..............................................................................	34
	Section 8.10.	Successor Agent ............................................................................	34

Article IX		Miscellaneous ...............................................................................	34

	Section 9.1.	Termination ..................................................................................	34
	Section 9.2.	Notices ........................................................................................	35
	Section 9.3.	Payments and Computations .........................................................	35
	Section 9.4.	Sharing of Recoveries ...................................................................	36
	Section 9.5.	Right of Setoff ..............................................................................	36
	Section 9.6.	Amendments ................................................................................	36
	Section 9.7.	Waivers .......................................................................................	37
	Section 9.8.	Successors and Assigns; Participations; Assignments .....................	37
	Section 9.9.	Intended Tax Characterization ......................................................	39
	Section 9.10.	Confidentiality ..............................................................................	39
	Section 9.11.	Agreement Not to Petition ............................................................	40
	Section 9.12.	Excess Funds ...............................................................................	40
	Section 9.13.	No Recourse ...............................................................................	40
	Section 9.14.	Headings; Counterparts ................................................................	40
	Section 9.15.	Cumulative Rights and Severability ...............................................	41
	Section 9.16.	Governing Law; Submission to Jurisdiction ...................................	41
	Section 9.17.	WAIVER OF TRIAL BY JURY .................................................	41
	Section 9.18.	Entire Agreement .........................................................................	41

Schedules	Description

Schedule I	Definitions

Schedule II	Related Bank Purchasers and Purchase Commitments of Related Bank Purchasers and Purchaser Groups


Exhibits	Description

Exhibit A	Form of Incremental Purchase Request
Exhibit B	Form of Notification of Assignment from a Conduit Purchaser to the Related Bank Purchasers
Exhibit C	Form of Periodic Report
Exhibit D	Addresses and Names of Seller and Originator; Capital Structure of Seller
Exhibit E	Subsidiaries
Exhibit F	Lock-Boxes, Lock-Box Banks and Depositary Banks
Exhibit G-1	Form of Lock-Box Letter
Exhibit G-2	Form of Depositary Account Letter
Exhibit H	Compliance Certificate
Exhibit I	Credit and Collection Policy

Amended and Restated
Receivables Sale Agreement

Amended and Restated Receivables Sale Agreement, dated as of February 29, 2000 (this "Agreement"), among Blue Hill, Inc., a Delaware corporation, as Seller (the "Seller"), Bergen Brunswig Drug Company, a California corporation, as initial Collection Agent (the "Initial Collection Agent," and, together with any successor thereto, the "Collection Agent"), Wachovia Bank, N.A. as the Blue Ridge Purchaser Agent and as administrative agent for the Purchasers (the "Agent"), The Bank of Nova Scotia, as the Liberty Street Purchaser Agent, General Electric Capital Corporation, as the GECC Purchaser Agent, the Related Bank Purchasers from time to time party hereto, Blue Ridge Asset Funding Corporation, as a Conduit Purchaser ("Blue Ridge"), Liberty Street Funding Corp., as a Conduit Purchaser ("Liberty Street"), General Electric Capital Corporation, as a Conduit Purchaser ("GECC") and the other Conduit Purchasers from time to time party hereto. Certain capitalized terms used herein, and certain rules of construction, are defined in Schedule I. The Related Bank Purchasers and their Commitments are listed on Schedule II.

The parties hereto agree to amend and restate the Receivables Sale Agreement dated as of December 17, 1999 by and among the Seller, the Initial Collection Agent, the Agent, and the Purchasers, as amended, as follows:

Article I
Purchases from Seller and Settlements

Section 1.1. Sales.

(a) The Sold Interest. Subject to the terms and conditions hereof, the Seller may, from time to time before the Termination Date, request that the Conduit Purchasers (or, only if a Conduit Purchaser denies such request or is unable to fund, ratably request that the Related Bank Purchasers) make purchases of an undivided percentage ownership interest in the Receivables, the Related Security and all related Collections. Upon any such request, subject to the terms and conditions of this Agreement, the Conduit Purchasers may, in their sole discretion, purchase such interest, or, if any such Conduit Purchaser decides not to purchase such interest, the Related Bank Purchasers for such Conduit Purchaser shall purchase such interest. Such interest shall be transferred to the Agent, on behalf of each Purchaser Agent as representative of the applicable Conduit Purchaser or Related Bank Purchaser, as the case may be. Any such purchase (a "Purchase") shall be made by each relevant Purchaser remitting funds to the Seller pursuant to Section 1.1(c) or by the Collection Agent remitting Collections to the Seller pursuant to Section 1.1(d). The Purchase Interest shall equal at any time the following quotient:

I + PRP

NRB

where:

I = the outstanding Investment of such Purchaser at such time;

NRB = the Net Receivables Balance at such time; and

PRP = the Purchaser Reserve Percentage at such time.

Except during a Liquidation Period for a Purchaser, such Purchaser's Purchase Interest will change whenever its Investment, its Purchaser Reserve Percentage or the Net Receivables Balance changes. During a Liquidation Period for a Purchaser its Purchase Interest shall remain constant, except for redeterminations to reflect Investment acquired from or transferred to a Purchaser under Article II or pursuant to a Transfer Agreement. The sum of all Purchasers' Purchase Interests at any time is referred to herein as the "Sold Interest", which at any time is the aggregate percentage ownership interest then held by the Purchasers in the Receivables, the Related Security and Collections.

(b) Conduit Purchaser Purchase Option and Committed Purchaser Commitments. Subject to Section 1.1(d) concerning Reinvestment Purchases, at no time will a Conduit Purchaser have any obligation to make a Purchase. Each Related Bank Purchaser severally hereby agrees, subject to Section 7.2 and the other terms and conditions hereof, to make Purchases before the Termination Date, based on the applicable Purchaser Group's Ratable Share of each Purchase (and, in the case of each Related Bank Purchaser, its Commitment Percentage of its Purchaser Group's Ratable Share of such Purchase), to the extent its Investment would not thereby exceed its Commitment, the Aggregate Investment would not thereby exceed the Purchase Limit, and the Matured Aggregate Investment would not thereby exceed the Aggregate Commitments. Each Purchaser's first Purchase and each additional Purchase by such Purchaser not made from Collections pursuant to Section 1.1(d) is referred to herein as an "Incremental Purchase." Each Purchase made by a Purchaser with the proceeds of Collections in which it has a Purchase Interest, which does not increase the outstanding Investment of such Purchaser, is referred to herein as a "Reinvestment Purchase." All Purchases hereunder shall be made ratably by such Purchaser Group in accordance with the Commitment of such Purchaser Group.

(c) Incremental Purchases. In order to request an Incremental Purchase from a Purchaser, the Seller must provide to the Agent and each Purchaser Agent an irrevocable written request (including by telecopier or other facsimile communication) substantially in the form of Exhibit A, by 11:00 a.m. (Atlanta time) two Business Days before the requested date (the "Purchase Date") of such Purchase, specifying the requested Purchase Date (which must be a Business Day) and the requested amount of such Purchase, which must be in a minimum amount of $500,000 and multiples thereof (or, if less, an amount equal to the Maximum Incremental Purchase Amount). All Incremental Purchases may only be requested ratably from the Conduit Purchasers in each Purchaser Group unless, a Conduit Purchaser, in its sole discretion, determines not to make its Ratable Share of such Incremental Purchase (which determination shall be made within one Business Day after the Seller's request for an Incremental Purchase), in which case the Seller shall request such Incremental Purchase from the Related Bank Purchasers for such Conduit Purchaser. Each Purchaser Agent shall promptly notify the related Purchasers from which a Purchase is requested of the contents of such request. If the Ratable Share of an Incremental Purchase is requested from a Conduit Purchaser, unless such Conduit Purchaser or its Purchaser Agent has notified the Agent, in accordance with this Section 1.1(c), that it has determined, in its sole discretion, not to make the requested Purchase, such Conduit Purchaser shall transfer to the Seller's Account its Ratable Share amount of such Incremental Purchase by no later than 1:00 p.m. (Atlanta time) on the Purchase Date. If a Conduit Purchaser or its Purchaser Agent has notified the Agent that it refuses to make a requested Purchase and the Seller requests the Incremental Purchase from the Related Bank Purchasers for such Conduit Purchaser three Business Days before such requested Purchase, subject to Section 7.2 and the other terms and conditions hereof, each such Related Bank Purchaser shall transfer its Commitment Percentage of its Purchaser Group's Ratable Share of such Purchase into the Seller's Account by no later than 1:00 p.m. (Atlanta time) on the Purchase Date (which in no event will be earlier than three Business Days after such request is made to the Committed Purchasers).

(d) Reinvestment Purchases. On each day before the Termination Date that any Collections are received by the Collection Agent and no Interim Liquidation is in effect, a Purchaser's Purchase Interest in such Collections shall automatically be used to make a Reinvestment Purchase by such Purchaser. In addition, Redwood may cease making Reinvestment Purchases at any time; provided, however, that, subject to the terms and conditions hereof, GECC shall make all Reinvestment Purchases that Redwood elects not to make. In addition, Redwood may assign any of its outstanding Investment and related Conduit Purchaser Settlement to GECC at any time and upon such assignment such Investment and related Conduit Purchaser Settlement shall be part of GECC's Investment and related Conduit Purchaser Settlement for all purposes hereof.

(e) Security Interest. To secure all of the Seller's obligations under the Transaction Documents, the Seller hereby grants to the Agent (for the benefit of the Purchasers and any other Person to whom any amount is owed hereunder) a security interest in all of the Seller's rights (if any) in the Receivables, the Related Security, the Transaction Documents, the Collections, the Depositary Accounts, and the Lock-Box Accounts and all proceeds of the foregoing (the "Seller Collateral").

Section 1.2. Interim Liquidations.

(a) Optional. The Seller may at any time direct that Reinvestment Purchases cease and that an Interim Liquidation commence for all Purchasers by giving the Agent, each Purchaser Agent and the Collection Agent at least three Business Days' prior written (including telecopy or other facsimile communication) notice specifying the date on which the Interim Liquidation shall commence and, if desired, when such Interim Liquidation shall cease (identified as a specific date prior to the Termination Date or as when the Aggregate Investment is reduced to a specified amount). If the Seller does not so specify the date on which an Interim Liquidation shall cease, it may cause such Interim Liquidation to cease at any time before the Termination Date, subject to Section 1.2(b) below, by notifying the Agent, each Purchaser Agent and the Collection Agent in writing (including by telecopy or other facsimile communication) at least three Business Days before the date on which it desires such Interim Liquidation to cease.

(b) Mandatory. If at any time before the Termination Date any condition in Section 7.2 is not fulfilled, the Seller shall immediately notify the Agent, each Purchaser Agent and the Collection Agent, whereupon Reinvestment Purchases shall cease and an Interim Liquidation shall commence, which shall cease only upon the Seller providing evidence reasonably satisfactory to the Agent that the conditions in Section 7.2 are fulfilled.

Section 1.3. Selection of Discount Rates and Tranche Periods for each Purchaser Group.

(a) Blue Ridge. All Investment of Blue Ridge shall be allocated to one or more Tranche Periods reflecting the Discount Rates at which such Investment accrues Discount and the Tranche Periods for which such Discount Rates apply selected by the Blue Ridge Purchaser Agent as provided below. All Investment of Blue Ridge shall accrue Discount at the CP Rate applicable to Blue Ridge. All CP Discount accrued during a Tranche Period on the Investment of Blue Ridge shall be payable by the Seller on the last day of such Tranche Period.

(b) Other Conduit Purchasers. The Investment of the Conduit Purchasers other than Blue Ridge shall be allocated to one or more Tranches reflecting the Discount Rates at which such Investment accrues Discount and the Tranche Periods for which such Discount Rates apply selected by the Purchaser Agent for such Conduit Purchaser as provided below. The Investment of the Conduit Purchasers may accrue Discount at either the CP Rate, the Eurodollar Rate or the Prime Rate, in all cases as established for each Tranche Period applicable to such Investment. During the pendency of a Termination Event, the applicable Purchaser Agent may reallocate any oustanding investment of the related Conduit Purchaser to a Prime Tranche. All Discount accrued during a Tranche Period for such Conduit Purchasers shall be payable on the related Settlement Date.

(c) Committed Purchasers. The Investment of the Committed Purchasers shall be allocated to one or more Tranches reflecting the Discount Rates at which such Investment accrues Discount and the Tranche Periods for which such Discount Rates apply selected by the Purchaser Agent for such Committed Purchaser as provided below. The Investment of the Committed Purchasers may accrue Discount at either the Eurodollar Rate or the Prime Rate, in all cases as established for such Tranche Period applicable to such Investment. During the pendence of a Termination Event, the applicable Purchaser Agent may reallocate any portion of the outstanding Investment of the related Committed Purchasers to a Prime Tranche. All Discount accrued on the Investment of the Committed Purchasers during a Tranche Period shall be payable by the Seller on the related Settlement Date or, for a Eurodollar Tranche with a Tranche Period of more than three months, 90 days after the commencement, and on the related Settlement Date.

(d) The relevant Purchaser Agent shall allocate the Investment of the related Conduit Purchaser and Committed Purchaser to Tranche Periods in its sole discretion. Any Investment purchased from a Conduit Purchaser pursuant to the relevant Transfer Agreement shall accrue interest at the Prime Rate and have an initial Tranche Period of three Business Days.

(e) If any Committed Purchaser determines (i) that maintenance of any Eurodollar Tranche would violate any applicable law or regulation, (ii) that deposits of a type and maturity appropriate to match fund any of such Committed Purchaser's Eurodollar Tranches are not available or (iii) that the maintenance of any Eurodollar Tranche will not adequately and fairly reflect the cost of such Purchaser of funding Eurodollar Tranches, then the applicable Purchaser Agent, upon the direction of such Committed Purchaser, shall suspend the availability of, and terminate any outstanding, Eurodollar Tranche so affected. All Investment allocated to any such terminated Eurodollar Tranche shall be reallocated to a Prime Tranche.

Section 1.4. Fees and Other Costs and Expenses. (a) Each Purchaser Agent shall receive from the Seller for the ratable benefit of its Purchaser Group such amounts as agreed to with the Purchaser in the Fee Letter for such Purchaser Group.

(b If (i) with respect to any Investment of any Purchaser Group, the amount of such Purchaser Group's Investment is reduced on any date other than the last day of a CP Tranche, (ii) the amount of Investment allocated to any Eurodollar Tranche is reduced before the last day of its Tranche Period or (iii) if a requested Incremental Purchase at the Eurodollar Rate does not take place on its scheduled Purchase Date, the Seller shall pay the Early Payment Fee to each Purchaser in the applicable Purchaser Group that had its Investment so reduced or scheduled Purchase not made; provided, however, no Early Payment Fee will be due by the Seller if the amount of Investment allocated to any Eurodollar Tranche is reduced before the last day of its Tranche Period pursuant to Section 1.3(e)(iii) hereof.

(c) Investment shall be payable solely from Collections and from amounts payable under Sections 1.5, 1.7 and 6.1 (to the extent amounts paid under Section 6.1 indemnify against reductions in or non-payment of Receivables). The Seller shall pay, as a full recourse obligation, all amounts payable pursuant to Sections 1.5, 1.7 and 6.1 and all other amounts payable hereunder and under the Fee Letter, including all Discount, fees described in clauses (a) and (b) above and amounts payable under Article VI.

Section 1.5. Maintenance of Sold Interest; Deemed Collection.

(a) General. If the Net Receivables Balance is less than the sum of the Aggregate Investment (or, if a Termination Event exists, the Matured Aggregate Investment) plus the Aggregate Reserve, the Seller shall pay to the Agent no later than the second Business Day after delivery of the Periodic Report disclosing such imbalance on the next succeeding Settlement Date following such imbalance an amount equal to such deficiency for application to reduce the Investments of the Purchasers ratably in accordance with the principal amount of their respective Investments, applied first to Prime Tranches and second to the other Tranches with the shortest remaining maturities unless otherwise specified by the Seller. Any amount so applied to reduce a Conduit Purchaser's Investment shall be deposited into an account designated by the Purchaser Agent for the relevant Purchaser Group.

(b) Deemed Collections. If on any day the outstanding balance of a Receivable is reduced or cancelled as a result of any defective or rejected goods or services, any cash discount or adjustment (including any adjustment resulting from the application of any special refund or other discounts or any reconciliation), any setoff or credit (whether such claim or credit arises out of the same, a related, or an unrelated transaction) or other similar reason not arising from the financial inability of the Obligor to pay undisputed indebtedness, the Seller shall be deemed to have received on such day a Collection on such Receivable in the amount of such reduction or cancellation and the remaining balance, if any, of such Receivable shall continue to be an Eligible Receivable. If on any day any representation, warranty, covenant or other agreement of the Seller related to a Receivable is not true or is not satisfied or a Receivable designated as an Eligible Receivable in a Periodic Report does not constitute an Eligible Receivable as of the date of such Periodic Report, the Seller shall be deemed to have received on such day a Collection in the amount of the outstanding balance of such Receivable. All such Collections deemed received by the Seller under this Section 1.5(b) shall be remitted by the Seller on the next succeeding Settlement Date to the Collection Agent in accordance with Section 5.1(i).

(c) Adjustment to Sold Interest. At any time before the Termination Date that the Seller is deemed to have received any Collection under Section 1.5(b) ("Deemed Collections") that derive from a Receivable that is otherwise reported as an Eligible Receivable, so long as no Liquidation Period then exists (unless such Liquidation Period only applies to a Conduit Purchaser pursuant to Section 1.1(d) hereof), the Seller may satisfy its obligation to deliver such amount to the Collection Agent by instead notifying the Agent and the Purchaser Agents that the Sold Interest and each Purchase Interest should be recalculated by decreasing the Net Receivables Balance by the amount of such Deemed Collections, so long as such adjustment does not cause the Sold Interest to exceed 100%.

(d) Payment Assumption. Unless an Obligor otherwise specifies or another application is required by contract or law, any payment received by the Seller from any Obligor in respect of any Receivable shall be applied as a Collection of Receivables of such Obligor (starting with the oldest such Receivable) and remitted to the Collection Agent as such.

Section 1.6. Reduction in Commitments. The Seller may, upon thirty days' notice to the Agent and each Purchaser Agent, reduce the Aggregate Commitment in increments of $1,000,000, so long as the Aggregate Commitment as so reduced equals at least the outstanding Matured Aggregate Investment. Each such reduction in the Aggregate Commitment shall reduce the Commitment of each Committed Purchaser in accordance with its Ratable Share and shall ratably reduce the Purchase Limit so that the Aggregate Commitment remains at least 102% of the Purchase Limit, the Aggregate Commitment of the GECC Purchaser Group is at least 103% of the aggregate Investment of the GECC Purchaser Group and the Purchase Limit is not less than the outstanding Aggregate Investment.

Section 1.7. Optional Repurchases. At any time that the Aggregate Investment is less than 10% of the Aggregate Commitment in effect on the date hereof, the Seller may, upon thirty days' notice to the Agent and each Purchaser Agent, repurchase the entire Sold Interest from the Purchasers at a price equal to the outstanding Matured Aggregate Investment and all other amounts then owed hereunder. Upon the payment of the repurchase price pursuant to this Section, the Agent and each Purchaser Agent shall execute and deliver all documents and instruments reasonably requested by the Seller in order to evidence the release of the Sold Interest. Any sale pursuant to this Section shall be without recourse, representation or warranty except for the representation and warranty that the portion of the Sold Interest sold by each Purchaser is free and clear of any Adverse Claim created or granted by, or attributable to, such Purchaser.

Section 1.8. Assignment of Purchase Agreement and Seller Collateral. The Seller hereby assigns and otherwise transfers to the Agent (for the benefit of the Agent, each Purchaser Agent, each Purchaser and any other Person to whom any amount is owed hereunder), all of the Seller's right, title and interest in, to and under the Purchase Agreement. The Seller shall execute, file and record all financing statements, continuation statements and other documents required to perfect or protect such assignment. This assignment includes (a) all monies due and to become due to the Seller from the Originator under or in connection with the Purchase Agreement (including fees, expenses, costs, indemnities and damages for the breach of any obligation or representation related to such agreement) and (b) all rights, remedies, powers, privileges and claims of the Seller against the Originator under or in connection with the Purchase Agreement. All provisions of the Purchase Agreement shall inure to the benefit of, and may be relied upon by, the Agent, each Purchaser Agent, each Purchaser and each such other Person. At any time that a Termination Event has occurred and is continuing, the Agent, on behalf of the Purchaser Agents and the Purchasers, shall have the sole right to enforce the Seller's rights and remedies under the Purchase Agreement to the same extent as the Seller could absent this assignment, but without any obligation on the part of the Agent, any Purchaser Agent, any Purchaser or any other such Person to perform any of the obligations of the Seller under the Purchase Agreement (or the promissory note executed thereunder). All amounts distributed to the Seller under the Purchase Agreement from Receivables sold to the Seller thereunder shall constitute Collections hereunder and shall be applied in accordance herewith. At such time as Redwood is a Conduit Purchaser hereunder, Redwood may assign its interests in the Seller Collateral to one or more members of its Purchaser Group.

Article II
Sales to and from Conduit Purchasers; Allocations

Section 2.1. Purchases from a Conduit Purchaser. (a) Each Conduit Purchaser may, at any time, sell to the relevant Related Bank Purchasers pursuant to the relevant Transfer Agreement any percentage designated by such Conduit Purchaser of such Conduit Purchaser Investment and its related Conduit Purchaser Settlement (each, a "Put").

(b) Any portion of any Investment of a Conduit Purchaser and related Conduit Purchaser Settlement purchased by a Related Bank Purchaser shall be considered part of such Related Bank Purchaser's Investment and related Conduit Purchaser Settlement from the date of the relevant Put. At the end of each applicable Tranche Period following any purchase by a Related Bank Purchaser of any portion of the relevant Conduit Purchaser Investment of the relevant Conduit Purchaser, the Seller shall pay to the relevant Purchaser Agent (for the ratable benefit of each such Purchaser) an amount equal to a portion of the sum of (i) the Assigned Conduit Purchaser Settlement and (ii) all unpaid Discount owed to such Conduit Purchaser (whether or not then due) to the end of each applicable Tranche Period to which any Investment being Put has been allocated, (iii) all accrued but unpaid fees (whether or not then due) payable to such Conduit Purchaser in connection herewith at the time of such purchase and (iv) all accrued and unpaid costs, expenses and indemnities due to such Conduit Purchaser from the Seller in connection herewith, which portion shall be calculated by dividing the amount of Investment allocated to the applicable Tranche Period by the total amount of Investment purchased.

(c) The proceeds from each Put received by a Conduit Purchaser other than a member of the GECC Purchaser Group (other than amounts described in clauses (iii) and (iv) of the preceding sentence) shall be used solely to pay that portion of the outstanding commercial paper of the relevant Conduit Purchaser issued to fund or maintain the Investment of such Conduit Purchaser so transferred. Until used to pay commercial paper, all proceeds of any Put pursuant to this Section shall be invested in Permitted Investments. All earnings on such Permitted Investments shall be promptly remitted to the Seller.

Section 2.2. Purchases by a Conduit Purchaser. Each Conduit Purchaser may at any time deliver to its Purchaser Agent and each relevant Related Bank Purchaser a notification of assignment in substantially the form required by the relevant Transfer Agreement. If a Conduit Purchaser delivers such notice, each Related Bank Purchaser which is a party to the Transfer Agreement with the Conduit Purchaser shall sell to such Conduit Purchaser and such Conduit Purchaser shall purchase in full from each such Related Bank Purchaser, the Investment of the Related Bank Purchasers on the last day of the relevant Tranche Periods, at a purchase price equal to such Investment plus accrued and unpaid Discount thereon. Any sale from any Related Bank Purchaser to the relevant Conduit Purchaser pursuant to this Section 2.2 shall be without recourse, representation or warranty except for the representation and warranty that the Investment sold by such Related Bank Purchaser is free and clear of any Adverse Claim created or granted by such Related Bank Purchaser and that such Related Bank Purchaser has not suffered a Bankruptcy Event.

Section 2.3. Allocations and Distributions. On each day during any Interim Liquidation and on each day on and after the Termination Date the Collection Agent shall set aside and hold solely for the account of each Purchaser Agent, for the benefit of each Purchaser Group to the extent provided below, (or deliver to each Purchaser Agent, if so instructed pursuant to Section 3.2(a)) and for the account of the Agent, all Collections received on such day and such Collections shall be allocated as follows:

(i) first, ratably to each Purchaser Group in accordance with its Ratable Share until all Discount due but not already paid to each Purchaser Group under the Transaction Documents, has been paid in full; and

(ii) second, ratably to each Purchaser Group in accordance with its Ratable Share until all Investment of each Purchaser Group under the Transaction Documents has been paid in full; and

(iii) third, ratably to each Purchaser Group until all amounts owed under the Transaction Documents to such Purchaser Group have been paid in full.

(iv) fourth, to the Agent until all amounts owed under the Transaction Documents to the Agent (in its capacity as Agent) have been paid in full;

(v) fifth, to each Purchaser Agent until all amounts owed under the Transaction Documents to such Persons have been paid in full;

(vi) sixth, to any other Person to whom any amounts are owed under the Transaction Documents until all such amounts have been paid in full; and

(vii) seventh, to the Seller (or as otherwise required by applicable law).

Unless an Interim Liquidation has ended by such date (in which case Reinvestment Purchases shall resume to the extent provided in Section 1.1(d)), on the last day of each Tranche Period (unless otherwise instructed by a Purchaser Agent pursuant to Section 3.2(a)), the Collection Agent shall pay to the appropriate parties, from such set aside Collections, all amounts allocated to such Tranche Period and all Tranche Periods that ended before such date that are due in accordance with the priorities in clauses (i) and (ii) above. No distributions shall be made to pay amounts under clauses (iii), (iv), (v), and (vi) above until sufficient Collections have been set aside to pay all amounts described in clause (i) that may become payable for all outstanding Tranche Periods. As provided in Section 1.4(c) all interest and other amounts payable hereunder other than Investment are payable by the Seller. If any part of the Sold Interest in any Collections is applied to pay any such amounts pursuant to this Section 2.3 and after giving effect to such application the Sold Interest is greater than 100%, the Seller shall pay to the Collection Agent the amount so applied to the extent necessary so that after giving effect to such payment the Sold Interest is no greater than 100%, for distribution as part of the Sold Interest in Collections.

Article III
Administration and Collections

Section 3.1. Appointment of Collection Agent. (a) The servicing, administering and collecting of the Receivables shall be conducted by a Person (the "Collection Agent") designated to so act on behalf of the Purchasers under this Article III. As the Initial Collection Agent, Originator is hereby designated as, and agrees to perform the duties and obligations of, the Collection Agent. The Originator acknowledges that the Agent, each Purchaser Agent and each Purchaser have relied on the Originator's agreement to act as Collection Agent (and the agreement of any of the sub-collection agents to so act) in making the decision to execute and deliver this Agreement and agrees that it will not voluntarily resign as Collection Agent without 90 days prior written notice to the Agent and each Purchaser Agent nor permit any sub-collection agent to voluntarily resign as a sub-collection agent without 90 days prior written notice to the Agent and each Purchaser Agent. In addition, the Collection Agent may only voluntarily resign as a result of nonpayment of the Collection Agent Fee. At any time after the occurrence and during the continuance of a Collection Agent Replacement Event, the Agent, upon the direction of the Instructing Group, may designate a new Collection Agent to succeed the Originator (or any successor Collection Agent).

(b) The Originator may, and if requested by the Agent, upon the direction of the Instructing Group, shall, delegate its duties and obligations as Collection Agent to the Parent or other Affiliate (acting as a sub-collection agent). Notwithstanding such delegation, the Originator shall remain primarily liable for the performance of the duties and obligations so delegated, and the Agent, each Purchaser Agent and each Purchaser shall have the right to look solely to the Originator for such performance. The Agent (with the consent of the Instructing Group) may at any time after the occurrence and during the continuance of a Collection Agent Replacement Event remove or replace any sub-collection agent.

(c) If replaced, the Collection Agent agrees it will terminate, and will cause each existing sub-collection agent to terminate, its collection activities in a manner requested by the Agent to facilitate the transition to a new Collection Agent. The Collection Agent shall cooperate with and assist any new Collection Agent (including providing access to, and transferring, all Records and allowing (to the extent permitted by applicable law and contract) the new Collection Agent to use all licenses, hardware or software necessary or desirable to collect the Receivables). The Originator irrevocably agrees to act (if requested to do so) as the data-processing agent for any new Collection Agent in substantially the same manner as the Originator conducted such data-processing functions while it acted as the Collection Agent. Any new Collection Agent shall execute a confidentiality agreement consistent with the provisions of Section 9.10 hereof.

Section 3.2. Duties of Collection Agent. (a) The Collection Agent shall take, or cause to be taken, all action necessary or advisable to collect each Receivable in accordance with this Agreement, the Credit and Collection Policy and all applicable laws, rules and regulations using the skill and attention the Collection Agent exercises in collecting other receivables or obligations owed solely to it. The Collection Agent shall, in accordance herewith, set aside all Collections to which a Purchaser is entitled. If so instructed by the appropriate Purchaser Agent, after the occurrence and during the continuance of a Collection Agent Replacement Event or a Termination Event, the Collection Agent shall transfer to the appropriate Purchaser Agent the amount of Collections to which the appropriate Purchaser Group is entitled by the Business Day following receipt. Each party hereto hereby appoints the Collection Agent to enforce such Person's rights and interests in the Receivables, but (notwithstanding any other provision in any Transaction Document) the Agent, upon the direction of the Instructing Group, shall at all times after the occurrence and during the continuance of a Collection Agent Replacement Event or a Termination Event have the sole right to direct the Collection Agent to commence or settle any legal action to enforce collection of any Receivable.

(b) If no Termination Event exists and the Collection Agent determines that such action is appropriate in order to maximize the Collections, the Collection Agent may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the outstanding balance of any Receivable. Any such extension or adjustment shall not alter the status of a Receivable as a Defaulted Receivable or Delinquent Receivable or limit any rights of the Agent, any Purchaser Agent or the Purchasers hereunder. If a Termination Event exists, the Collection Agent may make such extensions or adjustments only with the prior consent of the Instructing Group.

(c) If no Termination Event exists, the Collection Agent shall turn over to the Seller (i) any percentage of Collections in excess of the Sold Interest, less all reasonable costs and expenses of the Collection Agent for servicing, collecting and administering the Receivables and (ii) subject to Section 1.5(d), the collections and records for any indebtedness owed to the Seller that is not a Receivable. The Collection Agent shall have no obligation to remit any such funds or records to the Seller until the Collection Agent receives evidence (satisfactory to the Agent) that the Seller is entitled to such items. The Collection Agent has no obligations concerning indebtedness that is not a Receivable other than to deliver the collections and records for such indebtedness to the Seller when required by this Section 3.2(c).

(d) Furnishing Information and Inspection of Records. The Collection Agent will furnish to the Agent, each Purchaser Agent and the Purchasers such information concerning the Receivables and the Related Security as the Agent, any Purchaser Agent or a Purchaser may request. The Collection Agent will permit, at any time after reasonable notice during regular business hours, the Agent, any Purchaser Agent or any Purchaser (or any representatives thereof) (i) to examine and make copies of all Records, (ii) to visit the offices and properties of the Collection Agent for the purpose of examining the Records and (iii) to discuss matters relating hereto with any of the Collection Agent's officers, directors, employees or independent public accountants having knowledge of such matters. Once a year (and at any time during the continuance of a Termination Event) the Agent (at the request of any Purchaser Agent) may (at the reasonable expense of the Collection Agent) have an independent public accounting firm conduct an audit of the Records or make test verifications of the Receivables and Collections. The Collection Agent shall deliver any document or instrument necessary for the Agent, as the Agent may from time to time request, to obtain records from any service bureau or other Person that maintains records for the Seller or the Collection Agent.

Section 3.3. Reports. On or before the Second Business Day preceeding each Settlement Date, and at such other times, after the occurrence and during the continuance of a Termination Event covering such other periods as is requested by the Agent or the Instructing Group, the Collection Agent shall deliver to the Agent and each Purchaser Agent an electronic and printed report reflecting information as of the close of business of the Collection Agent for the immediately preceding Settlement Period or such other preceding period as is requested (each a "Periodic Report"), containing the information described on Exhibit C (with such modifications or additional information as requested by the Agent or the Instructing Group).

Section 3.4. Lock-Box and Depositary Account Arrangements. The Agent, upon the direction of the Instructing Group, is hereby authorized to give notice at any time after the occurrence of a Collection Agent Replacement Event or a Termination Event to any or all Lock-Box Banks and Depositary Banks that the Agent is exercising its rights under the Lock-Box Letters or Depositary Account Letters, as applicable, and to take all actions permitted under the Lock-Box Letters or the Depositary Account Letters. The Seller agrees to take any action requested by the Agent to facilitate the foregoing. After the Agent takes any such action under the Lock-Box Letters or Depositary Account Letters, the Seller shall immediately deliver to the Agent any Collections received by the Seller. If the Agent takes control of any Lock-Box Account or Depositary Account, the Agent shall distribute Collections it receives in accordance herewith and shall deliver to the Collection Agent, for distribution under Section 3.2, all other amounts it receives from such Lock-Box Account or Depositary Account.

Section 3.5. Enforcement Rights. (a) The Agent may at any time after the occurrence of a Collection Agent Replacement Event or a Termination Event direct the Obligors and the Lock-Box Banks to make all payments on the Receivables directly to the Agent or its designee. The Agent may, and the Seller shall at the Agent's request, withhold the identity of the Purchasers from the Obligors, Lock-Box Banks and Depositary Banks. Upon the Agent's request, upon the direction of the Instructing Group, after the occurrence of a Collection Agent Replacement Event or a Termination Event, the Seller (at the Seller's expense) shall (i) give notice to each Obligor of the Agent's ownership of the Sold Interest and direct that payments on Receivables be made directly to the Agent or its designee, (ii) assemble for the Agent all Records and collateral security for the Receivables and the Related Security and transfer to the Agent (or its designee), or (to the extent permitted by applicable law and contract) license to the Agent (or its designee) the use of, all software useful to collect the Receivables and (iii) segregate in a manner acceptable to the Agent all Collections the Seller receives and, promptly upon receipt, remit such Collections in the form received, duly endorsed or with duly executed instruments of transfer, to the Agent or its designee on behalf of the Purchaser Agents and the Purchasers.

(b) After the occurrence of a Collection Agent Replacement Event or a Termination Event, the Seller hereby irrevocably appoints the Agent on behalf of the Purchaser Agents and the Purchasers as its attorney-in-fact coupled with an interest, with full power of substitution and with full authority in the place of the Seller, to take any and all steps deemed desirable by the Agent, upon the direction of the Instructing Group, in the name and on behalf of the Seller to (i) collect any amounts due under any Receivable, including endorsing the name of the Seller on checks and other instruments representing Collections and enforcing such Receivables and the Related Security, and (ii) exercise any and all of the Seller's rights and remedies under the Purchase Agreement. The Agent's powers under this Section 3.5(b) shall not subject the Agent to any liability if any action taken by it proves to be inadequate or invalid, nor shall such powers confer any obligation whatsoever upon the Agent.

(c) None of the Agent, any Purchaser Agent or any Purchaser shall have any obligation to take or consent to any action to realize upon any Receivable or Related Security or to enforce any rights or remedies related thereto.

Section 3.6. Collection Agent Fee. On or before each Settlement Date, the Seller shall pay to the Collection Agent a fee for the immediately preceding calendar month as compensation for its services (the "Collection Agent Fee") equal to (a) at all times the Originator or an Affiliate of any Bergen Entity is the Collection Agent, such consideration as is set forth in Section 3.1 of the Purchase Agreement, the receipt and sufficiency of which is hereby acknowledged, and (b) at all times any other Person is the Collection Agent, a reasonable amount agreed upon by the Agent (with the consent of the Instructing Group which consent shall not be unreasonably withheld) and the new Collection Agent on an arm's-length basis reflecting rates and terms prevailing in the market at such time. The Collection Agent may apply to payment of the Collection Agent Fee only the portion of the Collections in excess of the Sold Interest plus Collections that fund Reinvestment Purchases. The Agent may, with the consent of the Instructing Group which consent shall not be unreasonably withheld, pay the Collection Agent Fee to the Collection Agent from the Sold Interest in Collections. The Seller shall be obligated to reimburse any such payment.

Section 3.7. Responsibilities of the Seller. The Seller shall, or shall cause the Originator to, pay when due all Taxes payable in connection with the Receivables and the Related Security or their creation or satisfaction. The Seller shall, and shall cause the Originator to, perform all of its obligations under agreements related to the Receivables and the Related Security to the same extent as if interests in the Receivables and the Related Security had not been transferred hereunder or, in the case of the Originator, under the Purchase Agreement. The Agent's, any Purchaser Agent's or any Purchaser's exercise of any rights hereunder shall not relieve the Seller or the Originator from such obligations. None of the Agent, any Purchaser Agent or any Purchaser shall have any obligation to perform any obligation of the Seller or of the Originator or any other obligation or liability in connection with the Receivables or the Related Security.

Section 3.8. Actions by Seller. The Seller shall defend and indemnify the Agent, each Purchaser Agent and each Purchaser against all reasonable costs, expenses, claims and liabilities for any action taken by the Seller, the Originator or any other Affiliate of the Seller or of the Originator (whether acting as Collection Agent or otherwise) related to any Receivable and the Related Security, or arising out of any alleged failure of compliance of any Receivable or the Related Security with the provisions of any law or regulation. If any goods related to a Receivable are repossessed, the Seller agrees to resell, or to have the Originator or another Affiliate resell, such goods in a commercially reasonable manner for the account of the Agent and remit, or have remitted, to the Agent the Purchasers' share in the gross sale proceeds thereof net of any out-of-pocket expenses and any equity of redemption of the Obligor thereon. Any such moneys collected by the Seller or the Originator or other Affiliate of the Seller pursuant to this Section 3.8 shall be segregated and held in trust for the Agent and remitted to the Agent within one Business Day of receipt as part of the Sold Interest in Collections for application as provided herein.

Section 3.9. Indemnities by the Collection Agent. Without limiting any other rights any Person may have hereunder or under applicable law, the Collection Agent hereby indemnifies and holds harmless the Agent, each Purchaser Agent, each Purchaser and each member of a Purchaser Group and their respective officers, directors, agents and employees (each an "Indemnified Party") from and against any and all damages, losses, claims, liabilities, penalties, Taxes, reasonable costs and expenses (including reasonable attorneys' fees and court costs) (all of the foregoing collectively, the "Indemnified Losses") at any time imposed on or incurred by any Indemnified Party arising out of or otherwise relating to:

(i) any representation or warranty made by or on behalf of the Collection Agent in this Agreement, any other Transaction Document, any Periodic Report or any other information or report delivered by the Collection Agent pursuant hereto, which shall have been false or incorrect in any material respect when made;

(ii) the failure by the Collection Agent to comply with any applicable law, rule or regulation related to any Receivable or the Related Security;

(iii) any loss of a perfected security interest (or in the priority of such security interest) as a result of any commingling by the Collection Agent of funds to which the Agent, any Purchaser Agent or any Purchaser is entitled hereunder with any other funds; or

(iv) the imposition of any Lien with respect to any Receivable or the Seller Collateral as a result of any action taken by the Collection Agent hereunder or under any of the Transaction Documents;

(v) any failure of the Collection Agent to perform its duties or obligations in accordance with the provisions of this Agreement (including without limitation compliance with the Credit and Collection Policy) or any other Transaction Document to which the Collection Agent is a party;

whether arising by reason of the acts to be performed by the Collection Agent hereunder or otherwise, excluding only Indemnified Losses to the extent (a) a final judgment of a court of competent jurisdiction determined that such Indemnified Losses resulted from gross negligence or willful misconduct of the Indemnified Party seeking indemnification, (b) solely due to the credit risk of the Obligor and for which reimbursement would constitute recourse to the Collection Agent for uncollectible Receivables, or (c) such Indemnified Losses include Taxes on, or measured by, the overall net income of the Agent, any Purchaser Agent, any Purchaser or any member of a Purchaser Group computed in accordance with the Intended Tax Characterization or other Excluded Taxes; provided, however, that nothing contained in this sentence shall limit the liability of the Collection Agent or limit the recourse of the Agent, any Purchaser Agent and each Purchaser to the Collection Agent for any amounts otherwise specifically provided to be paid by the Collection Agent hereunder.

Article IV
Representations and Warranties

Section 4.1. Representations and Warranties of the Seller. The Seller represents and warrants to the Agent, each Purchaser Agent and each Purchaser that:

(a) Corporate Existence and Power. Each of the Seller and each Bergen Entity is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has all corporate power and authority and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is now conducted, except where failure to obtain such license, authorization, consent or approval would not have (i) an adverse effect on its ability to perform its obligations under, or the enforceability of, any Transaction Document, (ii) a material adverse effect on its business or financial condition, (iii) an adverse effect on the interests of the Agent, any Purchaser Agent or any Purchaser under any Transaction Document or (iv) an adverse effect on the enforceability or collectibility of any Receivable.

(b) Corporate Authorization and No Contravention. The execution, delivery and performance by each of the Seller and each other Bergen Entity of each Transaction Document to which it is a party, and the creation of all security interests provided for herein and therein (i) are within its corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) do not contravene or constitute a default under (A) any applicable law, rule or regulation, (B) its charter or by-laws or (C) any material agreement, order or other instrument to which it is a party or its property is subject and (iv) will not result in any Adverse Claim on any Receivable, the Related Security or Collection or give cause for the acceleration of any indebtedness of the Seller or any other Bergen Entity.

(c) No Consent Required. No approval, authorization or other action by, or filings with, any Governmental Authority or other Person is required in connection with the execution, delivery and performance by the Seller or any other Bergen Entity of any Transaction Document to which it is a party or any transaction contemplated thereby except with respect to UCC filings contemplated by the Transaction Documents.

(d) Binding Effect. Each Transaction Document to which the Seller or any other Bergen Entity is a party constitutes the legal, valid and binding obligation of such Person enforceable against that Person in accordance with its terms, except as limited by bankruptcy, insolvency, or other similar laws of general application relating to or affecting the enforcement of creditors' rights generally and subject to general principles of equity.

(e) Perfection of Ownership Interest. Immediately preceding its sale of Receivables to the Seller, the Originator was the owner of, and effectively sold, such Receivables to the Seller, free and clear of any Adverse Claim. The Seller owns the Receivables, and all of its other properties and assets free of any Adverse Claim other than the interests of the Purchasers, and their respective successors and assigns (through the Agent) therein that are created hereby, and each Purchaser shall at all times have a valid undivided percentage ownership interest, which shall be a first priority perfected security interest for purposes of Article 9 of the applicable Uniform Commercial Code, in the Receivables and Collections to the extent of its Purchase Interest then in effect.

(f) Accuracy of Information. All information furnished by the Seller, any other Bergen Entity or any Affiliate of any such Person to the Agent, any Purchaser Agent or any Purchaser in connection with any Transaction Document, or any transaction contemplated thereby, is true and accurate in all material respects (and is not incomplete by omitting any information necessary to prevent such information from being materially misleading).

(g) No Actions, Suits. Except as disclosed in writing to the Agent and each Purchase Agent or disclosed in reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, there are no actions, suits or other proceedings (including matters relating to environmental liability) pending or threatened against or affecting any Bergen Entity, or any of their respective properties, that if adversely determined (individually or in the aggregate), may have a material adverse effect on the financial condition of the Seller or any other Bergen Entity or on the collectibility of the Receivables. There are no actions, suits or other proceedings (including matters relating to environmental liability) pending or threatened against or affecting the Seller or any of its property or involving any Transaction Document or any transaction contemplated thereby. None of the Seller or any other Bergen Entity is in default of any contractual obligation or in violation of any order, rule or regulation of any Governmental Authority, which default or violation may have a material adverse effect upon (i) the financial condition of the Seller and the other Bergen Entities taken as a whole or (ii) the collectibility of the Receivables.

(h) No Material Adverse Change. Except as disclosed in writing to the Agent and each Purchaser Agent or disclosed in reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, since September 30, 1999, there has been no material adverse change in the collectibility of the Receivables, taken as a whole, or any Bergen Entity's financial condition, business, operations or prospects. Since its formation, there has been no material adverse change in the Seller's financial condition, business, operations or prospects or in the ability of the Seller or any other Bergen Entity to perform its obligations under any Transaction Document.

(i) Accuracy of Exhibits; Lock-Box and Depositary Account Arrangements. All information on Exhibits D-F (listing offices and names of the Seller and the Originator and where they maintain Records; the Subsidiaries; Lock Boxes; and Depositary Accounts) is true and complete, subject to any changes permitted by, and notified to the Agent in accordance with, Article V. None of the Seller's or Originator's Records locations (including without limitation their respective chief executive offices and principal places of business) has changed within the past 12 months (or such shorter period as the Seller has been in existence). Neither the Seller nor the Originator has been known or used any corporate, fictitious or trade name other than a name set forth of Exhibit D. Exhibit D lists the federal employer identification numbers of the Seller and the Originator. The Seller has delivered a copy of all Lock-Box Agreements and Depositary Account Letters to the Agent. The Seller has not granted any interest in any Lock-Box, Lock-Box Account or Depositary Account to any Person other than the Agent and, (i) upon delivery to a Lock-Box Bank of the related Lock-Box Letter, the Agent will have exclusive ownership and control of the Lock-Box Account at such Lock-Box Bank and (ii) upon delivery to a Depositary Bank of the related Depositary Account Letter, the Agent will have exclusive ownership and control of the Depositary Account at such Depositary Bank.

(j) Sales by the Originator. Each sale by the Originator to the Seller of an interest in Receivables and their Collections has been made in accordance with the terms of the Purchase Agreement, including the payment by the Seller to the Originator of the purchase price described in the Purchase Agreement. Each such sale has been made for "reasonably equivalent value" (as such term is used in Section 548 of the Bankruptcy Code) and not for or on account of "antecedent debt" (as such term is used in Section 547 of the Bankruptcy Code) owed by the Originator to the Seller.

(k) Solvency. Both before and after giving effect to (i) the transactions contemplated by this Agreement and the other Transaction Documents and (ii) the payment and accrual of all transaction costs in connection with the foregoing, the Seller is and will be Solvent.

(l) Taxes. The Seller has filed all material tax returns and reports required by law to have been filed by it and has paid all material taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books.

(m) ERISA. During the twelve-consecutive-month period prior to the date of the execution and delivery of this Agreement and prior to the date of any Purchase hereunder, no steps have been taken by the PBGC to terminate any Pension Plan, and no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Pension Plan which might result in the incurrence by the Originator or any ERISA Affiliate of any material liability, fine or penalty. Neither the Originator nor any ERISA Affiliate has any contingent liability with respect to any post-retirement benefit under a Welfare Plan that has or course reasonably be expected to have a Material Adverse Effect, other than liability for continuation coverage described in Part 6 of Title I of ERISA. The Seller has not incurred and does not expect to incur any liabilities (except for premium payments arising in the ordinary course of business) payable to the PBGC under ERISA.

(n) Investment Company Act. The Seller is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act.

(o) Nonconsolidation. The Seller is operated in such a manner that the separate corporate existence of the Seller and each Bergen Entity and Affiliate thereof would not be disregarded in the event of the bankruptcy or insolvency of any Bergen Entity and Affiliate thereof and, without limiting the generality of the foregoing:

(i) the Seller has not engaged, and does not presently engage, in any activity other than those activities expressly permitted under the Seller's organizational documents and the Transaction Documents, nor has the Seller entered into any agreement other than this Agreement, the other Transaction Documents to which it is a party and, with the prior written consent of the Agent, any other agreement necessary to carry out more effectively the provisions and purposes hereof or thereof;

(ii) the Seller maintains a business office separate from that of each of the Bergen Entities and the Affiliates thereof;

(iii) the financial statements and books and records of the Seller and each Originator reflect the separate corporate existence of the Seller;

(iv) except as otherwise expressly permitted hereunder, under the other Transaction Documents and under the Seller's organizational documents, no Bergen Entity or Affiliate thereof (A) pays the Seller's expenses, (B) guarantees the Seller's obligations, or (C) advances funds to the Seller for the payment of expenses or otherwise; and

(v) the Seller does not act as agent for any Bergen Entity or Affiliate, but instead presents itself to the public as a corporation separate from each such Person and independently engaged in the business of purchasing and financing Receivables.

Section 4.2. Representations and Warranties of the Collection Agent. The Collection Agent represents and warrants to the Agent, each Purchase Agent and each Purchaser that:

(a) The Collection Agent is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified to do business, and is in good standing, in every jurisdiction where the nature of its business requires it to be so qualified, except to the extent the failure to so qualify would not have a Material Adverse Effect.

(b) The execution, delivery and performance by the Collection Agent of this Agreement and the other documents to be delivered by it hereunder (i) are within the Collection Agent's corporate powers, (ii) have been duly authorized by all necessary corporate action and (iii) do not contravene (1) the Collection Agent's charter or by-laws, (2) any material law, rule or regulation applicable to the Collection Agent, (3) any material contractual restriction binding on or affecting the Collection Agent or its property or (4) any order, writ, judgment, award, injunction or decree binding on or affecting the Collection Agent or its property. This Agreement has been duly executed and delivered by the Collection Agent.

(c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Collection Agent of this Agreement or any other document to be delivered by it hereunder.

(d) This Agreement constitutes the legal, valid and binding obligation of the Collection Agent enforceable against the Collection Agent in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(e) If the Collection Agent is an Originator or one of its Affiliates, each Periodic Report, information, exhibit, financial statement, document, book, record or report furnished or to be furnished at any time by or on behalf of the Seller or the Originators to the Agent or the Purchasers in connection with this Agreement is correct in all material respects as of its date or (except as otherwise disclosed to the Agent or the Purchasers, as the case may be, at such time) as of the date so furnished, and no such document contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading.

(f) No proceeds of any purchase or reinvestment hereunder will be used to acquire any equity security of a class which is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or for any other purpose that might cause any portion of such proceeds to be considered a "purpose credit" within the meaning of Regulations T, U or X of the Federal Reserve Board. The Seller does not own any equity security of a class which is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.

(g) The Collection Agent has reviewed the areas within its business and operations which could be adversely affected by, and has developed or are developing a program to address on a timely basis, the "Year 2000 Problem" (that is, the risk that computer applications used by the Collection Agent and its Subsidiaries may be unable to recognize and perform properly date-sensitive functions involving certain dates prior to and any date on or after December 31, 1999), and have made related appropriate inquiry of material suppliers and vendors. Based on such review and program, the Collection Agent believes that the "Year 2000 Problem" will not have a material adverse effect on the Collection Agent.

Article V
Covenants

Section 5.1. Covenants of the Seller. The Seller hereby covenants and agrees to comply with the following covenants and agreements, unless the Agent (with the consent of the Instructing Group) shall otherwise consent:

(a) Financial Reporting. The Seller will, and will cause each other Bergen Entity to, maintain a system of accounting established and administered in accordance with GAAP and will furnish to the Agent, each Purchaser Agent and each Purchaser:

(i) Annual Financial Statements. Within 90 days after each fiscal year of (A) the Parent copies of its annual audited financial statements (including a consolidated balance sheet, consolidated statement of income and retained earnings and statement of cash flows, with related footnotes) certified by independent certified public accountants satisfactory to the Agent and prepared on a consolidated basis in conformity with GAAP, which may be included as part of the Parent's report on Form 10-K delivered to the Securities and Exchange Commission, and (B) each of the Seller and the Originator the annual balance sheet for such Person (and, additionally for the Seller, an annual profit and loss statement) certified by a Designated Financial Officer thereof, in each case prepared on a consolidated basis in conformity with GAAP as of the close of such fiscal year for the fiscal year then ended;

(ii) Quarterly Financial Statements. Within 45 days after each (except the last) fiscal quarter of each fiscal year of (A) the Parent, copies of its unaudited financial statements (including at least a consolidated balance sheet as of the close of such quarter and statements of earnings and sources and applications of funds for the period from the beginning of the fiscal year to the close of such quarter), which may be included as part of the Parent's report on Form 10-Q delivered to the Securities and Exchange Commission, certified by a Designated Financial Officer and prepared in a manner consistent with the financial statements described in part (A) of clause (i) of this Section 5.l(a) and (B) each of the Seller and the Originator, the quarterly balance sheet for such Person (and, additionally for the Seller, a profit and loss statement) for the period from the beginning of such fiscal year to the close of such quarter, in each case certified by a Designated Financial Officer thereof and prepared in a manner consistent with part (B) of clause (i) of Section 5.1(a);

(iii) Officer's Certificate. Each time financial statements are furnished pursuant to clause (i) or (ii) of this Section 5.1(a), a compliance certificate (in substantially the form of Exhibit H) signed by a Designated Financial Officer, dated the date of such financial statements, and containing a computation of each of the financial ratios and restrictions contained herein;

(iv) Public Reports. Promptly upon becoming available, a copy of each report or proxy statement filed by the Parent with the Securities Exchange Commission or any securities exchange; and

(v) Other Information. With reasonable promptness, such other information (including non-financial information) as may be reasonably requested by the Agent, any Purchaser Agent or any Purchaser (with a copy of such request to the Agent).

(b) Notices. Immediately upon becoming aware of any of the following the Seller will notify the Agent and each Purchaser Agent and provide a description of:

(i) Potential Termination Events. The occurrence of any Termination Event, any Potential Termination Event described in clause (b) or (e) of the definition of Termination Event, or any other material Potential Termination Event;

(ii) Representations and Warranties. The failure of any representation or warranty herein to be true (when made or at any time thereafter) in any material respect;

(iii) Downgrading. The downgrading, withdrawal or suspension of any rating by any rating agency of any indebtedness of any Obligor with a Concentration Limit in excess of 2% or of the Parent;

(iv) Litigation. The institution of any litigation, arbitration proceeding or governmental proceeding reasonably likely to be material to any Bergen Entity or the collectibility or quality of the Receivables, taken as a whole;

(v) Judgments. The entry of any judgment, award or decree against any Bergen Entity that remains unvacated, unbonded or unstayed for a period of 20 consecutive days if the aggregate amount of all judgments then outstanding against the Bergen Entities exceeds $25,000,000 or the entry of a judgment, award or decree against the Seller; or

(vi) Changes in Business. Any change in, or proposed change in, the character of any Bergen Entity's business that could materially impair the collectibility or quality of the Receivables, taken as a whole.

If the Agent or any Purchaser Agent receives such a notice, the Agent or such Purchaser Agent shall promptly give notice thereof to each Purchaser Agent and each Purchaser and, until each Conduit Purchaser has no Investment after the Termination Date, to each CP Dealer and each Rating Agency.

(c) Conduct of Business. The Seller will perform, and will cause each other Bergen Entity and Significant Subsidiary to perform, all actions necessary to remain duly incorporated, validly existing and in good standing in its jurisdiction of incorporation and to maintain all requisite authority to conduct its business in each jurisdiction in which it conducts business except to the extent that such failure would not have a Material Adverse Effect.

(d) Compliance with Laws. The Seller will comply, and will cause each other Bergen Entity to comply, with all laws, regulations, judgments and other directions or orders imposed by any Governmental Authority to which such Person or any Receivable, any Related Security or Collection may be subject, except to the extent non-compliance would not have a Material Adverse Effect.

(e) Furnishing Information and Inspection of Records. The Seller will furnish to the Agent, each Purchaser Agent and the Purchasers such information concerning the Receivables and the Related Security as the Agent, any Purchaser Agent or a Purchaser may request. The Seller will, and will cause the Originator to, permit, at any time after reasonable notice during regular business hours, the Agent, any Purchaser Agent or any Purchaser (or any representatives thereof) (i) to examine and make copies of all Records, (ii) to visit the offices and properties of the Seller for the purpose of examining the Records and (iii) to discuss matters relating hereto with any of the Seller's or the Originator's officers, directors, employees or independent public accountants having knowledge of such matters. Once a year (and at any time during the continuance of a Termination Event), the Agent (at the request of any Purchaser Agent) may (at the reasonable expense of the Seller) have an independent public accounting firm conduct an audit of the Records or make test verifications of the Receivables and Collections.

(f) Keeping Records. (i) The Seller will, and will cause the Originator to, have and maintain (A) administrative and operating procedures (including an ability to recreate Records if originals are destroyed), (B) adequate facilities, personnel and equipment and (C) all Records and other information necessary or advisable for collecting the Receivables (including Records adequate to permit the immediate identification of each new Receivable and all Collections of, and adjustments to, each existing Receivable). The Seller will give the Agent and each Purchaser Agent prior notice of any material change in such administrative and operating procedures.

(ii) The Seller will, (A) at all times from and after the date hereof, clearly and conspicuously mark its computer and master data processing books and records with a legend describing the Agent's, the Purchaser Agents' and the Purchasers' interest in the Receivables and the Collections and (B) upon the request of the Agent after the occurrence and during the continuance of a Termination Event, so mark each contract relating to a Receivable that consists of chattel paper and deliver to the Agent all such contracts (including all multiple originals of such contracts), with any appropriate endorsement or assignment, or segregate (from all other receivables then owned or being serviced by the Seller) the Receivables and all contracts relating to each Receivable and hold in trust and safely keep such contracts so legended in separate filing cabinets or other suitable containers at such locations as the Agent may specify.

(g) Perfection. (i) The Seller will, and will cause the Originator to, at its expense, promptly execute and deliver all instruments and documents and take all action necessary or reasonably requested by the Agent (including the execution and filing of financing or continuation statements, amendments thereto or assignments thereof) to enable the Agent, on behalf of the Purchaser Agents and the Purchasers, to exercise and enforce all its rights hereunder and to vest and maintain vested in the Agent, on behalf of the Purchaser Agents and the Purchasers, a valid, first priority perfected security interest in the Seller Collateral and proceeds thereof free and clear of any Adverse Claim (and a perfected ownership interest in the Receivables and Collections). The Agent will be permitted to sign and file any continuation statements, amendments thereto and assignments thereof that are consistent with the Transaction Documents without the Seller's signature.

(ii) The Seller will, and will cause the Originator to, only change its name, identity or corporate structure or relocate its chief executive office or the Records following thirty (30) days advance written notice to the Agent and each Purchaser Agent and the delivery to the Agent of all financing statements, instruments and other documents (including direction letters) requested by the Agent.

(iii) Each of the Seller and the Originator will at all times maintain its chief executive offices within a jurisdiction in the USA (other than in the states of Florida, Maryland and Tennessee) in which Article 9 of the UCC is in effect. If the Seller or the Originator moves its chief executive office to a location that imposes Taxes, fees or other charges to perfect the Agent's, the Purchaser Agents' and the Purchasers' interests hereunder or the Seller's interests under the Purchase Agreement, the Seller will pay all such amounts and any other costs and expenses incurred in order to maintain the enforceability of the Transaction Documents, the Sold Interest and the interests of the Agent, the Purchaser Agents and the Purchasers in the Seller Collateral.

(h) Performance of Duties. The Seller will perform, and will cause each other Bergen Entity and the Collection Agent (if an Affiliate) to perform, its respective duties or obligations in accordance with the provisions of each of the Transaction Documents. The Seller (at its expense) will, and will cause each other Bergen Entity to, (i) fully and timely perform in all material respects all agreements required to be observed by it in connection with each Receivable, (ii) comply in all material respects with the Credit and Collection Policy, and (iii) refrain from any action that may impair the rights of the Agent, the Purchaser Agents or the Purchasers in the Seller Collateral.

(i) Payments on Receivables, Accounts. The Seller will, and will cause the Originator to, at all times either (i) instruct Obligors to deliver payments on the Receivables to a Lock-Box Account or (ii) promptly, but in any event within two Business Days after receipt, deposit all Collections received by such Persons into a Depositary Account or Lock-Box Account. The Seller will, and will cause the Originator to, instruct all Obligors to deliver payments on Receivables to a Lock-Box Account by no later than March 31, 2000. If any such payments or other Collections are received by the Seller or the Originator, it shall hold such payments in trust for the benefit of the Agent, the Purchaser Agents and the Purchasers until their deposit into a Depositary Account or Lock-Box Account. The Seller will cause each Lock-Box Bank and Depositary Bank to comply with the terms of each applicable Lock-Box Letter or Depositary Account Letter, as applicable. The Seller will not permit the funds of any Affiliate to be deposited into any Lock-Box Account or Depositary Account. If such funds are nevertheless deposited into any Lock-Box Account or Depositary Account, the Seller will promptly identify and separate such funds for segregation. The Seller will not, and will not permit any Collection Agent or other Person to, commingle Collections or other funds to which the Agent or any Purchaser is entitled with any other funds. The Seller shall only add, and shall only permit the Originator to add, a Lock-Box Bank, Lock-Box, Lock-Box Account, Depositary Bank or Depositary Account to those listed on Exhibit F if the Agent and each Purchaser Agent has received notice of and has consented to such addition, a copy of any new Lock-Box Agreement or Depositary Account Agreement, as applicable, and an executed and acknowledged copy of a Lock-Box Letter or Depositary Account Letter, as applicable, substantially in the form of Exhibit G-1 or G-2, respectively, (with such changes as are acceptable to the Agent and each Purchaser Agent) from any new Lock-Box Bank or Depositary Bank, as applicable. The Seller shall only terminate a Lock-Box Bank, Lock-Box or Depositary Bank, or close a Lock-Box Account or Depositary Account, upon 30 days advance notice to the Agent and each Purchaser Agent and, at the request of the Agent, substitution of a new Lock-Box Bank, Lock-Box Account, Depositary Bank or Depositary Account reasonably acceptable to the Agent and the Purchaser Agents therefor.

(j) Sales and Adverse Claims Relating to Receivables. Except as otherwise provided herein, the Seller will not, and will not permit the Originator to, (by operation of law or otherwise) dispose of or otherwise transfer, or create or suffer to exist any Adverse Claim upon, any material portion of the Receivables or any proceeds thereof or any other property or assets of the Seller.

(k) Extension or Amendment of Receivables. Except as otherwise permitted in Section 3.2(b) and then subject to Section 1.5, the Seller will not, and will not permit the Originator to, extend, amend, rescind or cancel any Receivable.

(l) Change in Business or Credit and Collection Policy. The Seller will not make any material change in the character of its business and will not, and will not permit the Originator to, make any material change to the Credit and Collection Policy without the prior written consent of the Agent and each Purchaser Agent.

(m) Lock-Box and Depositary Account Letters. The Seller will deliver to the Agent on or prior to January 31, 2000 all Lock-Box Letters and Depositary Account Letters not delivered on the date hereof.

(n) Sale of Stock and Assets. The Seller shall not sell, transfer, convey, assign or otherwise dispose of, or assign any right to receive income in respect of, any of its properties or other assets any Receivable or contract therefor or any of its rights with respect to any Lock-Box Account, Depositary Account or any other deposit account in which any Collections of any Receivable are deposited except as otherwise expressly permitted by this Agreement or any of the other Transaction Documents.

(o) Capital Structure and Business. The Seller shall not (i) transact business, other than in compliance with its certificate of incorporation and by-laws and in such corporate and trade names as are set forth on Exhibit D, or (ii) amend its certificate or articles of incorporation or bylaws.

(p) Mergers, Subsidiaries, Etc. The Seller shall not directly or indirectly, by operation of law or otherwise, (i) form or acquire any Subsidiary, or (ii) merge with, consolidate with, acquire all or substantially all of the assets or capital Stock of, or otherwise combine with or acquire, any Person.

(q) Sale Characterization; Purchase Agreement. The Seller shall not make statements or disclosures, prepare any financial statements or in any other respect account for or treat the transactions contemplated by the Purchase Agreement (including for accounting, tax and reporting purposes) in any manner other than (i) with respect to each purchase of each Purchased Receivable effected pursuant to the Purchase Agreement, as a true sale and absolute assignment of the title to and sole record and beneficial ownership interest of the Receivables by the Originator to the Seller and (ii) with respect to each contribution of Contributed Receivables thereunder, as an increase in the stated capital of the Seller.

(r) Indebtedness. The Seller shall not create, incur, assume or permit to exist any Debt, except (i) Debt of the Seller to any Indemnified Party or any other Person expressly permitted by this Agreement or any other Transaction Document, (ii) the Subordinated Note, (iii) deferred taxes, (iv) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law, and (v) indorser liability in connection with the indorsement of negotiable instruments for deposit or collection in the ordinary course of business.

(s) Commingling. The Seller shall not deposit or permit the deposit of any funds that do not constitute Collections of Receivables into any Depository Account or Lock-Box Account, except inadvertent deposits of checks from time to time in immaterial amounts that are readily traceable.

(t) Restricted Payments by the Seller. The Seller will not purchase or redeem any shares of the capital stock of the Seller, declare or pay dividends thereon (other than stock dividends), or make any distribution to stockholders or set aside any funds for any such purpose; provided, however, the foregoing shall not prevent the Seller from paying cash dividends on the Settlement Date, after making any payment required to be made by the Seller on such Settlement Date in accordance with the last sentence of Section 2.3 if, after giving effect to such payment, the Seller's net worth (as determined in accordance with GAAP) would not be less than 3% of the Purchase Limit.

Article VI
Indemnification

Section 6.1. Indemnities by the Seller. Without limiting any other rights any Person may have hereunder or under applicable law, the Seller hereby indemnifies and holds harmless, on an after-tax basis, the Agent, each Purchaser Agent, each Purchaser, and each member of a Purchaser Group and their respective officers, directors, agents and employees (each an "Indemnified Party") from and against any and all damages, losses, claims, liabilities, penalties, Taxes and reasonable costs and expenses (including attorneys' fees and court costs) (all of the foregoing collectively, the "Indemnified Losses") at any time imposed on or incurred by any Indemnified Party arising out of or otherwise relating to any Transaction Document, the transactions contemplated thereby or any action taken or omitted by any of the Indemnified Parties (including any action taken by the Agent as attorney-in-fact for the Seller pursuant to Section 3.5(b)), whether arising by reason of the acts to be performed by the Seller hereunder or otherwise, excluding only Indemnified Losses to the extent (a) a final judgment of a court of competent jurisdiction holds such Indemnified Losses resulted from gross negligence or willful misconduct of the Indemnified Party seeking indemnification, (b) solely due to the credit risk of the Obligor and for which reimbursement would constitute recourse to the Seller or the Collection Agent for uncollectible Receivables or (c) such Indemnified Losses include Excluded Taxes. Without limiting the foregoing indemnification, but subject to the limitations set forth in clauses (a), (b) and (c) of the previous sentence, the Seller shall indemnify each Indemnified Party for Indemnified Losses relating to or resulting from:

(i) any representation or warranty made by the Seller, any Bergen Entity or the Collection Agent (or any employee or agent of the Seller, any other Bergen Entity or the Collection Agent) under or in connection with this Agreement, any other Periodic Report or any other information or report delivered by the Seller, any other Bergen Entity or the Collection Agent pursuant hereto, which shall have been false or incorrect in any material respect when made or deemed made;

(ii) the failure by the Seller, any other Bergen Entity or the Collection Agent to comply with any applicable law, rule or regulation related to any Receivable, or the nonconformity of any Receivable with any such applicable law, rule or regulation;

(iii) the failure of the Seller to vest and maintain vested in the Agent, for the benefit of each Purchaser Agent and the Purchasers, a perfected ownership or security interest in the Sold Interest and the property conveyed pursuant to Section 1.1(e) and Section 1.8, free and clear of any Adverse Claim;

(iv) any commingling of funds to which the Agent, any Purchaser Agent or any Purchaser is entitled hereunder with any other funds;

(v) any failure of a Lock-Box Bank to comply with the terms of the applicable Lock-Box Letter or a Depositary Bank to comply with the terms of the applicable Depositary Account Letter;

(vi) any dispute, claim, offset or defense (other than discharge in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable, or any other claim resulting from the sale or lease of goods or the rendering of services related to such Receivable or the furnishing or failure to furnish any such goods or services or other similar claim or defense not arising from the financial inability of any Obligor to pay undisputed indebtedness;

(vii) any failure of the Seller or any other Bergen Entity, or any Affiliate of any thereof, to perform its duties or obligations in accordance with the provisions of this Agreement or any other Transaction Document to which such Person is a party (as a Collection Agent or otherwise);

(viii) any action taken by the Agent as attorney-in-fact for the Seller pursuant to Section 3.5(b); or

(ix) any environmental liability claim, products liability claim or personal injury or property damage suit or other similar or related claim or action of whatever sort, arising out of or in connection with any Receivable or any other suit, claim or action of whatever sort relating to any of the Transaction Documents.

Section 6.2. Increased Cost and Reduced Return. If the adoption after the date hereof of any applicable law, rule or regulation, or any change therein after the date hereof, or any change in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by any Funding Source, the Agent, any Purchaser Agent or any Purchaser (collectively, the "Funding Parties") with any request or directive (whether or not having the force of law) after the date hereof of any such Governmental Authority (a "Regulatory Change") (a) subjects any Funding Party to any charge or withholding on or in connection with a Funding Agreement or this Agreement (collectively, the "Funding Documents") or any Receivable, (b) changes the basis of taxation of payments to any of the Funding Parties of any amounts payable under any of the Funding Documents (except for changes in the rate of Tax on the overall net income of such Funding Party), (c) imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or any credit extended by, any of the Funding Parties, (d) has the effect of reducing the rate of return on such Funding Party's capital to a level below that which such Funding Party could have achieved but for such adoption, change or compliance (taking into consideration such Funding Party's policies concerning capital adequacy) or (e) imposes any other condition, and the result of any of the foregoing is (x) to impose a cost on, or increase the cost to, any Funding Party of its commitment under any Funding Document or of purchasing, maintaining or funding any interest acquired under any Funding Document, (y) to reduce the amount of any sum received or receivable by, or to reduce the rate of return of, any Funding Party under any Funding Document or (z) to require any payment calculated by reference to the amount of interests held or amounts received by it hereunder, then, upon demand by the Agent or the applicable Purchaser Agent, the Seller shall pay to the Agent (with respect to amounts owed to it) or the applicable Purchaser Agent (with respect to amounts owed to it or any Purchaser in its Purchaser Group) for the account of the Person such additional documented amounts as will compensate the Agent, the Purchaser Agent or such Purchaser (or, in the case of any Conduit Purchaser, will enable such Conduit Purchaser to compensate any Funding Source) for such increased cost or reduction; provided, however, that the Agent or the Purchase Agent, as applicable, shall promptly notify the Seller of any event (the "Applicable Event") which might cause such Person to seek compensation, and the Seller shall be obligated to pay only such compensation which is incurred after the date sixty (60) days prior to the date such notice is given; provided, however, that such 60 day limitation shall not apply to any such compensation that is applicable retroactively to periods prior to the effective date of the Applicable Event so long as the Agent notifies the Seller of the Applicable Event within 60 days of a responsible officer of the Agent receiving actual knowledge thereof.

Section 6.3. Other Costs and Expenses. The Seller shall pay to the Agent (with respect to amounts owed to it) or the applicable Purchaser Agent (with respect to amount owed to it or any Purchaser in its Purchaser Group) on demand all reasonable costs and expenses (to the extent, in the case of a Conduit Purchaser, not already included in such Conduit Purchaser's CP Rate) in connection with (a) the preparation, execution, delivery and administration (including amendments of any provision) of the Transaction Documents, (b) the sale of the Sold Interest, (c) the perfection of the Agent's rights on behalf of the Purchaser Agents and the Purchasers in the Receivables and Collections, (d) the enforcement by the Agent, any Purchaser Agent or the Purchasers of the obligations of the Seller under the Transaction Documents or of any Obligor under a Receivable and (e) the maintenance by the Agent of the Depositary Accounts, Lock-Boxes and Lock-Box Accounts, including fees, costs and expenses of legal counsel for the Agent and each Purchaser Agent relating to any of the foregoing or to advising the Agent, any Purchaser Agent and any Funding Source about its rights and remedies under any Transaction Document or any related Funding Agreement and all costs and expenses (including counsel fees and expenses) of the Agent, each Purchaser Agent, each Purchaser and each Funding Source in connection with the enforcement of the Transaction Documents or any Funding Agreement and in connection with the administration of the Transaction Documents following a Termination Event. The Seller shall reimburse the Agent, each Purchaser Agent and each Purchaser for the cost of the Agent's or such Purchaser's auditors (which may be employees of such Person) auditing the books, records and procedures of the Seller. The Seller shall reimburse each Conduit Purchaser for any amounts such Conduit Purchaser must pay to any Funding Source pursuant to any Funding Agreement on account of any Tax. The Seller shall reimburse each Conduit Purchaser on demand for all other costs and expenses incurred by such Purchaser or any shareholder of a Conduit Purchaser in connection with the Transaction Documents or the transactions contemplated thereby, including the cost of auditing a Conduit Purchaser's books by certified public accountants, the cost of the Ratings and the fees and out-of-pocket expenses of counsel of the Agent, each Purchaser Agent, each other member of a Purchaser Group, each Conduit Purchaser or any shareholder, or administrator, of such Conduit Purchaser for advice relating to such Conduit Purchaser's operation.

Section 6.4. Withholding Taxes. (a) All payments made by the Seller hereunder shall be made without withholding for or on account of any present or future taxes (other than overall net income taxes on the recipient). If any such withholding is so required, the Seller shall make the withholding, pay the amount withheld to the appropriate authority before penalties attach thereto or interest accrues thereon and pay such additional amount as may be necessary to ensure that the net amount actually received by each Purchaser, each Purchaser Agent and the Agent free and clear of such taxes (including such taxes on such additional amount) is equal to the amount that the Purchaser, Purchaser Agent or the Agent (as the case may be) would have received had such withholding not been made. If the Agent, any Purchaser Agent or any Purchaser pays any such taxes, penalties or interest the Seller shall reimburse the Agent, such Purchaser Agent or such Purchaser for that payment on demand. If the Seller pays any such taxes, penalties or interest, it shall deliver official tax receipts evidencing that payment or certified copies thereof to the Purchaser, Purchaser Agent or Agent on whose account such withholding was made (with a copy to the Agent if not the recipient of the original) on or before the thirtieth day after payment.

(b) Before the first date on which any amount is payable hereunder for the account of any Purchaser not incorporated under the laws of the USA such Purchaser shall deliver to the Seller and the Agent each two (2) duly completed copies of United States Internal Revenue Service Form W-8BEN or 8-WECI (or successor applicable form) certifying that such Purchaser is entitled to receive payments hereunder without deduction or withholding of any United States federal income taxes. Each such Purchaser shall replace or update such forms when necessary to maintain any applicable exemption and as requested by the Agent or the Seller.

Section 6.5. Payments and Allocations. If any Person seeks compensation pursuant to this Article VI, such Person shall deliver to the Seller and the Agent a certificate setting forth the amount due to such Person, a description of the circumstance giving rise thereto and the basis of the calculations of such amount, which certificate shall be conclusive absent manifest error. The Seller shall pay to the Agent (with respect to amounts owed to it) or the applicable Purchaser Agent (with respect to amounts owed to it or any Purchaser in its Purchaser Group), for the account of such Person, the amount shown as due on any such certificate within 10 Business Days after receipt of the notice.

Article VII
Conditions Precedent

Section 7.1. Conditions to Closing. This Agreement shall become effective on the first date all conditions in this Section 7.1 are satisfied. All fees payable to the Agent, the Purchaser Agents or any Purchaser shall have been paid on or before such date, and on or before such date, the Seller, and/or the Collection Agent shall deliver to the Agent and each Purchaser Agent the following documents in form, substance and quantity acceptable to the Agent and each Purchaser Agent, as applicable:

(a) A certificate of the Secretary of each of the Seller and each Bergen Entity certifying (i) the resolutions of the Seller's and each Bergen Entity's board of directors approving each Transaction Document to which it is a party, (ii) the name, signature, and authority of each officer who executes on the Seller's or any Bergen Entity's behalf a Transaction Document (on which certificate the Agent, each Purchaser Agent and each Purchaser may conclusively rely until a revised certificate is received), (iii) the Seller's and each other Bergen Entity's certificate or articles of incorporation certified by the Secretary of State of its state of incorporation, (iv) a copy of the Seller's and each other Bergen Entity's by-laws and (v) good standing certificates issued by the Secretaries of State of each jurisdiction where the Seller has operations or any other Bergen Entity has material operations.

(b) All instruments and other documents required, or deemed desirable by the Agent or any Purchaser Agent, to perfect the first priority interest of the Agent (on behalf of the Purchaser Agents and the Purchasers) in the Receivables and the other Seller Collateral, including Collections, the Purchase Agreement, the Lock-Box Accounts and Depositary Accounts in all appropriate jurisdictions.

(d) Executed copies of (i) all consents and authorizations necessary in connection with the Transaction Documents (ii) Lock-Box Letters and Depositary Account Letters for each Lock-Box Account and each Depositary Account, (iii) a compliance certificate in the form of Exhibit H covering the period ended January 31, 2000, (iv) a Periodic Report covering the month of January, 2000 and (v) each Transaction Document.

(e) Favorable opinions of counsel to the Seller and each Bergen Entity covering such matters as the Agent, any Conduit Purchaser or any Purchaser Agent may request.

(f) Such other approvals, opinions or documents as the Agent or any Conduit Purchaser may request.

(g) All legal matters related to the Purchase are satisfactory to the Purchasers.

Section 7.2. Conditions to Each Purchase. The obligation of each Committed Purchaser to make any Purchase, and the right of the Seller to request or accept any Purchase, are subject to the conditions (and each Purchase shall evidence the Seller's representation and warranty that clauses (a)-(e) of this Section 7.2 have been satisfied) that on the date of such Purchase before and after giving effect to the Purchase:

(a) no Potential Termination Event (or in the case of a Reinvestment Purchase, a Termination Event) shall then exist or shall occur as a result of the Purchase;

(b) the Termination Date has not occurred;

(c) after giving effect to the application of the proceeds of such Purchase, (x) the outstanding Matured Aggregate Investment would not exceed the Aggregate Commitment and (y) the outstanding Aggregate Investment would not exceed the Purchase Limit;

(d) the representations and warranties of Seller, the Originator and the Collection Agent contained herein or in any other Transaction Document are true and correct in all material respects on and as of such date (except to the extent such representations and warranties relate solely to an earlier date and then are true and correct as of such earlier date);

(e) each of the Seller and each other Bergen Entity is in full compliance with the Transaction Documents (including all covenants and agreements in Article V); and

(f) the Originator has not given any notice terminating its purchase of Receivables pursuant to the Purchase Agreement.

Nothing in this Section 7.2 limits the obligations of each Related Bank Purchaser, each Liquidity Bank and each Enhancement Bank to its related Conduit Purchaser

Article VIII
The Agent

Section 8.1. Appointment and Authorization. (a) Each Purchaser and each Purchaser Agent hereby irrevocably designates and appoints Wachovia Bank, N.A., as the "Agent" under the Transaction Documents and authorizes the Agent to take such actions and to exercise such powers as are delegated to the Agent thereby and to exercise such other powers as are reasonably incidental thereto. The Agent shall hold, in its name, for the benefit of each Purchaser, the Purchase Interest of the Purchaser. The Agent shall not have any duties other than those expressly set forth in the Transaction Documents or any fiduciary relationship with any Purchaser Agent or any Purchaser, and no implied obligations or liabilities shall be read into any Transaction Document, or otherwise exist, against the Agent. The Agent does not assume, nor shall it be deemed to have assumed, any obligation to, or relationship of trust or agency with, the Seller. Notwithstanding any provision of this Agreement or any other Transaction Document, in no event shall the Agent ever be required to take any action which exposes the Agent to personal liability or which is contrary to the provisions of any Transaction Document or applicable law.

(b) Each Purchaser hereby irrevocably designates and appoints the respective institution identified on the applicable signature page hereto or in the related Transfer Supplement (as applicable) as its Purchaser Agent hereunder, and each authorizes such Purchaser Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to such Purchaser Agent by the terms of this Agreement, if any, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, no Purchaser Agent shall have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Purchaser or other Purchaser Agent or the Agent, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Purchaser Agent shall be read into this Agreement or otherwise exist against such Purchaser Agent.

(c) Except as otherwise specifically provided in this Agreement, the provisions of this Article VIII are solely for the benefit of the Purchaser Agents, the Agent and the Purchasers, and none of the Seller or any Collection Agent shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this Article VIII, except that this Article VIII shall not affect any obligations which any Purchaser Agent, the Agent or the Purchaser may have to the Seller or any Collection Agent under the other provisions of this Agreement. Furthermore, no Purchaser shall have any rights as a third-party beneficiary or otherwise under any of the provisions hereof in respect of a Purchaser Agent which is not the Purchaser Agent for such Purchaser.

(d) In performing its functions and duties hereunder, the Agent shall act solely as the agent of the Purchasers and the Purchaser Agents and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Seller or Collection Agent or any of their successors and assigns. In performing its functions and duties hereunder, each Purchaser Agent shall act solely as the agent of its respective Purchaser and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Seller, any Collection Agent, any other Purchaser, any other Purchaser Agent or the Agent, or any of their respective successors and assigns.

Section 8.2. Delegation of Duties. The Agent may execute any of its duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

Section 8.3. Exculpatory Provisions. None of the Agent, any Purchaser Agent nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted (i) with the consent or at the direction of the Instructing Group or (ii) in the absence of such Person's gross negligence or willful misconduct. The Agent shall not be responsible to any Purchaser Agent, Purchaser or other Person for (i) any recitals, representations, warranties or other statements made by the Seller, any other Bergen Entity or any of their Affiliates, (ii) the value, validity, effectiveness, genuineness, enforceability or sufficiency of any Transaction Document, (iii) any failure of the Seller, any other Bergen Entity or any of their Affiliates to perform any obligation or (iv) the satisfaction of any condition specified in Article VII. The Agent shall not have any obligation to any Purchaser to ascertain or inquire about the observance or performance of any agreement contained in any Transaction Document or to inspect the properties, books or records of the Seller, any other Bergen Entity or any of their Affiliates.

Section 8.4. Reliance by Agent. (a) Each Purchaser Agent and the Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document, other writing or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person and upon advice and statements of legal counsel (including counsel to the Seller), independent accountants and other experts selected by the Agent. Each Purchaser Agent and the Agent shall in all cases be fully justified in failing or refusing to take any action under any Transaction Document unless it shall first receive such advice or concurrence of the Purchasers, and assurance of its indemnification, as it deems appropriate.

(b) The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Purchasers or the Purchaser Agents, and such request and any action taken or failure to act pursuant thereto shall be binding upon all Purchasers, the Agent and Purchaser Agents.

(c) Each Purchaser Agent (with the consent of the Agent) shall determine with its Purchaser Groups the number of such Purchasers (each, a "Voting Block"), which shall be required to request or direct such Purchaser Agent to take action, or refrain from taking action, under this Agreement on behalf of such Purchasers. Such Purchaser Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of its appropriate Voting Block, and such request and any action taken or failure to act pursuant thereto shall be binding upon all of such Purchaser Agent's Purchasers.

(d) Unless otherwise advised in writing by a Purchaser Agent or by any Purchaser on whose behalf such Purchaser Agent is purportedly acting, each party to this Agreement may assume that (i) such Purchaser Agent is acting for the benefit of each of the Purchasers in respect of which such Purchaser Agent is identified as being the "Purchaser Agent" in the definition of "Purchaser Agent" hereto, as well as for the benefit of each assignee or other transferee from any such Person, and (ii) each action taken by such Purchaser Agent has been duly authorized and approved by all necessary action on the part of the Purchasers on whose behalf it is purportedly acting. Each initial Purchaser (or, with the consent of all other Purchasers then existing, any other Purchasers) shall have the right to designate a new Purchaser Agent (which may be itself) to act on its behalf and on behalf of its assignees and transferees for purposes of this Agreement by giving to the Agent written notice thereof signed by such Purchaser(s) and the newly designated Purchaser Agent. Such notice shall be effective when receipt thereof is acknowledged by the Agent, which acknowledgment the Agent shall not unreasonably delay giving, and thereafter the party named as such therein shall be Purchaser Agent for such Purchaser under this Agreement. Each Purchaser Agent and its Purchaser(s) shall agree amongst themselves as to the circumstances and procedures for removal and resignation of such Purchaser Agent.

Section 8.5. Assumed Payments. Unless a Purchaser Agent shall have received notice from the applicable Purchaser before the date of any Put or of any Incremental Purchase that the applicable Purchaser will not make available to the applicable Purchaser Agent the amount it is scheduled to remit as part of such Put or Incremental Purchase, such Purchaser Agent may assume such Purchaser has made such amount available to the Purchaser Agent when due (an "Assumed Payment") and, in reliance upon such assumption, such Purchaser Agent may (but shall have no obligation to) make available such amount to the appropriate Person. If and to the extent that any Purchaser shall not have made its Assumed Payment available to the applicable Purchaser Agent, such Purchaser and the Seller hereby agree to pay the applicable Purchaser Agent forthwith on demand such unpaid portion of such Assumed Payment up to the amount of funds actually paid by the applicable Purchaser Agent, together with interest thereon for each day from the date of such payment by the Agent until the date the requisite amount is repaid to the applicable Purchaser Agent, at a rate per annum equal to the Federal Funds Rate plus 2%.

Section 8.6. Notice of Termination Events. Neither any Purchaser Agent nor the Agent shall be deemed to have knowledge or notice of the occurrence of any Potential Termination Event unless the Agent or such Purchaser Agent has received notice from any Purchaser, Purchaser Agent or the Seller stating that a Potential Termination Event has occurred hereunder and describing such Potential Termination Event. In the event that the Agent receives such a notice, it shall promptly give notice to each Purchaser Agent whereupon each Purchaser Agent shall promptly give notice thereof to its Purchasers, Enhancement Banks and Liquidity Banks. In the event that a Purchaser Agent receives such a notice (other than from the Agent) it shall promptly give notice thereof to the Agent and each of its affiliated Enhancement Banks and Liquidity Banks. The Agent shall take such action concerning a Potential Termination Event as may be directed by the Instructing Group (or, in the case where there are only two Purchaser Groups and neither Purchaser Group has a majority of the Commitments, either Purchaser Agent except if the proposed action is a waiver of the consequences of the Potential Termination Event, in which case such waiver shall require the consent of the Instructing Group) (or, if otherwise required for such action, all of the Purchasers), but until the Agent receives such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, as the Agent deems advisable and in the best interests of the Purchasers and the Purchaser Agents.

Section 8.7. Non-Reliance on Agent, Purchaser Agents and Other Purchasers. Each Purchaser expressly acknowledges that none of the Agent, the Purchaser Agents or any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Agent or any Purchaser Agent hereafter taken, including any review of the affairs of the Seller or any other applicable Bergen Entity, shall be deemed to constitute any representation or warranty by the Agent or Purchaser Agent, as applicable. Each Purchaser represents and warrants to the Agent and the Purchaser Agents that, independently and without reliance upon the Agent, their Purchase Agents or any other Purchaser and based on such documents and information as it has deemed appropriate, it has made and will continue to make its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller, the other Bergen Entities, and the Receivables and its own decision to enter into this Agreement and to take, or omit, action under any Transaction Document. Except for items specifically required to be delivered hereunder, the Agent shall not have any duty or responsibility to provide any Purchaser Agent or Purchaser with any information concerning the Seller, any other Bergen Entity or any of their Affiliates that comes into the possession of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

Section 8.8. Agent and Affiliates. Each of the Agent and the Purchaser Agents and their respective Affiliates may extend credit to, accept deposits from and generally engage in any kind of business with the Seller, any other Bergen Entity or any of their Affiliates and Wachovia may exercise or refrain from exercising its rights and powers as if it were not the Agent. With respect to the acquisition of the Eligible Receivables pursuant to this Agreement, each of the Purchaser Agents and the Agent shall have the same rights and powers under this Agreement as any Purchaser and may exercise the same as though it were not such an agent, and the terms "Purchaser" and "Purchasers" shall include each of the Purchaser Agents and the Agent in their individual capacities.

Section 8.9. Indemnification. Each Purchaser Group shall indemnify and hold harmless the Agent and its officers, directors, employees, representatives and agents (to the extent not reimbursed by the Seller or any other Bergen Entity and without limiting the obligation of the Seller or any other Bergen Entity to do so), ratably in accordance with its Ratable Share from and against any and all liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses and disbursements of any kind whatsoever (including in connection with any investigative or threatened proceeding, whether or not the Agent or such Person shall be designated a party thereto) that may at any time be imposed on, incurred by or asserted against the Agent or such Person as a result of, or related to, any of the transactions contemplated by the Transaction Documents or the execution, delivery or performance of the Transaction Documents or any other document furnished in connection therewith (but excluding any such liabilities, obligations, losses, damages, penalties, judgments, settlements, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Agent or such Person as finally determined by a court of competent jurisdiction).

Section 8.10. Successor Agent. The Agent may, upon at least five (5) days notice to the Seller and each Purchaser and each Purchaser Agent, resign as Agent. Such resignation shall not become effective until a successor agent is appointed by an Instructing Group and has accepted such appointment. Upon such acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all the rights and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under the Transaction Documents. After any retiring Agent's resignation hereunder, the provisions of Article VI and this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent.

Article IX
Miscellaneous

Section 9.1. Termination. Each Purchaser shall cease to be a party hereto when the Termination Date has occurred, each Purchaser holds no Investment and all amounts payable to it hereunder have been indefeasibly paid in full. This Agreement shall terminate following the Termination Date when no Investment is held by a Purchaser and all other amounts payable hereunder have been indefeasibly paid in full, but the rights and remedies of the Agent, each Purchaser Agent and each Purchaser under Article VI and Section 8.9 shall survive such termination. Upon such termination, the Agent shall promptly after request of the Seller (a) execute and deliver UCC-3 termination statements to the Seller with respect to each UCC-1 financing statement filed in favor of the Agent or any Purchaser in connection with this Agreement, (b) deliver written notice to all Lock-Box Banks and Depositary Banks to remit to the Collection Agent (unless otherwise directed by the Seller) all payments, remittances and other items that have been received by, or are maintained in, any Lock-Box Bank, Lock-Box, Lock-Box Account or Depositary Bank and to follow thereafter all directions of the Collection Agent (unless otherwise directed by the Seller) with respect to the continuance of termination of such Lock-Boxes and Depositary Accounts and (c) promptly deliver to the Collection Agent (unless otherwise directed by the Seller) all Collections and all other funds, records or other property of Seller or the Collection Agent that may come, or have come, into the Agent's or any Purchaser's custody or control.

Section 9.2. Notices. Unless otherwise specified, all notices and other communications hereunder shall be in writing (including by telecopier or other facsimile communication), given to the appropriate Person at its address or telecopy number set forth on the signature pages hereof or at such other address or telecopy number as such Person may specify, and effective when received at the address specified by such Person. Each party hereto, however, authorizes the Agent or such Purchaser Agent's to act on telephone notices of Purchases and Discount Rate and Tranche Period selections from any person the Agent or such Purchaser Agent in good faith believes to be acting on behalf of the relevant party and, at the Agent's or such Purchaser Agent's option, to tape record any such telephone conversation. Each party hereto agrees to deliver promptly to the Agent or such Purchaser Agent a confirmation of each telephone notice given or received by such party (signed by an authorized officer of such party), but the absence of such confirmation shall not affect the validity of the telephone notice. The Agent's or such Purchaser Agent's records of all such conversations shall be deemed correct and, if the confirmation of a conversation differs in any material respect from the action taken by the Agent or such Purchaser Agent, the records of the Agent or such Purchaser Agent shall govern absent manifest error. The number of days for any advance notice required hereunder may be waived (orally or in writing) by the Person receiving such notice and, in the case of notices to the Agent or such Purchaser Agent, the consent of each Person to which the Agent or such Purchaser Agent is required to forward such notice.

Section 9.3. Payments and Computations. Notwithstanding anything herein to the contrary, any amounts to be paid or transferred by the Seller or the Collection Agent to, or for the benefit of, any Purchaser or any other Person shall be paid or transferred to the Agent or appropriate Purchaser Agent, as specified herein. All amounts to be paid or deposited hereunder shall be paid or transferred on the day when due in immediately available Dollars (and, if due from the Seller or Collection Agent, by 2:00 p.m. (Atlanta time), with amounts received after such time being deemed paid on the Business Day following such receipt). The Seller hereby authorizes the Agent to debit the Seller Account for application to any amounts owed by the Seller hereunder. The Seller shall, to the extent permitted by law, pay to each Purchaser Agent upon demand, for the account of the applicable Person, interest on all amounts not paid or transferred by the Seller or the Collection Agent when due hereunder at a rate equal to the Prime Rate plus 2%, calculated from the date any such amount became due until the date paid in full. Any payment or other transfer of funds scheduled to be made on a day that is not a Business Day shall be made on the next Business Day, and any Discount Rate or interest rate accruing on such amount to be paid or transferred shall continue to accrue to such next Business Day. All computations of interest, fees, and Discount shall be calculated for the actual days elapsed based on a 360 day year.

Section 9.4. Sharing of Recoveries. Each Purchaser agrees that if it receives any recovery, through set-off, judicial action or otherwise, on any amount payable or recoverable hereunder in a greater proportion than should have been received hereunder or otherwise inconsistent with the provisions hereof, then the recipient of such recovery shall purchase for cash an interest in amounts owing to the other Purchasers (as return of Investment or otherwise), without representation or warranty except for the representation and warranty that such interest is being sold by each such other Purchaser free and clear of any Adverse Claim created or granted by such other Purchaser, in the amount necessary to create proportional participation by the Purchasers in such recovery (as if such recovery were distributed pursuant to Section 2.3). If all or any portion of such amount is thereafter recovered from the recipient, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

Section 9.5. Right of Setoff. During a Termination Event, each Purchaser is hereby authorized (in addition to any other rights it may have) to setoff, appropriate and apply (without presentment, demand, protest or other notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by such Purchaser (including by any branches or agencies of such Purchaser) to, or for the account of, the Seller against amounts owing by the Seller hereunder (even if contingent or unmatured).

Section 9.6. Amendments. Except as otherwise expressly provided herein, no amendment or waiver hereof or any other Transaction Document shall be effective unless signed by the Seller and the Instructing Group. In addition, no amendment of any Transaction Document shall, without the consent of (a) all the Purchasers, (i) extend the Termination Date or the date of any payment or transfer of Collections by the Seller to the Collection Agent or by the Collection Agent to the Agent or any Purchaser Agent, (ii) reduce the rate or extend the time of payment of Discount for any Eurodollar Tranche or Prime Tranche, (iii) reduce or extend the time of payment of any fee payable to the Purchasers, (iv) except as provided herein, release, transfer or modify any Committed Purchaser's Purchase Interest or change any Commitment, (v) amend the definition of Instructing Group, Termination Event or Section 1.1, 1.2, 1.5, 1.7, 2.1, 2.2, 2.3, 7.2 or 9.6, Article VI, Section 7.4 of the Purchase Agreement or any obligation of any Bergen Entity thereunder, (vi) consent to the assignment or transfer by the Seller or the Originator of any interest in the Receivables other than transfers under the Transaction Documents or permit any Bergen Entity to transfer any of its obligations under any Transaction Document except as expressly contemplated by the terms of the Transaction Documents, or (vii) amend any defined term relevant to the restrictions in clauses (i) through (vi) in a manner which would circumvent the intention of such restrictions or (b) the Agent and each affected Purchaser Agent, amend any provision hereof if the effect thereof is to affect the indemnities to, or the rights or duties of, the Agent or any Purchaser Agent or to reduce any fee payable for the Agent's own account. Notwithstanding the foregoing, the amount of any fee or other payment due and payable from the Seller or the Collection Agent to the Agent (for its own account), any Purchaser Agent or any Purchaser may be changed or otherwise adjusted solely with the consent of the Seller and the party to which such payment is payable. Any amendment hereof shall apply to each Purchaser equally and shall be binding upon the Seller, the Purchasers, the Purchaser Agents and the Agent. If required by the Rating Agencies for the applicable Conduit Purchaser, no material amendment hereof or assignment, termination, resignation or removal hereunder shall be effective unless a statement is obtained from the applicable Rating Agencies that its Rating will not be downgraded, withdrawn or suspended as a result of such amendment assignment, termination, resignation or removal. Furthermore, no amendment or waiver of clause (e) of the definition of Termination Event or clause (f)(vi) of the same definition shall be effective unless approved by the applicable Rating Agencies.

Section 9.7. Waivers. No failure or delay of the Agent, any Purchaser Agent or any Purchaser in exercising any power, right, privilege or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right, privilege or remedy preclude any other or further exercise thereof or the exercise of any other power, right, privilege or remedy. Any waiver hereof shall be effective only in the specific instance and for the specific purpose for which such waiver was given. After any waiver, the Seller, the Purchasers the Purchaser Agents and the Agent shall be restored to their former position and rights and any Potential Termination Event waived shall be deemed to be cured and not continuing, but no such waiver shall extend to (or impair any right consequent upon) any subsequent or other Potential Termination Event. Any additional Discount that has accrued after a Termination Event before the execution of a waiver thereof, solely as a result of the occurrence of such Termination Event, may be waived by the Agent or related Purchaser Agent at the direction of the Purchaser entitled thereto.

Section 9.8. Successors and Assigns; Participations; Assignments.

(a) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Except as otherwise provided herein, the Seller may not assign or transfer any of its rights or delegate any of its duties without the prior consent of the Agent, the Purchaser Agents and the Purchasers.

(b) Participations. Any Purchaser may sell to one or more Persons (each a "Participant") participating interests in the interests of such Purchaser hereunder and under the applicable Transfer Agreement. Such Purchaser shall remain solely responsible for performing its obligations hereunder, and the Seller, each Purchaser Agent and the Agent shall continue to deal solely and directly with such Purchaser in connection with such Purchaser's rights and obligations hereunder and under the Transfer Agreement. Each Participant shall be entitled to the benefits of Article VI and shall have the right of setoff through its participation in amounts owing hereunder to the same extent as if it were a Purchaser hereunder and under the applicable Transfer Agreement, which right of setoff is subject to such Participant's obligation to share with the Purchasers as provided in Section 9.4. A Purchaser shall not agree with a Participant to restrict such Purchaser's right to agree to any amendment hereto or to the applicable Transfer Agreement, except amendments described in clause (a) of Section 9.6.

(c) Assignments by Committed Purchasers. Any Committed Purchaser may assign to one or more Persons ("Purchasing Committed Purchasers"), acceptable to the applicable Purchaser Agent in its sole discretion and, prior to the occurrence of a Termination Event, subject to the prior written consent of the Seller (which consent will not be unreasonably withheld) any portion of its Commitment as a Committed Purchaser hereunder and under the applicable Transfer Agreement and Purchase Interest pursuant to a supplement hereto and to the applicable Transfer Agreement (a "Transfer Supplement") in form satisfactory to the applicable Purchaser Agent executed by each such Purchasing Committed Purchaser, such selling Committed Purchaser and the applicable Purchaser Agent. Any such assignment by a Committed Purchaser must be for an amount of at least Ten Million Dollars. Each Purchasing Committed Purchaser shall pay a fee of Three Thousand Dollars to the applicable Purchaser Agent. Any partial assignment shall be an assignment of an identical percentage of such selling Committed Purchaser Investment and its Commitment as a Committed Purchaser hereunder and under any applicable Transfer Agreement. Upon the execution and delivery to the applicable Purchaser Agent of the Transfer Supplement and payment by the Purchasing Committed Purchaser to the selling Committed Purchaser of the agreed purchase price, such selling Committed Purchaser shall be released from its future obligations hereunder and under the applicable Transfer Agreement to the extent of such assignment and such Purchasing Committed Purchaser shall for all purposes be a Committed Purchaser party hereto and shall have all the rights and obligations of a Committed Purchaser hereunder to the same extent as if it were an original party hereto and to the applicable Transfer Agreement with a Commitment as a Committed Purchaser, any Investment and any related Assigned Conduit Purchaser Settlement described in the Transfer Supplement.

(d) Replaceable Related Bank Purchaser. If any Related Bank Purchaser (a "Replaceable Purchaser") shall (i) petition the Seller for any amounts under Section 6.2 or (ii) have a short-term debt rating lower than the "A-1" by S&P and "P-1" by Moody's (unless such Related Bank Purchaser is also an Enhancement Bank), the Seller or applicable Conduit Purchaser may designate a replacement financial institution (a "Replacement Related Bank Purchaser") acceptable to the applicable Purchaser Agent and the applicable Conduit Purchaser, in its sole discretion and, prior to the occurrence of a Termination Event, subject to the prior written consent of the Seller (which consent will not be unreasonably withheld) to which such Replaceable Related Bank Purchaser shall, subject to its receipt of an amount equal to its Investment, any related Assigned Conduit Purchaser Settlement, and accrued Discount and fees thereon (plus, from the Seller, any Early Payment Fee that would have been payable if such transferred Investment had been paid on such date) and all amounts payable under Section 6.2, promptly assign all of its rights, obligations and Commitment hereunder and under the applicable Transfer Agreement, together with all of its Purchase Interest, and any related Assigned Conduit Purchaser Settlement, to the Replacement Related Bank Purchaser in accordance with Section 9.8(c).

(e) Assignment by Conduit Purchasers. With the prior written consent of the Seller (not to be unreasonably withheld), each other party hereto agrees and consents (i) to each Conduit Purchaser's assignment, participation, grant of security interests in or other transfers of any portion of not less than $25,000,000 of, or any of its beneficial interest in, the Purchase Interest and the related Assigned Conduit Purchaser Settlement and (ii) to the complete assignment by such Conduit Purchaser of all of its rights and obligations hereunder to any Person reasonably acceptable to the Seller, and upon such assignment such Conduit Purchaser shall be released from all obligations and duties hereunder. Each Conduit Purchaser shall promptly notify each party hereto of any such assignment. Each party hereto (including without limitation the Seller) hereby consents to the assumption by Redwood of the obligations of GECC as Conduit Purchaser hereunder and the assignment to Redwood by GECC of such of GECC's rights as a Conduit Purchaser hereunder as shall be determined by GECC and Redwood. Upon each such assignment of any portion of a Conduit Purchaser's Purchase Interest and the related Assigned Conduit Purchaser Settlement, the assignee shall have all of the rights of such Conduit Purchaser hereunder related to such Purchase Interest and related Assigned Conduit Purchaser Settlement.

(f) Opinions of Counsel. If required by any Purchaser Agent or to maintain the Ratings, each Transfer Supplement must be accompanied by an opinion of counsel of the assignee as to such matters as such Purchaser Agent may reasonably request.

Section 9.9. Intended Tax Characterization. It is the intention of the parties hereto that, for the purposes of all Taxes, the transactions contemplated hereby shall be treated as a loan by the Purchasers (through the Agent) to the Seller that is secured by the Receivables (the "Intended Tax Characterization"). The parties hereto agree to report and otherwise to act for the purposes of all Taxes in a manner consistent with the Intended Tax Characterization. As provided in Section 5.1(g), the Seller hereby grants to the Agent, for the ratable benefit of the Purchaser Agents and the Purchasers, a security interest in all Receivables and Collections to secure the payment of all amounts other than Investment owing hereunder and (to the extent of the Sold Interest) to secure the repayment of all Investment.

Section 9.10. Confidentiality. The parties hereto agree to hold the Transaction Documents or any other confidential or proprietary information received in connection therewith in confidence and agree not to provide any Person with copies of any Transaction Document or such other confidential or proprietary information other than to (i) any officers, directors, members, managers, employees or outside accountants, auditors or attorneys thereof, (ii) any prospective or actual assignee or participant which (in each case) has signed a confidentiality agreement substantially in the form of the confidentiality agreement signed by the Agent prior to the date hereof, (iii) any rating agency, (iv) any surety, guarantor or credit or liquidity enhancer to the Agent, any Purchaser Agent or any Purchaser which (in each case) has signed a confidentiality agreement substantially in the form of the confidentiality agreement, (v) any Conduit Purchaser's administrator, management company, referral agents, issuing agents or depositaries or CP Dealers and (vi) Governmental Authorities with appropriate jurisdiction. Notwithstanding the above stated obligations, provided that the other parties hereto are given notice of the intended disclosure or use, the parties hereto will not be liable for disclosure or use of such information which such Person can establish by tangible evidence: (i) was required by law, including pursuant to a valid subpoena or other legal process, (ii) was in such Person's possession or known to such Person prior to receipt or (iii) is or becomes known to the public through disclosure in a printed publication (without breach of any of such Person's obligations hereunder).

Section 9.11. Agreement Not to Petition. Each party hereto agrees, for the benefit of the holders of the privately or publicly placed indebtedness for borrowed money for any Conduit Purchaser, not, prior to the date which is one (1) year and one (1) day after the payment in full of all such indebtedness, to acquiesce, petition or otherwise, directly or indirectly, invoke, or cause any Conduit Purchaser to invoke, the process of any Governmental Authority for the purpose of (a) commencing or sustaining a case against any Conduit Purchaser under any federal or state bankruptcy, insolvency or similar law (including the Federal Bankruptcy Code), (b) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for such Conduit Purchaser, or any substantial part of its property, or (c) ordering the winding up or liquidation of the affairs of such Conduit Purchaser.

Section 9.12. Excess Funds. Other than amounts payable under Section 9.4, such Conduit Purchaser shall be required to make payment of the amounts required to be paid pursuant hereto only if such Conduit Purchaser has Excess Funds (as defined below). If a Conduit Purchaser does not have Excess Funds, the excess of the amount due hereunder (other than pursuant to Section 9.4) over the amount paid shall not constitute a "claim" (as defined in Section 101(5) of the Federal Bankruptcy Code) against such Conduit Purchaser until such time as such Conduit Purchaser has Excess Funds. If a Conduit Purchaser does not have sufficient Excess Funds to make any payment due hereunder (other than pursuant to Section 9.4), then such Conduit Purchaser may pay a lesser amount and make additional payments that in the aggregate equal the amount of deficiency as soon as possible thereafter. The term "Excess Funds" means the excess of (a) the aggregate projected value of a Conduit Purchaser assets and other property (including cash and cash equivalents), over (b) the sum of (i) the sum of all scheduled payments of principal, interest and other amounts payable on publicly or privately placed indebtedness of such Conduit Purchaser for borrowed money, plus (ii) the sum of all other liabilities, indebtedness and other obligations of such Conduit Purchaser for borrowed money or owed to any credit or liquidity provider, together with all unpaid interest then accrued thereon, plus (iii) all taxes payable by such Conduit Purchaser to the Internal Revenue Service, plus (iv) all other indebtedness, liabilities and obligations of such Conduit Purchaser then due and payable, but the amount of any liability, indebtedness or obligation of such Conduit Purchaser shall not exceed the projected value of the assets to which recourse for such liability, indebtedness or obligation is limited. Excess Funds shall be calculated once each Business Day.

Section 9.13. No Recourse. The obligations of each Conduit Purchaser, its management company, its administrator and its referral agents (each a "Program Administrator" ) under any Transaction Document or other document (each, a "Program Document") to which a Program Administrator is a party are solely the corporate obligations of such Program Administrator and no recourse shall be had for such obligations against any Affiliate, director, officer, member, manager, employee, attorney or agent of any Program Administrator.

Section 9.14. Headings; Counterparts. Article and Section Headings in this Agreement are for reference only and shall not affect the construction of this Agreement. This Agreement may be executed by different parties on any number of counterparts, each of which shall constitute an original and all of which, taken together, shall constitute one and the same agreement.

Section 9.15. Cumulative Rights and Severability. All rights and remedies of the Purchasers, Purchaser Agents and Agent hereunder shall be cumulative and non-exclusive of any rights or remedies such Persons have under law or otherwise. Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, in such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and without affecting such provision in any other jurisdiction.

Section 9.16. Governing Law; Submission to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws (and not the law of conflicts) of the State of New York. The Seller hereby submits to the nonexclusive jurisdiction of the united states district court for the southern district of new york and of any new york state court sitting in new york, new york for purposes of all legal proceedings arising out of, or relating to, the Transaction Documents or the transactions contemplated thereby. The Seller hereby irrevocably waives, to the fullest extent permitted by law, any objection it may now or hereafter have to the venue of any such proceeding and any claim that any such proceeding has been brought in an inconvenient forum. Nothing in this Section 9.16 shall affect the right of the Agent, any Purchaser Agent or any Purchaser to bring any action or proceeding against the Seller or its property in the courts of other jurisdictions.

Section 9.17. Waiver of Trial by Jury. To the extent permitted by applicable law, each party hereto irrevocably waives all right of trial by jury in any action, proceeding or counterclaim arising out of, or in connection with, any transaction document or any matter arising thereunder.

Section 9.18. Entire Agreement. The Transaction Documents constitute the entire understanding of the parties thereto concerning the subject matter thereof. Any previous or contemporaneous agreements, whether written or oral, concerning such matters are superseded thereby.

In Witness Whereof, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof.

Wachovia Bank, N.A., as the Related Bank Purchaser
for Blue Ridge, as the Blue Ridge Purchaser Agent
and as the Agent

Title

Address:            191 Peachtree Street, N.E., Mail Stop GA-423
                         Atlanta, Georgia 30303
                         Attn: Elizabeth K. Wagner, Asset-Backed Finance
Telephone:          (404) 332-1398

Telecopy: (404) 332-5152

Blue Ridge Asset Funding Corporation, as
a Conduit Purchaser
By: Wachovia Bank, N.A.,

as attorney-in-fact

BY:

Title

Address:            c/o Wachovia Bank, N.A.
                        191 Peachtree Street, N.E.
                        Atlanta, Georgia 30303
                        Attn: Brian Mellone
                        Telephone: (404) 332-4019
                        Facsimile: (404) 332-5152

The Bank of Nova Scotia, as the Related Bank Purchaser for Liberty Street, and as the Liberty Street Purchaser Agent

By:
            Title:
            Address:     One Liberty Plaza
                              26^th Floor
                              New York, New York 10006
                              Attn: Herman Santiago
            Telephone: (212) 225-5070
            Telecopy: (212) 225-5274

Liberty Street Funding Corp., as a Conduit Purchaser

By:
            Title:
            Address:     Global Securitization Services, L.L.C.
                              West 43^rd Street, Suite 704
                              New York, New York 10036
                              Attn: Andrew L. Stidd
            Telephone: (212) 302-8330
            Telecopy: (212) 302-8767

General Electric Capital Corporation, as the Related Bank Purchaser for GECC and as the GECC Purchaser Agent

By:
            Title:
            Address:     201 High Ridge Road
                              Stamford, Connecticut 06927
                              Attn: Vice President
                              Portfolio/Bergen Brunswig
            Telephone: (203) 316-7607
            Telecopy: (203) 316-7821

With Copies to:

            Address:     General Electric Capital
                              Corporation
                              3001 Summer Street, 2^nd Floor
                              Stamford, Connecticut 06927
            Telephone: (203) 961-5488
            Telecopy: (203) 961-2953

            Address:     Address: Sidley & Austin
                              555 West Fifth Street
                              Los Angeles, California 90013
                              Attn: Edward D. (Tod) Eddy,
                                                      III, Esq.
            Telephone: (213) 896-6619
            Telecopy: (213) 896-6600

General Electric Capital Corporation, as a Conduit Purchaser

By:

Title:

Blue Hill, Inc.,
as Seller

By:
Title

Address:            c/o Bergen Brunswig Corporation
                        4000 Metropolitan Drive
                        Orange, California 92868
                        Attn:

Telephone: (714) 385-4263

Telecopy: (714) 385-8888

Bergen Brunswig Drug Company
as Initial Collection Agent

By:
Title

Address:            c/o Bergen Brunswig Corporation
                        4000 Metropolitan Drive
                        Orange, California 92868
                        Attn:

Telephone: (714) 385-4263

Telecopy: (714) 385-8888

Schedule I
Definitions

The following terms have the meanings set forth, or referred to, below:

"Adjusted Dilution Ratio" means, at any time, the average of the Dilution Ratio for each of the 12 most recently completed calendar months.

"Adverse Claim" means, for any asset or property of a Person, a lien, security interest, charge, mortgage, pledge, hypothecation, assignment or encumbrance, or any other right or similar claim, in, of or on such asset or property in favor of any other Person, except those created by the Transaction Documents.

"Affiliate" means, for any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person. For purposes of this definition, "control" means the power, directly or indirectly, to either (i) vote ten percent (10%) or more of the securities having ordinary voting power for the election of directors of a Person or (ii) cause the direction of the management and policies of a Person.

"Agent" is defined in the first paragraph hereof.

"Aggregate Commitment" means the aggregate of all Commitments of each Purchaser Group, as such amount may be reduced pursuant to Section 1.6.

"Aggregate Investment" means the sum of the Investments of all Purchasers.

"Aggregate Reserve" means, at any time at which such amount is calculated, the greater of (a) the sum of the Loss Reserve, Dilution Reserve and Discount Reserve and (b) the Required Reserve Floor.

"Agreement" is defined in the first paragraph hereof.

"Applicable Margins" refers to each such term as defined in each of the Credit Agreements, as such term may be amended in either Credit Agreement from time to time; provided, if both the Credit Agreements shall be terminated, then the term "Applicable Margin" shall have the same meaning such term had in the Credit Agreement most recently terminated immediately prior to such termination.

"Assigned Conduit Purchaser Settlement" means, for each Related Bank Purchaser for a Conduit Purchaser for any Put, the product of such Related Bank Purchaser's Purchased Percentage and the amount of the Conduit Purchaser Settlement being transferred pursuant to such Put.

"Bankruptcy Event" means, for any Person, that (a) such Person makes a general assignment for the benefit of creditors or any proceeding is instituted by or against such Person seeking to adjudicate it bankrupt or insolvent, or seeking the liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or any substantial part of its property or (b) such Person takes any corporate action to authorize any such action.

"Bergen Entity" means the Parent and the Originator.

"Blue Ridge" is defined in the first paragraph hereof.

"Blue Ridge Committed Purchasers" means the Related Bank Purchasers for Blue Ridge.

"Blue Ridge Purchaser Agent" means Wachovia Bank, N.A.

"Blue Ridge Purchaser Group" means Blue Ridge and the Blue Ridge Committed Purchasers.

"Business Day" means any day other than (a) a Saturday, Sunday or other day on which banks in New York City, New York or Atlanta, Georgia are authorized or required to close, (b) a holiday on the Federal Reserve calendar and, (c) solely for matters relating to a Eurodollar Tranche, a day on which dealings in Dollars are not carried on in the London interbank market.

"Charge-Off" means any Receivable that has or should have been (in accordance with the Credit and Collection Policy) charged off or written off by the Seller.

"Collection" means any amount paid, or deemed paid, on a Receivable or by the Seller as a Deemed Collection under Section 1.5(b).

"Collection Agent" is defined in Section 3.1(a).

"Collection Agent Fee" is defined in Section 3.6.

"Collection Agent Replacement Event" means the occurrence of any one or more of the following:

(a) the Collection Agent (or any sub-collection agent) fails to observe or perform any material term, covenant or agreement under any Transaction Document and such failure continues after any applicable notice or cure period;

(b) any written representation, warranty, certification or statement made by the Collection Agent in, or pursuant to, any Transaction Document proves to have been incorrect in any material adverse respect when made;

(d) an "Event of Default" shall have occurred and is continuing under either Credit Agreement; or

(e) for purposes of the use of the term "Collection Agent Replacement Event" in the Lock Box Letters and Depository Account Letters only, a Termination Event has occurred or is continuing.

"Commitment" means, in the case of each Committed Purchaser, the amount set forth opposite the name of such Committed Purchaser on Schedule II, and, in the case of each Purchaser Group, the amount set forth opposite the name of such Purchaser Group on Schedule II, in each case, as adjusted in accordance with Sections 1.6 and 9.8.

"Commitment Percentage" means, for each Related Bank Purchaser in a Purchaser Group, such Related Bank Purchaser's Commitment divided by the total of all Commitments of all Related Bank Purchasers in such Purchaser Group.

"Committed Purchasers" means all of the Related Bank Purchasers.

"Concentration Limit" means, with respect to any Obligor, the percentage of the Eligible Receivable Balance set forth in the table below based upon the short-term unsecured debt rating (or, in the absence of such rating, the equivalent long-term unsecured senior debt rating) currently assigned to them by S&P and Moody's (and, if such Obligor is rated by both agencies and has a split rating (except for an A-1+/P-1 rating), the applicable rating will be the lower of the two) (or, if larger, the Special Limit applicable to such Obligor):

S&P Rating

Moody's Rating

Allowable % of
Eligible Receivables

A-1+

P-1

10%

A-1

P-1

8%

A-2

P-2

6%

A-3

P-3

3%

Below A-3 or Not Rated by either S&P or Moody's

Below P-3 or Not Rated by either S&P or Moody's

2%

If an Obligor has neither a long-term unsecured debt rating nor a short-term unsecured debt rating by either S&P or Moody's, that Obligor's Concentration Limit will be 2% of the Eligible Receivables Balance.

"Conduit Purchaser" means each of Blue Ridge, Liberty Street, GECC (or Redwood) and any other Person designated as such that from time to time becomes a party hereto.

"Conduit Purchaser Investment Percentage" means a fraction, expressed as a decimal, obtained by dividing the Investment of a Conduit Purchaser by the Investment of all Purchasers.

"Conduit Purchaser Settlement" means the sum of all claims and rights to payment pursuant to Section 1.5 or 1.7 or any other provision owed to a Conduit Purchaser (or owed to the Agent or Purchaser Agent or the Collection Agent for the benefit of a Conduit Purchaser) by the Seller that, if paid, would be applied to reduce Investment.

"Coverage Ratio" means, as of any time, (a) the sum of the Aggregate Investment plus Aggregate Reserve divided by (b) the Net Receivables Balance.

"CP Dealer" means, at any time for any Conduit Purchaser, each Person such Conduit Purchaser then engages as a placement agent or commercial paper dealer.

"CP Discount" means, (i) with respect to Blue Ridge, the difference between (x) the Face Amount of any commercial paper note of Blue Ridge and (y) the proceeds received by the Purchaser with respect to such commercial paper note and (ii) with respect to any other Conduit Purchaser, the amount specified in the Rate Supplement for the relevant Purchaser Group.

"CP Rate" means (a) for the Blue Ridge Purchaser Group, CP Rate means, with respect to any CP Tranche Period applicable to the Blue Ridge Purchaser Group, the rate equivalent to the rate (or if more than one rate, the weighted average of the rates) at which commercial paper notes having a term equal to such CP Tranche Period are sold plus the amount of any placement agent or commercial paper dealer fees incurred in connection with such sale; provided, however, if the rate (or rates) is a discounted rate (or rates), the "CP Rate" for such CP Tranche Period shall be the rate (or, if more than one rate, the weighted average of the rates) resulting from converting such discount rate (or rates) to an interest-bearing equivalent rate and (b) for any other Conduit Purchaser, the rate designated as such in the Rate Supplement for the relevant Purchaser Group.

"Credit Agreement Margin" means the higher of the Applicable Margins.

"Credit Agreements" means, collectively, that certain (i) Amended and Restated Credit Agreement dated as of September 30, 1994 by and among the Originator and the Parent, as Borrowers, certain financial institutions, as the Lenders, and Bank of America, N.A. ("BofA"), as Agent for the Lenders, as has been amended and as may be amended, restated, substituted or replaced from time to time, and (ii) Credit Agreement dated as of April 23, 1999 by and among the Originator and the Parent, as Borrowers, certain financial institutions named therein, as the Lenders, BofA, as Administrative Agent, Chase Securities Inc., as Syndication Agent and Wachovia, as Documentation Agent as has been amended and as may be amended, restated, substituted or replaced from time to time.

"Credit and Collection Policy" means the Seller's credit and collection policy and practices relating to Receivables attached hereto as Exhibit I.

"Debt" of any Person shall mean, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services payment for which is deferred 90 days or more, but excluding obligations to trade creditors incurred in the ordinary course of business that are not overdue by more than 90 days unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers' acceptances and surety bonds, whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all capital lease obligations, (f) all obligations of such person under commodity purchase or option agreements or other commodity price hedging arrangements, in each case whether contingent or matured, (g) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, in each case whether contingent or matured, (h) all liabilities of such Person under Title IV of ERISA, (i) all guaranteed indebtedness of such Person, and (j) all indebtedness referred to in clauses (a) through (i) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness.

"Deemed Collections" is defined in Section 1.5(c).

"Default Proxy Ratio" means, a fraction (expressed as a percentage), for any calendar month (the "Measurement Month"), the numerator of which is the aggregate outstanding balance as of the end of such Measurement Month of all Defaulted Receivables less than 90 days past the due date plus the aggregate outstanding balance as of the end of such Measurement Month of all Receivables less than 61 days past due that have been Charge-Offs and the denominator of which is the amount of sales generated during the month that ended three months prior to the last day of such Measurement Month.

"Default Ratio" means the ratio (expressed as a percentage) for any calendar month of (a) the sum of the outstanding balance of all Defaulted Receivables at the end of the most recently completed calendar month to (b) the outstanding balance of all Receivables at the end of such calendar month.

"Defaulted Receivable" means any Receivable (a) on which any amount is unpaid more than 60 days past its original due date or (b) the Obligor on which has suffered a Bankruptcy Event.

"Delinquency Ratio" means, the ratio (expressed as a percentage), for any calendar month of (a) the aggregate outstanding balance of all Delinquent Receivables as of the end of the most recently completed three calendar month period to (b) the sum of the aggregate outstanding balance of all Receivables as of the end of such period.

"Delinquent Receivable" means any Receivable (other than a Charge-Off or Defaulted Receivable) on which any amount is unpaid more than 30 days past its original due date.

"Depositary Account" means each account maintained by the Collection Agent at a Depositary Bank for the purpose of receiving or concentrating Collections, which account shall be maintained in the name of the Seller.

"Depositary Account Agreement" means each agreement between the Collection Agent and a Depositary Bank concerning a Depositary Account.

"Depositary Account Letter" means a letter in substantially the form of Exhibit G-2 (or otherwise acceptable to the Agent) from the Seller and the Collection Agent to each Depositary Bank, acknowledged and accepted by such Depositary Bank and the Agent.

"Depositary Bank" means each bank listed as such on Exhibit F as revised pursuant to Section 5.1(i).

"Designated Financial Officer" means the chief financial officer of the Seller or the other relevant Bergen Entity, as applicable.

"Dilution Horizon Ratio" means, as of any date, an amount calculated by dividing the aggregate sales of the Originator for the most recent calendar month by the aggregate outstanding balance of the Net Receivables Balance as of the last day of the most recent calendar month.

"Dilution Ratio" means, as of any date, an amount (expressed as a percentage) equal to a fraction, (i) the numerator of which is the aggregate amount of payments owed by the Seller pursuant to the first sentence of Section 1.5(b) hereof during the previous calendar month, and (ii) the denominator of which is the amount of sales generated by the Originator during the previous calendar month.

"Dilution Reserve" means, at any time, the product of (a) the greater of (i) 6%, and (ii) three times the highest Dilution Ratio (expressed as a decimal) as of the last day of each of the most recently completed twelve full calendar months for which a Periodic Report is required to have been delivered and (iii) an amount (expressed as a percentage) equal to the product of (A) the sum of (I) 2 times the Adjusted Dilution Ratio and (II) the Dilution Volatility Component and (B) the Dilution Horizon Ratio multiplied by (b) the Net Receivables Balance at such time.

"Dilution Volatility Component" means an amount (expressed as a percentage) equal to the product of (a) the difference between (i) the highest three-month rolling average Dilution Ratio over the past 12 months and (ii) the Adjusted Dilution Ratio and (b) a fraction, the numerator of which is the highest three-month rolling average Dilution Ratio during the past 12 months and the denominator of which is the Adjusted Dilution Ratio.

"Discount" means, for any Tranche Period for any Purchaser Group, (a) the product of (i) the Discount Rate for that Purchaser Group for such Tranche Period, (ii) the total amount of Investment allocated by the Purchaser Agent to the Tranche Period, and (iii) the number of days elapsed during the Tranche Period divided by (b) 360 days.

"Discount Rate" means, (i) for any Tranche Period relating to a CP Tranche, the CP Rate applicable thereto, (ii) for any Tranche Period relating to a Eurodollar Tranche, the Eurodollar Rate applicable thereto and (iii) for any Tranche Period relating to a Prime Tranche, the Prime Rate applicable thereto.

"Discount Reserve" means, at any time, the product of (a) 1.5 multiplied by (b) the rate announced by Wachovia as its "Prime Rate " (which may not be its best or lowest rate) plus 2.00% multiplied by (c) Aggregate Investment multiplied by (d) a fraction, the numerator of which is the higher of (i) 30 and (ii) the average of the Turnover Ratios calculated for the most recent three calendar months for which Periodic Reports were required to be delivered and the denominator of which is 360.

"Dollar" and "$" means lawful currency of the United States of America.

"Downgrade Trigger" means the downgrading of the Parent's long-term unsecured, unsubordinated indebtedness to BB- by S&P or to Ba3 by Moody's.

"Early Payment Fee" means, if any Investment of a Purchaser allocated (or, in the case of a requested Purchase not made by the Committed Purchasers for any reason other than their default, scheduled to be allocated) to a Tranche Period for a CP Tranche or Eurodollar Tranche is reduced or terminated before the last day of such Tranche Period (the amount of Investment so reduced or terminated being referred to as the "Prepaid Amount"), the cost to the relevant Purchaser of terminating or reducing such Tranche, which shall be specified in the applicable Rate Supplement for that Purchaser or otherwise (a) for a CP Tranche means any compensation payable in prepaying the related commercial paper or, if not prepaid, any shortfall between the amount that will be available to a Conduit Purchaser, on the maturity date of the related commercial paper from reinvesting the Prepaid Amount in Permitted Investments and the Face Amount of such commercial paper and (b) for a Eurodollar Tranche will be determined based on the difference between the LIBOR applicable to such Tranche and the LIBOR applicable for a period equal to the remaining maturity of the Tranche on the date the Prepaid Amount is received.

"Eligible Receivable" means, at any time, any Receivable:

(i) the Obligor of which (a) is a resident of, or organized under the laws of, or with its chief executive office in, the USA; (b) is not an Affiliate of any of the parties hereto or the Originator; (c) is not a government or a governmental subdivision or agency; and (d) has not suffered a Bankruptcy Event;

(ii) which is stated to be due and payable within 30 days after the original statement date therefor;

(iii) which is not a Defaulted Receivable or a Charge-Off;

(iv) which is an "account" or "chattel paper" within the meaning of Section 9-105 and Section 9-106, respectively of the UCC of all applicable jurisdictions;

(v) which is denominated and payable only in Dollars in the USA;

(vi) which arises under a contract that is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, counterclaim, defense or other Adverse Claim, and is not an executory contract or unexpired lease within the meaning of Section 365 of the Bankruptcy Code;

(vii) which arises under a contract that (a) contains an obligation to pay a specified sum of money and is subject to no contingencies and (b) does not require the Obligor under such contract to consent to the transfer, sale or assignment of any receivable or right to payment arising under such contract;

(viii) which does not, in whole or in part, contravene any law, rule or regulation applicable thereto (including, without limitation, those relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy);

(ix) which satisfies all applicable requirements of the Credit and Collection Policy and was generated in the ordinary course of the Originator's business from the sale of goods or provision of services to a related Obligor solely by the Originator;

(x) which does not constitute an interest in or claim in or under any policy of insurance pursuant to 9-104(g) of the UCC;

(xi) for all Obligors with Special Limits and for each of the ten Obligors with the largest Outstanding balances of Receivables, not more than 25% of the aggregate outstanding balance of all Receivables of such Obligor of which are Defaulted Receivables; and

(xii) which is purchased by or contributed to the Seller pursuant to the Purchase Agreement.

"Eligible Receivables Balance" means, at any time, the aggregate outstanding principal balance of all Eligible Receivables.

"Enhancement Bank" means any Person providing credit support to a Purchaser for such Purchaser's account, including pursuant to an unfunded commitment.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974 and any regulations promulgated thereunder.

"ERISA Affiliate" shall mean, with respect to the Originator, any trade or business (whether or not incorporated) that, together with the Originator, are treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the IRC.

"Eurodollar Rate" means for any Committed Purchaser, for any Tranche Period for a Eurodollar Tranche, the rate specified in the applicable Rate Supplement for that Purchaser or otherwise the sum of (a) LIBOR for such Tranche Period divided by 1 minus the "Reserve Requirement" plus (b) the sum of 0.60% and the Credit Agreement Margin plus the additional margin, if any, provided for in the Fee Letter, plus (c) during the pendency of a Termination Event, 2.00%; where "Reserve Requirement" means, for any Tranche Period for a Eurodollar Tranche, the maximum reserve requirement imposed during such Tranche Period on "eurocurrency liabilities" as currently defined in Regulation D of the Board of Governors of the Federal Reserve System.

"Excluded Taxes" means and includes any of the following Taxes: (a) any Taxes imposed by any jurisdiction in which a Person is organized, does business or maintains a permanent establishment solely by virtue of such organization, business or maintenance of a permanent establishment, (b) any Taxes on, or measured by, the overall net income of a Person; (c) any Taxes that would not be imposed if a Person were a "United States person" as defined in section 7701(a)(30) of the Internal Revenue Code of 1986, as amended and (d) any withholding taxes, to the extent that the relevant Person is eligible to claim a reduction in or exclusion from such withholding taxes under applicable statute or tax treaties in effect at the time such withholding taxes are imposed.

"Face Amount" means the face amount of any commercial paper issued by a Conduit Purchaser on a discount basis or, if not issued on a discount basis, the principal amount of such note and interest scheduled to accrue thereon to its stated maturity.

"Federal Funds Rate" means for any day the greater of (i) the highest rate per annum as determined by any Purchaser Agent at which overnight Federal funds are offered to such Purchaser Agent for such day by major banks in the interbank market, and (ii) if any Purchaser Agent is borrowing overnight funds from a Federal Reserve Bank that day, the highest rate per annum at which such overnight borrowings are made on that day. Each determination of the Federal Funds Rate by a Purchaser Agent shall be conclusive and binding on the Seller except in the case of manifest error and shall be reported to the Agent.

"Fee Letter" means, for each Purchaser Group the letter agreement dated as of the date hereof among the Seller and the Purchaser Agent for the applicable Purchaser Group.

"Funding Agreement" means any agreement or instrument executed by a Purchaser and executed by or in favor of any Funding Source or executed by any Funding Source at the request of a Purchaser.

"Funding Source" means any Enhancement Bank, Liquidity Bank or other insurance company, bank or other financial institution providing liquidity, back-up purchase or credit for any Conduit Purchaser.

"GAAP" means generally accepted accounting principles in the USA, applied on a consistent basis.

"GECC" is defined in the first paragraph hereof.

"GECC Committed Purchasers" means the Related Bank Purchasers for GECC.

"GECC Conduit Purchaser" means GECC as initial Conduit Purchaser and its assigns (including without limitation Redwood Receivables Corporation).

"GECC Purchaser Agent" mean GECC, as agent for the GECC Purchaser Group.

"GECC Purchaser Group" means the GECC Conduit Purchaser, the GECC Committed Purchasers and their related Liquidity Banks and Enhancement Banks.

"Governmental Authority" means any (a) Federal, state, municipal or other governmental entity, board, bureau, agency or instrumentality, (b) administrative or regulatory authority (including any central bank or similar authority) or (c) court, judicial authority or arbitrator, in each case, whether foreign or domestic.

"Incremental Purchase" is defined in Section 1.1(b).

"Initial Collection Agent" is defined in the first paragraph hereof.

"Instructing Group" means all Purchaser Agents representing all of the Purchaser Groups.

"Intended Tax Characterization" is defined in Section 9.9.

"Interim Liquidation" means any time before the Termination Date during which no Reinvestment Purchases are made by any Purchaser, as established pursuant to Section 1.2.

"Investment" means, for each Purchaser, (a) the sum of (i) all Incremental Purchases by such Purchaser and (ii) the aggregate amount of any payments or exchanges made by, or on behalf of, such Purchaser to any other Purchaser and applied by such other Purchaser to acquire Investment from such other Purchaser minus (b) all Collections, amounts received from other Purchasers and other amounts received or exchanged and, in each case, applied by the Agent or such Purchaser to reduce such Purchaser's Investment. A Purchaser's Investment shall be restored to the extent any amounts so received or exchanged and applied are rescinded or must be returned for any reason.

"IRC" means the Internal Revenue Code of 1986, as amended and any regulations promulgated thereunder.

"IRS" means the Internal Revenue Service.

"Liberty Street" is defined in the first paragraph hereof.

"Liberty Street Committed Purchasers" means the Related Bank Purchasers for Liberty Street.

"Liberty Street Purchaser Agent" means The Bank of Nova Scotia.

"Liberty Street Purchaser Group" means Liberty Street and the Liberty Street Committed Purchasers.

"LIBOR" means, with respect to any Committed Purchaser, for any Tranche Period for a Eurodollar Tranche or other time period, the rate per annum (rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for deposits in Dollars for a period equal to such Tranche Period or other period, which appears on Page 3750 of the Telerate Service (or any successor page or successor service that displays the British Bankers' Association Interest Settlement Rates for Dollar deposits) as of 11:00 a.m. (London, England time) two Business Days before the commencement of such Tranche Period or other period. If for any Tranche Period for a Eurodollar Tranche no such displayed rate is available (or, for any other period, if such displayed rate is not available or the need to calculate LIBOR is not notified to the Purchaser Agent for such Committed Purchaser at least three Business Days before the commencement of the period for which it is to be determined), such Purchaser Agent shall determine such rate based on the rates such Purchaser Agent is offered deposits of such duration in the London interbank market.

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

"Liquidation Period" means, for a Conduit Purchaser, all times when such Conduit Purchaser is not making Reinvestment Purchases pursuant to Section 1.1(d) and, for all Purchasers, all times (x) during an Interim Liquidation and (y) on and after the Termination Date.

"Liquidity Bank" means any commercial lending institution that is at any time a Purchaser or purchaser under any Transfer Agreement.

"Lock-Box" means each post office box or bank box listed on Exhibit F, as revised pursuant to Section 5.1(i).

"Lock-Box Account" means each account maintained by the Collection Agent at a Lock-Box Bank for the purpose of receiving or concentrating Collections, which account shall be maintained in the name of the Seller.

"Lock-Box Agreement" means each agreement between the Collection Agent and a Lock-Box Bank concerning a Lock-Box Account.

"Lock-Box Bank" means each bank listed as such on Exhibit F, as revised pursuant to Section 5.1(i).

"Lock-Box Letter" means a letter in substantially the form of Exhibit G-1 (or otherwise acceptable to the Agent) from the Seller and the Collection Agent to each Lock-Box Bank, acknowledged and accepted by such Lock-Box Bank and the Agent.

"Loss Horizon Ratio" means, at any time, a fraction (expressed as a ratio) the numerator of which is the aggregate outstanding balance of Receivables generated by the Originator during the most recent three month period and the denominator of which is the Net Receivables Balance as of the last day of such period.

"Loss Reserve" means, at any time, the product of (i) the greater of (a) 10% and (b) two times the product of the highest average Default Proxy Ratio for any consecutive three month period ended during the previous 12 months multiplied by the Loss Horizon Ratio calculated at the end of such period multiplied by (ii) the Net Receivables Balance at such time.

"Loss-to-Liquidation Ratio" means, for any calendar month, the ratio (expressed as a percentage) of the outstanding balance of Charge-Offs made during the most recent three calendar month period to the aggregate amount of Collections during such three month period.

"Material Adverse Effect" means a material adverse effect on the collectibility of the Receivables, taken as a whole, or the Seller's or any other Bergen Entity's financial condition, business, operations or prospects or ability to perform its obligations under any Transaction Document.

"Matured Aggregate Investment" means, at any time, the Matured Value of all Conduit Purchasers' Investments plus the total Investments of all other Purchasers then outstanding.

"Matured Value" means, of any Investment, the sum of such Investment and all unpaid Discount scheduled to become due (whether or not then due) on such Investment during all Tranche Periods to which any portion of such Investment has been allocated.

"Maximum Incremental Purchase Amount" means, at any time, the lesser of (a) the difference between the Purchase Limit and the Aggregate Investment then outstanding and (b) the difference between the Aggregate Commitment and the Matured Aggregate Investment then outstanding.

"Moody's" means Moody's Investors Service, Inc.

"Net Receivables Balance" means the Eligible Balance less the amount by which the Eligible Receivables Balance exceeds the Concentration Limits for all Obligors.

"Obligor" means, for any Receivable, each Person obligated to pay such Receivable and each guarantor of such obligation.

"Originator" means Bergen Brunswig Drug Company, a California corporation.

"Parent" means Bergen Brunswig Corporation, a New Jersey corporation.

"PBGC" means Pension Benefit Guaranty Corporation.

"Periodic Report" is defined in Section 3.3.

"Pension Plan" shall mean a Plan described in Section 3(2) of ERISA.

"Permitted Investments" shall mean (a) evidences of indebtedness, maturing not more than thirty (30) days after the date of purchase thereof, issued by, or the full and timely payment of which is guaranteed by, the full faith and credit of, the federal government of the United States of America, (b) repurchase agreements with banking institutions or broker-dealers that are registered under the Securities Exchange Act of 1934 fully secured by obligations of the kind specified in clause (a) above, (c) money market funds denominated in Dollars rated not lower than A-1 (and without the "r" symbol attached to any such rating) by S&P and P-1 by Moody's or otherwise acceptable to the Rating Agencies or (d) commercial paper denominated in Dollars issued by any corporation incorporated under the laws of the United States or any political subdivision thereof, provided that such commercial paper is rated at least A-1 (and without any "r" symbol attached to any such rating) thereof by S&P and at least Prime-1 thereof by Moody's.

"Person" means an individual, partnership, corporation, association, joint venture, Governmental Authority or other entity of any kind.

"Plan" shall mean, at any time, an "employee benefit plan," as defined in Section 3(3) of ERISA, that the Originator or an ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by the Originator or ERISA Affiliate.

"Potential Termination Event" means any Termination Event or any event or condition that with the lapse of time or giving of notice, or both, would constitute a Termination Event.

"Pricing Letter" means the (i) for the Blue Ridge Purchaser Group letter agreement dated as of the date hereof among the Liquidity Banks for Blue Ridge, the Blue Ridge Purchaser Agent and the Seller and (ii) for any other Purchaser Group, a letter agreement among the Liquidity Banks for such Purchaser Group, its Purchaser Agent and the Seller.

"Prime Rate" means, for any period for any Purchaser Group, the rate specified in the Rate Supplement for that Purchaser Group or, if no such rate is specified, the daily average during such period of (a) the greater of (i)(x) for the Blue Ridge Purchaser Group, that interest rate denominated and set by Wachovia as its "Prime Rate" from time to time as an interest rate basis for borrowings, and (y) for any other Purchaser Group, the rate set forth as its Purchaser Agents "prime rate" or equivalent in such Purchaser Group's Rate Supplement, plus in the case of either (x) or (y) 0.60% per annum, and (ii) the Federal Funds Rate plus 0.50% plus (b) during the pendency of a Termination Event, 2.00% per annum. The Prime Rate for the Blue Ridge Purchaser Group is but one of several interest rate basis used by Wachovia. Wachovia lends at interest rates above and below the Prime Rate.

"Purchase" is defined in Section 1.1(a).

"Purchase Agreement" means the Purchase and Sale Agreement dated as of the date hereof between the Seller and the Originator.

"Purchase Date" is defined in Section 1.1(c).

"Purchase Interest" means, for a Purchaser, the percentage ownership interest in the Receivables and Collections held by such Purchaser, calculated when and as described in Section 1.1(a); provided, however, that (except for purposes of computing a Purchase Interest or the Sold Interest in Section 1.5 or 2.3) at any time the Sold Interest would otherwise exceed 100% each Purchaser then holding any Investment shall have its Purchase Interest reduced by multiplying such Purchase Interest by a fraction equal to 100% divided by the Sold Interest otherwise then in effect, so that the Sold Interest is thereby reduced to 100%.

"Purchase Limit" means $350,000,000.

"Purchased Percentage" means, for any Put, for each Committed Purchaser, its Commitment Percentage or such lesser percentage as is necessary to prevent the Purchase Price of such Purchaser from exceeding its Unused Commitment.

"Purchaser Agent" means Blue Ridge Purchaser Agent, the Liberty Street Purchaser Agent, the GECC Purchaser Agent or any other person who becomes a party to this Agreement as a "Purchaser Agent."

"Purchaser Group" means, for each Conduit Purchaser, such Conduit Purchaser, its Related Bank Purchasers, and its related Liquidity Banks and Enhancement Banks (if any).

"Purchaser Reserve Percentage" means, for each Purchaser, the Reserve Percentage multiplied by a fraction, the numerator of which is such Purchaser's outstanding Investment and the denominator of which is the Aggregate Investment.

"Purchasers" means the Conduit Purchasers and the Related Bank Purchasers.

"Put" is defined in Section 2.1(a).

"Ratable Share" means, for each Purchaser Group, such Purchaser Group's aggregate Commitments divided by the aggregate Commitments of all Purchaser Groups.

"Rate Supplement" means, for each Purchaser Group that becomes a party hereto after the date hereof, a Rate Supplement among the members of such Purchaser Group, the Seller and the Agent.

"Rating Agency" means, for any Conduit Purchaser, Moody's, S&P and any other rating agency such Conduit Purchaser chooses to rate its commercial paper notes.

"Ratings" means, for any Conduit Purchaser, the ratings by the Rating Agencies of such Conduit Purchase of the indebtedness for borrowed money of such Conduit Purchaser.

"Receivable" means each obligation of an Obligor to pay for merchandise sold or services rendered by the Originator and transferred to the Seller pursuant to the Purchase Agreement and includes the Originator's rights to payment of any interest or finance charges and all proceeds of the foregoing. During any Interim Liquidation and on and after the Termination Date, the term "Receivable" shall only include such receivables existing on the date such Interim Liquidation commenced or Termination Date occurred, as applicable. Deemed Collections shall reduce the outstanding balance of Receivables hereunder, so that any Receivable that has its outstanding balance deemed collected shall cease to be a Receivable hereunder after (x) the Collection Agent receives payment of such Deemed Collections under Section 1.5(b) or (y) if such Deemed Collection is received before the Termination Date, an adjustment to the Sold Interest permitted by Section 1.5(c) is made.

"Records" means, for any Receivable, all contracts, books, records and other documents or information (including computer programs, tapes, disks, software and related property and rights) relating to such Receivable or the related Obligor to the extent it relates to such Receivable.

"Redwood" shall mean Redwood Receivables Corporation, a Delaware corporation.

"Reinvestment Purchase" is defined in Section 1.1(b).

"Related Bank Purchasers" means the Persons listed as such (and their respective Purchase Commitments) for each Conduit Purchaser as listed on Schedule II hereto.

"Related Security" means all of the Originator's rights in the merchandise (including returned goods) and contracts relating to the Receivables, all security interests, guaranties and property securing or supporting payment of the Receivables, all Records and all proceeds of the foregoing.

"Required Reserve Floor" means, at any time, the product of (a) 29% and (b) the Net Receivables Balance at such time.

"Reserve Percentage" means, at any time, the quotient obtained by dividing (a) the Aggregate Reserve by (b) the Net Receivables Balance.

"Retiree Welfare Plan" shall mean, at any time, a Welfare Plan that provides for continuing coverage or benefits for any participant or any beneficiary of a participant after such participant's termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the participant.

"Seller" is defined in the first paragraph hereof.

"Seller Account" means the Seller's account designated by the Seller to the Agent in writing.

"Seller Collateral" is defined in Section 1.1(e).

"Settlement Date" means (i) the 20th day of each calendar month or (ii) after a Downgrade Trigger, (A) the fifth day of each calendar month commencing with the fifth day of the calendar month that occurs at least 5 Business Days after the occurrence of the Downgrade Trigger with respect to the Settlement Period described in clause (ii) (A) of such definition and (B) the 20th day of each day of each calendar month with respect to the Settlement Period described in clause (ii) (B) of such definition; provided that, in any month in which a Downgrade Trigger does not occur at least 5 Business Days prior to the fifth day of such calendar month, the Settlement Period shall be a full calendar month, or, in each case, if such day is not a Business Day, the next succeeding Business Day.

"Settlement Period" means (i) a calendar month and (ii) if a Downgrade Trigger has occurred (A) the period from the first day of each calendar month to the fifteenth day of each calendar month, and (B) the period from the sixteenth day of each calendar month to the last day of each calendar month.

"Significant Subsidiary" refers to such term as defined in each Credit Agreement, as such term may be amended from time to time; provided, if the Credit Agreements shall be terminated, then the term "Significant Subsidiary" shall have the same meaning such term had immediately prior to such termination.

"Sold Interest" is defined in Section 1.1(a).

"Solvent" shall mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities (such as Litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can reasonably be expected to become an actual or matured liability.

"Special Limit" means, (i) for National Rx, Inc. ("National Rx"), a wholly owned subsidiary of Merck-Medco Managed Care, Inc., a wholly owned subsidiary of Merck & Co., Inc. ("Merck"), 15% of the Eligible Receivables Balance, provided, however, that such Special Limit shall be automatically deemed revoked (A) at the time, if any, when Merck ceases to have a short-term unsecured senior debt rating of higher than "A-2" from S&P and a short-term unsecured senior debt rating of higher than "P-2" from Moody's or (B) National Rx shall cease at any time to be, directly or indirectly, a wholly owned subsidiary of Merck, (ii) for Longs Drug Stores Corporation ("Longs"), 10% of the Eligible Receivables Balance; provided, however, that such Special Limit shall be automatically deemed revoked at the time, if any, when the sum of Delinquent Receivables and Defaulted Receivables to Longs exceeds 50% of the total outstanding balance of Receivables to Longs, unless in the case of either (i) or (ii), the Agent, at the direction of the Instructing Group, notifies the Seller of a different limit, (iii) for Walgreen Company, 12% of the Eligible Receivables Balance; provided, however, that such Special Limit shall be deemed automatically revoked at any time, if any, when Walgreen Company ceases to have a short-term unsecured senior debt rating of higher than "A-2" from S&P and a short-term unsecured senior debt rating of higher than "P-2" from Moody's, and (iv) such other "Special Limits" as shall be agreed to in writing by the Instructing Group for other Obligors from time to time and approved by the required Rating Agencies. If the Special Limit for National Rx is revoked as indicated in subsection (i)(A) of this definition, the Concentration Limit for National Rx will be based on the Merck short-term unsecured senior debt ratings and the associated Concentration Limits in the table appearing in such definition. If the Special Limit for National Rx is revoked as indicated in subsection (i)(B) of this definition, the Concentration Limit for National Rx will be based on the short-term unsecured senior debt ratings of National Rx and the associated Concentration Limits in the table appearing in such definition. If the Special Limit for any other Obligor is revoked at any time, such Obligor's Concentration Limit will be based on its short-term unsecured senior debt rating per the table appearing in the definition of "Concentration Limit."

"S&P" means Standard & Poor's Ratings Group.

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

"Stockholders" shall mean, with respect to any Person, each holder of Stock of such Person.

"Subordinated Note" means each revolving promissory note issued by the Seller to the Originator under the Purchase Agreement.

"Taxes" means all taxes, charges, fees, levies or other assessments (including income, gross receipts, profits, withholding, excise, property, sales, use, license, occupation and franchise taxes and including any related interest, penalties or other additions) imposed by any jurisdiction or taxing authority (whether foreign or domestic).

"Termination Date" means the earliest of (a) the Business Day designated by the Seller with no less than thirty (30) Business Days prior notice to the Agent and each Purchaser Agent, (b) the occurrence of a Termination Event and (c) January 31, 2001.

"Termination Event" means the occurrence of any one or more of the following:

(a) any representation, warranty, certification or statement made by the Seller or any other Bergen Entity in, or pursuant to, any Transaction Document is untrue or incorrect in any material respect as of the date when made or deemed made (including pursuant to Section 7.2); or

(b) the Collection Agent or any other Bergen Entity fails to make any payment or other transfer of funds hereunder when due (including any payments under Section 1.5(a)) and such failure remains unremedied for more than two Business Days; or

(c) the Seller fails to observe or perform any covenant or agreement contained in Sections 5.1(g), 5.1(i) or 5.1(j) of this Agreement or the Originator fails to perform any covenant or agreement in Sections 5.1(g), 5.1(h) or 5.1(i) of the Purchase Agreement; or

(d) the Seller or the Collection Agent (or any sub-collection agent) fails to observe or perform any other term, covenant or agreement under any Transaction Document, and such failure remains unremedied for two Business Days or more after written notice from the Agent to the Seller; or

(e) the Seller, any other Bergen Entity or any Significant Subsidiary suffers a Bankruptcy Event; or

(f) (i) the Delinquency Ratio exceeds 3.75%, (ii) (a) the Default Ratio exceeds 8.00% or (b) the average of the Default Ratio for any three consecutive calendar months exceeds 6.75%, (iii) the average of the Dilution Ratio for any three consecutive calendar months exceeds 6.0%, (iv) the Loss-to Liquidation Ratio at the end of any calendar month measured for the three month period then ending exceeds 0.5%, (v) the Turnover Ratio exceeds 20 days, or (vi) the Coverage Ratio exceeds 100%; or

(g) any Transaction Document fails to be the enforceable obligation of the Seller any Bergen Entity or any Affiliate party thereto; or

(h) (i) any Bergen Entity (A) generally does not pay its debts as such debts become due or admits in writing its inability to pay its debts generally or (B) fails to pay any of its indebtedness (except in aggregate principal amount of less than $25,000,000) or defaults (subject to any applicable grace period) in the performance of any provision of any agreement under which such indebtedness was created or is governed and such default permits such indebtedness to be declared due and payable or to be required to be prepaid before the scheduled maturity thereof or (ii) a default (subject to any applicable grace period) or termination or similar event occurs under any agreement providing for the sale, transfer or conveyance by the Seller or any Bergen Entity of any of its financial assets;

(i) the Parent's long-term unsecured, unsubordinated indebtedness is rated less than BB- by S&P (or such rating is withdrawn or suspended) or less than Ba3 by Moody's (or such rating is withdrawn or suspended);

(j) the Parent shall fail to own and control, directly or indirectly, 100% of the outstanding voting stock of the Seller and the Originator;

(b) a Collection Agent Replacement Event has occurred and is continuing;

(l) the Initial Collection Agent voluntarily resigns for any reason;

(m) a final judgment or judgments for the payment of money in excess of $25,000,000 in the aggregate at any time outstanding shall be rendered against any Bergen Entity or the Collection Agent and the same shall not, within 30 days after the entry thereof, have been discharged or execution thereof stayed or bonded pending appeal, or shall not have been discharged prior to the expiration of any such stay;

(n) a judgment or order for the payment of money shall be rendered against the Seller and shall have not been vacated or dismissed within 30 days after such judgment or order is entered;

(o) any Governmental Authority (including the IRS or the PBGC) shall file notice of Lien with regard to any assets of the Originator (other than a Lien (i) limited by its terms to assets other than Receivables and (ii) not materially adversely affecting the financial condition of the Originator or the Parent's ability to perform as Collection Agent hereunder);

(p) any Governmental Authority (including the IRS or the PBGC) shall file notice of a Lien with regard to any of the assets of the Seller;

(q) Any of the following events shall occur with respect to any Pension Plan:

(i) the institution of any steps by the Originator, any of its ERISA Affiliates or any other Person to terminate a Pension Plan if, as a result of such termination, the Originator or any ERISA Affiliate could be required to make a contribution to such Pension Plan, or could reasonably be expected to incur a liability or obligation to such Pension Plan, in excess of $5,000,000 in the aggregate for all such contributions, liabilities and obligations; or

(ii) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA;

(r) the Seller shall amend its bylaws or its certificate of incorporation without the express prior written consent of the Purchasers and the Agent;

(s) except as otherwise expressly provided herein, the Purchase Agreement or any Lock-Box Agreement or Depositary Agreement shall have been modified, amended or terminated without the prior written consent of the Purchasers and the Agent;

(t) there shall have occurred any event which materially adversely impairs in the reasonable judgment of the Agent the ability of the Initial Collection Agent to originate Receivables of a credit quality which are at least of the credit quality of the Receivables included in the initial Purchase, or any other event occurs that is reasonably likely to have a Material Adverse Effect; or

(u) the Originator shall fail to sell or contribute all of the Receivables to the Seller or, the Seller shall elect not to purchase all of the Originator's Receivables that have not been contributed.

Notwithstanding the foregoing, a failure of a representation or warranty or breach of any covenant described in clause (a), (c) or (d) above related to a Receivable shall not constitute a Termination Event if the Seller has been deemed to have collected such Receivable pursuant to Section 1.5(b) or, before the Termination Date, has adjusted the Sold Interest as provided in Section 1.5(c) so that such Receivable is no longer considered to be outstanding.

"Tranche" means a portion of the Investment of a Conduit Purchaser or of the Related Bank Purchasers allocated to a Tranche Period pursuant to Section 1.3. A Tranche is a (i) CP Tranche, (ii) Eurodollar Tranche or (iii) Prime Tranche depending whether Discount accrues during its Tranche Period based on a (i) CP Rate, (ii) Eurodollar Rate, or (iii) Prime Rate.

"Tranche Period" means a period of days ending on a Business Day selected pursuant to Section 1.3, which (i) for a CP Tranche shall not exceed 270 days, (ii) for a Eurodollar Tranche shall not exceed 180 days, and (iii) for a Prime Tranche shall not exceed 30 days.

"Transaction Documents" means this Agreement, each Fee Letter, each Pricing Letter, each Rate Supplement, the Purchase Agreement, the Subordinated Note and all other documents, instruments and agreements executed or furnished in connection herewith and therewith.

"Transfer Agreement" means (i) the Liquidity Asset Purchase Agreement dated the date hereof among Blue Ridge, Wachovia Bank, N.A., in its capacity as the Blue Ridge Purchaser Agent, administrative agent for Blue Ridge, and as a Liquidity Bank and the other Liquidity Banks from time to time party thereto and (ii) with respect to any other Purchaser Group, a transfer agreement, liquidity asset purchase agreement or other similar agreement identified as its "Transfer Agreement" in the Rate Supplement for such Purchaser Group.

"Transfer Supplement" means an agreement among the parties hereto pursuant to which an existing Purchaser Group adds a new Purchaser.

"Turnover Ratio" means, as of any calendar month, the product (expressed in number of days) of (a) the quotient of (i) the sum of the outstanding balances of all Receivables as of the first day of each of the three most recent calendar months divided by (ii) the sum of Collections during each of the same three months and (b) 30.

"UCC" means, for any state, the Uniform Commercial Code as in effect in such state.

"Unused Commitment" means, for any Committed Purchaser at any time, the difference between its Commitment and its Investment then outstanding.

"USA" means the United States of America (including all states and political subdivisions thereof).

"Wachovia" means Wachovia Bank, N.A., in its individual capacity and not in its capacity as Blue Ridge Purchaser Agent.

"Welfare Plan" means a Plan described in Section 3(l) of ERISA.

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. Unless otherwise inconsistent with the terms of this Agreement, all accounting terms used herein shall be interpreted, and all accounting determinations hereunder shall be made, in accordance with GAAP. Amounts to be calculated hereunder shall be continuously recalculated at the time any information relevant to such calculation changes. Any reference in this Agreement to any agreement, document, writing or similar instrument shall be deemed to include a reference to any permissible amendment, restatement or other modification thereto.

Conduit Purchaser	Name of Related Bank Purchaser	Commitments of Related Bank Purchasers
Blue Ridge	Wachovia Bank, N.A.	$153,000,000
Liberty Street	The Bank of Nova Scotia	$102,000,000
GECC	General Electric Capital Corporation	$103,000,000

Purchaser Group Commitments

Purchaser Group	Commitment
Blue Ridge Purchaser Group	$153,000,000
Liberty Street Purchaser Group	$102,000,000
GECC Purchaser Group	$103,000,000

Exhibit A
to
Receivables Sale Agreement
Form of Incremental Purchase Request

____________, 200_

_______________________, as Purchaser
Agent for the _________ Purchaser Group
__________________________________
__________________________________

Attn: _____________________________

Re: Amended and Restated Receivables Sale Agreement dated as of February 29, 2000 (the "Sale Agreement" ), among Blue Hill, Inc., as Seller, Bergen Brunswig Drug Company, as Initial Collection Agent,

Wachovia Bank, N.A., as Agent, the Purchaser Agents from time to time party thereto and the Purchasers thereunder

Ladies and Gentlemen:

The undersigned Seller under the above-referenced Sale Agreement hereby confirms it has requested an Incremental Purchase of $___________ by the Conduit Purchasers under the Sale Agreement. [In the event a Conduit Purchaser is unable or unwilling to make the requested Incremental Purchase, the Seller hereby requests an Incremental Purchase of $____________ by the Related Bank Purchasers for such Conduit Purchaser under the Sale Agreement at the [Eurodollar Rate with a Tranche Period of _______ months.] [Prime Rate]].

Attached hereto as Schedule I is information relating to the proposed Incremental Purchase required by the Sale Agreement. If on the date of this Incremental Purchase Request ("Notice"), an Interim Liquidation is in effect, this Notice revokes our request for such Interim Liquidation so that Reinvestment Purchases shall immediately commence in accordance with Section 1.1(d) of the Sale Agreement.

The Seller hereby certifies that both before and after giving effect to [each of] the proposed Incremental Purchase[s] contemplated hereby and the use of the proceeds therefrom, all of the requirements of Section 7.2 of the Sale Agreement have been satisfied.

Very truly yours,
Blue Hill, Inc.

By
Title

Schedule I
to
Incremental Purchase Requests

Summary of Information Relating to Proposed Sale(s)

1. Dates, Amounts, Purchaser(s), Proposed Tranche Periods

A1 Date of Notice _________

A2     Measurement Date (the last
          Business Day of the month
          immediately preceding the
          month in which the Date of
          Notice occurs)                                                                                               _________

A3      Proposed Purchase Dates     _________      _________      _________      _________
          (each of which is a
          Business Day)

A4      Respective Proposed
          Incremental Purchase on
          each such Purchase Date      $_________      $_________      $_________      $_________
          (each Incremental                     (A4A)                   (A4B)                 (A4C)                (A4D)
          Purchase must be in a
          minimum amount of
          $1,000,000 and multiples
          thereof, or, if less, an
          amount equal to the
          Maximum Incremental
          Purchase Amount)

A5      Proposed Allocation
          among Purchasers (Pro Rata)
          Conduit Purchasers

Name of
Related Bank
Purchaser $_________ $_________ $_________ $_________

A6      Used Aggregate
          Commitment Amount
          (after such Incremental Purchases)          $_________

Each proposed Purchase Date must be a Business Day and must occur no later than two weeks after the Measurement Date set forth above. The choice of Measurement Date is a risk undertaken by the Seller. If a selected Measurement Date is not the applicable Purchase Date, the Seller's choice and disclosure of such date shall not in any manner diminish or waive the obligation of the Seller to assure the Purchasers that, after giving effect to the proposed Purchase, the actual Sold Interest as of the date of such proposed Purchase does not exceed 100%.

Exhibit B
to
Receivables Sale Agreement

Form of Notification of Assignment from an Uncommitted Conduit
Purchaser to the Applicable Related Bank Purchasers

______________, 2000

Blue Hill, Inc.
4000 Metropolitan Drive
Orange, California 92868

___________________, as the ____________ Purchaser Agent
_____________________________
_____________________________
_____________________________
Attn: ________________________

[Insert Name and Address of each
applicable Related Bank Purchaser]

Re: Amended and Restated Receivables Sale Agreement dated as of February 29, 1999 (the "Sale Agreement") among Blue Hill, Inc., as Seller,
Wachovia Bank, N.A., as Agent, the Purchaser Agents from time to time party thereto and the Purchasers thereunder

Ladies and Gentlemen:

The Purchaser Agent under the above referenced Sale Agreement hereby notifies each of you that _____________ has notified such Purchaser Agent pursuant to Section 2.2 of the Sale Agreement that it will purchase from its Conduit Purchasers on _________________ (the "Purchase Date") that portion of its Conduit Purchasers' Investments identified on Schedule I hereto (the "Assigned Interest"). As further provided in Section 2.2 of the Sale Agreement, upon payment by ______________ to its Purchaser Agent of the purchase price of such Investments described on Schedule I hereto, effective as of the Purchase Date the assignment by the Conduit Purchasers to ____________ of the Assigned Interest shall be complete and all payments thereon under the Sale Agreement shall be made to ______________.

In accordance with the Sale Agreement, each Conduit Purchaser's acceptance of the portion of the purchase price payable to it described on Schedule I hereto constitutes its representation and warranty that it is the legal and beneficial owner of the portion of the Assigned Interest related to its Purchase Interest identified on Schedule I free and clear of any Adverse Claim created or granted by it and that on the Purchase Date it is not subject to a Bankruptcy Event.

Very truly yours,

________________________, as ___________ Purchaser Agent

By
Name
Title

Schedule I
to
Notification of Assignment

Dated ______________, ____

I. Amount of Committed Purchaser Investment Assigned: $________

II. Information for each Committed Purchaser:

Purchaser	Purchase Interest	Purchase Price*

III. Information for Seller:

Aggregate amount of purchase price in excess of amount of Investment assigned: $___________.

Exhibit C
Form of Periodic Report

Consolidated Receivables Activity

Current Month

Beginning Receivables Balance

Plus: New Receivables (Sales)

Less: Cash Collections

Less: Non-Cash Credits

Less: Charge-offs

Ending Receivables Balance

Less: Ineligible Receivables

Less: Dated Balance

Eligible Receivables

Less: Excess Concentrations [See Schedule I]

Net Receivables Balance (NRB)

Consolidated Receivables Agings [See Schedule II]

Current Month

Div-Held Notes

Dated Balances Not Due Yet

Current

1-30 Days Past Due

31-60 Days Past Due

61-90 Days Past Due

> 90 Days Past Due

Total

Ownership Interest and Reserve Calculations [See Schedule IV]

Required Reserve Floor

Loss Reserve

Discount Reserve

Dilution Reserve

Aggregate Reserve

Net Receivables Balance - Aggregate Reserve [Line 11-24]

Program Limit

Maximum Advance [Max of 25 a, 25 b]

Actual Aggregate Net Investment (ANI)

Required

Ratio for

Covenant Compliance [See Schedule V]

Covenant Level

Current Month

In Compliance?

Delinquency Ratio

less than 3.75%

1 Month Default Ratio

less than 8.00%

3 Month Default Ratio

less than 6.75%

Loss-to-Liquidation Ratio

less than 0.5%

Turnover Ratio

less than 20 days

Dilution Ratio

less than 6.0%

Coverage Ratio

less than 100%

Servicer Senior Unsecured Debt Ratings by S&P and Moodys

above BB & Ba2 by S&P/Moody's

By signing below, Bergen Brunswig attests to the accuracy and completeness of the stated information and continues to comply with the covenants, representations and warranties as set forth in the Receivables Sale Agreement dated 12/17/99.

Signed by:
Title:

Exhibit D
Addresses and Names of Seller and Originator

1. Locations. (a) The chief executive office of the Seller and the Originator are located at the following address:

4000 Metropolitan Drive
Orange, California 92868

No such address was different at any time since January 1, 1999.

(b) The following are all the locations where the Seller and the Originator directly or through its agents maintain any Records:

Same as 1(a) above and the locations listed on Annex I attached to this Exhibit D.

2. Names. The following is a list of all other names (including trade names or similar appellations) used by the Originator or any of its divisions or other business units that generate Receivables:

Healthcare Purchasing Agency
Intelligent Drug Information
Impact Distribution Company

The Seller does not use any other names.

3. Tax Identification Numbers. The following are the Tax Identification Numbers for the Originator and the Seller:

Originator: \95-2574740
Seller: 33-0883530

Annex I

Records Locations

Exhibit E

Subsidiaries

Choice Medical

BBC Transportation Co.

Bergen Brunswig Realty Services, Inc.

Century Advertising, Inc.

Medical Initiatives, Inc.

Durr-Fillauer Medical, Inc.

The Lash Group, Inc.

Ransdell Surgical, Inc.

Peacock Merger Corp.

K/S Instrument Corp.

LAD Drug Corporation

Los Angeles Drug Corporation

BBC Laboratories

Drug Service, Inc.

The Allen Company

J.M. Blanco, Inc.

Bergen Brunswig Medical Corporation

Bergen Brunswig Drug Company

Durr-Fillauer International, Inc.

Inteplex, Inc.

Bergen Brunswig Specialty Company

Pacific Criticare, Inc.

Sentry Medical Systems, Inc.

Cember, Inc.

Integrated Commercialization Solutions, Inc.

BBC Operating Sub., Inc.

BBC Licensing Sub., Inc.

ASD Specialty Healthcare, Inc.

ASD Hemophilia Management, LLC

ASD Hemophilia Program, LP

OpTX Corporation

MedNet, MPC Corp.

Medi-Mail, Inc.

Medi-Claim, Inc.

Medi-Phar, Inc.

Southwestern Drug Corporation

M.D.P. Properties, Inc.

Home Medical Equipment Health Company

Stadlander Operating Company, LLC

Stadlander Licensing Company, LLC

Stadt Solutions, LLC

Stadlander Drug of California, LP

Blue Hill, Inc.

Green Barn, Inc.

Exhibit F

Lock Boxes, Lock-Box Banks, Depositary Banks and Depositary Accounts

Lock-Box Bank	Lock-Box Number	Lock-Box Account
Wells Fargo Bank		4159268473

Depositary Bank	Depositary Account
Bank of Hawaii	1066293
Bank One	240420358401
Key Bank	359681013504
	800003432
Bank of America	3751289465
	3750900240
	3751449331
	3751454656
	3751454669
	3751454672
	103927508
Wells Fargo Bank	4375684628
	4375684636
	4159665546
	4375684685
	4159624865
	4375684644
	4159687425
	4159660018
	4159268499
	4159268481
SunTrust Bank	2362732
	8800418041
	215201332686
National City Bank	70170272
Bank of Boston	13613052
Wachovia Bank	6267075558
	6267077543
Regions Bank	200469661
	200469688
First Union National Bank	2083965006568
First America National Bank	9100583725

Exhibit G-1

to Receivables Sale Agreement

Form of Lock Box Letter

[Name of Lock Box Bank]

Ladies and Gentlemen:

Reference is made to the lock-box numbers _______________ and __________ and the associated lock-box demand deposit account number ____________ maintained with you (such lock-boxes and associated lock-box demand deposit account, collectively, the "Accounts"), each in the name of Bergen Brunswig Drug Company ("BBDC"). BBDC hereby confirms it has sold all Receivables (as defined below) to Blue Hill, Inc. (the "Seller").

In connection with the Receivables Sale Agreement, dated as of December 17, 1999 (as amended, supplemented or otherwise modified from time to time, the "Receivables Sale Agreement"), among the Seller, the Initial Collection Agent, Blue Ridge Asset Funding Corporation, as a Conduit Purchaser ("Blue Ridge"), the other Conduit Purchasers from time to time party thereto, the Related Bank Purchasers from time to time party thereto (collectively, the "Purchasers"), Wachovia Bank, N.A., as administrative agent for the Purchasers (the "Agent") and as Blue Ridge Purchaser Agent, the other Purchaser Agents from time to time party thereto and the Related Bank Purchasers from time to time party thereto, the Seller has assigned to the Agent for the benefit of the Purchasers an undivided percentage interest in the accounts, chattel paper, instruments or general intangibles (collectively, the "Receivables") under which payments are or may hereafter be made to the Accounts, and has granted to the Agent for the benefit of the Purchasers a security interest in its retained interest in such Receivables. As is the customary practice in this type of transaction, we hereby request that you execute this letter agreement. All references herein to "we" and "us" refer to BBDC and the Seller, jointly and severally. Your execution hereof is a condition precedent to our continued maintenance of the Accounts with you.

We hereby transfer exclusive dominion and control of the Accounts to the Agent, subject only to the condition subsequent that the Agent shall have given you notice that a "Collection Agent Replacement Event" has occurred and is continuing under the Receivables Sale Agreement and of its election to assume such dominion and control, which notice shall be in substantially the form attached hereto as Annex A (the "Agent's Notice").

At all times prior to the receipt of the Agent's Notice described above, all payments to be made by you out of, or in connection with the Accounts, are to be made in accordance with the instructions of the Seller or its agent.

We hereby irrevocably instruct you, at all times from and after the date of your receipt of the Agent's Notice as described above, to make all payments to be made by you out of, or in connection with, the Accounts directly to the Agent, at its address set forth below its signature hereto or as the Agent otherwise notifies you, or otherwise in accordance with the instructions of the Agent.

We also hereby notify you that, at all times from and after the date of your receipt of the Agent's Notice as described above, the Agent shall be irrevocably entitled to exercise in our place and stead any and all rights in connection with the Accounts, including, without limitation, (a) the right to specify when payments are to be made out of, or in connection with, the Accounts and (b) the right to require preparation of duplicate monthly bank statements on the Accounts for the Agent's audit purposes and mailing of such statements directly to an address specified by the Agent. At all times from and after the date of your receipt of the Agent's Notice, neither we nor any of our affiliates shall be given any access to the Accounts.

The Agent's Notice may be personally served or sent by telex, facsimile or U.S. mail, certified return receipt requested, to the address, telex or facsimile number set forth under your signature to this letter agreement (or to such other address, telex or facsimile number as to which you shall notify the Agent in writing). If the Agent's Notice is given by telex or facsimile, it will be deemed to have been received when the Agent's Notice is sent and the answerback is received (in the case of telex) or receipt is confirmed by telephone or other electronic means (in the case of facsimile). All other notices will be deemed to have been received when actually received or, in the case of personal delivery, delivered.

By executing this letter agreement, you acknowledge the existence of the Agent's right to dominion and control of the Accounts and its ownership of and security interest in the amounts from time to time on deposit therein and agree that from the date hereof the Accounts shall be maintained by you for the benefit of, and amounts from time to time therein held by you as agent for, the Agent on the terms provided herein. The Accounts are to be entitled "Blue Hill, Inc. and Wachovia Bank, N.A., as Agent for the Purchasers" with the subline "Bergen Brunswig Drug Company". Except as otherwise provided in this letter agreement, payments to the Accounts are to be processed in accordance with the standard procedures currently in effect. All service charges and fees in connection with the Accounts shall continue to be payable by us under the arrangements currently in effect.

By executing this letter agreement, you (a) irrevocably waive and agree not to assert, claim or endeavor to exercise, (b) irrevocably bar and estop yourself from asserting, claiming or exercising and (c) acknowledge that you have not heretofore received a notice, writ, order or other form of legal process from any other party asserting, claiming or exercising, any right of set-off, banker's lien or other purported form of claim with respect to the accounts or any funds from time to time therein. Except for your right to payment of your service charge and fees and to make deductions for returned items, you shall have no rights in the Accounts or funds therein, except deductions for service charges, fees and returned or misplaced items. To the extent you may ever have any additional rights, you hereby expressly subordinate all such rights to all rights of the Agent.

You may terminate this letter agreement by canceling the Accounts maintained with you, which cancellation and termination shall become effective only upon thirty (30) days prior written notice thereof from you to the Agent in the absence of fraud or abuse. Incoming mail addressed to the Accounts (including, without limitation, any direct funds transfer to the Accounts) received after such cancellation shall be forwarded in accordance with the Agent's instructions. This letter agreement may also be terminated upon written notice to you by the Agent stating that the Receivables Sale Agreement is no longer in effect. Except as otherwise provided in this paragraph, this letter agreement may not be terminated without the prior written consent of the Agent.

This letter agreement contains the entire agreement between the parties with respect to the subject matter hereof, and may not be altered, modified or amended in any respect, nor may any right, power or privilege of any party hereunder be waived or released or discharged, except upon execution by you, us and the Agent of a written instrument so providing. The terms and conditions of any agreement between us and you (a "Lock-Box Service Agreement") (whether now existing or executed hereafter) with respect to the lock-box arrangements, to the extent not inconsistent with this letter agreement, will remain in effect between you and us. In the event that any provision in this letter agreement is in conflict with, or inconsistent with, any provision of any such Lock-Box Service Agreement, this letter agreement will exclusively govern and control. Each party agrees to take all actions reasonably requested by any other party to carry out the purposes of this letter agreement or to preserve and protect the rights of each party hereunder.

BBDC agrees to indemnify, defend and hold harmless you and your affiliates, directors, officers, employees, agents, successors and assigns (each, an "Indemnitee") from and against any and all liabilities, losses, claims, damages, demands, costs and expenses of every kind (including but not limited to costs incurred as a result of items being deposited in the Account and being unpaid for any reason, reasonable attorney's fees and the reasonable charges of your in-house counsel) incurred or sustained by any Indemnitee arising out of your performance of the services contemplated by this Lock-Box Letter, except to the extent such liabilities, losses, claims, damages, demands, costs and expenses are the direct result of your gross negligence or willful misconduct. The provisions of this paragraph shall survive the termination of this Lock-Box Letter.

In the event BBDC becomes subject to a voluntary or involuntary proceeding under the United States Bankruptcy Code, or if you are otherwise served with legal process which you in good faith believe affects funds in the Account you may suspend disbursements from the Account otherwise required by the terms hereof until such time as you receive an appropriate court order or other assurances satisfactory to you establishing that the funds may continue to be disbursed according to the instructions contained in this Lock-Box Letter.

This letter agreement and the rights and obligations of the parties hereunder will be governed by and construed and interpreted in accordance with the laws of the state of New York. This letter agreement may be executed in any number of counterparts and all of such counterparts taken together will be deemed to constitute one and the same instrument.

Please indicate your agreement to the terms of this letter agreement by signing in the space provided below. This letter agreement will become effective immediately upon execution of a counterpart of this letter agreement by all parties hereto.

Very truly yours,

Bergen Brunswig Drug Company

By
Title

Blue Hill, Inc.

By
Title

Accepted and confirmed as of
the date first written above:
By: Wachovia Bank, N.A., as Agent

By
Title

Address of notice:

Wachovia Bank, N.A.
_____________________
_____________________
_____________________
Attention: _____________________
Telephone Number: __________________
Telecopy Number: __________________

Acknowledged and agreed to as of the date first written above:

[Name of Bank]

By
Title

Address of notice:

_____________________
_____________________
_____________________

Annex A to
Lock-Box Letter

[Name of Bank]

Re: Blue Hill, Inc.
Lock Box Numbers ______________
Lock-Box Account Number ____________

Ladies and Gentlemen:

Reference is made to the letter agreement dated _________________ (the "Letter Agreement") among Bergen Brunswig Drug Company, Blue Hill, Inc., the undersigned, as Agent, and you concerning the above-described lock-boxes and lock-box account (collectively, the "Accounts"). We hereby give you notice that a "Collection Agent Replacement Event" has occurred and is continuing under the Receivables Sale Agreement (as defined in the Letter Agreement) and of our assumption of dominion and control of the Accounts as provided in the Letter Agreement.

We hereby instruct you not to permit any other party to have access to the Accounts and to make all payments to be made by you out of or in connection with the Accounts directly to the undersigned upon our instructions, at our address set forth above.

Very truly yours,

Wachovia Bank, N.A.

By
Title

cc: Blue Hill, Inc.

Exhibit G-2

to Receivables Sale Agreement

Form of Depositary Account Letter

[Name of Depositary Bank]

Ladies and Gentlemen:

Reference is made to the deposit account numbers _______________ and __________ maintained with you (such deposit account collectively, the " Accounts"), each in the name of Bergen Brunswig Drug Company ("BBDC"). BBDC hereby confirms it has sold all Receivables (as defined below) to Blue Hill, Inc. (the "Seller").

In connection with the Receivables Sale Agreement, dated as of December 17, 1999 (as amended, supplemented or otherwise modified from time to time, the "Receivables Sale Agreement"), among the Seller, the Initial Collection Agent, Blue Ridge Asset Funding Corporation, as a Conduit Purchaser ("Blue Ridge"), the other Conduit Purchasers from time to time party thereto (collectively, the "Purchasers"), Wachovia Bank N.A., as administrative agent for the Purchasers (the "Agent") and as Blue Ridge Purchaser Agent, the other Purchaser Agents from time to time party thereto and the Related Bank Purchasers from time to time party thereto, the Seller has assigned to the Agent for the benefit of the Purchasers an undivided percentage interest in the accounts, chattel paper, instruments or general intangibles (collectively, the "Receivables") under which payments are or may hereafter be made to the Accounts, and has granted to the Agent for the benefit of the Purchasers a security interest in its retained interest in such Receivables. As is the customary practice in this type of transaction, we hereby request that you execute this letter agreement. All references herein to "we" and "us" refer to BBDC and the Seller, jointly and severally. Your execution hereof is a condition precedent to our continued maintenance of the Accounts with you.

You may terminate this letter agreement by canceling the Accounts maintained with you, which cancellation and termination shall become effective only upon thirty (30) days prior written notice thereof from you to the Agent in the absence of fraud or abuse. Incoming mail addressed to the Accounts (including, without limitation, any direct funds transfer to the Accounts) received after such cancellation shall be forwarded in accordance with the Agent's instructions. The Agent's rights under this letter agreement and the Accounts may also be terminated with respect to the Agent upon written notice to you by the Agent stating that the Receivables Sale Agreement is no longer in effect, at which time, the Seller shall be deemed to have succeeded to the Agent's rights under this Agreement. Except as otherwise provided in this paragraph, this letter agreement may not be terminated without the prior written consent of the Agent.

BBDC agrees to indemnify, defend and hold harmless you and your affiliates, directors, officers, employees, agents, successors and assigns (each, an "Indemnitee") from and against any and all liabilities, losses, claims, damages, demands, costs and expenses of every kind (including but not limited to costs incurred as a result of items being deposited in the Account and being unpaid for any reason, reasonable attorney's fees and the reasonable charges of your in-house counsel) incurred or sustained by any Indemnitee arising out of your performance of the services contemplated by this Lock-Box Letter, except to the extent such liabilities, losses, claims, damages, demands, costs and expenses are the direct result of your gross negligence or willful misconduct or Seller's gross negligence or willful misconduct. The provisions of this paragraph shall survive the termination of this Lock-Box Letter.

Seller agrees to indemnify, defend and hold harmless you and your affiliates, directors, officers, employees, agents, successors and assigns (each, an "Indemnitee") from and against any and all liabilities, losses, claims, damages, demands, costs and expenses of every kind (including but not limited to costs incurred as a result of items being deposited in the Account and being unpaid for any reason, reasonable attorney's fees and the reasonable charges of your in-house counsel) incurred or sustained by any Indemnitee arising out of your performance of the services contemplated by this Depositary Account Letter, except to the extent such liabilities, losses, claims, damages, demands, costs and expenses are the direct result of your gross negligence or willful misconduct or BBDC's gross negligence or willful misconduct. The provisions of this paragraph shall survive the termination of this Depositary Account Letter.

Very truly yours,

Bergen Brunswig Drug Company

By
Title

Blue Hill, Inc.

By
Title

Accepted and confirmed as of
the date first written above:

By: Wachovia Bank, N.A., as Agent

By
Title

Address of notice:

Wachovia Bank, N.A.
_____________________
_____________________
_____________________
Attention: _____________________
Telephone Number: __________________
Telecopy Number: __________________

Acknowledged and agreed to as of the date first written above:

[Name of Bank]

By
Title

Address of notice:

_____________________
_____________________
_____________________

Annex A to
Depositary Account Letter

[Name of Bank]

Re: Blue Hill, Inc.
Deposit Account Number ____________

Ladies and Gentlemen:

Reference is made to the letter agreement dated _________________ (the "Letter Agreement") among Bergen Brunswig Drug Company, Blue Hill, Inc., the undersigned, as Agent, and you concerning the above-described deposit account (collectively, the "Accounts"). We hereby give you notice that a "Collection Agent Replacement Event" has occurred and is continuing under the Receivables Sale Agreement (as defined in the Letter Agreement) and of our assumption of dominion and control of the Accounts as provided in the Letter Agreement.

Very truly yours,

Wachovia Bank, N.A.

By
Title

cc: Blue Hill, Inc.

Exhibit H

To Receivables Sale Agreement

Compliance Certificate

To: Wachovia Bank, N.A., as Agent, and
each Purchaser

This Compliance Certificate is furnished pursuant to Section 5.1(a) (iii) of the Receivables Sale Agreement, dated as of December 17, 1999 (as amended, supplemented or otherwise modified through the date hereof, the "Sale Agreement"), among Blue Hill, Inc. (the "Seller"), Bergen Brunswig Drug Company (the "Initial Collection Agent"), Blue Ridge Asset Funding Corporation, as a Conduit Purchaser ("Blue Ridge"), the other Conduit Purchasers from time to time party thereto, the Related Bank Purchasers from time to time party thereto (collectively, the "Purchasers"), Wachovia Bank, N.A., as Blue Ridge Purchaser Agent and as administrative agent for the Purchasers (in such capacity, the "Agent"). Terms used in this Compliance Certificate and not otherwise defined herein shall have the respective meanings ascribed thereto in the Sale Agreement.

The undersigned hereby represents, warrants, certifies and confirms that:

1. The undersigned is a duly elected Designated Financial Officer of the undersigned.

2. Attached hereto is a copy of the financial statements described in Section 5.1(a)(i) or 5.1(a)(ii) of the Sale Agreement.

3. The undersigned has reviewed the terms of the Transaction Documents and has made, or caused to be made under his/her supervision, a detailed review of the transactions and the conditions of the Seller and the Originator during and at the end of the accounting period covered by the attached financial statements.

4. The examinations described in paragraph 3 hereof did not disclose, and the undersigned has no knowledge of, the existence of any condition or event which constitutes a Potential Termination Event, during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate, except as set forth below.

5. Based on the examinations described in paragraph 3 hereof, the undersigned confirms that the representations and warranties contained in Article IV of the Sale Agreement are true and correct as though made on the date hereof, except as set forth below.

6. The undersigned confirms that Year 2000 remediation efforts are proceeding as scheduled.

7. [Indicate whether an auditor, regulator or third party consultant of the undersigned has issued a management letter or other communication regarding Year 2000 exposure, program or progress].

Described below are the exceptions, if any, to paragraphs 4 and 5 listing, in detail, the nature of the condition or event, the period during which it has existed and the action the undersigned has taken, is taking or proposes to take with respect to each such condition or event:

The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Compliance Certificate in support hereof, are made and delivered this ____ day of ___________, 199__.

[Name of Seller or Originator]

By
Designated Financial Officer

Exhibit I

Credit and Collection Policy

EX-10.C 4 FIRST AMENDMENT TO AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT FIRST AMENDMENT

Exhibit 10(c)

First Amendment
Dated as of April 19, 2000
to
Amended and Restated Receivables Sale Agreement
Dated as of February 29, 2000

This Amendment (the "Amendment"), dated as of April 19, 2000, is entered into among Blue Hill, Inc. (the "Seller"), Bergen Brunswig Drug Company, as the Initial Collection Agent (the "Collection Agent"), Wachovia Bank, N.A., as the Agent (the "Agent" ), the Related Bank Purchasers (the "Related Bank Purchasers" ) from time to time party thereto and the Conduit Purchasers from time to time party thereto (together with the Related Bank Purchasers, the " Purchasers").

Reference is hereby made to that certain Amended and Restated Receivables Sale Agreement, dated as of February 29, 2000 (as has been amended, supplemented or otherwise modified through the date hereof, the "Sale Agreement" ), among the Seller, the Collection Agent, the Purchasers and the Agent. Terms used herein and not otherwise defined herein which are defined in the Sale Agreement or the other Transaction Documents (as defined in the Sale Agreement) shall have the same meaning herein as defined therein.

For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. Subject to the following terms and conditions, including without limitation the conditions precedent set forth in Section 2, upon execution by the parties hereto in the space provided for that purpose below, the Sale Agreement shall be, and it hereby is, amended as follows:

(a) The first sentence of Section 4.1(e) of the Sale Agreement is hereby amended and as so amended shall be restated in its entirety to read as follows:

Upon the creation of Receivables and the sale or contribution of such Receivables to the Seller, the Originator was the owner of, and effectively sold, such Receivables to the Seller, free and clear of any Adverse Claim.

(b) The following defined terms appearing in Schedule I to the Sale Agreement shall be amended and as so amended shall be restated in their entirety to read as follows:

"Credit Agreement Margin" means (i) if the Credit Agreements described in clause (A) of the definition of Credit Agreements are in effect, the higher of the Applicable Margins or (ii) if the Credit Agreement described in clause (B) of the definition of Credit Agreements is in effect, the Applicable Rate.

"Credit Agreements" means (A) prior to the execution and effectiveness of the Credit Agreement referred to in subsection (B) to this definition, collectively, that certain (i) Amended and Restated Credit Agreement dated as of September 30, 1994 by and among the Originator and the Parent, as Borrowers, certain financial institutions, as the Lenders, and Bank of America, N.A. ("BofA"), as Agent for the Lenders, as has been amended and as may be amended, restated, substituted or replaced from time to time, and (ii) Credit Agreement dated as of April 23, 1999 by and among the Originator and the Parent, as Borrowers, certain financial institutions named therein, as the Lenders, BofA, as Administrative Agent, Chase Securities Inc., as Syndication Agent and Wachovia, as Documentation Agent as has been amended and as may be amended, restated, substituted or replaced from time to time or (B) after the execution and effectiveness of the following Credit Agreement, that certain Credit Agreement dated as of April 20, 2000 among the Parent, the Originator, Pharmerica, Inc., the other borrowing subsidiaries party thereto, the lenders party thereto, Wachovia, as Syndication Agent, First Union National Bank and Fleet National Bank, as Co-Documentation Agents, CIT Financial Group, as Collateral Agent and The Chase Manhattan Bank as Administrative Agent and Collateral Agent as has been amended and as may be amended, restated, substituted or replaced from time to time.

(c) The defined term "Termination Event" appearing in Schedule I to the Sale Agreement shall be amended by adding the following new subsections (v) and (w) immediately following subsection (u) with appropriate punctuation corrections:

(v) any one of the following events shall occur:

(i) less than 60% of all Collections for the period from May 16-June 15, 2000 shall have been made to a Lock-Box or a Lock-Box Account; a report indicating such collection activity due no later than June 20, 2000;

(ii) less than 75% of all Collections for the period from June 16-July 15, 2000 shall have been made to a Lock-Box or a Lock-Box Account; a report indicating such collection activity due no later than July 20, 2000; or

(iii) less than 90% of all Collections for the period from July 16-August 15, 2000 shall have been made to a Lock-Box or a Lock-Box Account; a report indicating such collection activity due no later than August 21, 2000; or

(w) (A) any rating agency indicates that the transactions contemplated by the Intercreditor Agreement and this Agreement as amended by the First Amendment to Receivables Sale Agreement dated as of April 19, 2000 (the "First Amendment") shall cause such rating agency to be unable to confirm the rating on the commercial paper notes of any Conduit Purchaser and (B) the Seller is unable to execute an amendment to the Intercreditor Agreement or this Agreement as amended by the First Amendment satisfactory for such rating agency to confirm the rating on the commercial paper notes of such Conduit Purchaser within 30 days of such rating agency indication.

(d) Schedule I to the Sale Agreement shall be amended by adding the following definitions to such Schedule in their proper alphabetical order:

"Applicable Rate" refers to such term as defined in the Credit Agreement referred to in subsection (B) of the definition of Credit Agreements as such term may be amended from time to time: provided, if the Credit Agreement referred to in subsection (B) of the definition of Credit Agreements shall be terminated, the term " Applicable Rate" shall have the same meaning such term had immediately prior to such termination.

"Intercreditor Agreement" means that certain Intercreditor Agreement dated as April 19, 2000 among the Originator, the Seller, Wachovia, in its capacity as Senior Agent thereunder, and The Chase Manhattan Bank, in its capacity as Junior Lien Collateral Agent thereunder.

Section 2. The Sale Agreement, as amended and supplemented hereby or as contemplated herein, and all rights and powers created thereby and thereunder or under the other Transaction Documents and all other documents executed in connection therewith, are in all respects ratified and confirmed. From and after the date hereof, the Sale Agreement shall be amended and supplemented as herein provided, and, except as so amended and supplemented, the Sale Agreement, each of the other Transaction Documents and all other documents executed in connection therewith shall remain in full force and effect.

Section 3. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but both or all of which, when taken together, shall constitute but one instrument.

Section 4. This Amendment shall be governed and construed in accordance with the internal laws of the State of New York.

In Witness Whereof, the parties have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written.

WACHOVIA BANK, N.A., as the Related Bank

Purchaser for Blue Ridge, as the Blue Ridge

Purchaser and as Agent

By:

Title:

Blue Ridge Asset Funding Corporation,

as a Conduit Purchaser

By: Wachovia Bank, N.A., as attorney-in-fact

By:

Title:

Blue Hill, Inc., as Seller

By:

Title:

Bergen Brunswig Drug Company, as Initial

Collection Agent

By:

Title:

The Bank of Nova Scotia, as the Related

Bank Purchaser for Liberty Street, and as

the Liberty Street Purchaser Agent

By:

Title:

Liberty Street Funding Corp., as a Conduit

Purchaser

By:

Title:

General Electric Capital Corporation,

as the Related Bank Purchaser for GECC

and as the GECC Purchaser Agent

By:

Title:

General Electric Capital Corporation,

as a Conduit Purchaser

By:

Title:

EX-27 5 ARTICLE 5 FDS FOR QUARTERLY REPORT FORM 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF BERGEN BRUNSWIG CORPORATION FOR THE SIX MONTH PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 U.S. DOLLARS 6-MOS SEP-30-2000 MAR-31-2000 1 14,163 0 1,465,184 149,100 2,234,779 3,598,281 416,657 147,794 5,676,014 2,583,641 1,282,782 206,426 0 0 1,303,165 5,676,014 0 11,791,857 11,063,004 11,658,264 0 0 70,956 62,637 35,340 31,945 0 0 0 31,945 0.24 0.24

~~-----END PRIVACY-ENHANCED MESSAGE-----~~

Title of each class of Common Stock		Number of Shares Outstanding April 30, 2000

Class A Common Stock -
par value $1.50 per share		134,506,696

		March 31,			September 30,
Dollars in thousands		2000			1999

7 3/8% senior notes due 2003		$	149,688	$	149,633
7 1/4% senior notes due 2005			99,819		99,802
8 3/8% senior subordinated notes due 2008			308,119		308,119
Revolving credit facilities averaging 7.32% and
	6.00%, respectively		662,200		249,717
Commercial paper averaging 5.72%			-		692,891
7% convertible subordinated debentures due 2006			20,609		20,609
6 7/8% exchangeable subordinated
	debentures due 2011		8,425		8,425
10% unsecured promissory note			-		4,500
Other			3,145		4,205

	Total		1,252,005		1,537,901

Less current portion			3,535		544,557

	Total	$	1,248,470	$	993,344

	Six Months
	Ended
	March 31,
Dollars in millions, except per share amounts	1999

Net sales and other revenues	$	10,404.4


Net earnings	$	75.8


Diluted earnings per share	$	0.56

		Three Months Ended March 31,							Six Months Ended March 31,

Net Sales and Other Revenues			2000			1999				2000			1999

Pharmaceutical Distribution		$	4,415,412		$	4,025,786		$		8,779,825		$	7,763,449
PharMerica			320,056			-				629,500			-
Stadtlander			142,215			100,099				287,248			100,099
Other Businesses			223,150			219,767				456,498			444,025
Corporate			110			196				578			281
Intersegment Eliminations			(215,089	)		(43,903	)			(434,615	)		(45,803	)

	Revenue excluding bulk shipments		4,885,854			4,301,945				9,719,034			8,262,051

Bulk shipments of pharmaceuticals
	to customers' warehouses		977,041			706,516				2,072,823			1,766,728


Total net sales and other revenues		$	5,862,895		$	5,008,461		$		11,791,857		$	10,028,779

			Three Months Ended March 31,							Six Months Ended March 31,

Operating Earnings, LIFO Basis				2000			1999				2000			1999

Pharmaceutical Distribution			$	86,065		$	92,152		$		163,782		$	161,513
PharMerica				8,464			-				16,233			-
Stadtlander				(7,991	)		3,042				(14,938	)		3,042
Other Businesses				1,784			2,091				1,704			3,893
Corporate				(16,368	)		(15,533	)			(33,188	)		(31,116	)

	Total operating earnings,
		LIFO basis		71,954			81,752				133,593			137,332

Net interest expense				(29,913	)		(17,144	)			(59,256	)		(25,862	)

	Earnings before taxes on income
		and distributions on preferred
		securities of subsidiary trust	$	42,041		$	64,608		$		74,337		$	111,470

	Three Months Ended March 31,					%					Six Months Ended March 31,						%

Dollars in millions	2000			1999	Change							2000			1999		Change

Net sales and other revenues	$	5,862.9	$	5,008.5	17			%	$	11,791.9			$	10,028.8		18			%


Operating earnings	$	72.0	$	81.8	(12		)	%	$	133.6			$	137.3		(3		)	%


Net interest expense*	$	29.9	$	17.1	74			%	$	59.3			$	25.9		129			%


Net earnings	$	17.3	$	38.4	(55		)	%	$	31.9			$	66.3		(52		)	%


Diluted earnings per share	$	0.13	$	0.35	(63		)	%	$	0.24			$	0.62		(61		)	%


* Excluding distributions on preferred securities of subsidiary trust.

Acquisition Date	Acquired Entity	Segment

April 1999	PharMerica, Inc.	PharMerica
February 1999	J.M. Blanco, Inc.	Pharmaceutical Distribution
January 1999	Stadtlander Operating Company, LLC	Stadtlander
December 1998	Medical Initiatives, Inc.	Pharmaceutical Distribution

Dollars in millions

Revenues Excluding				Three Months						Growth		Six Months										Growth
Bulk Shipments				Ended March 31,						Rate		Ended March 31,										Rate

					2000			1999				2000						1999

Pharmaceutical Distribution				$	4,415.4	$		4,025.8		10	%	$	8,779.8	$			7,763.5				13		%
PharMerica					320.1			-		-			629.5				-				-
Stadtlander					142.2			100.1		-			287.2				100.1				-
Other Businesses					223.2			219.8		2			456.5				444.0				3
Corporate					.1			.2		-			.6				.3				-
Intersegment Eliminations					(215.1	)		(43.9	)	-			(434.6	)			(45.8			)	-

	Total			$	4,885.9	$		4,302.0		14	%	$	9,719.0	$			8,262.1				18		%


Operating Earnings (Loss),				Three Months						Growth		Six Months										Growth
LIFO Basis				Ended March 31,						Rate		Ended March 31,										Rate

					2000			1999				2000						1999

Pharmaceutical Distribution				$	86.1	$		92.2		(7	)%	$	163.8	$			161.5				1		%
PharMerica					8.5			-		-			16.2				-				-
Stadtlander					(8.0	)		3.0		-			(14.9	)			3.0				-
Other Businesses					1.8			2.1		(15	)		1.7				3.9				(56		)
Corporate					(16.4	)		(15.5	)	(5	)		(33.2	)			(31.1			)	(7		)

	Total			$	72.0	$		81.8		(12	)%	$	133.6	$			137.3				(3		)%


Operating earnings (loss) as
	a percentage of revenues
	excluding bulk shipments:
		Pharmaceutical Distribution			1.95		%	2.29	%				1.87		%	2.08			%
		PharMerica			2.64		%	-	%				2.58		%	-			%
		Stadtlander			(5.62	)	%	3.04	%				(5.20	)	%	3.04			%
		Other Businesses			0.80		%	0.95	%				0.37		%	0.88			%
			Total		1.47		%	1.90	%				1.37		%	1.66			%

		Three Months Ended					Six Months Ended
		March 31,					March 31,

Dollars in millions			2000		1999			2000		1999

Net interest expense (pre-tax)		$	29.9	$	17.1	$		59.3	$	25.9

Distributions on preferred securities of
	subsidiary Trust ($5.8 and $11.7,
	respectively, pre-tax less $2.3 and
	$4.6, respectively, tax benefit)	$	3.5	$	-	$		7.1	$	-

	March 31, 2000	September 30, 1999

Debt, net of cash	39%	43%
Equity, including the Preferred Securities	61%	57%

(a) All of management's nominees for the Company's Board of Directors were elected (for a term ending in the year so indicated) with the following vote:


Nominee	For	Withheld

Rodney H. Brady (2003)	108,762,750	10,518,483

Brent R. Martini (2003)	108,859,218	10,422,015

James R. Mellor (2003)	108,761,268	10,519,965

Francis G. Rodgers (2003)	108,736,478	10,544,755

Charles C. Edwards, M.D. (2001)	108,739,586	10,544,647

Directors whose term of office continued after the Annual Meeting were: Jose E. Blanco, Sr., Neil F. Dimick, Charles J. Lee, George R. Liddle, Robert E. Martini and George E. Reinhardt, Jr.

	BERGEN BRUNSWIG CORPORATION




	By	/s/ Robert E. Martini

		Robert E. Martini Chairman of the Board and Chief Executive Officer



	By	/s/ Neil F. Dimick

		Neil F. Dimick Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

TABLE OF CONTENTS

		Page

ARTICLE I Definitions

SECTION 1.01.1	Defined Terms .........................................................................................	1
SECTION 1.02.	Classification of Loans and Borrowings ............................................	24
SECTION 1.03.	Terms Generally .....................................................................................	24
SECTION 1.04.	Accounting Terms; GAAP .....................................................................	25


ARTICLE II The Credits

SECTION 2.01.	Commitments .........................................................................................	25
SECTION 2.02.	Loans and Borrowings ........................................................................	25
SECTION 2.03.	Requests for Borrowings ....................................................................	26
SECTION 2.04.	Swingline Loans ..................................................................................	27
SECTION 2.05.	Letters of Credit ...................................................................................	28
SECTION 2.06.	Funding of Borrowings .....................................................................	31
SECTION 2.07.	Interest Elections .................................................................................	31
SECTION 2.08.	Termination and Reduction of Commitments ..................................	32
SECTION 2.09.33	Repayment of Loans; Evidence of Debt ...........................................	33
SECTION 2.10.34	Amortization of Term Loans ...............................................................	34
SECTION 2.11.	Prepayment of Loans. ..........................................................................	36
SECTION 2.12.	Fees ............................................................................ ............................	37
SECTION 2.13.	Interest ............................................................................ ......................	38
SECTION 2.14.	Alternate Rate of Interest ....................................................................	38
SECTION 2.15.39	Increased Costs ...................................................................................	39
SECTION 2.16.	Break Funding Payments ..................................................................	39
SECTION 2.17.	Taxes ......................................................................... ............................	40
SECTION 2.18.	Payments Generally; Pro Rata Treatment; Sharing of Set-offs ...	41
SECTION 2.19.	Mitigation Obligations; Replacement of Lenders .........................	42
SECTION 2.20.	Borrowing Subsidiaries .......................................................................	42


ARTICLE III Representations and Warranties

SECTION 3.01.	Organization; Powers .........................................................................	43
SECTION 3.02.	Authorization; Enforceability ...........................................................	43
SECTION 3.03.	Governmental Approvals; No Conflicts ...........................................	43
SECTION 3.04.	Financial Condition; No Material Adverse Change ...................	43
SECTION 3.05.	Properties ........................................................................ ....................	44
SECTION 3.06.	Litigation and Environmental Matters ............................................	44
SECTION 3.07.	Compliance with Laws and Agreements .........................................	45
SECTION 3.08.	Investment and Holding Company Status .......................................	45
SECTION 3.09.	Taxes ....................................................................... ...............................	45
SECTION 3.10.	ERISA............................................. ........................................................	45
SECTION 3.11.	Disclosure .................................................................. ............................	45
SECTION 3.12.	Subsidiaries .................................................................. .........................	45
SECTION 3.13.	Insurance ................................................................... ............................	45
SECTION 3.14.	Labor Matters ................................................................... ....................	46
SECTION 3.15.	Solvency ..................................................................... .............................	46
SECTION 3.16.	Senior Indebtedness .............................................................................	46
SECTION 3.17.	Year 2000 .......................................................................... ....................	46


ARTICLE IV Conditions
SECTION 4.01.	Effective Date ................................................................. .......................	46
SECTION 4.02.	Each Credit Event .................................................................................	48
SECTION 4.03.	Initial Credit Event for each Borrowing Subsidiary ......................	49


ARTICLE V Affirmative Covenants

SECTION 5.01.	Financial Statements and Other Information ...................................	49
SECTION 5.02.	Notices of Material Events ..................................................................	51
SECTION 5.03.	Information Regarding Collateral .....................................................	51
SECTION 5.04.	Existence; Conduct of Business ..........................................................	52
SECTION 5.05.	Payment of Obligations .......................................................................	52
SECTION 5.06.	Maintenance of Properties .................................................................	52
SECTION 5.07.	Insurance .......................................................................... .....................	52
SECTION 5.08.	Casualty and Condemnation ..............................................................	53
SECTION 5.09.	Books and Records; Inspection and Audit Rights ..........................	52
SECTION 5.10.	Compliance with Laws .........................................................................	53
SECTION 5.11.	Use of Proceeds and Letters of Credit ................................................	53
SECTION 5.12.	Additional Subsidiaries .......................................................................	54
SECTION 5.13.	Further Assurances ..............................................................................	54


ARTICLE VI Negative Covenants

SECTION 6.01.	Indebtedness; Certain Equity Securities ..........................................	54
SECTION 6.02.	Liens ................................................................. .......................................	56
SECTION 6.03.	Fundamental Changes ..........................................................................	56
SECTION 6.04.	Investments, Loans, Advances, Guarantees and Acquisitions .......	57
SECTION 6.05.	Asset Sales .......................................................................... ....................	58
SECTION 6.06.	Sale and Leaseback Transactions ......................................................	58
SECTION 6.07.	Hedging Agreements ..............................................................................	59
SECTION 6.08.	Restricted Payments; Certain Payments of Indebtedness ..............	59
SECTION 6.09.	Transactions with Affiliates ..................................................................	59
SECTION 6.10.	Restrictive Agreements ..........................................................................	59
SECTION 6.11.	Material Documents ..............................................................................	60
SECTION 6.12.	Fixed Charge Coverage Ratio .............................................................	60
SECTION 6.13.	Leverage Ratio .......................................................................................	61
SECTION 6.14.	Minimum Net Worth ...............................................................................	61
SECTION 6.15.	Capital Expenditures .............................................................................	61
SECTION 6.16.	Restricted Properties .............................................................................	61
SECTION 6.17.	Fiscal Quarters .......................................................................................	62


ARTICLE VII Events of Default


ARTICLE VIII The Administrative Agent



ARTICLE IX Guarantee



ARTICLE X Miscellaneous

SECTION 10.01.	Notices ........................................................................ .............................	66
SECTION 10.02.	Waivers; Amendments ............................................................................	67
SECTION 10.03.	Expenses; Indemnity; Damage Waiver ...............................................	68
SECTION 10.04.	Successors and Assigns .........................................................................	69
SECTION 10.05.	Survival .............................................................................. .....................	72
SECTION 10.06.	Counterparts; Integration; Effectiveness ...........................................	72
SECTION 10.07.	Severability ..................................................................... ........................	72
SECTION 10.08.	Right of Setoff .................................................................... .....................	72
SECTION 10.09.	Governing Law; Jurisdiction; Consent to Service of Process .........	73
SECTION 10.10.	WAIVER OF JURY TRIAL ......................................................................	73
SECTION 10.11.	Headings ............................................................................. .....................	73
SECTION 10.12.	Confidentiality ......................................................................... ................	73
SECTION 10.13.	Interest Rate Limitation ............................................................................	74

SCHEDULES:
Schedule 1.01	Pro Forma Amounts
Schedule 2.01	Commitments
Schedule 3.05	Properties
Schedule 3.12	Subsidiaries
Schedule 3.13	Insurance
Schedule 6.01	Existing Indebtedness and Preferred Stock
Schedule 6.02	Existing Liens
Schedule 6.04	Existing Investments
Schedule 6.10	Existing Restrictions


EXHIBITS:
Exhibit A	Form of Assignment and Acceptance
Exhibit B	Form of Borrowing Base Certificate
Exhibit C-1	Form of Borrowing Subsidiary Agreement
Exhibit C-2	Form of Borrowing Subsidiary Termination
Exhibit D	Form of Guarantee Agreement
Exhibit E	Form of Indemnity, Subrogation and Contribution Agreement
Exhibit F	Form of Intercreditor Agreement
Exhibit G	Form of Perfection Certificate
Exhibit H	Form of Pledge Agreement
Exhibit I	Form of Security Agreement
Exhibit J-1	Form of Opinion of Lowenstein Sandler PC, Counsel for the Company
Exhibit J-2	Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison, Counsel for the Company
Exhibit J-3	Form of Opinion of Milan A. Sawdei, Executive Vice President and Chief Legal Officer of the Company
Exhibit J-4	Form of Borrowing Subsidiary Opinion

	LEVEL I	LEVEL II	LEVEL III	LEVEL IV	LEVEL V	LEVEL VI
	If the Index Debt is rated at least BBB by S&P and Baa2 by Moody= s.	If the Index Debt is rated at least BBB- by S&P and Baa3 by Moody= s.	If the Index Debt is rated at least BB+ by S&P and Ba1 by Moody= s.	If the Index Debt is rated at least BB by S&P and Ba2 by Moody= s.	If the Index Debt is rated at least BB- by S&P and Ba3 by Moody = s.	If no other Level is applicable.
Commitment Fee Rate	.375%	.375%	.500%	.500%	.500%	.500%
Eurodollar Spread	1.750	2.000	2.250	2.500	2.750	3.000
ABR Spread	0.750	1.000	1.250	1.500	1.750	2.000

Date	Amount
June 30, 2001	$11,250,000
September 30, 2001	$11,250,000
December 31, 2001	$11,250,000
March 31, 2002	$11,250,000
June 30, 2002	$15,000,000
September 30, 2002	$15,000,000
December 31, 2002	$15,000,000
March 31, 2003	$15,000,000
June 30, 2003	$22,500,000
September 30, 2003	$22,500,000
December 31, 2003	$22,500,000
March 31, 2004	$22,500,000
June 30, 2004	$26,250,000
September 30, 2004	$26,250,000
December 31, 2004	$26,250,000
March 31, 2005	$26,250,000

Date	Amount
June 30, 2000	$500,000
September 30, 2000	$500,000
December 31, 2000	$500,000
March 31, 2001	$500,000
June 30, 2001	$500,000
September 30, 2001	$500,000
December 31, 2001	$500,000
March 31, 2002	$500,000
June 30, 2002	$500,000
September 30, 2002	$500,000
December 31, 2002	$500,000
March 31, 2003	$500,000
June 30, 2003	$500,000
September 30, 2003	$500,000
December 31, 2003	$500,000
March 31, 2004	$500,000
June 30, 2004	$500,000
September 30, 2004	$500,000
December 31, 2004	$500,000
March 31, 2005	$500,000
June 30, 2005	$47,500,000
September 30, 2005	$47,500,000
December 31, 2005	$47,500,000
March 31, 2006	$47,500,000

Period	Ratio
March 31, 2000 - March 30, 2001	1.25
March 31, 2001 - September 29, 2002	1.50
September 30, 2002 - September 29, 2003	1.75
September 30, 2003 - September 29, 2004	2.00
September 30, 2004 - September 29, 2005	2.25
thereafter	2.50

Period	Ratio
March 31, 2000 - June 29, 2000	6.00
June 30, 2000 - December 30, 2000	5.75
December 31, 2000 - June 29, 2001	5.50
June 30, 2001 - September 29, 2001	4.50
September 30, 2001 - September 29, 2002	4.25
September 30, 2002 - September 29, 2003	3.75
September 30, 2003 - September 29, 2004	3.50
September 30, 2004 - September 29, 2005	3.25
thereafter	3.00

Period	Amount
April 1, 2000 - September 30, 2000	$ 60,000,000
October 1, 2000 - September 30, 2001	$115,000,000
October 1, 2001 - September 30, 2002	$115,000,000
each fiscal year thereafter	$125,000,000

BERGEN BRUNSWIG CORPORATION,

	by
		Name:
		Title:



BERGEN BRUNSWIG DRUG COMPANY,

	by
		Name:
		Title:



PHARMERICA, INC.,

	by
		Name:
		Title:


THE CHASE MANHATTAN BANK, individually and as Administrative Agent, Collateral Agent, Issuing Bank and Swingline Lender,

	by
		Name:
		Title:


[OTHER BANKS],

	by
		Name:
		Title:

S&P Rating	Moody's Rating	Allowable % of Eligible Receivables
A-1+	P-1	10%
A-1	P-1	8%
A-2	P-2	6%
A-3	P-3	3%
Below A-3 or Not Rated by either S&P or Moody's	Below P-3 or Not Rated by either S&P or Moody's	2%

WACHOVIA BANK, N.A., as the Related Bank
	Purchaser for Blue Ridge, as the Blue Ridge
	Purchaser and as Agent

By:

Title:



Blue Ridge Asset Funding Corporation,
	as a Conduit Purchaser

By: Wachovia Bank, N.A., as attorney-in-fact

By:

Title:



Blue Hill, Inc., as Seller


By:

Title:



Bergen Brunswig Drug Company, as Initial
	Collection Agent


By:

Title:

The Bank of Nova Scotia, as the Related
	Bank Purchaser for Liberty Street, and as
	the Liberty Street Purchaser Agent

By:

Title:



Liberty Street Funding Corp., as a Conduit
	Purchaser


By:

Title:



General Electric Capital Corporation,
	as the Related Bank Purchaser for GECC
	and as the GECC Purchaser Agent


By:

Title:



General Electric Capital Corporation,
	as a Conduit Purchaser


By:

Title: