-----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, IYp1zvhAXyos8qK6GyDCmEStUzPBDelWaXx0Wjub8L3io3K41omFmKmMkQH48I0q luPVNq6SGxjW8+aonwmxGg== 0000950152-03-005601.txt : 20030515 0000950152-03-005601.hdr.sgml : 20030515 20030515174059 ACCESSION NUMBER: 0000950152-03-005601 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARDINAL HEALTH INC CENTRAL INDEX KEY: 0000721371 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 310958666 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11373 FILM NUMBER: 03706473 BUSINESS ADDRESS: STREET 1: 7000 CARDINAL PLACE CITY: DUBLIN STATE: OH ZIP: 43017 BUSINESS PHONE: 6147575000 MAIL ADDRESS: STREET 1: 7000 CARDINAL PLACE CITY: DUBLIN STATE: OH ZIP: 43017 FORMER COMPANY: FORMER CONFORMED NAME: CARDINAL DISTRIBUTION INC DATE OF NAME CHANGE: 19920703 10-Q 1 l00848ae10vq.txt CARDINAL HEALTH, INC. | FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarter Ended March 31, 2003 Commission File Number 1-11373 CARDINAL HEALTH, INC. (Exact name of registrant as specified in its charter) OHIO 31-0958666 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 7000 CARDINAL PLACE, DUBLIN, OHIO 43017 (Address of principal executive offices and zip code) (614) 757-5000 (Registrant's telephone number, including area code) 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes |X| No | | The number of Registrant's Common Shares outstanding at the close of business on April 30, 2003 was as follows: Common Shares, without par value: 446,448,190 Page 1 CARDINAL HEALTH, INC. AND SUBSIDIARIES Index *
Page No. -------- Part I. Financial Information: Item 1. Financial Statements: Condensed Consolidated Statements of Earnings for the Three and Nine Months Ended March 31, 2003 and 2002 (unaudited).......................................... 3 Condensed Consolidated Balance Sheets at March 31, 2003 and June 30, 2002 (unaudited).......................................................... 4 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2003 and 2002 (unaudited)................................................ 5 Notes to Condensed Consolidated Financial Statements............................... 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition............................................................ 19 Item 3. Quantitative and Qualitative Disclosures about Market Risk......................... 27 Item 4. Controls and Procedures............................................................ 27 Part II. Other Information: Item 1. Legal Proceedings.................................................................. 27 Item 5. Other Information.................................................................. 30 Item 6. Exhibits and Reports on Form 8-K................................................... 30
* Items not listed are inapplicable. Page 2 PART I. FINANCIAL INFORMATION CARDINAL HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Operating revenue $ 12,837.3 $ 11,541.3 $ 36,960.2 $ 32,628.4 Operating cost of products sold 11,643.2 10,472.8 33,679.7 29,644.7 ----------- ----------- ----------- ----------- Operating gross margin 1,194.1 1,068.5 3,280.5 2,983.7 Bulk deliveries to customer warehouses and other 1,534.0 1,700.7 4,588.2 5,479.1 Cost of products sold - bulk deliveries and other 1,534.0 1,700.7 4,588.2 5,479.1 ----------- ----------- ----------- ----------- Bulk gross margin -- -- -- -- Selling, general and administrative expenses 576.1 536.0 1,623.0 1,552.4 Special items - merger charges 15.9 39.1 49.3 68.2 Special items - other (6.1) -- (58.4) -- ----------- ----------- ----------- ----------- Operating earnings 608.2 493.4 1,666.6 1,363.1 Interest expense and other 30.6 39.6 92.7 107.0 ----------- ----------- ----------- ----------- Earnings before income taxes, discontinued operations, and cumulative effect of change in accounting 577.6 453.8 1,573.9 1,256.1 Provision for income taxes 192.7 153.5 533.2 426.1 ----------- ----------- ----------- ----------- Earnings from continuing operations before cumulative effect of change in accounting 384.9 300.3 1,040.7 830.0 Loss from discontinued operations (net of tax of $1.1, see (1.8) -- (1.8) -- Note 12) Cumulative effect of change in accounting (See Note 7) -- -- -- (70.1) ----------- ----------- ----------- ----------- Net earnings $ 383.1 $ 300.3 $ 1,038.9 $ 759.9 =========== =========== =========== =========== Basic earnings per Common Share: Continuing operations $ 0.86 $ 0.67 $ 2.34 $ 1.85 Discontinued operations (0.01) -- (0.01) -- Cumulative effect of change in accounting -- -- -- (0.16) ----------- ----------- ----------- ----------- Net basic earnings per Common Share $ 0.85 $ 0.67 $ 2.33 $ 1.69 =========== =========== =========== =========== Diluted earnings per Common Share: Continuing operations $ 0.85 $ 0.66 $ 2.30 $ 1.81 Discontinued operations (0.01) -- (0.01) -- Cumulative effect of change in accounting -- -- -- (0.15) ----------- ----------- ----------- ----------- Net diluted earnings per Common Share $ 0.84 $ 0.66 $ 2.29 $ 1.66 =========== =========== =========== =========== Weighted average number of Common Shares outstanding: Basic 449.1 449.9 445.8 449.8 Diluted 456.3 459.1 453.5 459.8 Cash dividends declared per Common Share $ 0.025 $ 0.025 $ 0.075 $ 0.075
See notes to condensed consolidated financial statements. Page 3 CARDINAL HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN MILLIONS)
MARCH 31, JUNE 30, 2003 2002 --------- --------- ASSETS Current assets: Cash and equivalents $ 545.2 $ 1,382.0 Trade receivables, net 2,845.3 2,295.4 Current portion of net investment in sales-type leases 185.7 218.3 Inventories 8,775.6 7,361.0 Prepaid expenses and other 710.5 649.9 Assets held for sale from discontinued operations 218.1 -- --------- --------- Total current assets 13,280.4 11,906.6 --------- --------- Property and equipment, at cost 3,655.5 3,509.3 Accumulated depreciation and amortization (1,650.4) (1,614.9) --------- --------- Property and equipment, net 2,005.1 1,894.4 Other assets: Net investment in sales-type leases, less current portion 589.5 618.6 Goodwill and other intangibles 2,317.4 1,544.1 Other 288.1 474.3 --------- --------- Total $18,480.5 $16,438.0 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable, banks $ 7.5 $ 0.8 Current portion of long-term obligations 19.0 17.4 Accounts payable 6,465.2 5,504.5 Other accrued liabilities 1,465.0 1,287.7 Liabilities from discontinued operations 90.2 -- --------- --------- Total current liabilities 8,046.9 6,810.4 --------- --------- Long-term obligations, less current portion 2,328.2 2,207.0 Deferred income taxes and other liabilities 860.8 1,027.6 Shareholders' equity: Preferred Stock, without par value Authorized - 0.5 million shares, Issued - none -- -- Common Shares, without par value Authorized - 755.0 million shares, Issued - 464.7 million shares and 461.0 million shares at March 31, 2003 and June 30, 2002, respectively 2,308.3 2,105.2 Retained earnings 6,161.3 5,156.1 Common Shares in treasury, at cost, 18.7 million shares and 12.2 million shares at March 31, 2003 and June 30, 2002, respectively (1,134.3) (737.0) Other comprehensive loss (82.5) (120.9) Other (8.2) (10.4) --------- --------- Total shareholders' equity 7,244.6 6,393.0 --------- --------- Total $18,480.5 $16,438.0 ========= =========
See notes to condensed consolidated financial statements. Page 4 CARDINAL HEALTH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN MILLIONS)
NINE MONTHS ENDED MARCH 31, 2003 2002 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Earnings from continuing operations before cumulative effect of change in accounting $1,040.7 $ 830.0 Adjustments to reconcile earnings from continuing operations before cumulative effect of change in accounting to net cash from operating activities: Depreciation and amortization 195.2 181.5 Provision for bad debts 15.8 36.9 Change in operating assets and liabilities, net of effects from acquisitions: Increase in trade receivables (474.3) (164.4) Increase in inventories (1,386.7) (1,609.2) Decrease in net investment in sales-type leases 61.7 133.9 Increase/(decrease) in accounts payable 895.6 (54.7) Other operating items, net 167.8 203.2 -------- -------- Net cash provided by/(used in) operating activities 515.8 (442.8) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of subsidiaries, net of cash acquired (3.2) (10.9) Proceeds from sale of property, equipment, and other assets 41.7 17.6 Additions to property and equipment (264.1) (186.1) Proceeds from sale of discontinued operations 7.8 -- -------- -------- Net cash used in investing activities (217.8) (179.4) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net change in commercial paper and short-term debt 6.7 290.3 Reduction of long-term obligations (50.9) (9.7) Proceeds from long-term obligations, net of issuance costs 9.4 318.4 Proceeds from issuance of Common Shares 125.3 107.7 Purchase of treasury shares (1,191.7) (115.7) Dividends on Common Shares (33.6) (33.7) -------- -------- Net cash provided by/(used in) financing activities (1,134.8) 557.3 -------- -------- NET DECREASE IN CASH AND EQUIVALENTS (836.8) (64.9) CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 1,382.0 934.1 -------- -------- CASH AND EQUIVALENTS AT END OF PERIOD $ 545.2 $ 869.2 ======== ========
See notes to condensed consolidated financial statements. Page 5 CARDINAL HEALTH, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION. The condensed consolidated financial statements of Cardinal Health, Inc. (the "Company") include the accounts of all majority-owned subsidiaries and all significant intercompany amounts have been eliminated. These condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by generally accepted accounting principles for interim reporting. In the opinion of management, all adjustments necessary for a fair presentation have been included. Except as disclosed elsewhere in this Form 10-Q, all such adjustments are of a normal and recurring nature. The condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2002 (the "2002 Form 10-K"). Note 1 of the "Notes to Consolidated Financial Statements" from the 2002 Form 10-K contains specific accounting policies and is incorporated herein by reference. RECENT FINANCIAL ACCOUNTING STANDARDS. In April 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". This statement amends and clarifies the financial accounting and reporting requirements, as were originally established in FASB Statement No. 133, for derivative instruments and hedging activities. FASB Statement No. 149 provides greater clarification of the characteristics of a derivative instrument so that contracts with similar characteristics will be accounted for consistently. This statement is effective for contracts entered into or modified after June 30, 2003, as well as for hedging relationships designated after June 30, 2003, excluding certain implementation issues that have been effective prior to this date under FASB Statement No. 133. The adoption of this statement is not anticipated to have a material effect on the Company's financial position or results of operations. In January 2003, the Emerging Issues Task Force ("EITF") finalized Issue No. 02-16, "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor". This issue requires that cash consideration received by a customer from a vendor be recorded as a reduction of cost of sales within a company's results of operations, excluding payments received when a customer sells products and services to the vendor as well as reimbursement of costs incurred by the customer in selling the vendor's product. This issue also requires rebates or refunds provided to a customer as the result of achieving certain purchase levels or other defined measures to be recorded as a reduction of cost of sales. If the rebate or refund is probable and reasonably estimable, it can be allocated over the time period in which it is earned. The adoption of this statement did not have a material effect on the Company's financial position or results of operations. In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities". This interpretation defines when a business enterprise must consolidate a variable interest entity. This interpretation applies immediately to variable interest entities created after January 31, 2003. It applies in the first fiscal year or interim period beginning after June 15, 2003, to entities in which an enterprise holds a variable interest that was acquired before February 1, 2003. The Company currently has certain operating lease agreements with entities it believes qualify as variable interest entities. The Company does not believe that these entities will qualify as variable interest entities as of the effective date of this interpretation and, therefore, does not anticipate any material impact to the Company's financial position or results of operations. In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," which amends FASB Statement No. 123. This statement provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation and amends the disclosure requirements of FASB Statement No. 123. The transition guidance and annual disclosure provisions are effective for fiscal years ending after December 15, 2002. The interim disclosure provisions (shown below) are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. Page 6 At March 31, 2003, the Company maintained several stock incentive plans for the benefit of certain officers, directors and employees. The Company accounts for those plans under the intrinsic value method prescribed in APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations. The Company did not recognize compensation expense related to employee stock options as the options granted under these plans had an exercise price equal to the fair market value of the underlying common stock on the date of grant. The Company did recognize compensation expense related to restricted shares and restricted share units. Restricted shares and restricted share units are awarded by the Company with an exercise price of zero and are amortized to expense over the period in which participants perform services. The following tables illustrate the effect on net income and earnings per share if the Company adopted the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation":
For the Three Months For the Nine Months Ended Ended (in millions) March 31, March 31, 2003 2002 2003 2002 --------- --------- --------- --------- Net earnings, as reported $ 383.1 $ 300.3 $ 1,038.9 $ 759.9 Stock based employee compensation expense included in net earnings, net of related tax effects 0.4 0.7 1.3 2.5 Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax effects (22.5) (21.4) (62.7) (53.5) --------- --------- --------- --------- Pro Forma net earnings $ 361.0 $ 279.6 $ 977.5 $ 708.9 ========= ========= ========= =========
For the Three Months For the Nine Months Ended Ended March 31, March 31, 2003 2002 2003 2002 --------- --------- --------- --------- Basic earnings per Common Share: As reported $ 0.85 $ 0.67 $ 2.33 $ 1.69 Pro forma basic earnings per Common Share $ 0.80 $ 0.62 $ 2.19 $ 1.58 Diluted earnings per Common Share: As reported $ 0.84 $ 0.66 $ 2.29 $ 1.66 Pro forma diluted earnings per Common Share $ 0.79 $ 0.61 $ 2.16 $ 1.54
In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". This interpretation requires a guarantor to recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. It also enhances guarantor's disclosure requirements to be made in its interim and annual financial statements about its obligations under certain guarantees it has issued. The initial recognition and initial measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. The Company adopted the enhanced disclosure requirements in the second quarter of fiscal 2003. The adoption of the recognition and initial measurement provisions during the third quarter of fiscal 2003 did not have a material effect on the Company's financial position or results of operations. In November 2002, the EITF finalized Issue No. 00-21 "Accounting for Revenue Arrangements with Multiple Deliverables," effective for arrangements entered into after June 15, 2003. This issue defines units of accounting for arrangements with multiple deliverables resulting in revenue being allocated over the units of accounting for revenue recognition purposes. The adoption of this statement is not anticipated to have a material effect on the Company's financial position or results of operations. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," effective for exit or disposal activities that are initiated after December 31, 2002. This statement nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." This statement requires that a liability for a cost associated with an exit or disposal activity, other than those associated with a business combination, be recognized when the liability is incurred instead of recognizing the liability at the date of an entity's commitment to Page 7 an exit plan as was required in EITF Issue No. 94-3. The adoption of this statement did not have a material effect on the Company's financial position or results of operations. 2. EARNINGS PER SHARE AND SHAREHOLDERS' EQUITY Basic earnings per Common Share ("Basic") is computed by dividing net earnings (the numerator) by the weighted average number of Common Shares outstanding during each period (the denominator). Diluted earnings per Common Share is similar to the computation for Basic, except that the denominator is increased by the dilutive effect of stock options outstanding, computed using the treasury stock method. The following table reconciles the number of shares used to compute basic and diluted earnings per Common Share:
For the Three Months Ended For the Nine Months Ended March 31, March 31, (in millions) 2003 2002 2003 2002 ------ ------ ------ ------ Weighted-average shares - basic 449.1 449.9 445.8 449.8 Effect of dilutive securities: Employee stock options 7.2 9.2 7.7 10.0 ------ ------ ------ ------ Weighted-average shares - diluted 456.3 459.1 453.5 459.8 ====== ====== ====== ======
The potentially dilutive employee stock options that were antidilutive for the three months ended March 31, 2003 and 2002 were 23.7 million and 12.6 million, respectively, and for the nine months ended March 31, 2003 and 2002 were 23.0 million and 0.1 million, respectively. On January 28, 2003, the Company's Board of Directors authorized the repurchase of Common Shares up to an aggregate amount of $500 million. Pursuant to this authorization, the Company repurchased approximately 8.6 million Common Shares having an aggregate cost of approximately $500 million during the quarter ended March 31, 2003. The repurchased shares will be treasury shares available to be used for general corporate purposes. On August 7, 2002, the Company's Board of Directors authorized the repurchase of Common Shares up to an aggregate amount of $500 million. Pursuant to this authorization, the Company repurchased approximately 0.9 million Common Shares having an aggregate cost of approximately $49.0 million during the quarter ended March 31, 2003. The cumulative amount repurchased under this authorization, which was completed in January 2003, was approximately 7.8 million Common Shares having an aggregate cost of approximately $500 million. The repurchased shares will be treasury shares available to be used for general corporate purposes. In September 2001, the Company's Board of Directors authorized the repurchase of Common Shares up to an aggregate amount of $500 million. Pursuant to this authorization, the Company repurchased approximately 3.2 million Common Shares having an aggregate cost of approximately $191.7 million during the quarter ended September 30, 2002. The cumulative amount repurchased under this authorization, which was completed in August 2002, was approximately 8.3 million Common Shares having an aggregate cost of approximately $500 million. The repurchased shares will be treasury shares available to be used for general corporate purposes. 3. COMPREHENSIVE INCOME The following is a summary of the Company's comprehensive income for the three and nine months ended March 31, 2003 and 2002:
For the Three Months Ended For the Nine Months Ended March 31, March 31, (in millions) 2003 2002 2003 2002 -------- -------- -------- -------- Net earnings $ 383.1 $ 300.3 $1,038.9 $ 759.9 Foreign currency translation adjustment 9.3 (12.6) 37.5 (8.6) Unrealized gain on investment -- -- -- 2.2 Reclassification adjustment for investment losses included in net earnings -- -- -- 3.2 Net unrealized gain/(loss) on derivative instruments (11.5) 3.6 0.9 (0.7) -------- -------- -------- -------- Total comprehensive income $ 380.9 $ 291.3 $1,077.3 $ 756.0 ======== ======== ======== ========
Page 8 4. MERGER-RELATED COSTS AND OTHER SPECIAL ITEMS The following is a summary of the special items for the three and nine months ended March 31, 2003 and 2002.
Special Items Three Months Ended Nine Months Ended March 31, March 31, ---------------------- ---------------------- (in millions) 2003 2002 2003 2002 ------- ------- ------- ------- Merger-Related Costs: Employee-related costs $ (2.5) $ (9.9) $ (17.5) $ (18.6) Pharmaceutical distribution center consolidation (6.8) (12.6) (16.6) (13.4) Other exit costs (0.1) (2.2) (2.1) (6.4) Other integration costs (6.5) (14.4) (13.1) (29.8) ------- ------- ------- ------- Total merger-related costs $ (15.9) $ (39.1) $ (49.3) $ (68.2) ------- ------- ------- ------- Other Special Items: Employee-related costs $ (0.1) $ -- $ (1.5) $ -- Manufacturing facility closures (0.2) -- (21.4) -- Litigation settlements, net 6.8 -- 99.6 -- Asset impairment and other (0.4) -- (18.3) -- ------- ------- ------- ------- Total other special items $ 6.1 $ -- $ 58.4 $ -- ------- ------- ------- ------- Total special items $ (9.8) $ (39.1) $ 9.1 $ (68.2) Tax effect of special items 3.4 14.4 (9.0) 25.6 ------- ------- ------- ------- Net effect of special items $ (6.4) $ (24.7) $ 0.1 $ (42.6) ======= ======= ======= =======
MERGER-RELATED COSTS Costs of integrating the operations of various merged companies are recorded as merger-related costs when incurred. The merger-related costs recognized as of March 31, 2003, were primarily a result of the merger or acquisition transactions involving Syncor International Corporation ("Syncor"), Boron, Lepore & Associates, Inc. ("BLP"), Magellan Laboratories Incorporated ("Magellan"), Bindley Western Industries, Inc. ("Bindley"), Bergen Brunswig Medical Corporation ("BBMC"), Allegiance Corporation ("Allegiance") and R.P. Scherer Corporation ("Scherer"). EMPLOYEE-RELATED COSTS. During the above-stated periods, the Company incurred employee-related costs associated with certain of its mergers and acquisitions. For the three months ended March 31, 2003, the costs primarily related to amortization expense of noncompete agreements associated with the Bindley and Allegiance merger transactions. For the nine months ended March 31, 2003, $8.8 million related to an approved plan to curtail certain defined benefit pension plans within the Pharmaceutical Technologies and Services segment. The remaining employee-related costs for the nine months ended March 31, 2003, primarily related to amortization expense of the noncompete agreements noted above. For the three and nine months ended March 31, 2002, the employee-related costs primarily consist of amortization expense of noncompete agreements and severance as a result of certain of the Company's mergers and acquisitions. PHARMACEUTICAL DISTRIBUTION CENTER CONSOLIDATION. In connection with the merger transaction with Bindley, the Company anticipated closing and consolidating a total of 16 Bindley distribution centers, Bindley's corporate office, and one of the Company's data centers. These closures were to result in the termination of approximately 1,250 employees. As of March 31, 2003, all 16 Bindley distribution centers and the Company's data center have been closed, and the majority of the 1,250 employees have been terminated. The Company has substantially completed the corporate office consolidation, and recorded approximately $6.6 million related to this consolidation during the three months ended March 31, 2003. The corporate office consolidation is expected to be complete by June 30, 2003. During the three and nine months ended March 31, 2003, the Company recorded charges totaling $6.8 million and $16.6 million, respectively, associated with the consolidations and closures noted above, as compared to $12.6 million and $13.4 million, respectively, for the comparable periods in fiscal 2002. The Company incurred employee-related costs, primarily from the termination of employees due to the distribution center closures, as well as exit costs to consolidate and close the various facilities mentioned above, including asset impairment charges, inventory move costs, contract and lease termination costs, and duplicate salary costs incurred during the shutdown periods. Page 9 OTHER EXIT COSTS. Other exit costs related primarily to costs associated with lease terminations, moving expenses, and asset impairments as a direct result of the merger transactions with BBMC, Allegiance and Scherer. OTHER INTEGRATION COSTS. Other integration costs, which primarily relate to the merger and acquisition transactions noted above, included charges directly related to the integration of operations of the transactions noted, such as consulting costs related to information systems and employee benefit integration, as well as relocation and travel costs directly associated with the integrations. OTHER SPECIAL ITEMS EMPLOYEE-RELATED COSTS. During the three and nine months ended March 31, 2003, the Company incurred $0.1 million and $1.5 million, respectively, of employee-related costs associated with the restructuring of certain operations within the Pharmaceutical Distribution and Provider Services segment. A significant portion of the charges recorded represent severance accrued at the time severance terms were communicated to employees during the second quarter of fiscal 2003. The restructuring of operations is expected to be complete by June 30, 2003, and will result in the termination of approximately 30 employees. MANUFACTURING FACILITY CLOSURES. During the three and nine months ended March 31, 2003, the Company recorded a total of $0.2 million and $21.4 million, respectively, as special charges related to the closure and consolidation of certain manufacturing facilities. These closures and consolidations occurred within the Medical Products and Services segment and the Pharmaceutical Technologies and Services segment. Within the Medical Products and Services segment, three manufacturing facility closures were announced during the nine months ended March 31, 2003 (one during the first quarter of fiscal 2003 and two during the second quarter of fiscal 2003). Two of the manufacturing facility closures were complete as of December 31, 2002. The other closure is expected to be complete by June 30, 2003. Exit costs of $0.2 million and $2.9 million were incurred during the three and nine months ended March 31, 2003, respectively, primarily related to dismantling and moving machinery and equipment. Also, asset impairment charges of $8.9 million were incurred during the nine months ended March 31, 2003. The remaining $4.6 million for the nine months ended March 31, 2003, related to severance costs due to the termination of employees as a result of these closures. The Company expects to terminate approximately 530 employees due to these closures. As of March 31, 2003, the majority of these employees have been terminated. The Company incurred special charges during the nine months ended March 31, 2003, related to two manufacturing facility closures within the Pharmaceutical Technologies and Services segment. One closure was complete as of December 31, 2002. The other is expected to be complete by June 30, 2003. Asset impairment charges of $1.1 million were incurred during the nine months ended March 31, 2003. Also, exit costs of $1.6 million were incurred during this same period, primarily related to dismantling machinery and equipment and transferring certain technologies to other existing facilities within the Company. In addition, $1.6 million of severance costs, related to the termination of approximately 75 employees, were incurred during the nine months ended March 31, 2003, as a result of these closures. As of March 31, 2003, the majority of these employees were terminated. LITIGATION SETTLEMENTS. During the three and nine months ended March 31, 2003, the Company recorded income from net litigation settlements of $6.8 million and $99.6 million, respectively. The settlements resulted primarily from the recovery of antitrust claims against certain vitamin manufacturers for amounts overcharged in prior years. The total recovery through March 31, 2003 was $136.4 million, of which $8.3 million was recorded during the three months ended March 31, 2003. While the Company still has pending claims with smaller vitamin manufacturers, the total amount of future recovery is not currently estimable but the Company believes it is not likely to be a material amount. Any future recoveries will be recorded as a special item in the period in which a settlement is reached. During the three months ended March 31, 2003, the vitamin litigation income was partially offset by a litigation settlement totaling $1.5 million. ASSET IMPAIRMENT AND OTHER. During the nine months ended March 31, 2003, the Company incurred asset impairment and other charges of $18.3 million, of which $10.1 million related to asset impairment charges resulting from the Company's decision to exit certain North American commodity operations in its Pharmaceutical Technologies and Services segment. An additional $7.8 million relates to a writeoff of design, tooling and development costs. Page 10 ACCRUAL ROLLFORWARD The following table summarizes the activity related to the liabilities associated with the Company's special charges during the nine months ended March 31, 2003.
For the Nine Months Ended ($ in millions) March 31, 2003 -------------- Balance at June 30, 2002 $ 64.7 Additions(1) 92.0 Payments (109.7) ------ Balance at March 31, 2003 $ 47.0 ======
(1) Amount represents items that have been either expensed as incurred or accrued according to generally accepted accounting principles. This amount does not include litigation settlement income recorded during the nine months ended March 31, 2003 of $101.1 million, which was reported as a reduction to special charges. SUMMARY The net effect of special items recorded during the three months ended March 31, 2003, was to decrease reported earnings from continuing operations by $6.4 million to $384.9 million and to decrease reported diluted earnings per Common Share from continuing operations by $0.01 per share to $0.85 per share. In comparison, the net effect of special items recorded during the three months ended March 31, 2002, was to reduce reported earnings from continuing operations by $24.7 million to $300.3 million and to reduce reported diluted earnings per Common Share from continuing operations by $0.05 per share to $0.66 per share. The net effect of special items recorded during the nine months ended March 31, 2003, was to increase reported earnings from continuing operations before cumulative effect of change in accounting by $0.1 million to $1,040.7 million. The reported diluted earnings per Common Share from continuing operations before cumulative effect of change in accounting remained unchanged. In comparison, the net effect of special items recorded during the nine months ended March 31, 2002, was to reduce reported earnings from continuing operations before cumulative effect of change in accounting by $42.6 million to $830.0 million and to reduce reported diluted earnings per Common Share from continuing operations before cumulative effect of change in accounting by $0.09 per share to $1.81 per share. 5. SEGMENT INFORMATION The Company is organized based on the products and services it offers. Under this organizational structure, the Company operates within four operating business segments: Pharmaceutical Distribution and Provider Services, Medical Products and Services, Pharmaceutical Technologies and Services, and Automation and Information Services. With the exception of the change noted in the following paragraph, the Company has not made any significant changes in the segments reported or the basis of measurement of segment profit or loss from the information provided in the 2002 Form 10-K. During the third quarter of fiscal 2003, the Company reclassified Central Pharmacy Services, Inc. and Cord Logistics, Inc. from the Pharmaceutical Distribution and Provider Services segment to the Pharmaceutical Technologies and Services segment and therefore restated these segments' financial results. All prior period financial results presented in this Form 10-Q have also been restated to reflect this reclassification. In addition, with the completion of the Syncor acquisition on January 1, 2003, Syncor is included within the Pharmaceutical Technologies and Services segment. The Pharmaceutical Distribution and Provider Services segment involves the distribution of a broad line of pharmaceuticals, healthcare, and other specialty pharmaceutical products and other items typically sold by hospitals, retail drug stores and other healthcare providers. In addition, this segment provides services to the healthcare industry through integrated pharmacy management, temporary pharmacy staffing, as well as franchising of apothecary-style retail pharmacies. The Medical Products and Services segment involves the manufacture of medical, surgical and laboratory products and the distribution of these products as well as products not manufactured internally to hospitals, physician offices, surgery centers and other healthcare providers. Page 11 The Pharmaceutical Technologies and Services segment provides services to the healthcare industry through the design of proprietary drug delivery systems including softgel capsules, controlled release forms, Zydis(R) fast dissolving wafers, and advanced sterile delivery technologies. It also provides comprehensive packaging, radiopharmaceutical manufacturing, pharmaceutical development and analytical science expertise, as well as medical education, marketing and contract sales services. The Automation and Information Services segment provides services to hospitals and other healthcare providers through pharmacy automation equipment and clinical information system services. The Company evaluates the performance of the segments based on operating earnings after the corporate allocation of administrative expenses. Special charges are not allocated to the segments. The following tables include revenue and operating earnings for the three and nine months ended March 31, 2003 and 2002 for each segment and reconciling items necessary to equal amounts reported in the condensed consolidated financial statements:
NET REVENUE For the Three Months Ended For the Nine Months Ended (in millions) March 31, March 31, 2003 2002 2003 2002 --------- --------- --------- --------- Operating revenue: Pharmaceutical Distribution and Provider Services $10,446.0 $ 9,513.5 $30,269.7 $26,637.3 Medical Products and Services 1,644.8 1,560.8 4,879.1 4,624.9 Pharmaceutical Technologies and Services 596.2 345.4 1,399.5 1,027.7 Automation and Information Services 166.2 142.3 464.6 390.3 Corporate (1) (15.9) (20.7) (52.7) (51.8) --------- --------- --------- --------- Total operating revenue $12,837.3 $11,541.3 $36,960.2 $32,628.4 ========= ========= ========= ========= Bulk deliveries to customer warehouses and other: Pharmaceutical Distribution and Provider Services $ 1,482.4 $ 1,700.7 $ 4,450.1 $ 5,479.1 Pharmaceutical Technologies and Services (2) 51.6 -- 138.1 -- --------- --------- --------- --------- Total bulk deliveries to customer warehouses and other $ 1,534.0 $ 1,700.7 $ 4,588.2 $ 5,479.1 ========= ========= ========= =========
OPERATING EARNINGS For the Three Months Ended For the Nine Months Ended (in millions) March 31, March 31, 2003 2002 2003 2002 --------- --------- --------- --------- Operating earnings: Pharmaceutical Distribution and Provider Services $ 342.8 $ 309.7 $ 899.6 $ 779.9 Medical Products and Services 163.7 138.6 446.0 395.6 Pharmaceutical Technologies and Services 94.4 66.0 252.1 201.0 Automation and Information Services 64.3 53.4 179.8 138.3 Corporate (3) (57.0) (74.3) (110.9) (151.7) --------- --------- --------- --------- Total operating earnings $ 608.2 $ 493.4 $ 1,666.6 $ 1,363.1 ========= ========= ========= =========
(1) Corporate operating revenue primarily consists of foreign currency translation adjustments. (2) At the beginning of fiscal 2003, the Company began classifying out-of-pocket expenses received through its recently acquired sales and marketing services' business within the bulk deliveries to customer warehouses and other line item. The customer is contractually required to reimburse the Company for these expenses. The Company does not generate any margin from these reimbursements. (3) Corporate operating earnings include special items of ($9.8) million and ($39.1) million in the three-month periods ended March 31, 2003 and 2002, respectively, and $9.1 million and ($68.2) million for the nine-month periods ended March 31, 2003 and 2002, respectively, and unallocated corporate administrative expenses and investment spending. In addition, at the beginning of fiscal 2003, the Company began expanding the use of its shared service center, which previously supported the Medical Products and Services segment, to benefit and support company-wide initiatives and other business segments. Accordingly, the cost of the shared service center, which was previously reported within the Medical Products and Services segment, has been classified within Corporate operating earnings for fiscal 2003 to Page 12 be consistent with internal segment reporting. The cost of these services for the three and nine months ended March 31, 2003 were approximately $4.7 million and $14.3 million, respectively. These costs are included within Corporate operating earnings, a portion of which are included in the general corporate cost allocation to each segment. 6. LEGAL PROCEEDINGS Latex Litigation On September 30, 1996, Baxter International Inc. ("Baxter") and its subsidiaries transferred to Allegiance and its subsidiaries Baxter's U.S. healthcare distribution business, surgical and respiratory therapy business and healthcare cost-saving business as well as certain foreign operations (the "Allegiance Business") in connection with a spin-off of the Allegiance Business by Baxter (the "Baxter-Allegiance Spin-Off"). In connection with this spin-off, Allegiance, which merged with a subsidiary of the Company on February 3, 1999, agreed to indemnify Baxter, and to defend and indemnify Baxter Healthcare Corporation ("BHC"), as contemplated by the agreements between Baxter and Allegiance, for all expenses and potential liabilities associated with claims arising from the Allegiance Business, including certain claims of alleged personal injuries as a result of exposure to natural rubber latex gloves. The Company is not a party to any of the lawsuits and has not agreed to pay any settlements to the plaintiffs. As of March 31, 2003, there were 271 lawsuits pending against BHC and/or Allegiance involving allegations of sensitization to natural rubber latex products and some of these cases were proceeding to trial. The total dollar amount of potential damages cannot be reasonably quantified. Some plaintiffs plead damages in extreme excess of what they reasonably can expect to recover, some plead a modest amount, and some do not include a request for any specific dollar amount. Not including cases that ask for no specific damages, the damage requests per action have ranged from $10,000 to $240 million. All of these cases name multiple defendants, in addition to Baxter/Allegiance. The average number of defendants per case exceeds twenty-five. Based on the significant differences in the range of damages sought and based on the multiple number of defendants in these lawsuits, Allegiance cannot reasonably quantify the total amount of possible/probable damages. Therefore, Allegiance and the Company do not believe that these numbers should be considered as an indication of either reasonably possible or probable liability. Since the inception of this litigation, Baxter/Allegiance have been named as a defendant in 831 cases. During the fiscal year ended June 30, 2002, Allegiance began settling some of these lawsuits with greater frequency. As of March 31, 2003, Allegiance had resolved more than sixty percent of these cases. About twenty percent of the lawsuits that have been resolved were concluded without any liability to Baxter/Allegiance. No individual claim has been settled for a material amount, nor have all the settled claims, in the aggregate, comprised a material amount. Due to the number of claims filed and the ongoing defense costs that will be incurred, Allegiance believes it is probable that it will incur substantial legal fees related to the resolution of the cases still pending. Although the Company continues to believe that it cannot reasonably estimate the potential cost to settle these lawsuits, the Company believes that the impact of such lawsuits upon Allegiance will be immaterial to the Company's financial position, liquidity and results of operations, and could be in the range of $0 to $20 million, net of insurance proceeds. The Company believes a substantial portion of any liability will be covered by insurance policies Allegiance has with financially viable insurance companies, subject to self-insurance retentions, exclusions, conditions, coverage gaps, policy limits and insurer solvency. The Company and Allegiance continue to believe that insurance recovery is probable. Shareholder Litigation against Cardinal Health On November 8, 2002, a complaint was filed by a purported shareholder against the Company and its directors in the Court of Common Pleas, Delaware County, Ohio, as a purported derivative action. On or about March 21, 2003, after the Company filed a Motion to Dismiss the complaint, an amended complaint was filed alleging breach of fiduciary duties and corporate waste in connection with the alleged failure by the Board of Directors of the Company to (a) renegotiate or terminate the Company's proposed acquisition of Syncor, and (b) determine the propriety of indemnifying Monty Fu, the former Chairman of Syncor. The Company has filed a Motion to Dismiss the amended complaint and believes the allegations made in the amended complaint are without merit and intends to vigorously defend this action. The Company currently does not believe that the impact of this lawsuit, if any, will have a material adverse effect on the Company's financial position, liquidity or results of operations. The Company currently believes that there will be some insurance coverage available under the Company's directors' and officers' liability insurance policies in effect at the time this action was filed. Page 13 Shareholder Litigation against Syncor Eleven purported class action lawsuits have been filed against Syncor and certain of its officers and directors, asserting claims under the federal securities laws (collectively referred to as the "federal securities actions"). All of these actions were filed in the United States District Court for the Central District of California. The federal securities actions purport to be brought on behalf of all purchasers of Syncor shares during various periods, beginning as early as March 30, 2000, and ending as late as November 5, 2002 and allege, among other things, that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act, by issuing a series of press releases and public filings disclosing significant sales growth in Syncor's international business, but omitting mention of certain allegedly improper payments to Syncor's foreign customers, thereby artificially inflating the price of Syncor shares. A lead plaintiff has been appointed by the court in the federal securities actions and a consolidated complaint is expected to be filed in May 2003. On November 14, 2002, two additional actions were filed by individual stockholders of Syncor in the Court of Chancery of the State of Delaware (the "Delaware actions") against seven of Syncor's nine directors (the "director defendants"). The complaints in each of the Delaware actions were identical and alleged that the director defendants breached certain fiduciary duties to Syncor by failing to maintain adequate controls, practices and procedures to ensure that Syncor's employees and representatives did not engage in improper and unlawful conduct. Both complaints asserted a single derivative claim, for and on behalf of Syncor, seeking to recover all of the costs and expenses that Syncor incurred as a result of the allegedly improper payments (including the costs of the federal securities actions described above), and a single purported class action claim seeking to recover damages on behalf of all holders of Syncor shares in the amount of any losses sustained if consideration received in the merger by Syncor stockholders was reduced. On November 22, 2002, the plaintiff in one of the two Delaware actions filed an amended complaint adding as defendants the Company, its subsidiary Mudhen Merger Corp. and the remaining two Syncor directors, who are hereafter included in the term "director defendants." On November 18, 2002, two additional actions were filed by individual stockholders of Syncor in the Superior Court of California for the County of Los Angeles (the "California actions") against the director defendants. The complaints in the California actions allege that the director defendants breached certain fiduciary duties to Syncor by failing to maintain adequate controls, practices and procedures to ensure that Syncor's employees and representatives did not engage in improper and unlawful conduct. Both complaints asserted a single derivative claim, for and on behalf of Syncor, seeking to recover costs and expenses that Syncor incurred as a result of the allegedly improper payments. An amended complaint was filed on December 6, 2002 in one of these cases, purporting to allege direct claims on behalf of a class of shareholders. The defendants' motion for a stay of these cases pending the resolution of the Delaware actions (discussed above) was granted on April 30, 2003. The Company recently learned that a proposed class action complaint was filed on April 8, 2003, against the Company, Syncor, and certain officers and employees of the Company by a purported participant in the Syncor Employees' Savings and Stock Ownership Plan. The suit alleges that the defendants breached certain fiduciary duties owed under the Employee Retirement Income Security Act ("ERISA"). Each of the actions described under the heading "Shareholder Litigation against Syncor" is in its early stages and it is impossible to predict the outcome of these proceedings or their impact on Syncor or the Company. However, the Company currently does not believe that the impact of these actions will have a material adverse effect on the Company's financial position, liquidity or results of operations. The Company and Syncor believe the allegations made in the complaints described above are without merit and intend to vigorously defend such actions and have been informed that the individual director and officer defendants deny liability for the claims asserted in these actions, believe they have meritorious defenses and intend to vigorously defend such actions. The Company and Syncor currently believe that there will be some insurance coverage available under the Company's and Syncor's directors' and officers' liability insurance policies in effect at the time these actions were filed. Other Matters The Company also becomes involved from time-to-time in other litigation incidental to its business, including, without limitation, inclusion of certain of its subsidiaries as a potentially responsible party for environmental clean-up costs. Although the ultimate resolution of the litigation referenced herein cannot be forecast with certainty, the Company intends to vigorously defend itself and does not currently believe that the outcome of any pending litigation will have a material adverse effect on the Company's financial position, liquidity and results of operation. Page 14 7. CHANGE IN ACCOUNTING In the first quarter of fiscal 2002, the method of recognizing revenue for pharmacy automation equipment was changed from recognizing revenue when the units were delivered to the customer to recognizing revenue when the units are installed at the customer site. Management believes that the change in accounting will provide for a more objectively determinable method of revenue recognition. In addition, the Company has implemented other changes to better service its customers and leverage operational efficiencies. The Company recorded a cumulative effect of change in accounting of $70.1 million (net of tax of $44.6 million) in the consolidated statement of earnings during the first quarter of fiscal 2002. The after tax dilutive impact of the cumulative effect was $0.15 per diluted share. 8. GOODWILL AND OTHER INTANGIBLE ASSETS Changes in the carrying amount of goodwill for the nine months ended March 31, 2003, were as follows:
Pharmaceutical Medical Distribution Products Pharmaceutical Automation and and Provider and Technologies and Information (in millions) Services Services Services Services Total -------- -------- -------- -------- ----- Balance at June 30, 2002 $ 159.8 $ 675.4 $ 639.4 $ 50.7 $1,525.3 Goodwill acquired, net of purchase price adjustments and other 5.2 11.3 715.3 -- 731.8 Goodwill write-off -- -- (7.6) -- (7.6) -------- -------- -------- -------- -------- Balance at March 31, 2003 $ 165.0 $ 686.7 $1,347.1 $ 50.7 $2,249.5 ======== ======== ======== ======== ========
For further details on the goodwill acquired as a result of the Syncor acquisition, see Note 11. During the second quarter of fiscal 2003, the Company made the decision to exit certain North American commodity operations within the Pharmaceutical Technologies and Services segment. As a result of this decision, the Company recorded a write-off of goodwill totaling $7.6 million. All intangible assets for the periods presented are subject to amortization and are being amortized using the straight-line method over periods that range from five to forty years. The detail of other intangible assets by class as of March 31, 2003, and June 30, 2002 was as follows:
(in millions) Gross Accumulated Net Intangible Amortization Intangible ---------- ------------ ---------- June 30, 2002 Trademarks and patents $ 28.7 $ 20.0 $ 8.7 Non-compete agreements 21.3 20.0 1.3 Other 17.7 8.9 8.8 ------ ------ ------ Total $ 67.7 $ 48.9 $ 18.8 ------ ------ ------ March 31, 2003 Trademarks and patents $ 47.9 $ 20.4 $ 27.5 Non-compete agreements 27.4 21.7 5.7 Other 46.3 11.6 34.7 ------ ------ ------ Total $121.6 $ 53.7 $ 67.9 ------ ------ ------
For further details on the intangible assets acquired as a result of the Syncor acquisition, see Note 11. Amortization expense for the three months ended March 31, 2003 and 2002 was $2.4 million and $1.0 million, respectively, and for the nine months ended March 31, 2003 and 2002 was $4.1 million and $2.1 million, respectively. The following table represents the estimated amortization expense for the fiscal years ending June 30:
2003 2004 2005 2006 2007 ---- ---- ---- ---- ---- Amortization expense $ 6.9 $ 9.7 $ 9.3 $ 9.0 $ 6.5
Page 15 9. OFF-BALANCE SHEET TRANSACTIONS The Company formed Cardinal Health Lease Funding 2002A, LLC ("CHLF2002A") for the sole purpose of acquiring a pool of sales-type leases and the related leased equipment from Cardinal Health 301, Inc ("CH301"), formerly known as Pyxis Corporation, and selling lease receivables and granting a security interest in the related leased equipment to Cardinal Health Lease Funding 2002AQ, LLC ("CHLF2002AQ"). CHLF2002A is a wholly owned, special purpose, bankruptcy-remote subsidiary of CH301. CHLF2002AQ was formed for the sole purposes of acquiring lease receivables under sales-type leases from CHLF2002A and granting a beneficial interest in the lease receivables and a security interest in the related equipment to the leasing subsidiary of a third-party bank. CHLF2002AQ is a wholly owned, special purpose, bankruptcy-remote subsidiary of CHLF2002A. The transaction qualifies for sale treatment under SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," and, accordingly, the related receivables are not included in the Company's consolidated financial statements. As required by U.S. generally accepted accounting principles, the Company consolidates CHLF2002A and does not consolidate CHLF2002AQ, as CHLF2002AQ is a qualified special purpose entity, as defined under SFAS No. 140. Both CHLF2002A and CHLF2002AQ are separate legal entities that maintain separate financial statements from Cardinal Health, Inc. and CH301. The assets of CHLF2002A and CHLF2002AQ are available first and foremost to satisfy the claims of their respective creditors. During the nine months ended March 31, 2003, CHLF2002A sold $200.0 million of lease receivables to CHLF2002AQ and recognized an immaterial gain that was classified as operating revenue within its results of operations. 10. GUARANTEES In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (see Note 1). This interpretation enhances a guarantor's disclosure requirements in its interim and annual financial statements regarding obligations under certain guarantees. The Company adopted the enhanced disclosure requirements in the second quarter of fiscal 2003. The initial recognition and measurement provisions of the interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. For the quarter ended March 31, 2003, the Company did not enter into any material guarantee arrangements where the fair value of the guarantee would be required to be recorded. The Company has contingent commitments related to certain operating lease agreements. These operating leases consist of certain real estate and equipment used in the operations of the Company. In the event of termination of these operating leases, which range in length from one to five years, the Company guarantees reimbursement for a portion of any unrecovered property cost. At March 31, 2003, the maximum amount the Company could be required to reimburse was $370.5 million. Based upon current information, the Company believes that the proceeds from the sale of properties under these operating lease agreements would exceed its payment obligation. In the ordinary course of business, the Company, from time to time, agrees to indemnify certain other parties under agreements with the Company, including under acquisition agreements, customer agreements, and intellectual property licensing agreements. Such indemnification obligations vary in scope and, when defined, in duration. Generally, a maximum obligation is not explicitly stated and, therefore, the overall maximum amount of the liability under such indemnification obligations cannot be reasonably estimated. Where appropriate, such indemnification obligations are recorded as a liability. Historically, the Company has not, individually or in the aggregate, made payments under these indemnification obligations in any material amounts. In certain circumstances, the Company believes that its existing insurance arrangements, subject to the general deduction and exclusion provisions, would cover portions of the liability that may arise from these indemnification obligations. In addition, the Company believes that the likelihood of material liability being triggered under these indemnification obligations is not significant. In the ordinary course of business, the Company, from time to time, enters into agreements that obligate the Company to make fixed payments upon the occurrence of certain events. Such obligations primarily relate to obligations arising under acquisition transactions, where the Company has agreed to make payments based upon the achievement of certain financial performance measures by the acquired company. Generally, the obligation is capped at an explicit amount. The Company's aggregate exposure for these obligations, assuming the achievement of all financial performance measures, is not material. Any potential payment for these obligations would be treated as an adjustment to the purchase price of the related entity and would have no impact on the Company's results of operations. Page 16 11. ACQUISITIONS On January 1, 2003, the Company completed the purchase of Syncor, a Woodland Hills, California-based company which is a leading provider of nuclear pharmacy services. As a result of the acquisition, the Company has become the leading provider of nuclear pharmacy services in the United States. The stock for stock transaction was valued at approximately $780 million based on the issuance of approximately 12.5 million shares at an average market price of the Company's stock over a period before and after the terms of the agreement, as amended, were announced. In addition, the Company assumed approximately $120 million in debt. Syncor's operations will be integrated with the Company's existing Nuclear Pharmacy Services business and reported within the Pharmaceutical Technologies and Services segment. The allocation of the purchase price is not yet finalized and is subject to adjustment as the Company is still assessing the value of the acquired discontinued operations, the acquired intangible assets, and certain other matters. The preliminary allocation of the purchase price has resulted in an allocation to goodwill of $700.4 million and an allocation to identifiable intangible assets of $36.8 million. The Company valued intangible assets related to customer relationships, vendor agreements, patents, trademarks, trade names and software. The breakdown by category is as follows:
Amount Average Category (in millions) Life(Years) - -------- ----------- ---------- Trademarks, trade names and patents $ 10.1 10 Customer relationships and other 26.7 4 ------ Total Intangible Assets Acquired $ 36.8 5 ======
Supplemental pro forma results of operations are not required to be disclosed as the impact to the Company of the acquisition of Syncor was not material. 12. DISCONTINUED OPERATIONS As discussed in Note 11, the Company acquired certain operations of Syncor that were or will be discontinued. Prior to the acquisition, Syncor announced the discontinuation of certain operations including the medical imaging business ("CMI") and certain overseas operations. The Company is continuing with these plans and has added additional international and non-core domestic businesses to the discontinued operations. In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the net assets and results of operations of these businesses are presented as discontinued operations. The Company is currently overseeing the planned sale of the discontinued operations and is actively marketing these businesses. As of March 31, 2003, the Company has certain commitments in place for the sale of certain of these discontinued operations and expects to sell the remaining discontinued operations by January 1, 2004. The results of discontinued operations for the three and nine months ended March 31, 2003 are summarized as follows:
Three and Nine Months Ended March 31, (in millions) 2003 ------------- Revenue $ 51.6 Loss before income taxes (2.9) Gain/(Loss) on sale of business - Income tax benefit 1.1 ------ Loss from discontinued operations $ (1.8) ======
Interest expense allocated to discontinued operations for the three and nine months ended March 31, 2003, was $0.3 million. Interest expense was allocated to the discontinued operations based upon a ratio of the net assets of discontinued operations versus the overall net assets of Syncor. Page 17 At March 31, 2003, the major components of assets and liabilities of the discontinued operations were as follows:
March 31, (in millions) 2003 Current Assets $ 83.7 Property and Equipment 115.9 Other Assets 18.5 ------ Total Assets $218.1 ====== Current Liabilities $ 55.2 Long Term Debt 36.2 Other Liabilities (1.2) ------ Total Liabilities $ 90.2 ======
Cash flows generated from the discontinued operations are immaterial to the Company and, therefore, are not disclosed separately. Page 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Management's discussion and analysis is concerned with material changes in financial condition and results of operations for the Company's condensed consolidated balance sheets as of March 31, 2003 and June 30, 2002, and for the condensed consolidated statements of earnings for the three and nine-month periods ended March 31, 2003 and 2002. This discussion and analysis should be read together with management's discussion and analysis included in the 2002 Form 10-K. Portions of management's discussion and analysis presented below include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe", "expect", "anticipate", "project", and similar expressions, among others, identify "forward-looking statements", which speak only as of the date the statement was made. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to materially differ from those made, projected or implied. The most significant of such risks, uncertainties and other factors are described in Exhibit 99.01 to this Form 10-Q and on page 8 of the 2002 Form 10-K and are incorporated herein by reference. The Company disclaims any obligation to update any forward-looking statement. GENERAL The Company operates within four operating business segments: Pharmaceutical Distribution and Provider Services, Medical Products and Services, Pharmaceutical Technologies and Services, and Automation and Information Services. See Note 5 of "Notes to Condensed Consolidated Financial Statements" for a description of these segments. RESULTS OF OPERATIONS
Percent of Total Percent of Total Operating Revenues Operating Revenues ------------------ ----------------- Operating Revenue Three Months Ended Nine Months Ended March 31, March 31, ------------------ ----------------- Growth (1) 2003 2002 Growth (1) 2003 2002 ---------- ---- ---- ---------- ---- ---- Pharmaceutical Distribution and Provider Services 10% 81% 83% 14% 82% 82% Medical Products and Services 5% 13% 13% 5% 13% 14% Pharmaceutical Technologies and Services 73% 5% 3% 36% 4% 3% Automation and Information Services 17% 1% 1% 19% 1% 1% Total Company 11% 100% 100% 13% 100% 100% -- --- --- -- --- ---
(1) Growth is calculated as the increase/(decrease) in the operating revenue for the three and nine months ended March 31, 2003 as a percentage of the operating revenue for the three and nine months ended March 31, 2002, respectively. Total operating revenue for the three and nine months ended March 31, 2003 increased 11% and 13% compared to the same periods of the prior year. This increase is a result of a higher sales volume across each of the Company's segments; the addition of new products; and the addition of new customers, some of which was a result of new corporate agreements with healthcare providers. In addition, the Syncor acquisition within the Pharmaceutical Technologies and Services segment accounted for approximately 1% of the overall growth for the three months ended March 31, 2003. The overall growth was partially offset by a decline within the Company's non-core wholesaler to wholesaler pharmaceutical trading business, as further discussed below. The Pharmaceutical Distribution and Provider Services segment's operating revenue growth during the three and nine months ended March 31, 2003 resulted from strong sales to various customer segments. The most significant growth was in the alternate site and chain pharmacies customer businesses, which yielded growth of approximately 23% and 13%, respectively, for the three months ended March 31, 2003 and 23% and 16%, respectively, for the nine months ended March 31, 2003, after considering the reduction in business with Kmart due to their closures of various stores. The temporary slow down of operating revenue growth for the segment during the three months Page 19 ended March 31, 2003 was primarily driven by the lack of availability of certain pharmaceutical products from manufacturers during the quarter which impacted non-core wholesaler to wholesaler revenue from the pharmaceutical trading business. This lack of availability was, in part, brought about by the increased trend in the industry's use of inventory management agreements ("IMA's"). IMA's generally provide for the Company to be compensated on a negotiated basis to help manufacturers better match their shipments to meet market demand, thereby resulting in less surplus inventory for the Company's trading business. Core distribution operating revenue growth, excluding the pharmaceutical trading business, was approximately 15%. The impact of the decline in the trading business was significant in the current quarter due to that business reaching record levels during the same quarter last year. This impact will significantly diminish in future periods as the decline in trading business to current levels began in the fourth quarter of fiscal 2002. The Medical Products and Services segment's operating revenue growth during the three and nine months ended March 31, 2003, resulted from an increase in sales of distributed and self-manufactured products. The addition of several new contracts with hospitals and health care networks and improved penetration in the surgery center market increased demand for certain existing and new products within this segment. In particular, the increased demand for self-manufactured products such as the proprietary Procedure Based Delivery Systems, custom sterile kits, and surgical and exam gloves helped contribute to this segment's growth. The Pharmaceutical Technologies and Services segment's operating revenue growth during the three and nine months ended March 31, 2003, resulted from strong demand for proprietary branded and sterile manufacturing products and from acquisitions, primarily Syncor. Oral products that showed particular strength included Lilly's Zyprexa(R) , an anti-psychotic and Amnesteem, the generic for isotretinoin. Increased demand for sterile manufacturing included Sepracor's Xopenex(R) (respiratory) and Pharmacia's Xalatan(R) (glaucoma). These gains were partially offset by slower sales in non-core businesses such as international health and nutritional products and the planned shut down of a domestic sterile manufacturing facility to expand capacity. Excluding Syncor, this segment experienced revenue growth in the high teens. The Automation and Information Services segment's operating revenue growth during the three and nine months ended March 31, 2003, resulted from strong sales in the patient safety and supply management product lines, such as MEDSTATION SN(R) and SUPPLYSTATION(R). Bulk Deliveries to Customer Warehouses and Other The Pharmaceutical Distribution and Provider Services segment reports bulk deliveries made to customers' warehouses as revenue. These sales involve the Company acting as an intermediary in the ordering and subsequent delivery of pharmaceutical products. Fluctuations in bulk deliveries result largely from circumstances that the Company cannot control, including consolidation within the customers' industries, decisions by customers to either begin or discontinue warehousing activities, and changes in policies by manufacturers related to selling directly to customers. Due to the lack of margin generated through bulk deliveries, fluctuations in their amount have no significant impact on the Company's earnings. The Pharmaceutical Technologies and Services segment records out-of-pocket reimbursements received through its sales and marketing services' business as revenue. These out-of-pocket expenses, which generally include travel expenses and other incidental costs, are incurred to fulfill the services required by the contract. Within these contracts, the customer agrees to reimburse the Company for the expenses. Due to the Company not generating any margin from these reimbursements, fluctuations in their amount have no impact on the Company's earnings.
Gross Margin Three Months Ended Nine Months Ended March 31, March 31, --------- --------- (as a percentage of operating revenue) 2003 2002 2003 2002 ---- ---- ---- ---- Pharmaceutical Distribution and Provider Services 4.88% 5.33% 4.70% 5.06% Medical Products and Services 22.96% 22.39% 21.82% 21.98% Pharmaceutical Technologies and Services 31.75% 33.70% 33.12% 34.28% Automation and Information Services 69.89% 69.06% 71.45% 68.06% Total Company 9.30% 9.26% 8.88% 9.14% ---- ---- ---- ----
The overall gross margin as a percentage of operating revenue increased during the three months ended March 31, 2003 and decreased for the nine months ended March 31, 2003 compared to the same periods of the prior year. For the three months ended March 31, 2003 gross margin improvement was partially driven by a greater mix of Page 20 higher margin business combined with manufacturing and operational efficiencies achieved within the Medical Products and Services and Automation and Information Services segments. This was complemented by the acquisition of Syncor, which had margins greater than the prior year average for the entire Company. For the nine months ended March 31, 2003, gross margin declined primarily as a result of changes in business and customer mix. These decreases were partially offset by an increase in the Automation and Information Services segment and changes in third quarter gross margin, as discussed above. The increase within the Automation and Information Services segment was primarily due to changes within the segment's product mix as well as productivity improvements. The Pharmaceutical Distribution and Provider Services segment's gross margin as a percentage of operating revenue decreased during the three and nine months ended March 31, 2003. This decrease was due primarily to an increase in sales to lower-margin customers where there is a lower cost of distribution that helps offset the reduced gross margins. Operating revenue generated from sales to chain pharmacy, alternate site, health system, and independent customers as a percentage of total operating revenue for pharmaceutical distribution, the largest operating unit within this segment, trended as follows:
Three Months Nine Months Customer Class Ended March 31, Ended March 31, --------------- --------------- 2003 2002 2003 2002 ---- ---- ---- ---- Chain Pharmacy 47% 47% 48% 47% Alternate Site 22% 20% 21% 20% Health System 18% 19% 18% 19% Independent 13% 14% 13% 14% --- --- --- --- Total 100% 100% 100% 100% === === === ===
The decrease in selling margins was partially offset by vendor margins from favorable price increases and manufacturer marketing programs, including IMA's whereby the Company is generally compensated on a negotiated basis to help manufacturers better match their shipments with market demand. The Company has seen changes in vendor policies related to product availability, including an increasing trend within the industry for the use of IMA's. The Company expects this trend to continue. Generally, the Company is compensated under its IMA's based on the timing of the inventory price increase and the volume of inventory purchases during the agreed upon period. The Company recognizes the benefit from such agreements within gross margins based upon related inventory turns. As these vendor policies continue to develop, the Company expects to negotiate terms for the collective services offered to its vendors to permit the Company to retain a similar level of overall profitability. There can be no assurance that vendor programs that occurred in the first nine months of fiscal 2003 will recur in the same form or at the same levels in the future or that the Company will be successful in negotiating favorable terms in response to changes in vendor policies. The Medical Products and Services segment's gross margin as a percentage of operating revenue increased during the three months ended March 31, 2003 and decreased for the nine months ended March 31, 2003. For the three months ended March 31, 2003, gross margin improvement was driven by customer and product mix within the domestic distribution business and a greater mix of self manufactured products driven by new product introduction (e.g., new synthetic surgeon gloves). Manufacturing efficiencies achieved in this segment also contributed to the gross margin improvement. For the nine months ended March 31, 2003, gross margin continued to be impacted by new distribution agreements in which lower margin distributed products have been sold at a faster rate initially as compared to the rate of sale of higher margin self-manufactured products. The Pharmaceutical Technologies and Services segment's gross margin as a percentage of operating revenue decreased during the three and nine months ended March 31, 2003. This decrease was primarily driven by the addition of the Syncor nuclear pharmacy services business. Syncor has a slightly lower gross margin ratio than the other businesses within the segment. In addition to the impact of the Syncor business, for the nine months ended March 31, 2003, the gross margin comparison in this segment was negatively impacted by certain items that occurred in fiscal year 2002 that did not recur in fiscal year 2003, including the recording of pricing adjustments related to the minimum recovery expected to be received for claims against vitamin manufacturers for amounts overcharged in prior years (also, see Note 4 of "Notes to Condensed Consolidated Financial Statements"). These pricing adjustments were recorded as a reduction of cost of goods sold, consistent with the classification of the original overcharge, and were based on the minimum amounts estimated to be recoverable based on the facts and circumstances available at the time they were recorded. The amount recorded for these pricing adjustments was $12.0 million in the first quarter of fiscal 2002. Page 21 The Automation and Information Services segment's gross margin as a percentage of operating revenue increased during the three and nine months ended March 31, 2003. This increase resulted from increased sales within the relatively higher margin MEDSTATION SN(R) and newer version supply control products as well as productivity gains realized from the operational improvements implemented early last fiscal year.
Selling, General & Administrative Expenses Three Months Ended Nine Months Ended March 31, March 31, --------- --------- (as a percentage of operating revenue) 2003 2002 2003 2002 ---- ---- ---- ---- Pharmaceutical Distribution and Provider Services 1.60% 2.07% 1.73% 2.13% Medical Products and Services 13.01% 13.51% 12.68% 13.43% Pharmaceutical Technologies and Services 15.92% 14.60% 15.10% 14.72% Automation and Information Services 31.17% 31.57% 32.75% 32.65% Total Company 4.49% 4.64% 4.39% 4.76%
Selling, general and administrative expenses as a percentage of operating revenue decreased during the three and nine months ended March 31, 2003 as compared to the same periods of fiscal 2002. The decrease in the Pharmaceutical Distribution and Provider Services segment was due to the synergies achieved following the Bindley merger and the continued achievement of economies of scale as this business continues to grow. From an operational perspective, the Bindley distribution center integration is considered complete. This segment is operating three fewer distribution centers than it had for the same period last fiscal year and has substantially exited Bindley's corporate headquarters facility. In addition, a portion of the decline in this segment is attributed to increased efficiency due to distribution automation and customer mix. The decline in the Medical Products and Services segment is primarily a result of continued productivity improvements and efficiencies achieved from the restructuring activities within the segment, which were initiated in the fourth quarter of fiscal 2002. Partially offsetting the improvements in fiscal 2003 was an increase in selling, general and administrative expenses as a percentage of operating revenue for the Pharmaceutical Technologies and Services segment. This increase was primarily a result of a change within the business mix of this segment, largely driven by the acquisition of Syncor during the third quarter of fiscal 2003. The decrease in selling, general and administrative expenses as a percentage of operating revenue in the Automation and Information Services segment was driven by improved productivity during the three months ending March 31, 2003. For the nine months ending March 31, 2003, increased expense as a percentage of operating revenue in Automation and Information Services was driven largely by product mix, increased research and development spending, and the cost of increasing installation resources to meet future installation requirements for the Company's products. Special Items The following is a summary of the special items for the three and nine months ended March 31, 2003 and 2002.
Special Items Three Months Ended Nine Months Ended March 31, March 31, --------- --------- (in millions) 2003 2002 2003 2002 ------- ------- ------- ------- Merger-Related Costs: Employee-related costs $ (2.5) $ (9.9) $ (17.5) $ (18.6) Pharmaceutical distribution center consolidation (6.8) (12.6) (16.6) (13.4) Other exit costs (0.1) (2.2) (2.1) (6.4) Other integration costs (6.5) (14.4) (13.1) (29.8) ------- ------- ------- ------- Total merger-related costs $ (15.9) $ (39.1) $ (49.3) $ (68.2) ------- ------- ------- ------- Other Special Items: Employee-related costs $ (0.1) $ -- $ (1.5) $ -- Manufacturing facility closures (0.2) -- (21.4) -- Litigation settlements, net 6.8 -- 99.6 -- Asset impairment and other (0.4) -- (18.3) -- ------- ------- ------- ------- Total other special items $ 6.1 $ -- $ 58.4 $ -- ------- ------- ------- ------- Total special items $ (9.8) $ (39.1) $ 9.1 $ (68.2) Tax effect of special items 3.4 14.4 (9.0) 25.6 ------- ------- ------- ------- Net effect of special items $ (6.4) $ (24.7) $ 0.1 $ (42.6) ======= ======= ======= =======
Page 22 MERGER-RELATED COSTS Costs of integrating the operations of various merged companies are recorded as merger-related costs when incurred. The merger-related costs recognized as of March 31, 2003, were primarily a result of the merger or acquisition transactions involving Syncor, BLP, Magellan, Bindley, BBMC, Allegiance and Scherer. EMPLOYEE-RELATED COSTS. During the above-stated periods, the Company incurred employee-related costs associated with certain of its mergers and acquisitions. For the three months ended March 31, 2003, the costs primarily related to amortization expense of noncompete agreements associated with the Bindley and Allegiance merger transactions. For the nine months ended March 31, 2003, $8.8 million related to an approved plan to curtail certain defined benefit pension plans within the Pharmaceutical Technologies and Services segment. The remaining employee-related costs for the nine months ended March 31, 2003, primarily related to amortization expense of the noncompete agreements noted above. For the three and nine months ended March 31, 2002, the employee-related costs primarily consist of amortization expense of noncompete agreements and severance as a result of certain of the Company's mergers and acquisitions. PHARMACEUTICAL DISTRIBUTION CENTER CONSOLIDATION. In connection with the merger transaction with Bindley, the Company anticipated closing and consolidating a total of 16 Bindley distribution centers, Bindley's corporate office, and one of the Company's data centers. These closures were to result in the termination of approximately 1,250 employees. As of March 31, 2003, all 16 Bindley distribution centers and the Company's data center have been closed, and the majority of the 1,250 employees have been terminated. The Company has substantially completed the corporate office consolidation and recorded approximately $6.6 million related to this consolidation during the three months ended March 31, 2003. The corporate office consolidation is expected to be complete by June 30, 2003. During the three and nine months ended March 31, 2003, the Company recorded charges totaling $6.8 million and $16.6 million, respectively, associated with the consolidations and closures noted above, as compared to $12.6 million and $13.4 million, respectively, for the comparable periods in fiscal 2002. The Company incurred employee-related costs, primarily from the termination of employees due to the distribution center closures, as well as exit costs to consolidate and close the various facilities mentioned above, including asset impairment charges, inventory move costs, contract and lease termination costs, and duplicate salary costs incurred during the shutdown periods. OTHER EXIT COSTS. Other exit costs related primarily to costs associated with lease terminations, moving expenses, and asset impairments as a direct result of the merger transactions with BBMC, Allegiance and Scherer. OTHER INTEGRATION COSTS. Other integration costs, which primarily relate to the merger and acquisition transactions noted above, included charges directly related to the integration of operations of the transactions noted, such as consulting costs related to information systems and employee benefit integration, as well as relocation and travel costs directly associated with the integrations. OTHER SPECIAL ITEMS EMPLOYEE-RELATED COSTS. During the three and nine months ended March 31, 2003, the Company incurred $0.1 million and $1.5 million, respectively, of employee-related costs associated with the restructuring of certain operations within the Pharmaceutical Distribution and Provider Services segment. A significant portion of the charges recorded represent severance accrued at the time severance terms were communicated to employees during the second quarter of fiscal 2003. The restructuring of operations is expected to be complete by June 30, 2003, and will result in the termination of approximately 30 employees. MANUFACTURING FACILITY CLOSURES. During the three and nine months ended March 31, 2003, the Company recorded a total of $0.2 million and $21.4 million, respectively, as special charges related to the closure and consolidation of certain manufacturing facilities. These closures and consolidations occurred within the Medical Products and Services segment and the Pharmaceutical Technologies and Services segment. Within the Medical Products and Services segment, three manufacturing facility closures were announced during the nine months ended March 31, 2003 (one during the first quarter of fiscal 2003 and two during the second quarter of fiscal 2003). Two of the manufacturing facility closures were complete as of December 31, 2002. The other closure is expected to be complete by June 30, 2003. Exit costs of $0.2 million and $2.9 million were incurred during the three and nine months ended March 31, 2003, respectively, primarily related to dismantling and moving machinery and equipment. Also, asset impairment charges of $8.9 million were incurred during the nine months ended March 31, 2003. The remaining $4.6 million for the nine months ended March 31, 2003, related to severance Page 23 costs due to the termination of employees as a result of these closures. The Company expects to terminate approximately 530 employees due to these closures. As of March 31, 2003, the majority of these employees have been terminated. The Company incurred special charges during the nine months ended March 31, 2003, related to two manufacturing facility closures within the Pharmaceutical Technologies and Services segment. One closure was complete as of December 31, 2002. The other is expected to be complete by June 30, 2003. Asset impairment charges of $1.1 million were incurred during the nine months ended March 31, 2003. Also, exit costs of $1.6 million were incurred during this same period, primarily related to dismantling machinery and equipment and transferring certain technologies to other existing facilities within the Company. In addition, $1.6 million of severance costs, related to the termination of approximately 75 employees, were incurred during the nine months ended March 31, 2003, as a result of these closures. As of March 31, 2003, the majority of these employees were terminated. LITIGATION SETTLEMENTS. During the three and nine months ended March 31, 2003, the Company recorded income from net litigation settlements of $6.8 million and $99.6 million, respectively. The settlements resulted primarily from the recovery of antitrust claims against certain vitamin manufacturers for amounts overcharged in prior years. The total recovery through March 31, 2003 was $136.4 million, of which $8.3 million was recorded during the three months ended March 31, 2003. While the Company still has pending claims with smaller vitamin manufacturers, the total amount of future recovery is not currently estimable but the Company believes it is not likely to be a material amount. Any future recoveries will be recorded as a special item in the period in which a settlement is reached. During the three months ended March 31, 2003, the vitamin litigation income was partially offset by a litigation settlement totaling $1.5 million. ASSET IMPAIRMENT AND OTHER. During the nine months ended March 31, 2003, the Company incurred asset impairment and other charges of $18.3 million, of which $10.1 million related to asset impairment charges resulting from the Company's decision to exit certain North American commodity operations in its Pharmaceutical Technologies and Services segment. An additional $7.8 million relates to a writeoff of design, tooling and development costs. SUMMARY The net effect of special items recorded during the three months ended March 31, 2003, was to decrease reported earnings from continuing operations by $6.4 million to $384.9 million and to decrease reported diluted earnings per Common Share from continuing operations by $0.01 per share to $0.85 per share. In comparison, the net effect of special items recorded during the three months ended March 31, 2002, was to reduce reported earnings from continuing operations by $24.7 million to $300.3 million and to reduce reported diluted earnings per Common Share from continuing operations by $0.05 per share to $0.66 per share. The net effect of special items recorded during the nine months ended March 31, 2003, was to increase reported earnings from continuing operations before cumulative effect of change in accounting by $0.1 million to $1,040.7 million. The reported diluted earnings per Common Share from continuing operations before cumulative effect of change in accounting remained unchanged. In comparison, the net effect of special items recorded during the nine months ended March 31, 2002, was to reduce reported earnings from continuing operations before cumulative effect of change in accounting by $42.6 million to $830.0 million and to reduce reported diluted earnings per Common Share from continuing operations before cumulative effect of change in accounting by $0.09 per share to $1.81 per share. The Company estimates that in future periods it will incur additional merger-related costs, restructuring costs and integration expenses associated with the various mergers and acquisitions it has completed as of March 31, 2003 (primarily related to the Bindley merger and the acquisitions of Syncor, Magellan and BLP) of approximately $110 million ($70 million, net of tax). These costs are expected to be incurred primarily in fiscal 2003 and 2004 and relate to the exit of contractual arrangements, employee-related costs, and costs to properly integrate operations and implement efficiencies. Such amounts will be charged to expense when incurred. Page 24 PROVISION FOR INCOME TAXES The Company's provision for income taxes relative to pre-tax earnings was 33.4% for the third quarter of fiscal 2003 and 33.8% for the third quarter of fiscal 2002. For the nine months ended March 31, 2003 and 2002, the Company's provision for income taxes relative to pre-tax earnings was 33.9%. Fluctuations in the effective tax rate are primarily due to the impact of recording certain non-deductible special items during various periods as well as fluctuating state and foreign effective tax rates as a result of the Company's business mix. LIQUIDITY AND CAPITAL RESOURCES Working capital increased to $5.2 billion at March 31, 2003 from $5.1 billion at June 30, 2002. This increase in working capital resulted primarily from increases in inventories and accounts receivable of $1,414.6 million and $549.9 million, respectively, partially offset by the decrease of cash and equivalents of $836.8 million and an increase in accounts payable of $960.7 million. The increase in inventories is attributed to the general build-up for seasonality within the pharmaceutical distribution business. The increase also reflects the higher level of business volume in the Pharmaceutical Distribution and Provider Services segment. The increase in accounts receivable is primarily due to the Company's revenue growth and the acquisition of Syncor. The decrease in cash and equivalents is primarily attributed to the repurchase of Common Shares, resulting in a total cash outlay of $1,191.7 million, partially offset by the sale of $200 million in sales-type leases within the Automation and Information Services segment. The change in accounts payable is due primarily to the timing of inventory purchases and related payments. The increase in inventories noted above is less than in prior years due to the impact of branded to generic product conversions and an increase in inventory management agreements, both of which lower the Company's inventory investment, as well as synergies realized from the Bindley integration. The Company has also experienced liquidity improvements in its investment in trade receivables over the comparable period in prior years. Net investment in sales type leases decreased $61.7 million at March 31, 2003, as compared to June 30, 2002. This decrease was primarily the result of the sale by CHLF2002A of a pool of sales-type leases to CHLF2002AQ at amounts approximating their fair value. CHLF2002A obtained proceeds of approximately $200.0 million related to the transaction (see Note 9 in the "Notes to Condensed Consolidated Financial Statements" for further discussion). At March 31, 2003, the Company has an investment in sales type leases totaling approximately $775 million which may serve as a future source of liquidity through similar sale transactions. Shareholders' equity increased by $ 851.6 million at March 31, 2003, as compared to June 30, 2002. Shareholders' equity increased primarily due to net earnings of $1,038.9 million, the issuance of shares held in treasury for the Syncor acquisition, totaling approximately $780.8 million, and the valuation of Syncor vested options acquired of approximately $47.2 million. This increase was partially offset by the repurchase of Common Shares of $1,191.7 million and dividends of $33.6 million. On January 28, 2003, the Company's Board of Directors authorized the repurchase of Common Shares up to an aggregate amount of $500 million. Pursuant to this authorization, the Company repurchased approximately 8.6 million Common Shares having an aggregate cost of approximately $500 million during the quarter ended March 31, 2003. The repurchased shares will be treasury shares available to be used for general corporate purposes. On August 7, 2002, the Company's Board of Directors authorized the repurchase of Common Shares up to an aggregate amount of $500 million. Pursuant to this authorization, the Company repurchased approximately 0.9 million Common Shares having an aggregate cost of approximately $49.0 million during the quarter ended March 31, 2003. The cumulative amount repurchased under this authorization, which was completed in January 2003, was approximately 7.8 million Common Shares having an aggregate cost of approximately $500 million. The repurchased shares will be treasury shares available to be used for general corporate purposes. In September 2001, the Company's Board of Directors authorized the repurchase of Common Shares up to an aggregate amount of $500 million. Pursuant to this authorization, the Company repurchased approximately 3.2 million Common Shares having an aggregate cost of approximately $191.7 million during the quarter ended September 30, 2002. The cumulative amount repurchased under this authorization, which was completed in August 2002, was approximately 8.3 million Common Shares having an aggregate cost of approximately $500 million. The repurchased shares will be treasury shares available to be used for general corporate purposes. Page 25 As of March 31, 2003, the Company had the capacity to issue approximately $1 billion of equity and debt securities pursuant to effective registration statements that were previously filed with the Securities and Exchange Commission. The Company has an unsecured bank credit facility providing for up to an aggregate of $1.5 billion in borrowings of which $750 million expires on March 26, 2004, and $750 million expires on March 27, 2008. The facility expiring on March 26, 2004, allows the Company, at its option, to extend the maturity of any moneys borrowed for up to one year. At expiration, these facilities can be extended upon mutual consent of the Company and the lending institutions. This credit facility exists largely to support issuances of commercial paper as well as other short-term borrowings and remained unused at March 31, 2003. The Company believes that it has adequate capital resources at its disposal to fund currently anticipated capital expenditures, business growth and expansion, and current and projected debt service requirements, including those related to business combinations. Page 26 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company believes there has been no material change in the quantitative and qualitative market risks from those discussed in the 2002 Form 10-K. ITEM 4: CONTROLS AND PROCEDURES Within 90 days prior to this filing, an evaluation was performed under the supervision and with the participation of the Company's management, including the CEO and CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective. To date, there have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation. Management will continue to review the Company's disclosure controls and procedures on an ongoing basis, looking for opportunities to strengthen them where appropriate. Disclosure controls and procedures are the Company's controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files under the Exchange Act is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. PART II. OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS The discussion below includes an update of material developments that have occurred in various judicial proceedings, which are more fully described in Part I, Item 3, of the 2002 Form 10-K, and are incorporated herein by reference. The following disclosure should be read together with the disclosure set forth in the 2002 Form 10-K, the Form 10-Q for the fiscal quarter ended September 30, 2002, and December 31, 2002, and to the extent any portions of the discussion below constitute "forward looking statements", reference is made to Exhibit 99.01 of this Form 10-Q and page 8 of the 2002 Form 10-K. Latex Litigation On September 30, 1996, Baxter International Inc. ("Baxter") and its subsidiaries transferred to Allegiance and its subsidiaries Baxter's U.S. healthcare distribution business, surgical and respiratory therapy business and healthcare cost-saving business as well as certain foreign operations (the "Allegiance Business") in connection with a spin-off of the Allegiance Business by Baxter (the "Baxter-Allegiance Spin-Off"). In connection with this spin-off, Allegiance, which merged with a subsidiary of the Company on February 3, 1999, agreed to indemnify Baxter, and to defend and indemnify Baxter Healthcare Corporation ("BHC"), as contemplated by the agreements between Baxter and Allegiance, for all expenses and potential liabilities associated with claims arising from the Allegiance Business, including certain claims of alleged personal injuries as a result of exposure to natural rubber latex gloves. The Company is not a party to any of the lawsuits and has not agreed to pay any settlements to the plaintiffs. As of March 31, 2003, there were 271 lawsuits pending against BHC and/or Allegiance involving allegations of sensitization to natural rubber latex products and some of these cases were proceeding to trial. The total dollar amount of potential damages cannot be reasonably quantified. Some plaintiffs plead damages in extreme excess of what they reasonably can expect to recover, some plead a modest amount, and some do not include a request for any specific dollar amount. Not including cases that ask for no specific damages, the damage requests per action have ranged from $10,000 to $240 million. All of these cases name multiple defendants, in addition to Baxter/Allegiance. The average number of defendants per case exceeds twenty-five. Based on the significant differences in the range of damages sought and based on the multiple number of defendants in these lawsuits, Allegiance cannot reasonably quantify the total amount of possible/probable damages. Therefore, Allegiance and the Company do not believe that these numbers should be considered as an indication of either reasonably possible or probable liability. Page 27 Since the inception of this litigation, Baxter/Allegiance have been named as a defendant in 831 cases. During the fiscal year ended June 30, 2002, Allegiance began settling some of these lawsuits with greater frequency. As of March 31, 2003, Allegiance had resolved more than sixty percent of these cases. About twenty percent of the lawsuits that have been resolved were concluded without any liability to Baxter/Allegiance. No individual claim has been settled for a material amount, nor have all the settled claims, in the aggregate, comprised a material amount. Due to the number of claims filed and the ongoing defense costs that will be incurred, Allegiance believes it is probable that it will incur substantial legal fees related to the resolution of the cases still pending. Although the Company continues to believe that it cannot reasonably estimate the potential cost to settle these lawsuits, the Company believes that the impact of such lawsuits upon Allegiance will be immaterial to the Company's financial position, liquidity or results of operations, and could be in the range of $0 to $20 million, net of insurance proceeds. The Company believes a substantial portion of any liability will be covered by insurance policies Allegiance has with financially viable insurance companies, subject to self-insurance retentions, exclusions, conditions, coverage gaps, policy limits and insurer solvency. The Company and Allegiance continue to believe that insurance recovery is probable. Vitamins Litigation On May 17, 2000, Scherer, which was acquired by the Company in August 1998, filed a civil antitrust lawsuit in the United States District Court for the District of Illinois against certain of its raw material suppliers and other alleged co-conspirators alleging that the defendants unlawfully conspired to fix vitamin prices and allocate vitamin production volume and vitamin customers in violation of U.S. antitrust laws. The complaint seeks monetary damages and injunctive relief. After the lawsuit was filed, it was consolidated for pre-trial purposes with other similar cases. The case is pending in the United States District Court for the District of Columbia (where it was transferred). As of March 31, 2003, Scherer has entered into settlement agreements with the majority of the defendants in consideration of payments of approximately $136 million, net of attorney fees and expenses withheld prior to the disbursement of the funds to Scherer. While the Company still has pending claims with smaller vitamin manufacturers and cannot predict the outcome of the claims against those defendants, the total amount of any future recovery will not likely represent a material amount. Shareholder Litigation against Cardinal Health On November 8, 2002, a complaint was filed by a purported shareholder against the Company and its directors in the Court of Common Pleas, Delaware County, Ohio, as a purported derivative action. Doris Staehr v. Robert D. Walter, et al., No. 02-CVG-11-639. On or about March 21, 2003, after the Company filed a Motion to Dismiss the complaint, an amended complaint was filed alleging breach of fiduciary duties and corporate waste in connection with the alleged failure by the Board of Directors of the Company to (a) renegotiate or terminate the Company's proposed acquisition of Syncor and (b) determine the propriety of indemnifying Monty Fu, the former Chairman of Syncor. The Company has filed a Motion to Dismiss the amended complaint and believes the allegations made in the amended complaint are without merit and intends to vigorously defend this action. The Company currently does not believe that the impact of this lawsuit, if any, will have a material adverse effect on the Company's financial position, liquidity or results of operations. The Company currently believes that there will be some insurance coverage available under the Company's directors' and officers' liability insurance policies in effect at the time this action was filed. Shareholder Litigation against Syncor Eleven purported class action lawsuits have been filed against Syncor and certain of its officers and directors, asserting claims under the federal securities laws (collectively referred to as the "federal securities actions"). All of these actions were filed in the United States District Court for the Central District of California. These cases include Richard Bowe v. Syncor Int'l Corp., et al., No. CV 02-8560 LGB (RCx) (C.D. Cal.), Alan Kaplan v. Syncor Int'l Corp., et al., No. CV 02-8575 CBM (MANx) (C.D. Cal), Franklin Embon, Jr. v. Syncor Int'l Corp., et al., No. CV 02-8687 DDP (AJWx) (C.D. Cal), Jonathan Alk v. Syncor Int'l Corp., et al., No. CV 02-8841 GHK (RZx) (C.D. Cal), Joyce Oldham v. Syncor Int'l Corp., et al., CV 02-8972 FMC (RCx) (C.D. Cal), West Virginia Laborers Pension Trust Fund v. Syncor Int'l Corp., et al., No. CV 02-9076 NM (RNBx) (C.D. Cal), Brad Lookingbill v. Syncor Int'l Corp., et al., CV 02-9248 RSWL (Ex) (C.D. Cal), Them Luu v. Syncor Int'l Corp., et al., CV 02-9583 RGK (JwJx) (C.D. Cal), David Hall v. Syncor Int'l Corp., et al., CV 02-9621 CAS (CWx) (C.D. Cal), Phyllis Walzer v. Syncor Int'l Corp., et al., CV 02-9640 RMT (AJWx) (C.D. Cal) and Larry Hahn v. Syncor Int'l Corp., et al., CV 03-52 LGB (RCx) (C.D. Cal.). Page 28 The federal securities actions purport to be brought on behalf of all purchasers of Syncor shares during various periods, beginning as early as March 30, 2000, and ending as late as November 5, 2002 and allege, among other things, that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act, by issuing a series of press releases and public filings disclosing significant sales growth in Syncor's international business, but omitting mention of certain allegedly improper payments to Syncor's foreign customers, thereby artificially inflating the price of Syncor shares. A lead plaintiff has been appointed by the court in the federal securities actions and a consolidated complaint is expected to be filed in May 2003. On November 14, 2002, two additional actions were filed by individual stockholders of Syncor in the Court of Chancery of the State of Delaware (the "Delaware actions") against seven of Syncor's nine directors (the "director defendants"). The complaints in each of the Delaware actions were identical and alleged that the director defendants breached certain fiduciary duties to Syncor by failing to maintain adequate controls, practices and procedures to ensure that Syncor's employees and representatives did not engage in improper and unlawful conduct. Both complaints asserted a single derivative claim, for and on behalf of Syncor, seeking to recover all of the costs and expenses that Syncor incurred as a result of the allegedly improper payments (including the costs of the federal securities actions described above), and a single purported class action claim seeking to recover damages on behalf of all holders of Syncor shares in the amount of any losses sustained if consideration received in the merger by Syncor stockholders was reduced. On November 22, 2002, the plaintiff in one of the two Delaware actions filed an amended complaint adding as defendants the Company, its subsidiary Mudhen Merger Corp. and the remaining two Syncor directors, who are hereafter included in the term "director defendants." These cases include Alan Kaplan v. Monty Fu, et al., Case No. 20026-NC (Del. Ch.), and Richard Harman v. Monty Fu, et al., Case No. 20027-NC (Del. Ch). These cases have been consolidated under the caption "In re: Syncor International Corp. Shareholders Litigation." On November 18, 2002, two additional actions were filed by individual stockholders of Syncor in the Superior Court of California for the County of Los Angeles (the "California actions") against the director defendants. The complaints in the California actions allege that the director defendants breached certain fiduciary duties to Syncor by failing to maintain adequate controls, practices and procedures to ensure that Syncor's employees and representatives did not engage in improper and unlawful conduct. Both complaints asserted a single derivative claim, for and on behalf of Syncor, seeking to recover costs and expenses that Syncor incurred as a result of the allegedly improper payments. These cases include Joseph Famularo v. Monty Fu, et al, Case No. BC285478 (Cal. Sup. Ct., Los Angeles Cty.), and Mark Stroup v. Robert G. Funari, et al., Case No. BC285480 (Cal. Sup. Ct., Los Angeles Cty.). An amended complaint was filed on December 6, 2002 in the Famularo action, purporting to allege direct claims on behalf of a class of shareholders. The defendants' motion for a stay of the California actions pending the resolution of the Delaware actions (discussed above) was granted on April 30, 2003. The Company recently learned that a proposed class action complaint was filed on April 8, 2003, against the Company, Syncor, and certain officers and employees of the Company by a purported participant in the Syncor Employees' Savings and Stock Ownership Plan. The suit alleges that the defendants breached certain fiduciary duties owed under the Employee Retirement Income Security Act ("ERISA"). Each of the actions described under the heading "Shareholder Litigation against Syncor" is in its early stages and it is impossible to predict the outcome of these proceedings or their impact on Syncor or the Company. However, the Company currently does not believe that the impact of these actions will have a material adverse effect on the Company's financial position, liquidity or results of operations. The Company and Syncor believe the allegations made in the complaints described above are without merit and intend to vigorously defend such actions and have been informed that the individual director and officer defendants deny liability for the claims asserted in these actions, believe they have meritorious defenses and intend to vigorously defend such actions. The Company and Syncor currently believe that there will be some insurance coverage available under the Company's and Syncor's directors' and officers' liability insurance policies in effect at the time these actions were filed. Other Matters The Company also becomes involved from time-to-time in other litigation incidental to its business, including, without limitation, inclusion of certain of its subsidiaries as a potentially responsible party for environmental clean-up costs. Although the ultimate resolution of the litigation referenced herein cannot be forecast with certainty, the Company intends to vigorously defend itself and does not currently believe that the outcome of any pending litigation will have a material adverse effect on the Company's financial position, liquidity or results of operations. Page 29 ITEM 5: OTHER INFORMATION William E. Bindley resigned from the Board of Directors of the Company, effective February 14, 2003. Since this vacancy has not been filled, the number of Directors serving on the Board has been reduced from 14 to 13 effective May 7, 2003. On January 22, 2002, Kmart Corporation ("Kmart") filed for Chapter 11 bankruptcy court protection. Cardinal Distribution, the largest business within the Pharmaceutical Distribution and Provider Services segment, has serviced Kmart for more than ten years and continues to service approximately 1,138 of its stores nationwide. On October 30, 2002, Kmart and Cardinal Distribution extended and amended their supply agreement, and the bankruptcy court authorized Kmart's post-petition assumption of the agreement. On May 6, 2003, Kmart announced that it had emerged from bankruptcy. Sales to Kmart represent less than 5% of the Company's total annual operating revenue, and earnings from these sales are an even smaller percentage of the Company's total annual operating earnings. Due to a unique consignment arrangement in which the Company still owns the related pharmaceutical inventories, it has significantly limited its credit exposure to Kmart. ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K: (a) Listing of Exhibits:
Exhibit Exhibit Description ------- ------------------- Number ------ 10.01 First Amendment to the Prime Vendor Agreement between Cardinal Distribution and Express Scripts, Inc. dated January 15, 2003 (includes the Prime Vendor Agreement between Cardinal Distribution and Express Scripts, Inc. as in effect as of January 15, 2003) (1). 10.02 364-Day Credit Agreement dated as of March 27, 2003 among the Registrant, certain subsidiaries of the Registrant, certain lenders, and Bank One, NA, as Administrative Agent, Bank of America, as Syndication Agent, Wachovia Bank, National Association, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, Duetsche Banc Alex. Brown Inc., as Documentation Agent, First Union National Bank, as Documentation Agent and Banc One Capital Markets, Inc., as Lead Arranger and Book Manager. 10.03 Five-Year Credit Agreement dated as of March 27, 2003 among the Registrant, certain subsidiaries of the Registrant, certain lenders, and Bank One, NA, as Administrative Agent, Bank of America, as Syndication Agent, Wachovia Bank, National Association, as Syndication Agent, Barclays Bank PLC, as Documentation Agent, Duetsche Banc Alex. Brown Inc., as Documentation Agent, First Union National Bank, as Documentation Agent and Banc One Capital Markets, Inc., as Lead Arranger and Book Manager. 99.01 Statement Regarding Forward-Looking Information (2). 99.02 Additional Exhibit Certification of the Chairman and Chief Executive Officer and Executive Vice President and Chief Financial Officer of the Registrant, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
- ---------- (1) Confidential treatment has been requested for portions of this document, and the confidential information has been filed separately with the Securities and Exchange Commission. (2) Included as an exhibit to the Registrant's Annual Report on Form 10-K filed September 30, 2002 (File No. 1-11373) and incorporated herein by reference. (b) Reports on Form 8-K: On January 2, 2003, the Company filed a Current Report on Form 8-K under Item 5, disclosing the completion of its previously announced acquisition of Syncor International Corporation. Page 30 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. CARDINAL HEALTH, INC. Dated: May 15, 2003 /s/ Robert D. Walter ---------------------------------------------------- Robert D. Walter Chairman and Chief Executive Officer /s/ Richard J. Miller ---------------------------------------------------- Richard J. Miller Executive Vice President and Chief Financial Officer Page 31 CERTIFICATIONS I, Robert D. Walter, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Cardinal Health, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: May 15, 2003 /s/ Robert D. Walter ------------------------------ Robert D. Walter Chairman and Chief Executive Officer Page 32 I, Richard J. Miller, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Cardinal Health, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: May 15, 2003 /s/ Richard J. Miller ------------------------------ Richard J. Miller Executive Vice President, and Chief Financial Officer Page 33 EX-10.01 3 l00848aexv10w01.txt EX-10.01 PRIME VENDOR AGREEMENT EXHIBIT 10.01 [***] indicates the omission of confidential portions for which confidential treatment has been requested. Such confidential information has been filed separately with the Commission. ================================================================================ CARDINAL DISTRIBUTION* AND EXPRESS SCRIPTS, INC. PRIME VENDOR AGREEMENT ================================================================================ PRIME VENDOR AGREEMENT THIS PRIME VENDOR AGREEMENT (THE "AGREEMENT") IS MADE JULY 1, 2001, BETWEEN EXPRESS SCRIPTS, INC., ON BEHALF OF ITSELF AND ITS SUBSIDIARIES (COLLECTIVELY, "BUYER") AND CARDINAL DISTRIBUTION* ("CARDINAL"), WHO HEREBY AGREE AS FOLLOWS: 1. DESIGNATION AS PRIMARY WHOLESALER During the term of this Agreement, Buyer will designate Cardinal as the primary wholesale pharmaceutical supplier to all pharmacies whether now or hereafter owned, managed or operated by Buyer in the United States (collectively, the "PHARMACIES" and individually, a "PHARMACY"). A current list of the Pharmacies is attached hereto as EXHIBIT A. Additional pharmacies may be added to Exhibit A from time to time subject to the prior approval of Buyer and Cardinal. 2. SALE OF MERCHANDISE Buyer will purchase from Cardinal during the term of this Agreement its Primary Wholesale Requirements of pharmaceuticals for the Pharmacies ("RX PRODUCTS") and, may, at its option, purchase certain other inventory carried by Cardinal ("NON-RX PRODUCTS" and, together with Rx Products, collectively the "MERCHANDISE") for delivery directly to the Pharmacies ("DIRECT STORE DELIVERY Purchases"). The term "PRIMARY WHOLESALE REQUIREMENTS" means that Buyer will purchase for each Pharmacy all of its requirements of Rx Products purchased from wholesalers from Cardinal. With the exception of Merchandise that is only available from the manufacturer with less than six (6) months' dating, Cardinal removes Merchandise from its inventory that has an expiration date of six (6) months, not including the current month, so that such Merchandise shipped to Buyer has a minimum of six (6) months' dating. Cardinal reserves the right at all times to determine what Merchandise it will carry based upon product quality, manufacturer indemnity, insurance, and other policies, and other standards determined by it, and may delete from its available inventory items of Merchandise with limited or no movement activity. Cardinal acknowledges that Buyer, from time to time, [***], including [***] 3. PURCHASE PRICE Buyer will pay a purchase price for all Merchandise purchased under this Agreement in an amount equal to Cardinal's Cost plus the percentage specified in the pricing matrix attached hereto as EXHIBIT B (the "PRICING MATRIX"). For purposes of this Agreement: (a) the term "CARDINAL'S COST" will mean the manufacturer's published wholesale acquisition cost for Merchandise at the date of Cardinal's invoice to the Pharmacy, including all discounts, price reductions and promotions offered off-invoice by the manufacturer for the duration of the manufacturer's offer period, but without reduction for customary cash discounts; and (b) the term "QUALIFIED PURCHASES" will - -------------------------------------------------------------------------------- 2 mean all purchases made and paid for by Buyer and/or the Pharmacies under the terms of this Agreement, net of all returns, credits, rebates, late charges, or other similar items, on an annual, quarterly, or monthly basis, as applicable. Notwithstanding anything herein to the contrary, the purchase price of Merchandise which is subject to a Manufacturer Contract (as hereinafter defined) will be Buyer's contract price for the Pharmacies. Cardinal reserves the right to adjust the purchase price of any item of Merchandise in the event that the manufacturer of such item implements a change in policy which eliminates or decreases the customary cash discount terms effective on the Commencement Date with respect to such item. The purchase price for selected Merchandise, including but not limited to [***] described above [***] in accordance with [***]. Merchandise described in this paragraph is sometimes referred to as [***] The pricing specified in the Pricing Matrix does not reflect administrative fees for membership in any group purchasing organization (a "GPO"). If any Pharmacy affiliates with a GPO, the appropriate administrative fee will be added to the percentages specified in the Pricing Matrix. [***] CardinalCHOICE(R) pharmacy system [***] for the pricing specified in the Pricing Matrix. 4. [***] AND SAVINGS During the initial term of this Agreement, [***] with related savings as more fully described on EXHIBIT C. 5. PAYMENT TERMS (a) Initial Payment Terms. The payment terms initially applicable to Buyer will be as follows: (i) For DIRECT STORE DELIVERY PURCHASES, Buyer shall cause Cardinal to receive payment in full by not later than [***] of each calendar month of the amount due for all Merchandise delivered and services provided during the first (1st) [***] of such calendar month, and by not later than the [***] of each calendar month, of the amount due for all Merchandise delivered and services provided during the period beginning on the [***] of the preceding calendar month and ending on the last day of such preceding calendar month [***]. (ii) For [***] (I.E., [***] (iii) For [***] in accordance with the terms set forth in Exhibit C [***] - -------------------------------------------------------------------------------- 3 If any payments are due on Saturday, Buyer will cause Cardinal to receive payment in full on the immediately preceding Friday, and if payment is due on Sunday, Buyer will cause Cardinal to receive payment in full on the immediately following Monday. Buyer will deliver to Cardinal any credit information reasonably requested by Cardinal not less than thirty (30) days prior to its initial purchases of Merchandise under this Agreement. All payments for the Merchandise purchased under this Agreement will be due in accordance with the terms set forth above unless and until otherwise agreed by Buyer and Cardinal. In such event, Buyer acknowledges and agrees that Buyer's Cost of Goods may be adjusted by Cardinal to reflect Buyer's new payment terms and credit considerations deemed relevant to Cardinal. (b) Payment. At the end of each calendar month, Cardinal will evaluate Buyer's payment history, adjusted to reflect legitimately disputed amounts. The due date of each Cardinal invoice will be compared with the date Cardinal received payment to relieve that invoice. Buyer and Cardinal acknowledge that Buyer's cost to purchase Merchandise from Cardinal is based upon Buyer making payments in accordance with Buyer's applicable payment terms as set forth above. For those invoices paid after the applicable due date, Buyer will pay to Cardinal an amount equal to [***] times the amount of each invoice times the number of days the payment to relieve the invoice was late. Cardinal will provide an invoice to Buyer for all amounts due hereunder by the 10th of the following month. Such invoice will reflect the amount due to Cardinal for those invoices that were paid beyond Buyer's applicable payment terms. This invoice will be accompanied by an electronic file that will detail the calculation of all amounts due. Buyer shall remit payment for such invoice by the 20th of the month in which it was billed. Failure or delay by Cardinal to bill Buyer for any amounts due hereunder shall not waive Cardinal's right to receive the same. All payments for Merchandise delivered and services provided by Cardinal will be made to the applicable servicing division specified in Cardinal's invoice (or as otherwise specified by Cardinal) by electronic funds transfer or other method acceptable to Cardinal so as to provide Cardinal with good funds by the due date. In addition to all other rights and remedies contained in this Agreement, Cardinal retains the right, in its sole discretion, but exercising good faith, to immediately, upon written notice to Buyer, change Buyer's payment terms or place Buyer on C.O.D. status if Cardinal has not received payment when due for Merchandise delivered or services provided to Buyer, or based upon credit considerations deemed relevant by Cardinal, as determined by Cardinal in good faith. The provisions of Sections 25 and 26 shall not be applicable to this provision. If Cardinal changes Buyer's payment terms or places Buyer on C.O.D. status pursuant to this Section 5(b), and Buyer remains subject to such payment terms for at least ninety (90) consecutive days, or on C.O.D. for at least sixty consecutive (60) days, Buyer may terminate this Agreement upon written notice to Cardinal and payment of all - -------------------------------------------------------------------------------- 4 outstanding amounts due from Buyer to Cardinal. No termination notice from Buyer to Cardinal shall be effective until all outstanding amounts due from Buyer to Cardinal are paid in full. During the applicable time period, Cardinal and Buyer shall negotiate in good faith regarding restoring Buyer's payment terms to those in effect prior to any action taken by Cardinal hereunder. (c) Submission of Financial Statements. Buyer will provide Cardinal with a copy of its publicly available financial statements as Cardinal may reasonably request from time to time. (d) Guaranty. As an inducement for Cardinal to supply Merchandise and provide services to the subsidiaries and affiliates of Buyer, whether existing now or in the future (collectively, "Borrowers"), Buyer (i) guarantees to Cardinal the punctual and full payment (and not merely the ultimate collectability) of all sums now or hereafter due from Borrowers to Cardinal and (ii) agrees to pay to Cardinal on demand the reasonable cost and expense incurred by Cardinal in attempting to enforce any indebtedness, liability, or obligation under this Agreement, including, without limitation, reasonable attorney's fees. 6. ORDERING AND DELIVERY Cardinal will deliver the Merchandise F.O.B. destination to the applicable Pharmacy and exercise its good faith efforts to provide an efficient delivery schedule designed to meet the mutual needs of Cardinal and the Pharmacies, in accordance with Cardinal's general delivery schedules established from time to time by the applicable Cardinal servicing division (exclusive of holidays, etc.). All deliveries will be accompanied by an invoice and all delivery costs (not including emergency deliveries) absorbed by Cardinal. Pharmacies having Qualified Monthly Purchases in excess of $[***] will be eligible to receive [***], except Pharmacies located outside of the contiguous United States or other Pharmacies mutually agreed upon by the parties from time to time; provided, however, Buyer's Pharmacies located in Tempe, Arizona, Albuquerque, New Mexico, and St. Louis, Missouri, will be eligible to receive [***]. Buyer will incur a separate delivery charge, not to exceed Cardinal's actual cost, for additional deliveries. Delivery schedules and purchase order deadlines may be reviewed and changed from time to time as mutually agreed upon by Cardinal and Buyer. Cardinal will make every reasonable effort to accommodate individual order entry and delivery requirements. Buyer will submit all orders, except for orders for Schedule II drugs, for all Merchandise to Cardinal via electronic order entry using equipment supplied by Cardinal to Buyer at no additional charge to Buyer or other mutually agreeable electronic means. This equipment benefits Buyer and the Pharmacies and relates to the provision of products and services by Cardinal hereunder. Buyer and each Pharmacy agree not to use such equipment (including hardware and software) for any purpose unrelated to this Agreement. Any such equipment supplied by Cardinal will be returned to Cardinal by Buyer upon the expiration or termination of this Agreement for any reason or prior to termination or expiration if Cardinal reasonably believes its proprietary rights are - -------------------------------------------------------------------------------- 5 threatened. In the event that electronic order entry is temporarily interrupted for reasons beyond the control of Buyer or Cardinal, Buyer may place orders manually and both parties will use reasonable efforts to rectify the problem. DEA Form 222 may be mailed to the applicable Cardinal distribution center or given to the delivery driver. Schedule II orders will be delivered within one (1) day of Cardinal's receipt of the signed original DEA Form 222. Buyer acknowledges that if Buyer gives the DEA Form 222s to the delivery driver, such forms will not be received by Cardinal until such time that the delivery driver physically delivers the DEA Form 222 to the applicable Cardinal distribution center. Notwithstanding the foregoing, no Schedule II orders will be delivered other than in compliance with DEA regulations. 7. OTHER SERVICES Cardinal will provide the services to Buyer and the Pharmacies as set forth EXHIBIT D to this Agreement, pursuant to the terms and conditions contained therein. 8. EMERGENCY DELIVERIES Cardinal will provide a twenty-four (24) hour, seven (7) day per week emergency delivery service. The courier charge for such orders will be prepaid by Cardinal and added to Buyer's invoice. A listing of key management personnel and emergency order procedures will be supplied to each Pharmacy. 9. BACKORDER RELAY [***] a "backorder relay" system [***]. 10. MANUFACTURER CONTRACT ADMINISTRATION Cardinal will recognize and administer manufacturer contracts between Buyer and any manufacturer (collectively, "MANUFACTURER CONTRACTS") subject to such Manufacturer Contracts' continued validity in accordance with applicable laws and subject to such credit considerations concerning the applicable manufacturers as Cardinal may consider appropriate; however, if manufacturers' chargebacks for contract items submitted by Cardinal are disallowed, uncollectable, or unreconcilable, then the applicable charge will be billed back to Buyer. Cardinal reserves the right, at any time, to decline to sell or carry any manufacturer's merchandise, based upon credit considerations deemed relevant to Cardinal. Buyer will notify Cardinal of all Manufacturer Contracts. In addition, Buyer or the Pharmacies will provide Cardinal with a copy of all new Manufacturer Contracts entered into after the Commencement Date and manufacturer verification of all renewals, replacements or terminations of Manufacturer Contracts not less than forty-five (45) days prior to the effective date of such new Contract, renewal, replacement or termination. Failure to comply with these notice requirements will entitle Cardinal to discontinue the service level provisions herein until forty-five (45) days after delivery of accurate usage data for the new items. - -------------------------------------------------------------------------------- 6 In order to facilitate Cardinal's inventory management requirements, Buyer will provide Cardinal, with respect to each Pharmacy not currently being serviced by Cardinal, but to be included hereunder as a Pharmacy, available six (6) months' usage figures (including NDC numbers) on both contract and non-contract items in compatible electronic (disk) format thirty (30) days prior to participation under this Agreement by that Pharmacy. The service level provisions set forth in Section 12 below will be waived by Buyer until accurate usage figures are obtained by Cardinal with regard to such Pharmacies, or for six (6) months, whichever is less. All purchases under this Agreement by Buyer will be for the Pharmacies' "own use" as that term is defined in judicial or legislative interpretation, and Buyer will comply with applicable manufacturers' pricing criteria and policies. 11. LICENSURE Buyer attests to Cardinal that Buyer's Pharmacies are all properly licensed with applicable state licensing agencies to receive, dispense, distribute and otherwise legally dispose of Rx Products. Buyer understands that by attesting to this, Cardinal is complying with the "good faith inquiry" standard to ensure that Rx Products are distributed to properly licensed and/or registered pharmacy locations. Prior to purchasing Rx Products from Cardinal hereunder, Buyer will provide Cardinal with copies of all such licenses and any renewals, revocations or other changes to the same. 12. SERVICE LEVEL For [***] Cardinal will exercise all reasonable efforts to provide [***] ([***]%) [***] in accordance with Cardinal's customary standards and procedures in effect from time to time. [***] ([***]%) [***] ([***]%) [***] ([***]%) [***] For example, [***] $[***]%[***]$[***]([***])[***]% -[***]% = [***]% and ([***])[***]% x $[***]x[***]% = $[***]([***])[***]. Buyer may, [***] ([***]%), [***] (as hereinafter defined) and [***] Notwithstanding [***] set forth above, [***] in accordance with Cardinal's customary standards and procedures in effect from time to time is [***] ([***]%), [***] as set forth above) [***] ([***]%) [***]. 13. RETURNED GOODS POLICY Cardinal will accept Merchandise for return from Pharmacies in accordance with the Standard Cardinal Returned Goods Policy (the "CARDINAL RETURNS POLICY") in effect from time to time. Cardinal will not accept for return any Merchandise from Buyer prior to execution of an Ongoing Assurances Form in the identical form as attached as an exhibit hereto. Cardinal will work with a third party returned goods processor in accordance with the Standard Third Party Returned Goods Policy (the "THIRD PARTY RETURNS POLICY") in effect from time to time. In connection with the Cardinal Returns - -------------------------------------------------------------------------------- 7 Policy and applicable law, Buyer will execute a Cardinal Health Return Goods Authorization Ongoing Assurance, in the form attached hereto as EXHIBIT E. For [***], subject to the following conditions: [***] and must be[***] [***] and[***] [***] [***] [***]percent ([***]%) [***]. [***]. 14. TERM The initial term of this Agreement will be for a period of three (3) years beginning July 1, 2001 (the "COMMENCEMENT DATE"). Thereafter, this Agreement shall automatically renew for two (2) additional one (1) year renewal terms, unless either party provides written notice of non-renewal at least ninety (90) days prior to the expiration of the initial term or the then current renewal term. The "initial term" and any "renewal terms" shall be referred to collectively as the "term." Either party may effect an early termination of this Agreement upon the occurrence of a material breach by the other party and such party's failure to cure such material breach within ninety (90) days after the non-breaching party provides written notice thereof. For purposes of this Agreement, a lower-priced offer from a competitor of Cardinal to Buyer to provide the Merchandise and perform the services as set forth in this Agreement, shall not be deemed to, nor shall it constitute, a material breach of this Agreement by Cardinal, thereby permitting Buyer to terminate this Agreement pursuant to the provisions of this Section 14. Notwithstanding the foregoing, with respect to payment defaults by Buyer, Cardinal may terminate this Agreement immediately. Buyer's obligation to pay Cardinal any amounts due hereunder shall survive termination of this Agreement. 15. NOTICES Any notice or other communication required or desired to be given to either party under this Agreement shall be in writing and shall be deemed given when: (a) received by the recipient, after being sent via certified mail, return receipt requested, and addressed to that party at the address for such party set forth at the end of this Agreement; (b) received by the recipient after being sent via Federal Express, Airborne, or any other similar overnight delivery service for delivery to that party at that address; or (c) received by facsimile transmission, as evidenced by electronic confirmation, to that party at its facsimile number set forth at the end of this Agreement. Either party may change its address or facsimile number for notices under this Agreement by giving the other party notice of such change. - -------------------------------------------------------------------------------- 8 16. TAXES/COMPLIANCE WITH LAWS Buyer will pay when due any sales, use, excise, gross receipts, or other federal, state, or local taxes or other assessments (other than any tax based solely on the net income of Cardinal) and related interest and penalties in connection with or arising out of the transactions contemplated by this Agreement. If Cardinal pays any such amounts which Buyer is obligated to pay under this section, then Buyer will promptly reimburse Cardinal in an amount equal to the amount so paid by Cardinal. If and to the extent any discount, credit, rebate or other purchase incentive (as set forth in the Pricing Matrix and this Agreement) is paid or applied by Cardinal with respect to the Merchandise purchased under this Agreement, such discount, credit, rebate or other purchase incentive shall constitute a "discount or other reduction in price," as such terms are defined under the Medicare/Medicaid Anti-Kickback Statute, on the Merchandise purchased by Buyer under the terms of this Agreement. Cardinal and Buyer agree to use their best efforts to comply with any and all requirements imposed on sellers and buyers, respectively, under 42 U.S.C. ss. 1320a-7b(b)(3)(A) and the "safe harbor" regulations regarding discounts or other reductions in price set forth in 42 C.F.R. ss. 1001.952(h). In this regard, Buyer may have an obligation to accurately report, as may be required, under any state or federal program which provides cost or charge based reimbursement for the products or services covered by this Agreement, the net cost actually paid by Buyer. 17. FORCE MAJEURE Cardinal's obligations under this Agreement will be excused if and to the extent that any delay or failure to perform such obligations is due to fire or other casualty, product or material shortages, strikes or labor disputes, transportation delays, manufacturer out-of-stock or delivery disruptions, acts of God, seasonal supply disruptions, or other causes beyond the reasonable control of Cardinal. During the period of any such delay or failure, Buyer may purchase the Primary Wholesale Requirements for the affected Pharmacies from others, but will recommence purchasing from Cardinal upon cessation of such delay or failure; provided, however, that if such delay or failure continues for more than sixty (60) calendar days, Buyer shall have the right to immediately terminate this Agreement. 18. RECORDS AND AUDIT Cardinal will maintain records pertaining to this Agreement and the pharmaceutical products purchased by Buyer hereunder as required by applicable FDA requirements. Not more than once in any twelve (12) month period, and following sixty (60) days' advance written notice to Cardinal, Buyer will have the right to appoint one (1) or more of its employees to review those relevant records applicable to its pharmaceutical purchases for the sole purpose of verifying compliance with this Agreement, including but not limited to the pricing terms of this Agreement hereof; provided, however, any - -------------------------------------------------------------------------------- 9 information proprietary to Cardinal, as solely determined by Cardinal, shall be redacted from such records prior to review by Buyer, further provided, however, Cardinal shall ensure that Buyer receives the information necessary to verify compliance with this Agreement. Any such review will be limited to twelve (12) months of historical information as of the date such review begins and will be subject to a confidentiality agreement prepared by Cardinal and signed by the Buyer and its employee(s) who will have access to the information prior to beginning the review. Cardinal will have the right to, following sixty (60) days' advance written notice to Buyer, appoint an independent auditor to review Buyer's purchase records in order to verify the growth rate of Buyer's purchase volume for purposes of the savings related to the [***]. 19. RETURN OF HARDWARE/SOFTWARE Upon termination of this Agreement for any reason, Buyer's rights as a licensee of the CardinalCHOICE(R), CardinalCHOICE(R)-HQ or other Cardinal software will automatically expire, and Buyer will promptly return such software and any related, Cardinal-provided hardware not purchased by Buyer to a return location specified by Cardinal. 20. ENTIRE AGREEMENT; SUCCESSORS This Agreement and its exhibits constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, proposals, bids/bid responses, and understandings between the parties relative to the subject matter of this Agreement. This Agreement will be governed by Ohio law. Neither Cardinal nor Buyer may assign its rights under this Agreement without the written consent of the other; provided, however, that either party may delegate its rights and obligations to any entity that is controlled by or under common control with the assigning party; provided that neither Cardinal nor Buyer shall be relieved of their respective liabilities and obligations hereunder in the event of such an assignment. This Agreement will be binding on, inure to the benefit of, and be enforceable by and against the respective successors and assigns of each party to this Agreement. 21. AMENDMENTS No changes to this Agreement will be made or be binding on any party unless made in writing and signed by each party to this Agreement. 22. WAIVER The failure of either party to enforce any provision of this Agreement will not be considered a waiver of any future right to enforce such provision. - -------------------------------------------------------------------------------- 10 23. ANNOUNCEMENTS Neither party will issue any press release or other public announcement, verbally or in writing, referring to the other party or any entity which is controlled by or under common control with such other party, without such other party's prior written consent and advice of counsel. A written copy of any such press release or other public announcement will be provided to the other party no less than seventy-two (72) hours prior to the issuing party's intent to issue such release or announcement. The issuing party is responsible for confirming in writing that the other party has received any such proposed press release. Any such press release or other public announcement proposed by either party will be subject to the other party's revision and final approval. Nothing contained herein will limit the right of either party to issue a press release if, in the opinion of such party's counsel, a press release is required pursuant to state or federal securities laws, rules or regulations. 24. CHANGE IN LAWS Notwithstanding any other provision of this Agreement, if the governmental agencies that administer the Medicare, Medicaid, or other federal programs (or their representatives or agents), or any other federal, state, or local governmental or non-governmental agency, or any court or administrative tribunal passes, issues, or promulgates any law, rule, regulation, standard, interpretation, order, decision, or judgment, including, but not limited to, those relating to any regulation pursuant to state or federal anti-kickback or self-referral statutes (collectively or individually, "Change in Laws"), which, in the good faith judgment of a party to this Agreement (the "Noticing Party"), materially and adversely affects that party's license, accreditation, certification, or ability to refer, to accept any referral, to bill, to claim, to present a bill or claim, or to receive payment or reimbursement from any federal, state, or local governmental or non-governmental payor, or which subjects the Noticing Party to a risk of prosecution or civil monetary penalty, or which, in the good faith judgment of the Noticing Party, indicates a rule or regulation with which the Noticing Party desires further compliance and the Change in Laws has a material affect on the legality of this Agreement, or if Cardinal believes such Change in Laws may adversely affect Cardinal's financial position, then the Noticing Party may give the other party notice of intent to amend or terminate this Agreement. Such notice shall include an opinion of counsel stating: (i) the Change in Laws giving rise to the notice; (ii) the consequences of the Change in Laws as to the Noticing Party; (iii) the Noticing Party's intention either to terminate this Agreement due to an unacceptable risk of prosecution or civil monetary penalty or to amend this Agreement, together with a statement setting forth the specific purpose of the amendment as it relates to the legal compliance issue or risk that the Noticing Party seeks to address; (iv) the Noticing Party's proposed amendment(s); and (v) the Noticing Party's request for commencement of the Renegotiation Period (as hereinafter defined). If the notice provides for an amendment of this Agreement, the parties have ten (10) days from the giving of the notice ("Renegotiation Period") within which to attempt to amend this Agreement in accordance with the Noticing Party's proposal (if any) or otherwise as the parties may agree. If this Agreement is not amended within the Renegotiation Period, - -------------------------------------------------------------------------------- 11 this Agreement will automatically terminate as of midnight on the tenth (10th) day after notice was given, or as otherwise may be mutually agreed upon by the parties. Except as otherwise required by applicable law, any amounts then-owing to either party must be paid up to the date of termination, and any obligation under this Agreement that is to continue beyond expiration or termination must so continue pursuant to its terms. All opinions of counsel presented by the Noticing Party, and any corresponding opinions given by the other party are Confidential Information solely for purposes of renegotiation and settlement of a potential dispute, and must not be deemed disclosed so as to waive any privileges otherwise applicable to the opinions. 25. DISPUTE RESOLUTION Any dispute relating to this Agreement which the parties are unable to resolve by mutual agreement and meeting of the Executive Resolution Committee shall be settled by a sole arbitrator in a binding, non-reviewable and non-appealable alternative dispute resolution process conducted in accordance with the procedures set forth on EXHIBIT F. The existence of the dispute, the dispute resolution process, and the arbitrator's award shall be maintained confidential, provided that the arbitrator's award may be entered as a final judgment in any court having jurisdiction. 26. EXECUTIVE RESOLUTION COMMITTEE From time to time during the term of this Agreement, upon the request of either party, a panel consisting of two (2) executives from Buyer and two (2) executives from Cardinal (the "EXECUTIVE RESOLUTION COMMITTEE") will meet to review issues pertaining to this Agreement raised by either party, resolve disputes relating to this Agreement and address other issues as they may determine. Each executive on the Executive Resolution Committee shall be of the Senior Vice President level, or higher, and the identity of the executives from each party shall be determined based upon the issue or dispute presented. Except as otherwise set forth herein, the Executive Resolution Committee shall meet within forty-five (45) days of the request by either party. With respect to disputes, a copy of the terms of this Agreement, agreed upon facts and areas of disagreement, and a concise summary of the basis for each side's contentions will be provided to the Executive Resolution Committee who will review the same, confer, and attempt to reach a mutual resolution of the issue. If the Executive Resolution Committee is unable to reach a mutual resolution with regard to any dispute related to this Agreement, such dispute shall be settled in accordance with the dispute resolution process set forth in Section 25 of this Agreement. 27. SEVERABILITY Should, by any reason, any clause or provision of this Agreement be held or ruled unenforceable or ineffective under the law, such a ruling will in no way affect the validity or the enforceability of any other clause or provision contained herein. 28. CONFIDENTIALITY - -------------------------------------------------------------------------------- 12 Each party acknowledges that as a result of this Agreement, that party will learn confidential information of the other party. As used in this Agreement, the term "Confidential Information" includes all such information furnished by Cardinal or Buyer, any Pharmacy, or any of their respective representatives, to the other or its representatives, whether furnished before, on or after the date hereof and regardless of the manner in which it is furnished. Confidential Information includes all analyses, compilations, business or technical information and other materials prepared by Cardinal or Buyer, any Pharmacy, or any of their respective representatives, containing or based in whole or in part on any such information furnished by the other party or its representatives. Confidential Information also includes the existence of this Agreement and the terms and conditions hereof. Neither party will disclose any Confidential Information of the other party to any third party, or use, or permit any third party to use, any of such Confidential Information, excepting only: (a) disclosures on a confidential basis to and use by the directors, officers, employees, and agents of that party or its affiliates who have a reasonable need to know such information in connection with that party's performance of this Agreement, (b) disclosures which are required by law, as reasonably determined by that party or its legal counsel, or are made on a confidential basis to that party's attorneys, accountants, and other professional advisors in connection with matters relating to this Agreement, and (c) routine disclosures in the normal course of business, including to IMS/DDD or similar organizations and manufacturers. The obligations of confidentiality hereunder will survive the termination of this Agreement for a period of three (3) years, unless otherwise mutually agreed upon by the parties. Upon termination of this Agreement (for any reason) each party will promptly: (i) return to the other party all documentation and other materials (including copies of original documentation or other materials) containing any confidential information of the other party; or (ii) certify to the other party, pursuant to a certificate in form and substance reasonably satisfactory to the other party, as to the destruction of all such documentation and other materials. 29. COUNTERPARTS; FACSIMILE SIGNATURES This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single agreement. Each party acknowledges that a facsimile signature on this Agreement shall be binding upon such party. - -------------------------------------------------------------------------------- 13 EXPRESS SCRIPTS, INC. CARDINAL DISTRIBUTION* 13900 RIVERPORT DRIVE 7000 CARDINAL PLACE MARYLAND HEIGHTS, MISSOURI 63043 DUBLIN, OHIO 43017 FACSIMILE: (314) 702-7120 FACSIMILE: (614) 757-6000 BY /s/ Barrett Toan BY /s/ Robert D. Walter --------------------------------------------------- --------------------------------------------------- NAME Barrett Toan NAME Robert D. Walter TITLE Chairman and CEO TITLE Chairman and CEO DATE 7/16/01 DATE 7/19/01
*The term "CARDINAL DISTRIBUTION" will include the following affiliated operating companies: Cardinal Syracuse, Inc., a New York corporation (Syracuse, New York); James W. Daly, Inc., a Massachusetts corporation (Peabody, Massachusetts); Ohio Valley-Clarksburg, Inc., a Delaware corporation (Wheeling, West Virginia); Cardinal Southeast, Inc. a Mississippi corporation (Madison, Mississippi); Whitmire Distribution Corporation, a Delaware corporation (Folsom, California); Bindley Western Drug Company, an Indiana corporation (Indianapolis, Indiana); and any other subsidiary of Cardinal Health, Inc., an Ohio corporation ("CHI"), as may be designated by CHI. - -------------------------------------------------------------------------------- 14 EXHIBIT A PHARMACIES Express Scripts, Inc. 14000 Riverport Drive Maryland Heights, Missouri 63043 Express Scripts, Inc. 1700 North Desert Drive Tempe, Arizona 85281 Express Scripts, Inc. 4500 Alexander Boulevard Albuquerque, New Mexico 87107 Express Scripts, Inc. 3684 Marshall Lane Bensalem, Pennsylvania 19020 Express Scripts, Inc. 433 River Street, Suite 800 Troy, New York 12180 Express Access Pharmacy, Inc.* dba Express Scripts, Inc. 767 Electronic Drive Horsham, Pennsylvania 19020 Express Scripts, Inc. Specialty Distribution Service 3168 Riverport Tech Center Maryland Heights, Missouri 63043 *This location will be subject to the terms and the conditions of this Agreement upon termination of its existing supply agreement, which is approximately sixty (60) days from the Commencement Date of this Agreement. - -------------------------------------------------------------------------------- 15 EXHIBIT B PRICING MATRIX 1. [***]. The [***] has been established based upon [***] (a) [***]; (b) [***]($[***]); and (c) [***]($[***]). (collectively referred to herein as the [***]"). If, for any reason, [***]. Subject to the [***] of this Agreement regarding [***](that is[***]) for [***]; provided, however, during the [***] of this Agreement, [***]%. -------------------------------------------------- ------------------------------------------------- [***] [***] -------------------------------------------------- ------------------------------------------------- $[***] - [***] [***]% -------------------------------------------------- ------------------------------------------------- $[***] - [***] [***]% -------------------------------------------------- ------------------------------------------------- $[***] - [***] [***]% -------------------------------------------------- ------------------------------------------------- $[***] - [***] [***]% -------------------------------------------------- ------------------------------------------------- $[***] [***]% -------------------------------------------------- -------------------------------------------------
This [***] and any [***]; provided, however, that such [***]. Any [***] as a result of a[***] pursuant to the terms hereof shall be[***]. Any [***] pursuant to the terms hereof shall be [***]. In all instances, [***] by this Agreement, the [***]. For example, [***]. If[***]. If[***]. 2. [***] of this Agreement regarding [***] (that is [***]) for[***]. 3. SPECIALLY PRICED MERCHANDISE. Notwithstanding the foregoing, the following Merchandise will not be available for purchase in accordance with the cost of goods set forth above, but instead will be special net billed: [***] [***] Certain [***] [***] subject to [***] Other [***] 4. UP-FRONT DISCOUNT. Buyer shall be eligible to receive an up-front discount on Buyer's purchases through Cardinal in the amount of [***] Dollars ($[***]) (the "DISCOUNT"). The - -------------------------------------------------------------------------------- 16 Discount shall be payable within sixty (60) days after full execution of this Agreement in the form of a check. If this Agreement is terminated prior to the end of the term, Buyer shall repay to Cardinal, within sixty (60) days of the date of termination, a pro rata amount (calculated based on a sixty (60) month term) of the Discount paid to Buyer hereunder; provided, however, Buyer shall have no obligation to repay to Cardinal any portion of the Discount if Buyer terminates this Agreement due to Cardinal's material breach of this Agreement and failure to cure such material breach in accordance with the terms of Section 14. The parties agree, and Buyer acknowledges, that such payment by Buyer has been negotiated in good faith and is not intended as a penalty. 5. [***]. During the term of this Agreement, [***]("[***]"). Cardinal [***] In addition, [***], based upon a [***] ($[***]); provided, however, except as set forth herein, [***] Dollars ($[***]) [***]; further provided, however, that [***] shall be [***] In no event shall [***] Dollars ($[***]). If [***] Dollars ($[***]), [***] Dollars ($[***]), or the applicable [***] as set forth herein, [***] For example, if during the first contract year, [***] Dollars ($[***]), [***] Dollars ($[***]) ($[***] $[***]), or [***] Dollars ($[***])[***]. If [***] as set forth above,[***]If [***] as set forth above during the [***] Solely for purposes of this paragraph [***] as set forth above, [***] , shall be [***] (as hereinafter defined)); provided, however, in order for such [***] Provided the [***] Dollars ($[***]), [***] percent ([***]) of all [***] transactions hereunder ([***] only) ("[***]"). The [***] of the applicable[***]. All [***]. In order to [***] the Commencement Date of this Agreement. Until [***] of this Agreement; provided, however, if [***]. 6. MEDICARE/MEDICAID DISCLOSURE. The Discount and [***] constitute a "discount or other reduction in price," as such terms are defined under the Medicare/Medicaid Anti-Kickback Statute, on the Merchandise purchased by Buyer under the terms of this Agreement. Cardinal and Buyer agree to use their best efforts to comply with any and all requirements imposed on sellers and buyers, respectively, under 42 U.S.C. ss. 1320a-7b(b)(3)(A) and the "safe harbor" regulations regarding discounts or other reductions in price set forth in 42 C.F.R. ss. 1001.952(h). In this regard, Buyer may have an obligation to accurately report, as may be required, under any state or federal program which provides cost or charge based reimbursement for the products or services covered by this Agreement, the net cost actually paid by Buyer. - -------------------------------------------------------------------------------- 17 EXHIBIT C [***] During the term of this Agreement, [***] pursuant to the term and conditions set forth below ("[***]"). [***] As a result of [***] and [***] with the terms and conditions of the [***] Contract Year 1 $[***] Contract Year 2 $[***] Contract Year 3 $[***] Renewal Contract Year 4 $[***] Renewal Contract Year 5 $[***] The [***] set forth above are based on [***] percent ([***]%) [***] during the first contract year of this Agreement as the [***] percent ([***]%) for contract years two (2) through five (5), [***]. [***] in accordance with the provisions set forth below. Except as otherwise set forth below, if, upon the completion of each contract year, [***] set forth above, [***] as set forth below [***] ("[***]"). Any [***] [***] of this Agreement [***]. If this Agreement is [***] in which the Agreement is [***], and the terms as set forth above shall be of [***]. [***] ("[***]") in accordance with the terms and conditions of this Agreement. For purposes of the [***]. For purposes of this Agreement, [***] as follows: [***] ([***]%) [***] set forth below [***] as set forth herein]. The [***] Rx Products [***] or BTC and [***]; provided, the [***] Rx Products [***] ([***]%) [***] Rx Products [***] The [***] as it relates to [***], as well as [***] on the information provided to [***] as set forth herein. During the term of this Agreement, [***] For [***], who, in turn, will [***]. Upon [***]. Upon [***] (i.e., [***]). If [***] as set forth above, will be included in the [***] will be as determined by [***] [***] [***] - -------------------------------------------------------------------------------- 18 [***] ([***]%), based on the [***] or the applicable [***], for all [***] of the following month. [***] hereunder will be included in the [***] Within [***] set forth above, [***] as set forth below: ------------------------------------------- ------------------------------------------ [***] [***] ------------------------------------------- ------------------------------------------ [***]% [***]% ------------------------------------------- ------------------------------------------ [***]% - [***]% [***]% ------------------------------------------- ------------------------------------------ [***]% - [***]% [***]% ------------------------------------------- ------------------------------------------ [***]% - [***]% [***]% ------------------------------------------- ------------------------------------------ [***]% [***]% ------------------------------------------- ------------------------------------------
[***] [***] - -------------------------------------------------------------------------------- 19 EXHIBIT D OTHER SERVICES HARDWARE/SOFTWARE [***], pursuant to the provision of Cardinal's Software License Agreement, [***] CardinalCHOICE(R) unit ([***]) [***] CardinalCHOICE(R)-HQ ([***]) Any such [***] shall remain the [***] of this Agreement, or upon [***] Upon termination of this Agreement for any reason, Buyer's or any Pharmacy's rights as a licensee of the CardinalCHOICE(R), CardinalCHOICE(R)-HQ or other Cardinal software will automatically expire, and Buyer and each Pharmacy will promptly return such software and any hardware provided hereunder not purchased by Buyer or any Pharmacy to a return location specified by Cardinal. Cardinal will license to Buyer, pursuant to the provision of Cardinal's Software License Agreement, its eReceiver Systems available to the Pharmacies pursuant to Cardinal's customary terms and practices. ON-SITE EMPLOYEE During the term of this Agreement, [***] employee [***] The employee will be [***] The provision of this employee [***] and relates solely to this Agreement. [***] such employee[***] such employee [***] During the term of this Agreement, [***] such employee [***] such employee [***] The employee will be [***] with this Agreement; provided, however, that such employee will [***] employee of [***] such employee [***] the Commencement Date of this Agreement. SPONSORSHIP OF BUYER'S OUTCOMES SEMINAR [***] [***] [***] - -------------------------------------------------------------------------------- 20 EXHIBIT E CARDINAL HEALTH RETURN GOODS AUTHORIZATION ONGOING ASSURANCE The undersigned Buyer ("BUYER") of one (1) or more of the Cardinal Health companies identified below ("WHOLESALER," whether one (1) or more) hereby agrees that this document is being delivered to confirm Buyer's compliance with applicable federal, state, and local laws / guidelines concerning returned goods and will apply to all returns by Buyer to Wholesaler from time to time and will supersede any inconsistent provisions which may be contained in any credit request, purchase order, or other documents pertaining to the supply relationship between Buyer and Wholesaler. 1. Buyer represents, warrants, and guarantees to Wholesaler that: (a) each such return will be made only to the specific Wholesaler from which the item was originally purchased; (b) each such return will be accompanied by Wholesaler's credit request form (the "RETURN FORM"), which will specify both Buyer's and Wholesaler's name and address, the date of the return, the quantity and description of the product returned, and such other information as may reasonably be requested on Wholesaler's Return Form; (c) Buyer will retain a copy of each Return Form and related credit memo and make such documentation available to the manufacturer and to authorized federal, state, and local law enforcement officers upon request; (d) the credit claimed or accepted by Buyer for any such return will not exceed the original purchase price paid to Wholesaler; and (e) all merchandise returned to Wholesaler has been stored and handled by Buyer in accordance with all applicable federal, state, and local laws, manufacturer guidelines when disclosed to Buyer by the manufacturer or wholesaler, and good trade practices, and such merchandise has not been adulterated or misbranded by Buyer within the meaning of the Federal Food, Drug, and Cosmetic Act and meets all FDA, state, and other applicable requirements and guidelines. 2. Buyer will indemnify and defend Wholesaler against and from any expense, claim, liability, or penalty (including reasonable legal fees) arising from any failure of Buyer to properly comply with the provisions specified in this exhibit. 3. The term "CARDINAL HEALTH" or "WHOLESALER" will include the following affiliated operating companies: Cardinal Syracuse, Inc., a New York corporation (Syracuse, New York); James W. Daly, Inc., a Massachusetts corporation (Peabody, Massachusetts); Ohio Valley-Clarksburg, Inc., a Delaware corporation (Wheeling, West Virginia); Cardinal Southeast, Inc. a Mississippi corporation (Madison, Mississippi); Whitmire Distribution Corporation, a Delaware corporation (Folsom, California); Bindley Western Drug Company, an Indiana corporation (Indianapolis, Indiana); and any other subsidiary of Cardinal Health, Inc., an Ohio corporation ("CHI"), as may be designated by CHI. EXPRESS SCRIPTS, INC. ------------------------------------ Dated: , 2001 By Authorized Signature / Title ------------------------ - -------------------------------------------------------------------------------- 21 EXHIBIT E ALTERNATIVE DISPUTE RESOLUTION (a) The parties recognize that a bona fide dispute as to certain matters may arise from time to time during the term of this Agreement which relates to either party's rights and/or obligations. To have such a dispute resolved by this Alternative Dispute Resolution ("ADR") provision, the parties first must attempt to resolve the dispute with the Executive Resolution Committee in accordance with Section 26 of the Agreement. Any negotiations regarding a dispute shall be treated as settlement negotiations for purposes of the Federal Rules of Evidence and any similar state rules of evidence. Such negotiations shall not be admissible in any subsequent ADR hearing. If the matter has not been resolved by the Executive Resolution Committee within forty-five (45) days of the notice of dispute, or such shorter period as set forth in the Agreement, or if the parties fail to meet within such forty-five (45) days, or such shorter period as set forth in the Agreement, either party may initiate an ADR proceeding as provided herein. The parties shall have the right to be represented by counsel in such a proceeding. (b) To begin an ADR proceeding, a party shall provide written notice to the other party of the issues to be resolved by ADR. Within fourteen (14) days after its receipt of such notice, the other party may, by written notice to the party initiating the ADR, add additional issues to be resolved within the same ADR. (c) The ADR proceeding and the resolution of any disputes in the ADR proceeding shall be conducted by a panel of three neutrals. Within twenty-one (21) days following receipt of the original ADR notice, the parties shall each select one neutral, and the American Arbitration Association shall select one neutral pursuant to the following procedures: (1) The AAA shall submit to the parties a list of not less than five (5) candidates within fourteen (14) days after receipt of the original ADR notice, along with a Curriculum Vitae for each candidate. No candidate shall be an employee, director, or shareholder of either party or any of their subsidiaries or Affiliates. (2) Such list shall include a statement of disclosure by each candidate of any circumstances likely to affect his or her impartiality. (3) Each party shall number the candidates in order of preference (with the number one (1) signifying the greatest preference) and shall deliver the list to the AAA within seven (7) days following receipt of the list of candidates. If a party believes a conflict of interest exists regarding any of the candidates, that party shall provide a written explanation of the conflict to the AAA along with its list showing its order of preference for the candidates. Any party failing to return a list of preferences on time shall be deemed to have no order of preference. (4) If the parties collectively have identified fewer than three (3) candidates deemed to have conflicts, the AAA immediately shall designate as the neutral the - -------------------------------------------------------------------------------- 22 candidate who has no conflicts and for whom the parties collectively have indicated the greatest preference. If a tie should result between two candidates, the AAA may designate either candidate. If the parties collectively have identified three (3) or more candidates deemed to have conflicts, the AAA shall review the explanations regarding conflicts and, in its sole discretion, may either (I) immediately designate as the neutral the candidate who has no conflicts and for whom the parties collectively have indicated the greatest preference, or (ii) issue a new list of not less than five (5) candidates, in which case the procedures set forth in subparagraphs (c)(1) - (4) shall be repeated. (d) No earlier than twenty-eight (28) days or later than fifty-six (56) days after selection, the panel of neutrals shall hold a hearing to resolve each of the issues identified by the parties. The ADR proceeding shall take place at a location, other than the principal place of business of either party or any of their subsidiaries or affiliates, as designated by the panel of neutrals. (e) At least seven (7) days prior to the hearing, each party shall submit the following to the other party and the panel of neutrals: (1) a copy of all exhibits on which such party intends to rely in any oral or written presentation to the panel of neutrals; (2) a list of any witnesses such party intends to call at the hearing, and a short summary of the anticipated testimony of each witness; (3) a proposed ruling on each issue to be resolved, together with a request for a specific damage award or other remedy for each issue. The proposed rulings and remedies shall not contain any recitation of the facts or any legal arguments and shall not exceed one (1) page per issue. (4) a brief in support of such party's proposed rulings and remedies, provided that the brief shall not exceed twenty (20) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding. Except as expressly set forth in subparagraphs (e)(1) - (4), no discovery shall be required or permitted by any means, including depositions, interrogatories, requests for admissions, or production of documents. (f) The hearing shall be conducted on two (2) consecutive days and shall be governed by the following rules: (1) Each party shall be entitled to five (5) hours of hearing time to present its case. The panel of neutrals shall determine whether each party has had the five (5) hours to which it is entitled. - -------------------------------------------------------------------------------- 23 (2) Each party shall be entitled, but not required, to make an opening statement, to present regular and rebuttal testimony, documents or other evidence, to cross-examine witnesses, and to make a closing argument. Cross-examination of witnesses shall occur immediately after their direct testimony, and cross-examination time shall be charged against the party conducting the cross-examination. (3) The party initiating the ADR shall begin the hearing and, if it chooses to make an opening statement, shall address not only issues it raised but also any issues raised by the responding party. The responding party, if it chooses to make an opening statement, also shall address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents, other evidence, and closing arguments shall proceed in the same sequence. (4) Except when testifying, witnesses shall be excluded from the hearing until closing arguments. (5) Settlement negotiations shall not be admissible under any circumstances. Affidavits prepared for purposes of the ADR hearing also shall not be admissible. As to all other matters, the panel of neutrals shall have sole discretion regarding the admissibility of any evidence. (g) Within seven (7) days following completion of the hearing, each party may submit to the other party and the panel of neutrals a post-hearing brief in support of its proposed rulings and remedies, provided that such brief shall not contain or discuss any new evidence and shall not exceed ten (10) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding. (h) The panel of neutrals shall rule on each disputed issue within fourteen (14) days following completion of the hearing. Such ruling shall adopt in its entirety the proposed ruling and remedy of one of the parties on each disputed issue but may adopt one party's proposed rulings and remedies on some issues and the other party's proposed rulings and remedies on other issues. The panel of neutrals shall not issue any written opinion or otherwise explain the basis of the ruling. (i) The panel of neutrals shall be paid a reasonable fee plus expenses. These fees and expenses, along with the reasonable legal fees and expenses of the prevailing party (including all expert witness fees and expenses), the fees and expenses of a court reporter, and any expenses for a hearing room, shall be paid as follows: (1) If the panel of neutrals rules in favor of one party on all disputed issues in the ADR, the losing party shall pay 100% of such fees and expenses. (2) If the panel of neutrals rules in favor of one party on some issues and the other party on other issues, the panel of neutrals shall issue with the rulings a written determination as to how such fees and expenses shall be allocated between - -------------------------------------------------------------------------------- 24 the parties. The panel of neutrals shall allocate fees and expenses in a way that bears a reasonable relationship to the outcome of the ADR, with the party prevailing on more issues, or on issues of greater value or gravity, recovering a relatively larger share of its legal fees and expenses. (j) The rulings of the panel of neutrals and the allocation of fees and expenses shall be binding, non-reviewable, and non-appealable, and may be entered as a final judgment in any court having jurisdiction. (k) Except as provided in paragraph (j) or as required by law, the existence of the dispute, any settlement negotiations, the ADR hearing, any submissions (including exhibits, testimony, proposed rulings, and briefs), and the rulings shall be deemed Confidential Information. The panel of neutrals shall have the authority to impose sanctions for unauthorized disclosure of Confidential Information. (l) Except as otherwise set forth herein the ADR proceedings shall be governed in accordance with the AAA rules. (m) All references to days in this Exhibit F shall mean calendar days. - -------------------------------------------------------------------------------- 25 FIRST AMENDMENT TO PRIME VENDOR AGREEMENT THIS FIRST AMENDMENT TO PRIME VENDOR AGREEMENT ("FIRST AMENDMENT") is among Cardinal Distribution* ("CARDINAL"), and Express Scripts, Inc. ("BUYER"). WHEREAS, Cardinal and Buyer executed a Prime Vendor Agreement, dated July 1, 2001 (the "AGREEMENT"). WHEREAS, Buyer desires to discontinue purchasing certain [***] Products directly from the applicable manufacturers and/or suppliers and commence purchasing such [***] Products through Cardinal. WHEREAS, the parties now desire to amend the Agreement as set forth below. NOW THEREFORE, in consideration of the foregoing recitals, the parties hereby agree as follows: 1. SECTION 2, SALE OF MERCHANDISE. The definition of "PRIMARY WHOLESALE REQUIREMENTS" shall be deleted in its entirety and replaced with the following: "The term `PRIMARY REQUIREMENTS' means that Buyer will purchase for each Pharmacy [***] of its requirements of [***] Products that are available from Cardinal from Cardinal. If Cardinal notifies Buyer (such notice to be provided at the time of order confirmation) that it will be unable to supply any [***]Product within forty-eight (48) hours of Buyer's order of such [***] Product, Buyer may purchase such [***] Product from another supplier, including, but not limited to alternate source vendors, and such purchases shall be included in the calculations of Buyer's Qualified Annual and Monthly Purchases for the purpose of determining Buyer's compliance with the Minimum Requirements (as hereinafter defined) and Buyer's applicable cost of goods; provided, however, Buyer shall provide to Cardinal reasonable documentation of the [***] Products purchased from other suppliers and that Buyer attempted to purchase such [***] Products from Cardinal and they were unavailable within forty-eight (48) hours." Further, all references to the term "PRIMARY WHOLESALE REQUIREMENTS" in the Agreement shall be deleted and replaced with the term "PRIMARY REQUIREMENTS". The following paragraph shall be deleted from Section 2, Sale of Merchandise: "Cardinal acknowledges that Buyer, [***]." 2. SECTION 3, PURCHASE PRICE. The last paragraph of Section 3, Purchase Price, shall be deleted in its entirety and replaced with the following: "All [***] CardinalCHOICE(R)pharmacy system [***] the pricing specified in the Pricing Matrix; provided, however, [***] 3. SECTION 4, [***] AND SAVINGS AND EXHIBIT C. Section 4, [***] and Savings, and Exhibit C, [***] and Related Savings, shall be deleted in their entirety. - -------------------------------------------------------------------------------- 26 4. SECTION 5, PAYMENT TERMS. The following additional payment terms shall be added to Section 5(a)(i) for Direct Store Delivery Purchases: (a) [***] Buyer will cause Cardinal to receive payment in full by [***] of the amount due for all Merchandise delivered and services provided during the [***] (b) [***] Buyer will cause Cardinal to receive payment in full: (1) by not later than the [***] day of each calendar month of the amount due for all Merchandise delivered and services provided during the first (1st) [***] days of such calendar month; (2) by not later than the [***] day of each calendar month, of the amount due for all Merchandise delivered and services provided during the [***] through the [***] day of such calendar month; and (3) by not later than the [***] day of each calendar month, of the amount due for all Merchandise delivered and services provided during the period beginning on the [***] day of the preceding calendar month and ending on the last day of such preceding calendar month. Sections 5(a)(ii) and (iii) shall be deleted in their entirety. 5. SECTION 6, ORDERING AND DELIVERY. The third sentence of Section 6, Ordering and Delivery, shall be amended to add the Pharmacies located in Bensalem, Pennsylvania; East Hanover, New Jersey; and Harrisburg, Pennsylvania. In addition, the fourth sentence shall be deleted in its entirety and replaced with the following: "Buyer will incur a separate delivery charge, not to exceed Cardinal's actual cost for courier delivery, for additional deliveries (beyond [***] )." 6. EXHIBIT B, PRICING MATRIX. Section 1 of Exhibit B, Pricing Matrix, shall be deleted in its entirety and replaced with Section 1 of Exhibit A attached to this Amendment. Section 2, Brokerage Purchases, of Exhibit B, Pricing Matrix, shall be deleted in its entirety. Section 5, Generic Outsource Program Rebate, of Exhibit B, Pricing Matrix, shall be deleted in its entirety. 7. EXHIBIT D, OTHER SERVICES. The paragraph titled, [***], shall be deleted in its entirety from Exhibit D, Other Services. 8. SECTION 12, SERVICE LEVEL. Section 12, Service Level, shall be deleted in its entirety and replaced with the following: "Cardinal will exercise all reasonable efforts to provide [***] (excluding Buyer's Top [***] Items (as hereinafter defined)) [***] ([***]%) [***] in accordance with the standards and procedures specified in AMENDMENT EXHIBIT B attached hereto. For Buyer's Top [***] Items, Cardinal will exercise all reasonable efforts to provide each Pharmacy with an average monthly service level of at least [***] ([***]%) calculated quarterly (calendar) in accordance with the standards and procedures specified in AMENDMENT EXHIBIT B attached hereto. - -------------------------------------------------------------------------------- 27 Buyer's "Top [***] Items" means the top [***]Rx Products purchased by Buyer based on Rx count. Buyer will provide to Cardinal a report of the "Top [***] Items" on a quarterly (calendar) basis for purposes of measuring the service level on such items the following calendar quarter. [***] ([***]%) [***] ([***]%) [***] ([***]%) [***] ([***]%) [***] ([***]%), [***]. For example, [***] $[***] % [***] $ [***] ([***]) [***]% - [***]% = [***] % and ([***]) [***]% x $[***] x [***]% = $[***]. Notwithstanding [***] in accordance with the standards and procedures specified in AMENDMENT EXHIBIT B attached hereto is [***] ([***]%) [***] ([***]%) [***] as set forth above) [***] ([***]%) [***] ([***]%) [***]." 9. EXHIBIT A, PHARMACIES. Exhibit A is hereby amended to add the following additional Pharmacies: Central Fill, Inc. 4415 Lewis Road Harrisburg, Pennsylvania 17111 Central Fill, Inc. 721 Ridgedale Avenue East Hanover, New Jersey 07936 ESI Mail Pharmacy Service, Inc. 7909 South Hardy Tempe, Arizona 85284 10. MISCELLANEOUS. Capitalized terms not defined herein will have the same meaning ascribed to them in the Agreement, it being the intent of the parties that the Agreement and this First Amendment will be applied and construed as a single instrument. The Agreement, as modified by this First Amendment, constitutes the entire agreement between Cardinal and Buyer regarding the subject matter of the Agreement and this First Amendment and supersedes all prior or contemporaneous writings and understandings between the parties regarding the same. This First Amendment will be binding upon the parties, their heirs, legal representatives, successors and assigns. The terms and provisions of this First Amendment are severable. If any term or provision of this First Amendment is determined to be illegal or unenforceable by a court of competent jurisdiction, the remaining terms and provisions of this First Amendment and the Agreement will remain in full force and effect. This First Amendment may only be amended in a writing signed by Cardinal and Buyer. 11. EFFECTIVE DATE. This First Amendment shall be effective as of the date of full execution ("EFFECTIVE Date"). Except as otherwise amended herein, the terms and conditions of the Restated Agreement shall remain in full force and effect. CARDINAL DISTRIBUTION* EXPRESS SCRIPTS, INC. BY: /s/ Mark Parrish BY: /s/ George Paz -------------------------- ------------------------------
- -------------------------------------------------------------------------------- 28 NAME: Mark Parrish NAME: George Paz TITLE: President TITLE: CFO DATE: 1/15/03 DATE: 1/9/03
*The term "Cardinal Distribution" shall include the following affiliated operating companies: James W. Daly, Inc., a Massachusetts corporation (Peabody, Massachusetts) (now known as "Cardinal Health 106, Inc."); Cardinal Southeast, Inc. a Mississippi corporation (Madison, Mississippi) (now known as "Cardinal Health 103, Inc."); Whitmire Distribution Corporation, a Delaware corporation (Folsom, California) (now known as "Cardinal Health 110, Inc."); Bindley Western Industries, Inc., a Indiana corporation (Indianapolis, Indiana) (now known as "Cardinal Health 100, Inc."); and any other subsidiary of Cardinal Health, Inc., an Ohio corporation ("CHI"), as may be designated by CHI. - -------------------------------------------------------------------------------- 29 EXHIBIT A 1. [***]. The [***] has been established based upon [***]: (a) [***]; (b) [***] Dollars ($[***]); and (c) [***] Dollars ($[***]). (collectively referred to herein as the [***]. If, for any reason, [***] Dollars ($[***]) [***] beginning on the Commencement Date of this Agreement Subject to the [***] of this Agreement regarding [***] (that is [***]) for [***]; provided, however, until all Pharmacies are converted to purchasing their Primary Requirements from Cardinal, the applicable price for the Harrisburg, PA, East Hanover, NJ and Specialty Distribution Service (Maryland Heights, MO) Pharmacies will be equal to [***] (as defined in the Agreement) [***] provided, however, conversion of all Pharmacies shall be completed within six (6) months following the first day of the conversion of the first Pharmacy. The remaining Pharmacies will continue to purchase at their current pricing until converted, at which time they will move to the [***] - --------------------------------------------------- --------------------- ---------------------- --------------------- [***] [***] [***] [***] - --------------------------------------------------- --------------------- ---------------------- --------------------- $[***] - [***] [***]% [***]% [***]% - --------------------------------------------------- --------------------- ---------------------- --------------------- $[***] - [***] [***]% [***]% [***]% - --------------------------------------------------- --------------------- ---------------------- --------------------- $[***] - [***] [***]% [***]% [***]% - --------------------------------------------------- --------------------- ---------------------- --------------------- $[***] - [***] [***]% [***]% [***]% - --------------------------------------------------- --------------------- ---------------------- --------------------- $[***] - [***] [***]% [***]% [***]% - --------------------------------------------------- --------------------- ---------------------- --------------------- $[***] - [***] [***]% [***]% [***]% - --------------------------------------------------- --------------------- ---------------------- --------------------- $[***] - [***] [***] - --------------------------------------------------- --------------------- ---------------------- ---------------------
Upon completion of the conversion of all Pharmacies or achievement of at least [***] Dollars ($[***]) in total [***], whichever is earlier, the next [***] will be annualized to determine the applicable pricing tier for all fully converted Pharmacies. Such pricing will be effective on the [***] of the next [***]. For example, if all conversions are completed in [***] to determine the applicable price beginning on [***]. Such pricing will continue until a full [***] can be reviewed. The pricing will be adjusted on the [***] of the [***]. For example, [***] for [***] will be reviewed with the next [***]. Thereafter, [***] will be reviewed on a [***] basis and any [***] based on [***] days during such [***]; provided, however, that such [***] of the [***]. In all instances, [***]. For example, [***]. The pricing set forth on this Exhibit A [***] (as hereinafter defined) [***] that include, but are not limited to, [***] In the event that [***] during the term of this Agreement [***] or in the event that [***], then [***] In such event, [***]. If the [***]; provided, however, [***] shall be [***]. - -------------------------------------------------------------------------------- 30 AMENDMENT EXHIBIT B SERVICE LEVEL DEFINITION For purposes of this Agreement, the service level percentage will be calculated by dividing total lines of Rx Products shipped by the number of lines of Rx Products ordered. The following items will be excluded from the service level calculation: 1. [***] 2. [***] items [***]; 3. [***]; 4. Items where a Facility has [***]; 5. Items where a Facility's [***]; and 6. [***] item [***]. The service level for each Pharmacy will commence fourteen days (14) days following the later of such Pharmacy's initial order of Merchandise under this Amendment from Cardinal or Cardinal's receipt of accurate usage data from such Pharmacy. The service level for Facilities added to this Agreement after the Commencement Date will commence fourteen (14) days following receipt by Cardinal of accurate usage data. This will allow Cardinal to gain usage information and adjust inventory levels appropriately. Upon Buyer's request, if Cardinal does not meet its service level for any quarter, Cardinal and Buyer will jointly develop a service level action plan for the following quarter. Buyer will notify Cardinal at least forty-five (45) days prior to the expiration of any manufacturer's contract which is being replaced with a different contract, and will cooperate with and assist Cardinal in disposing of any excess inventory of Merchandise previously stocked at Buyer's or a Facility's request. Failure to comply with these notice requirements will entitle Cardinal to discontinue the service level to the Facilities until ninety (90) days after delivery of accurate usage data for the new items. - -------------------------------------------------------------------------------- 31 EX-10.02 4 l00848aexv10w02.txt EX-10.02 364 DAY AGREEMENT Exhibit 10.02 CARDINAL HEALTH, INC. 364-DAY CREDIT AGREEMENT DATED AS OF MARCH 27, 2003 THE SUBSIDIARY BORROWERS PARTY HERETO, THE LENDERS PARTY HERETO AND BANK ONE, NA, AS ADMINISTRATIVE AGENT BANK OF AMERICA N.A., AS SYNDICATION AGENT WACHOVIA BANK, NATIONAL ASSOCIATION, AS SYNDICATION AGENT BARCLAYS BANK PLC, AS DOCUMENTATION AGENT CREDIT SUISSE FIRST BOSTON, AS DOCUMENTATION AGENT DEUTSCHE BANK SECURITIES, INC., AS DOCUMENTATION AGENT BANC ONE CAPITAL MARKETS, INC., AS LEAD ARRANGER AND BOOK MANAGER TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS........................................................................................ 1 ARTICLE II. THE CREDITS....................................................................................... 10 2.1 Commitments of the Lenders; Revolving Credit Advances.................................... 10 2.2 Termination.............................................................................. 10 2.3 Ratable Loans............................................................................ 10 2.4 Types of Advances........................................................................ 10 2.5 Facility Fee; Reductions in Aggregate Commitment; Utilization Fee........................ 11 2.6 Minimum Amount of Each Advance........................................................... 11 2.7 Prepayments.............................................................................. 11 2.8 Method of Selecting Types and Interest Periods for New Advances.......................... 11 2.9 Conversion and Continuation of Outstanding Advances...................................... 12 2.10 Method of Borrowing...................................................................... 12 2.11 Changes in Interest Rate, etc............................................................ 13 2.12 Rates Applicable After Default........................................................... 13 2.13 Method of Payment........................................................................ 13 2.14 Noteless Agreement; Evidence of Indebtedness............................................. 14 2.15 Telephonic Notices....................................................................... 14 2.16 Interest Payment Dates; Interest and Fee Basis........................................... 14 2.17 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions.......... 15 2.18 Lending Installations.................................................................... 15 2.19 Non-Receipt of Funds by the Administrative Agent......................................... 15 2.20 Replacement of Lender.................................................................... 16
i ARTICLE III. YIELD PROTECTION; TAXES.......................................................................... 16 3.1 Yield Protection......................................................................... 16 3.2 Changes in Capital Adequacy Regulations.................................................. 17 3.3 Availability of Types of Advances........................................................ 18 3.4 Funding Indemnification.................................................................. 18 3.5 Taxes.................................................................................... 18 3.6 Lender Statements; Survival of Indemnity................................................. 20 ARTICLE IV. CONDITIONS PRECEDENT.............................................................................. 20 4.1 Initial Advance.......................................................................... 20 4.2 Each Advance............................................................................. 21 ARTICLE V. REPRESENTATIONS AND WARRANTIES..................................................................... 22 5.1 Existence and Standing................................................................... 22 5.2 Authorization and Validity............................................................... 22 5.3 No Conflict; Government Consent.......................................................... 22 5.4 Financial Statements..................................................................... 22 5.5 Material Adverse Change.................................................................. 23 5.6 Taxes.................................................................................... 23 5.7 Litigation and Contingent Obligations.................................................... 23 5.8 Subsidiaries............................................................................. 23 5.9 ERISA.................................................................................... 24 5.10 Accuracy of Information.................................................................. 24 5.11 Regulation U............................................................................. 24 5.12 Maintenance of Property.................................................................. 24 5.13 Insurance................................................................................ 24 5.14 Plan Assets; Prohibited Transactions..................................................... 25
ii 5.15 Environmental Matters.................................................................... 25 5.16 Investment Company Act................................................................... 25 5.17 Public Utility Holding Company Act....................................................... 25 5.18 Default.................................................................................. 25 5.19 Reportable Transaction................................................................... 25 ARTICLE VI. COVENANTS......................................................................................... 25 6.1 Financial Reporting...................................................................... 26 6.2 Use of Proceeds.......................................................................... 26 6.3 Notice of Default........................................................................ 26 6.4 Conduct of Business; Maintenance of Property............................................. 27 6.5 Taxes.................................................................................... 27 6.6 Insurance................................................................................ 27 6.7 Compliance with Laws..................................................................... 27 6.8 Inspection............................................................................... 27 6.9 Merger................................................................................... 28 6.10 Sale of Assets........................................................................... 28 6.11 Investments.............................................................................. 29 6.12 Liens.................................................................................... 29 6.13 Subsidiary Indebtedness.................................................................. 30 6.14 Limitation on Restrictions on Significant Subsidiary Distributions....................... 31 6.15 Contingent Obligations................................................................... 32 6.16 Minimum Net Worth........................................................................ 32 ARTICLE VII. DEFAULTS......................................................................................... 32 ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.................................................. 34
iii 8.1 Acceleration............................................................................. 34 8.2 Amendments............................................................................... 34 8.3 Preservation of Rights................................................................... 35 ARTICLE IX. GENERAL PROVISIONS................................................................................ 35 9.1 Survival of Representations.............................................................. 35 9.2 Governmental Regulation.................................................................. 35 9.3 Headings................................................................................. 35 9.4 Entire Agreement......................................................................... 35 9.5 Several Obligations; Benefits of this Agreement.......................................... 36 9.6 Expenses; Indemnification................................................................ 36 9.7 Numbers of Documents..................................................................... 36 9.8 Accounting............................................................................... 36 9.9 Severability of Provisions............................................................... 37 9.10 Nonliability of Lenders.................................................................. 37 9.11 Confidentiality; Disclosure.............................................................. 37 9.12 Nonreliance.............................................................................. 38 ARTICLE X. THE AGENT.......................................................................................... 38 10.1 Appointment; Nature of Relationship...................................................... 38 10.2 Powers................................................................................... 38 10.3 General Immunity......................................................................... 38 10.4 No Responsibility for Loans, Recitals, etc............................................... 39 10.5 Action on Instructions of Lenders........................................................ 39 10.6 Employment of Agents and Counsel......................................................... 39 10.7 Reliance on Documents; Counsel........................................................... 39 10.8 Administrative Agent's Reimbursement and Indemnification................................. 40
iv 10.9 Notice of Default........................................................................ 40 10.10 Rights as a Lender....................................................................... 40 10.11 Lender Credit Decision................................................................... 41 10.12 Successor Administrative Agent........................................................... 41 10.13 Administrative Agent's Fee............................................................... 41 10.14 Delegation to Affiliates................................................................. 42 10.15 Administrative Agent, Syndication Agents, Documentation Agents, Lead Arranger, etc....... 42 ARTICLE XI. SETOFF; RATABLE PAYMENTS.......................................................................... 42 11.1 Setoff................................................................................... 42 11.2 Ratable Payments......................................................................... 42 ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS................................................ 43 12.1 Successors and Assigns................................................................... 43 12.2 Participations........................................................................... 43 12.2.1. Permitted Participants; Effect................................................. 43 12.2.2. Voting Rights.................................................................. 43 12.2.3. Benefit of Setoff.............................................................. 43 12.3 Assignments.............................................................................. 44 12.3.1. Permitted Assignments.......................................................... 44 12.3.2. Effect; Effective Date......................................................... 44 12.4 Dissemination of Information............................................................. 45 12.5 Tax Treatment............................................................................ 45 12.6 Transfer to an SPC....................................................................... 45 ARTICLE XIII. NOTICES......................................................................................... 45 13.1 Notices.................................................................................. 45 13.2 Change of Address........................................................................ 46
v ARTICLE XIV. COUNTERPARTS..................................................................................... 46 ARTICLE XV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL...................................... 46 15.1 CHOICE OF LAW............................................................................ 46 15.2 CONSENT TO JURISDICTION.................................................................. 46 15.3 WAIVER OF JURY TRIAL..................................................................... 47
Exhibits: Exhibit A Form of Opinion Exhibit B Compliance Certificate Exhibit C Assignment Agreement Exhibit D Loan/Credit Related Money Transfer Instructions Exhibit E Note Schedules: Pricing Schedule A-1 Lender Commitments 1 Subsidiary and Other Investments 3 Eurodollar Payment Offices of the Agent 4 Lending Installations 7 Litigation/Contingent Liabilities 8 Persons Authorized to Give Telephone Instructions vi 364-DAY CREDIT AGREEMENT This Agreement, dated as of March 27, 2003, is among Cardinal Health, Inc. (the "Company"), certain Subsidiaries of the Company (the "Subsidiary Borrowers", and together with the Company, the "Borrowers"), the lenders party hereto from time to time (the "Lenders"), the Documentation Agents and Syndication Agent party hereto, and Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as Administrative Agent (the "Administrative Agent"). The parties hereto agree as follows: ARTICLE I. DEFINITIONS As used in this Agreement: "Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Company or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company. "Adjusted Tangible Net Worth" means, as of any date, (i) the amount of any capital stock, paid in capital and similar equity accounts plus (or minus in the case of a deficit) the capital surplus and retained earnings of the Company and its consolidated Subsidiaries, but excluding the amount of any foreign currency translation adjustment account shown as a capital account, less (ii) the net book value of all items of the following character which are included in the assets of the Company and its consolidated Subsidiaries: (a) goodwill, including, without limitation, the excess of cost over book value of any asset, (b) organization or experimental expenses, (c) unamortized debt discount and expense, (d) patents, trademarks, trade names and copyrights, (e) treasury stock, (f) franchises, licenses and permits, and (g) other assets which are deemed intangible assets under Agreement Accounting Principles. "Administrative Agent" means Bank One, NA (Main office Chicago) in its capacity as contractual representative of the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Article X. "Advance" means a borrowing hereunder, (i) made by the Lenders on the same Borrowing Date, or (ii) converted or continued by the Lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurodollar Loans, for the same Interest Period. "Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. 1 "Aggregate Commitment" means the aggregate of the Commitments of all the Lenders, as reduced from time to time pursuant to the terms hereof. As of the date of this Agreement, the original Aggregate Commitment is $750,000,000. "Agreement" means this credit agreement, as it may be amended or modified and in effect from time to time. "Agreement Accounting Principles" means generally accepted accounting principles in the United States of America in effect from time to time, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.4; provided, however, that if any change in Agreement Accounting Principles from those applied in preparing such financial statements affects the calculation of any financial covenant contained in this Agreement, the Borrowers and the Administrative Agent hereby agree to negotiate in good faith towards making appropriate amendments acceptable to the Required Lenders to the provisions of this Agreement to reflect as nearly as possible the effect of the financial covenants as in effect on the date hereof. "Applicable Fee Rate" means, at any time, the percentage rate per annum at which Facility Fees are accruing on the Aggregate Commitment (without regard to usage) at such time as set forth in the Pricing Schedule. "Applicable Margin" means, with respect to any Eurodollar Loan, Floating Rate Loan or the Facility Fee, as the case may be at any time, the percentage which is applicable at such time set forth in the Pricing Schedule, provided that from and after the Conversion Date, the Applicable Margin as in effect from time to time shall increase by 12.5 basis points, and upon the occurrence and during the continuation of a Default, the Applicable Margin shall be the highest Applicable Margin set forth in the Pricing Schedule. "Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. "Article" means an article of this Agreement unless another document is specifically referenced. "Authorized Officer" means any of the Chief Financial Officer, Principal Accounting Officer or Treasurer of a Borrower, or their equivalent, acting singly. "Bank One" means Bank One, NA (Main office Chicago) in its individual capacity, and its successors. "Borrowers" means the Company and the Subsidiary Borrowers, and "Borrower" means any of them, as the context may require. "Borrowing Date" means a date on which an Advance is made hereunder. "Borrowing Notice" is defined in Section 2.8. "Business Day" means (i) with respect to any borrowing, payment or rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities and on which dealings in Eurodollars are carried on in the London interbank market, and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities. 2 "Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Cash Equivalent Investments" means (i) short-term obligations of, or fully guaranteed by, the United States of America, (ii) commercial paper rated A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts maintained in the ordinary course of business, (iv) certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000, (v) banker's acceptances, (vi) money-market funds, provided that such funds invest solely in securities otherwise described in this definition, (vii) variable rate demand notes, (viii) municipal preferred stock, (ix) cash market preferred stock, and (x) short term municipal notes; provided in each case that the same provides for payment of both principal and interest (and not principal alone or interest alone) and is not subject to any contingency regarding the payment of principal or interest. "Change in Control" means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of the Company, provided, however, that the acquisitions by or on behalf of a Plan, an employee stock purchase plan of the Company, or by Persons who before such acquisition were officers, directors, employees or who held in the aggregate not less than 5% of the outstanding shares of voting stock of the Company shall not be included in determining whether a Change in Control shall have occurred. "Closing Date" shall mean March 27, 2003. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "Commitment" means, for each Lender, the obligation of such Lender to make Loans not exceeding the amount set forth on Schedule A-1 or as set forth in any assignment that has become effective pursuant to Section 12.3.2, as such amount may be modified from time to time pursuant to the terms hereof. "Company" means Cardinal Health, Inc., an Ohio corporation, and its successors and assigns. "Consolidated or "consolidated" means, when used with reference to any financial term in this Agreement, the aggregate for two or more Persons of the amounts signified by such term for all such Persons determined on a consolidated basis in accordance with Agreement Accounting Principles. "Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person for Indebtedness, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract, operating lease, securitization transaction or the obligations of any such Person as general partner of a partnership 3 with respect to the liabilities of the partnership, provided, however, that any assumption, guaranty, endorsement or undertaking with respect to any liability of any of its Subsidiaries to any other of its Subsidiaries shall not be a Contingent Obligation of the Company. "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "Conversion/Continuation Notice" is defined in Section 2.9. "Conversion Date" means the date selected by the Company to convert the Loans into a Term Loan pursuant to Section 2.5 "Default" means an event described in Article VII. "Defaulting Lender" means any Lender that (a) on any Borrowing Date fails to make available to the Administrative Agent such Lender's Loans required to be made to a Borrower on such Borrowing Date or (b) shall not have made available to the Administrative Agent its proportionate share of the Unpaid Amount as required pursuant to Section 2.19(b). Once a Lender becomes a Defaulting Lender, such Lender shall continue as a Defaulting Lender until such time as such Defaulting Lender makes available to the Administrative Agent the amount of such Defaulting Lender's Loans together with all other amounts required to be paid to the Administrative Agent or any other Lender pursuant to this Agreement. "Documentation Agents" means Credit Suisse First Boston, Deutsche Bank Securities, Inc. and Barclays Bank PLC. "Dollars" and "$" shall mean the lawful currency of the United States of America. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder. "Eurodollar Advance" means an Advance which, except as otherwise provided in Section 2.12, bears interest at the applicable Eurodollar Rate. "Eurodollar Payment Office" of the Administrative Agent shall mean the office, branch, affiliate or correspondent bank of the Administrative Agent specified as the "Eurodollar Payment Office" in Schedule 3 hereto or such other office, branch, affiliate or correspondent bank of the Administrative Agent as it may from time to time specify to the Borrowers and each Lender as its Eurodollar Payment Office. "Eurodollar Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Reference Rate applicable to such Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, 4 plus (ii) the Applicable Margin. The Eurodollar Rate shall be expressed as a percentage rounded to four decimal places. "Eurodollar Reference Rate" means, with respect to a Eurodollar Advance for the relevant Interest Period the rate determined by the Administrative Agent to be the rate at which Bank One offers to place deposits in Dollars with first-class banks in the London interbank market at 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period in the approximate amount of the relevant Eurodollar Loan of Bank One and having a maturity equal to such Interest Period. "Excluded Taxes" means, in the case of each Lender or applicable Lending Installation and the Administrative Agent, taxes imposed on its overall net income, and franchise taxes (and any interest, fees or penalties for late payment thereof) imposed on it by (i) the jurisdiction under the laws of which such Lender or the Administrative Agent is incorporated or organized or (ii) the jurisdiction in which the Administrative Agent's or such Lender's principal executive office or such Lender's applicable Lending Installation is located. "Exhibit" refers to an exhibit to this Agreement, unless another document is specifically referenced. "Facility Termination Date" means March 26, 2004, or if the Company has elected to exercise the conversion option contained in Section 2.5, the Term Loan Maturity Date, or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof. "Federal Funds Effective Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for such day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion. "Financial Contract" of a Person means (a) any exchange-traded or over the counter futures, forward, swap or option contract or other financial instrument with similar characteristics or (b) any Rate Hedging Agreement. "Five Year Credit Agreement" means the Five Year Credit Agreement dated March 27, 2003, among the Company, the Subsidiary Borrowers party thereto, the Lenders and the Administrative Agent, as Administrative Agent, as such agreement may be amended, restated or extended from time to time. "Floating Rate" means, for any day, a rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum. "Floating Rate Advance" means an Advance which, except as otherwise provided in Section 2.12, bears interest at the Floating Rate. "Floating Rate Loan" means a Loan which, except as otherwise provided in Section 2.12, bears interest at the Floating Rate. 5 "Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business. "Guarantor" means the Company and its successors and assigns. "Guaranty" means that certain Guaranty dated the date hereof executed by the Guarantor in favor of the Administrative Agent, for the ratable benefit of the Lenders, as it may be amended or modified and in effect from time to time. "Indebtedness" of a Person means, as of any date, such Person's (i) obligations for borrowed money or evidenced by bonds, notes, acceptances, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or bankers' acceptances, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (iv) obligations of such Person to purchase securities or other Property arising out of or in connection with the sale of the same or substantially similar securities or Property, (v) Capitalized Lease Obligations, (vi) any other obligation for borrowed money or other financial accommodation which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person, (vii) any Rate Hedging Obligations of such Person, and (viii) all Contingent Obligations of such Person with respect to or relating to the indebtedness, obligations and liabilities of others similar in character to those described in clauses (i) through (viii) of this definition. "Interest Period" means, with respect to a Eurodollar Advance, a period of one, two, three or six months (or such longer or shorter period requested by the Borrower and acceptable to all of the Lenders), commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such date one, two, three or six months thereafter (or such longer or shorter period requested by the Borrower and acceptable to all of the Lenders), provided, however, that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day. "Investment" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person. "Lead Arranger" means Banc One Capital Markets, Inc., a Delaware corporation, and its successors. "Lenders" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. 6 "Lending Installation" means, with respect to a Lender or the Administrative Agent, the office, branch, subsidiary or Affiliate of such Lender or the Administrative Agent selected by such Lender and the Administrative Agent pursuant to Section 2.18. "Letter of Credit" of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable. "Lien" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "Loan" means, with respect to a Lender, such Lender's loan made pursuant to Article II (or any conversion or continuation thereof). "Loan Documents" means this Agreement, the Notes, the Guaranty and any other instrument or document executed in connection with any of the foregoing at any time. "Material Adverse Effect" means a material adverse effect on (i) the business, Property, condition (financial or otherwise), results of operations, or prospects of the Company and its Subsidiaries taken as a whole, (ii) the ability of the Company to perform its obligations under the Loan Documents to which it is a party, or (iii) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent or the Lenders thereunder. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Company is a party to which more than one employer is obligated to make contributions. "Net Worth" means at any time the consolidated stockholder's equity of the Company and its Subsidiaries calculated on a consolidated basis as of such time in accordance with Agreement Accounting Principles. "Non-U.S. Borrower" is defined in Section 3.1(b). "Non-U.S. Lender" is defined in Section 3.5(iv). "Note" means any promissory note issued at the request of a Lender pursuant to Section 2.14 in the form of Exhibit E. "Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrowers to the Lenders or to any Lender, the Administrative Agent or any indemnified party arising under the Loan Documents. "Other Taxes" is defined in Section 3.5(ii). "Overdue Rate" means a per annum rate that is equal to the sum of two percent (2%) plus the Floating Rate, changing as and when the Floating Rate changes. 7 "Participants" is defined in Section 12.2.1. "Payment Date" means the last day of each calendar quarter, commencing June 30, 2003. "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. "Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof. "Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and as to which the Company or any member of the Controlled Group may have any liability. "Pricing Schedule" means the Schedule attached hereto identified as such. "Prime Rate" means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes. "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned or leased by such Person. "Purchasers" is defined in Section 12.3.1. "Rate Hedging Agreement" means an agreement, device or arrangement providing for payments which are related to fluctuations of interest rates, exchange rates or forward rates, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants. "Rate Hedging Obligations" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Rate Hedging Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Hedging Agreement. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System. "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided, however, that a failure to meet the minimum 8 funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code. "Required Lenders" means Lenders in the aggregate having at least 51% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least 51% of the aggregate unpaid principal amount of the outstanding Advances. "Reserve Requirement" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurodollar liabilities. "S&P" means Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. "Schedule" refers to a specific schedule to this Agreement, unless another document is specifically referenced. "Section" means a numbered section of this Agreement, unless another document is specifically referenced. "Significant Subsidiary" means any Subsidiary of the Company that would be a "significant subsidiary" within the meaning of Rule 1-02 of the Securities and Exchange Commission's Regulation S-X if 5% were substituted for 10% wherever it occurs in such Rule. "Single Employer Plan" means a Plan maintained by the Company or any member of the Controlled Group for employees of the Company or any member of the Controlled Group. "Subsidiary" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Company. "Subsidiary Borrower" means each Subsidiary of the Company listed as a Subsidiary Borrower on Schedule 1 as amended from time to time in accordance with Section 5.8. "Substantial Portion" means, with respect to the Property of the Company and its Subsidiaries, Property which (i) represents more than 20% of the consolidated assets of the Company and its Subsidiaries as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than 20% of the consolidated net sales or of the consolidated net income of the Company and its Subsidiaries as reflected in the financial statements referred to in clause (i) above. "Syndication Agents" means Bank of America, N.A and Wachovia Bank, National Association. "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes. 9 "Term Loan Maturity Date" means the date one year after the Conversion Date. "Transferee" is defined in Section 12.4. "Type" means, with respect to any Advance, its nature as a Floating Rate Advance or as Eurodollar Advance. "Unfunded Liabilities" means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations. "Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. "Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. ARTICLE II. THE CREDITS 2.1 Commitments of the Lenders; Revolving Credit Advances. From and including the date of this Agreement and prior to the Facility Termination Date, each Lender severally agrees, for itself only, subject to the terms and conditions set forth in this Agreement, to make Loans to the Borrowers from time to time in amounts not to exceed in the aggregate at any one time outstanding the amount of its Commitment. Subject to the terms of this Agreement, the Borrowers may borrow, repay and reborrow at any time prior to the earlier of the Conversion Date or the Facility Termination Date. The Commitments to lend hereunder shall expire on the earlier to occur of the Conversion Date or the Facility Termination Date. 2.2 Termination. Any outstanding Advances together with any other unpaid Obligations then due and payable shall be paid in full by the Borrowers on the Facility Termination Date. 2.3 Ratable Loans. Each Advance hereunder shall consist of Loans made from the several Lenders ratably in proportion to the ratio that their respective Commitments bear to the Aggregate Commitment. 2.4 Types of Advances. 10 The Advances may be Floating Rate Advances or Eurodollar Advances, or a combination thereof, selected by the relevant Borrowers in accordance with Sections 2.8 and 2.9. 2.5 Facility Fee; Reductions in Aggregate Commitment; Utilization Fee. The Company agrees to pay to the Administrative Agent for the account of each Lender a facility fee, determined in accordance with the Pricing Schedule, calculated on the Aggregate Commitment, (and, after the Conversion Date, calculated on the aggregate amount of Outstanding Loans) whether used or unused, payable quarterly in arrears for the ratable benefit of the Lenders from the date of this Agreement until Loans are paid in full. The Aggregate Commitment may permanently and ratably be reduced by the Company in multiples of $10,000,000 upon three Business Days' prior written notice. In addition, a utilization fee at the per annum rate set forth on the Pricing Schedule will accrue on the aggregate principal amount of outstanding Advances for the ratable benefit of the Lenders, payable in arrears on each Payment Date until the Facility Termination Date (i) for each day on which the aggregate principal amount of outstanding Advances exceeds 50% of the Aggregate Commitment and (ii) on the aggregate amount of outstanding Advances after the Conversion Date (regardless of the amount of outstanding Advances). At any time when Loans are outstanding, at the Company's option upon written notice (a "Notice to Convert") to the Agent (who shall promptly notify each of the Lenders), the Company, on behalf of the Borrowers, may convert the then outstanding aggregate principal amount of Loans hereunder to a term loan. The Notice to Convert shall (i) expressly state the date on which such conversion shall occur (such date being the "Conversion Date"), which date shall be a Business Day occurring on or before March 26, 2004, (ii) be irrevocable once given and (iii) constitute a representation and warranty by the Company that the conditions contained in Section 4.2 have been satisfied as of the date of such Notice to Convert and as of the Conversion Date. Upon delivery of such Notice to Convert, (i) the Borrowers' option to borrow and reborrow Loans hereunder shall terminate, (ii) the Aggregate Commitment shall be reduced to zero, and (iii) the outstanding principal balance of all Loans hereunder shall be due and payable on the earlier of (a) the Term Loan Maturity Date and (b) the date on which all Loans shall become due and payable under Article VIII. 2.6 Minimum Amount of Each Advance. Each Eurodollar Advance shall be in the minimum amount of $5,000,000 (and in multiples of $1,000,000 in excess thereof, and each Floating Rate Advance shall be in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess thereof), provided, however, that any Floating Rate Advance may be in the amount of the unused Aggregate Commitment. 2.7 Prepayments. The Borrowers may from time to time pay, without penalty or premium, all outstanding Floating Rate Advances, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion of the outstanding Floating Rate Advances upon one Business Days' prior notice to the Administrative Agent. The Borrowers may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Eurodollar Advances, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion of the outstanding Eurodollar Advances upon three Business Days' prior notice to the Administrative Agent. 2.8 Method of Selecting Types and Interest Periods for New Advances. 11 The Company or the relevant Borrower shall select the Type of Advance and, in the case of each Eurodollar Advance, the Interest Period applicable thereto from time to time. The Company or the relevant Borrower shall give the Administrative Agent irrevocable notice (a "Borrowing Notice") not later than 10:00 a.m. (Chicago time) on the Borrowing Date of each Floating Rate Advance and not later than 11:00 a.m. (Chicago time) three Business Days before the Borrowing Date for each Eurodollar Advance, specifying: (i) the Borrower, (ii) the Borrowing Date, which shall be a Business Day, of such Advance, (iii) the aggregate amount of such Advance, (iv) the Type of Advance selected, and (v) in the case of each Eurodollar Advance, the Interest Period applicable thereto. Not later than noon (Chicago time) on each Borrowing Date, each Lender shall make available its Loan or Loans in funds immediately available to the Administrative Agent at its address specified pursuant to Article XIII. The Administrative Agent will make the funds so received from the Lenders available to the Borrower at the Administrative Agent's aforesaid address. 2.9 Conversion and Continuation of Outstanding Advances. Floating Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurodollar Advances pursuant to this Section 2.9 or are repaid in accordance with Section 2.7. Each Eurodollar Advance shall continue as a Eurodollar Advance until the end of the then applicable Interest Period therefor, at which time each such Eurodollar Advance shall be automatically converted into a Floating Rate Advance unless (x) such Eurodollar Advance is or was repaid in accordance with Section 2.7 or (y) the Borrower shall have given the Administrative Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurodollar Advance either continue as a Eurodollar Advance for the same or another Interest Period or be converted into a Floating Rate Advance. Subject to the terms of Section 2.6, the Borrower may elect from time to time to convert all or any part of an Advance of any Type into any other Type or Types of Advances, provided that any conversion of any Eurodollar Advance shall be made on, and only on, the last day of the Interest Period applicable thereto. The Borrower shall give the Administrative Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion of an Advance or continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least one Business Day, in the case of a conversion into a Floating Rate Advance, three Business Days, in the case of a conversion into or continuation of a Eurodollar Advance, prior to the date of the requested conversion or continuation, specifying: i. the requested date, which shall be a Business Day, of such conversion or continuation, and ii. the amount and Type(s) of Advance(s) into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of a Eurodollar Advance, the duration of the Interest Period applicable thereto. 2.10 Method of Borrowing. 12 On each Borrowing Date, each Lender shall make available its Loan or Loans, not later than noon, Chicago time, in Federal or other funds immediately available to the Administrative Agent, in Chicago, Illinois at its address specified in or pursuant to Article XIII. Unless the Administrative Agent determines that any applicable condition specified in Article IV has not been satisfied, the Administrative Agent will make the funds so received from the Lenders available to the relevant Borrower at the Administrative Agent's aforesaid address. Notwithstanding the foregoing provisions of this Section 2.10, to the extent that a Loan made by a Lender matures on the Borrowing Date of a requested Loan, such Lender shall apply the proceeds of the Loan it is then making to the repayment of principal of the maturing Loan. 2.11 Changes in Interest Rate, etc. Each Floating Rate Advance shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is converted from a Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.9 to but excluding the date it becomes due or is converted into a Eurodollar Advance pursuant to Section 2.9 hereof, at a rate per annum equal to the Floating Rate for such day. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Floating Rate. Each Eurodollar Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined by the Administrative Agent as applicable to such Eurodollar Advance based upon the Borrower's selections under Sections 2.8 and 2.9 and otherwise in accordance with the terms hereof. No Interest Period may end after the Facility Termination Date. 2.12 Rates Applicable After Default. Notwithstanding anything to the contrary contained in Section 2.8 or 2.9, during the continuance of a Default or Unmatured Default the Required Lenders may, at their option, by notice to the Borrowers (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that no Advance may be made as, converted into or continued as a Eurodollar Advance. During the continuance of a Default the Required Lenders may, at their option, by notice to the Borrowers (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that (i) each Eurodollar Advance shall bear interest for the remainder of the applicable Interest Period at the rate otherwise applicable to such Interest Period plus 2% per annum and (ii) each Floating Rate Advance shall bear interest at a rate per annum equal to the Floating Rate in effect from time to time plus 2% per annum, provided that, during the continuance of a Default under Section 7.6 or 7.7, the interest rates set forth in clauses (i) and (ii) above shall be applicable to all Advances without any election or action on the part of the Administrative Agent or any Lender. 2.13 Method of Payment. All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds by wire transfer to the Administrative Agent at (except as set forth in the next sentence) the Administrative Agent's address specified pursuant to Article XIII, or at any other Lending Installation of the Administrative Agent specified in writing by the Administrative Agent to the Borrower, by noon (local time) on the date when due and shall be applied ratably by the Administrative Agent among the Lenders. Each payment delivered to the Administrative Agent for the account of any Lender shall be delivered promptly by the Administrative Agent to such Lender in the same type of funds that the Administrative Agent received at its address specified pursuant to Article XIII 13 or at any Lending Installation specified in a notice received by the Administrative Agent from such Lender. 2.14 Noteless Agreement; Evidence of Indebtedness. (i) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (ii) The Administrative Agent shall maintain accounts in which it will record (a) the amount of each Loan made hereunder, the Type thereof and, if applicable, the Interest Period with respect thereto, (b) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (c) the amount of any sum received by the Administrative Agent hereunder from the Borrowers and each Lender's share thereof. (iii) The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Obligations in accordance with their terms. (iv) Any Lender may request that its Loans be evidenced by a promissory note (a "Note"). In such event, the relevant Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender in a form supplied by the Administrative Agent and reasonably acceptable to the Company. Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be represented by a Note payable to the order of the payee named therein or any assignee pursuant to Section 12.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (i) and (ii) above. 2.15 Telephonic Notices. The Borrowers hereby authorize the Lenders and the Administrative Agent to extend, convert or continue Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices given to the Administrative Agent by any person or persons listed on Schedule 8, as such Schedule may be revised by the Company from time to time in accordance with Section 13.1, it being understood that the foregoing authorization is specifically intended to allow Borrowing Notices and Conversion/Continuation Notices to be given telephonically. The Borrowers agree to deliver promptly to the Administrative Agent a written confirmation, if such confirmation is requested by the Administrative Agent or any Lender, of each telephonic notice signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Administrative Agent and the Lenders, the records of the Administrative Agent regarding the telephonic notice shall govern absent manifest error. 2.16 Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which the Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest on Floating Rate Loans shall be calculated for actual days elapsed on the basis of a 365 or 366-day year, as appropriate. 14 Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurodollar Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurodollar Advance shall be payable in arrears on the last day of its applicable Interest Period, on any date on which the Eurodollar Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurodollar Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest shall be calculated for actual days elapsed on the basis of a 360-day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (local time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. 2.17 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions. Promptly after receipt thereof, the Administrative Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. The Administrative Agent will notify each Lender, the Company and the relevant Borrower of the interest rate applicable to each Eurodollar Advance promptly upon determination of such interest rate and will give each Lender and the Company prompt notice of each change in the Floating Rate. 2.18 Lending Installations. Each Lender will book its Loans at the appropriate Lending Installation listed on Schedule 4 or such other Lending Installation designated by such Lender in accordance with the final sentence of this Section 2.18. All terms of this Agreement shall apply to any such Lending Installation and the Loans and any Notes issued hereunder shall be deemed held by each Lender for the benefit of any such Lending Installation. Each Lender may, by not less than one days' prior written notice to the Administrative Agent and the Borrowers in accordance with Article XIII, designate replacement or additional Lending Installations through which Loans will be made by it and for whose account Loan payments are to be made. 2.19 Non-Receipt of Funds by the Administrative Agent. (a) Unless the relevant Borrower or a Lender, as the case may be, notifies the Administrative Agent prior to the date on which it is scheduled to make payment to the Administrative Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) in the case of such Borrower, a payment of principal, interest or fees to the Administrative Agent for the account of the Lenders, that it does not intend to make such payment, the Administrative Agent may assume that such payment has been made. The Administrative Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or the Borrower, as the case may be, has not in fact made such payment to the Administrative Agent, the recipient of such payment shall, on demand by the Administrative Agent, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to (x) in the case of payment by a Lender, the Federal Funds Effective Rate for such day, or (y) in the case of payment by the Borrower, the interest rate applicable to the relevant Loan. 15 (b) The failure of any Lender to make the Loan to be made by it as part of any Advance shall not relieve any other Lender of its obligation hereunder to make its Loan on the date of such Advance, but no Lender, except as otherwise provided in the next sentence of this Section 2.19(b), shall be responsible for the failure of a Defaulting Lender to make the Loan to be made by such Defaulting Lender on the date of any Advance. Notwithstanding the foregoing sentence, but otherwise subject to the terms and conditions of this Agreement, the Administrative Agent shall notify each Lender of the failure by a Defaulting Lender to make a Loan required to be made by it hereunder (the amount not available being the "Unpaid Amount"), and each Lender shall immediately transfer to the Administrative Agent on such date the lesser of such Lender's proportionate share (based on its Commitment divided by the Commitments of all Lenders that have not so failed to fund their Loans) of the Unpaid Amount and its unused Commitment. Any such transfer shall be deemed to be a Floating Rate Loan by such Lender. Each Defaulting Lender shall pay on demand to each other Lender that makes a payment under this Section 2.19(b) the amount paid by such other Lender to cover such failure, together with interest thereon, for each day from the date such payment was made until the date such other Lender has been paid such amount in full, at a rate per annum equal to the Federal Funds Effective Rate plus two percent (2%). 2.20 Replacement of Lender. If any Borrower is required pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if any Lender's obligation to make or continue, or to convert Floating Rate Advances into, Eurodollar Advances shall be suspended pursuant to Section 3.3, or if any Lender shall become a Defaulting Lender (any Lender so affected an "Affected Lender"), the Company may elect, if such amounts continue to be charged or such suspension is still effective, to replace such Affected Lender as a Lender party to this Agreement, provided that no Default or Unmatured Default shall have occurred and be continuing at the time of such replacement, and provided further that, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to the Company and the Administrative Agent shall agree, as of such date, to purchase for cash the Advances and other Obligations due to the Affected Lender pursuant to an assignment substantially in the form of Exhibit C and to become a Lender for all purposes under this Agreement and to assume all obligations of the Affected Lender to be terminated as of such date and to comply with the requirements of Section 12.3 applicable to assignments, and (ii) the Borrowers shall pay to such Affected Lender in same day funds on the day of such replacement all interest, fees and other amounts then accrued but unpaid to such Affected Lender by the Borrowers hereunder to and including the date of termination, including without limitation payments due to such Affected Lender under Sections 3.1, 3.2 and 3.5. Nothing herein shall release any Defaulting Lender from any obligation it may have to any Borrower, the Administrative Agent or any other Lender. ARTICLE III YIELD PROTECTION; TAXES 3.1 Yield Protection. (a) If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or applicable Lending Installation with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency: 16 (i) subjects any Lender or any applicable Lending Installation to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender in respect of its Eurodollar Loans, or (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation (other than reserves and assessments taken into account in determining the interest rate applicable to Eurodollar Advances), or (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation of maintaining its Commitment or making, funding or maintaining its Eurodollar Loans or reduces any amount receivable by any Lender or any applicable Lending Installation in connection with its Eurodollar Loans, or requires any Lender or any applicable Lending Installation to make any payment calculated by reference to its Commitment or the amount of Eurodollar Loans held or interest received by it, by an amount deemed material by such Lender, and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation of making or maintaining its Eurodollar Loans or Commitment or to reduce the return received by such Lender or applicable Lending Installation in connection with such Eurodollar Loans or Commitment, then, within 30 days of demand by such Lender, the relevant Borrower shall pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received. (b) Non-U.S. Reserve Costs or Fees With Respect to Loans to Non-U.S. Borrowers. If any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive of any jurisdiction outside of the United States of America or any subdivision thereof (whether or not having the force of law) imposes or deems applicable any reserve requirement against or fee with respect to assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation, and the result of the foregoing is to increase the cost to such Lender or applicable Lending Installation of making or maintaining its Eurodollar Loans to any Borrower that is not incorporated under the laws of the United States of America or a state thereof (each a "Non-U.S. Borrower") or its Commitment to any Non-U.S. Borrower or to reduce the return received by such Lender or applicable Lending Installation in connection with such Eurodollar Loans to any Non-U.S. Borrower or Commitment to any Non-U.S. Borrower, then, within 30 days of demand by such Lender, such Non-U.S. Borrower shall pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction in amount received, provided that such Non-U.S. Borrower shall not be required to compensate any Lender for such non-U.S. reserve costs or fees to the extent that an amount equal to such reserve costs or fees is received by such Lender as a result of the calculation of the interest rate applicable to Eurodollar Advances pursuant to clause (i)(b) of the definition of "Eurodollar Rate." 3.2 Changes in Capital Adequacy Regulations. If a Lender determines the amount of capital required or expected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling such Lender is increased as a result of a Change (as defined below), then, within 15 days of demand by such Lender, the Company shall pay such Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender determines is attributable to this Agreement, its Loans or its Commitment to make Loans hereunder (after taking into account such Lender's policies as to capital adequacy). "Change" means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the 17 force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any Lending Installation or any corporation controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 3.3 Availability of Types of Advances. If any Lender determines that maintenance of its Eurodollar Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (i) deposits of a type, currency and maturity appropriate to match fund Eurodollar Advances are not available or (ii) the interest rate applicable to Eurodollar Advances does not accurately reflect the cost of making or maintaining Eurodollar Advances, then the Administrative Agent shall suspend the availability of Eurodollar Advances and require any affected Eurodollar Advances to be repaid or converted to Floating Rate Advances at the end of the then current Interest Period for the affected Eurodollar Advance. 3.4 Funding Indemnification. If any payment of a Eurodollar Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not made on the date specified by a Borrower for any reason other than default by the Lenders, the Borrowers will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurodollar Advance. 3.5 Taxes. (i) All payments by the Borrowers to or for the account of any Lender or the Administrative Agent hereunder or under any Note shall be made free and clear of and without deduction for any and all Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Agent, (a) 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 3.5) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions, (c) the Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) the Borrower shall furnish to the Administrative Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made. (ii) In addition, the Borrowers hereby agree to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note ("Other Taxes"). (iii) The Borrowers hereby agree to indemnify the Administrative Agent and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by the Administrative Agent or such 18 Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Administrative Agent or such Lender makes demand therefor pursuant to Section 3.6. (iv) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a "Non-U.S. Lender") agrees that it will, not less than ten Business Days after the date of this Agreement, (i) deliver to each of the Company and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case that such Lender is entitled to receive payments under this Agreement from the Company and any other Borrower that is not a Non-U.S. Borrower without deduction or withholding of any United States federal income taxes, or (ii) deliver to each of the Company and the Administrative Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Company and the Administrative Agent (x) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by the Company or the Administrative Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises the Company and the Administrative Agent that it is not capable of receiving payments from the Company and any other Borrower that is not a Non-U.S. Borrower without any deduction or withholding of United States federal income tax. (v) For any period during which a Non-U.S. Lender has failed to provide the Company with an appropriate form pursuant to clause (iv), above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (iv), above, the Company shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes. (vi) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty 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 as will permit such payments to be made without withholding or at a reduced rate. (vii) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because such Lender failed to notify the Administrative Agent of a change in circumstances which rendered its exemption from withholding ineffective), such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by 19 any jurisdiction on amounts payable to the Administrative Agent under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Administrative Agent, which attorneys may be employees of the Administrative Agent). The obligations of the Lenders under this Section 3.5(vii) shall survive the payment of the Obligations and termination of this Agreement. 3.6 Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurodollar Loans to reduce any liability of the Borrowers to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar Advances under Section 3.3, so long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Borrowers (with a copy to the Administrative Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrowers in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar Loan through the purchase of a deposit of the type, currency and maturity corresponding to the deposit used as a reference in determining the Eurodollar Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrowers of such written statement. The obligations of the Borrowers under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement. ARTICLE IV. CONDITIONS PRECEDENT 4.1 Initial Advance. The Lenders shall not be required to make the initial Advance hereunder unless the Borrowers have satisfied the following conditions: (a) Each Borrower has furnished to the Administrative Agent with sufficient copies for the Lenders: (i) Copies of the articles or certificate of incorporation of such Borrower, together with all amendments, and a certificate of good standing, each certified by the appropriate governmental officer in its jurisdiction of incorporation. (ii) Copies, certified by the Secretary or Assistant Secretary of such Borrower, of its by-laws or code of regulations and of its Board of Directors' resolutions and of resolutions or actions of any other body authorizing the execution of the Loan Documents to which such Borrower is a party. (iii) An incumbency certificate, executed by the Secretary or Assistant Secretary of such Borrower, which shall identify by name and title and bear the signatures of the Authorized Officers and any other officers of such Borrower authorized to sign the Loan Documents to which such Borrower is a party, upon which certificate the Administrative Agent and the Lenders shall be entitled to rely until informed of any change in writing by such Borrower. 20 (iv) A certificate, signed by the Chief Financial Officer or Treasurer of such Borrower, stating that on the initial Borrowing Date no Default or Unmatured Default has occurred and is continuing. (v) A written opinion of such Borrower's counsel, addressed to the Lenders in substantially the form of Exhibit A. (vi) Any Notes requested by a Lender pursuant to Section 2.14 payable to the order of each such requesting Lender. (vii) Written money transfer instructions, in substantially the form of Exhibit D, addressed to the Administrative Agent and signed by an Authorized Officer, together with such other related money transfer authorizations as the Administrative Agent may have reasonably requested. (viii) A pro forma covenant compliance certificate in form and substance reasonably satisfactory to the Administrative Agent from the Chief Financial Officer or Treasurer of the Company. (ix) The Guaranty, duly executed by the Company. (x) Such other documents as any Lender or its counsel may have reasonably requested. (b) The presentation of evidence satisfactory to the Administrative Agent that the Five-Year Credit Agreement dated as of March 31, 1999 among the Borrowers, and the lenders party thereto and the agent named therein shall terminate and all indebtedness, liabilities, and obligations outstanding thereunder shall be paid in full or will be paid from the proceeds of the initial Advance. (c) The presentation of evidence satisfactory to the Administrative Agent that the 364-Day Credit Agreement dated March 28, 2002, among the Borrowers and the lenders party thereto and the agent named therein shall have been terminated and all indebtedness, liabilities, and obligations outstanding thereunder shall have been paid in full or will be paid from the proceeds of the initial Advance. (d) Payment of the fees described in the letter agreement referred to in Section 10.13. 4.2 Each Advance. The Lenders shall not be required to make, continue or convert any Advance unless on the applicable Borrowing Date or date of conversion or continuation: (i) There exists no Default or Unmatured Default. (ii) The representations and warranties contained in Article V (other than Section 5.5, 5.7 and 5.15) are true and correct in all material respects as of such Borrowing Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date. (iii) All legal matters incident to the making of such Advance shall be satisfactory to the Lenders and their counsel. 21 (iv) Each Borrowing Notice with respect to each such Advance and each Notice to Convert shall constitute a representation and warranty by the Borrower that the conditions contained in Sections 4.2(i) and (ii) have been satisfied. ARTICLE V. REPRESENTATIONS AND WARRANTIES The Company and each of the Borrowers represents and warrants to the Lenders that: 5.1 Existence and Standing. Each of the Company and its Significant Subsidiaries is a corporation, partnership (in the case of Subsidiaries only) or limited liability company duly and properly incorporated or organized, as the case may be, validly existing and (to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 5.2 Authorization and Validity. Each Borrower has the power and authority and legal right to execute and deliver the Loan Documents to which it is a party and to perform its obligations thereunder. The execution and delivery by each Borrower of the Loan Documents to which it is a party and the performance of its obligations thereunder have been duly authorized by proper corporate or other proceedings, and the Loan Documents to which such Borrower is a party constitute legal, valid and binding obligations of such Borrower enforceable against such Borrower in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 5.3 No Conflict; Government Consent. Neither the execution and delivery by the Borrowers of the Loan Documents to which they are a party, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on any Borrower or (ii) any Borrower's articles or certificate of incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, by-laws, code or regulations, or operating or other management agreement, as the case may be, or (iii) the provisions of any indenture, instrument or agreement to which any Borrower is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in, or require, the creation or imposition of any Lien in, of or on the Property of any Borrower pursuant to the terms of any such indenture, instrument or agreement. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, which has not been obtained by a Borrower, is required to be obtained by any Borrower in connection with the execution and delivery of the Loan Documents, the borrowings under this Agreement, the payment and performance by such Borrower of the Obligations or the legality, validity, binding effect or enforceability of any of the Loan Documents. 5.4 Financial Statements. The following consolidated financial statements heretofore delivered to the Lenders were prepared in accordance with Agreement Accounting Principles in effect on the date such statements were 22 prepared and fairly present the consolidated financial condition and operations of the Company and its Subsidiaries at such date and the consolidated results of their operations for the period then ended, subject, in the case of such interim statements, to routine year-end audit adjustments: (i) June 30, 2002 audited consolidated financial statements of the Company and its Subsidiaries; and (ii) December 31, 2002 unaudited interim consolidated financial statements of the Company and its Subsidiaries. 5.5 Material Adverse Change. Since June 30, 2002 there has been no change in the business, Property, prospects, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries which could reasonably be expected to have a Material Adverse Effect. 5.6 Taxes. The Company and its Subsidiaries have filed all United States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Company or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien exists. No tax liens have been filed and no claims are being asserted with respect to any such taxes which could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of any taxes or other governmental charges are adequate. 5.7 Litigation and Contingent Obligations. Except as set forth on Schedule 7, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Company or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of any Loans. As of the date of this Agreement, other than any liability incident to any litigation, arbitration or proceeding which (i) could not reasonably be expected to have a Material Adverse Effect or (ii) is set forth on Schedule 7, the Company has no material Contingent Obligations not provided for or disclosed in the financial statements referred to in Section 5.4. 5.8 Subsidiaries. Schedule 1 contains an accurate list of all Subsidiaries of the Company (other than immaterial or inactive Subsidiaries) and each Subsidiary Borrower as of the date of this Agreement, setting forth their respective jurisdictions of organization and the percentage of their respective capital stock or other ownership interests owned by the Company or other Subsidiaries. All of the issued and outstanding shares of capital stock or other ownership interests of such Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable, except to the extent that the lack of such status could not reasonably be expected to have a Material Adverse Effect. The Company may amend Schedule 1 from time to time by delivering to the Administrative Agent an updated list of Subsidiaries, and the Company may designate any Subsidiary thereon which is directly or indirectly 80% (or, in the case of R.P. Scherer S.A., 75%) or more owned by the Company as a Subsidiary Borrower hereunder so long as (a) the Company guarantees the 23 obligations of such new Subsidiary Borrower pursuant to the terms of the Guaranty, (b) such new Subsidiary Borrower delivers all corporate or organizational documents and authorizing resolutions and legal opinions reasonably requested by the Administrative Agent and (c) such new Subsidiary Borrower agrees to the terms and conditions of this Agreement and the Borrowers and the new Subsidiary Borrower execute all agreements and take such other action reasonably requested by Administrative Agent. Schedule 1 may be amended to remove any Subsidiary as a Subsidiary Borrower upon (i) written notice by the Company to the Administrative Agent to such effect and (ii) repayment in full of all outstanding Loans of such Subsidiary Borrower. 5.9 ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the aggregate exceed 2% of Adjusted Tangible Net Worth. Each Single Employer Plan complies in all material respects with all applicable requirements of law and regulations where the failure to so comply could reasonably be expected to have a Material Adverse Effect. No Reportable Event has occurred with respect to any Plan where such occurrence could reasonably be expected to have a Material Adverse Effect. Neither the Company or any of its Significant Subsidiaries has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Single Employer Plan where in either instance a liability in excess of 2% of Adjusted Tangible Net Worth could reasonably be expected to result. 5.10 Accuracy of Information. No information, exhibit or report furnished by the Company or any of its Subsidiaries to the Administrative Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not misleading; provided, however, that to the extent any such information, exhibits or reports include or incorporate by reference any forward-looking statement (each, a "Forward-Looking Statement") which reflects the Company's current view (as of the date such Forward-Looking Statement is made) with respect to future events, prospects, projections or financial performance, such Forward-Looking Statement is subject to uncertainties and other factors which could cause actual results to differ materially from such Forward-Looking Statement. 5.11 Regulation U. Margin stock (as defined in Regulation U) constitutes less than 25% of the value of those assets of the Company and its Subsidiaries which are subject to any limitation on sale, pledge, or other restriction hereunder. 5.12 Maintenance of Property. The Company and its Subsidiaries, maintain all Property and keep such Property in good repair, working order and condition in accordance with customary and prudent business practices for similar businesses, except where the failure to do so could not reasonably be expected to cause a Material Adverse Effect. 5.13 Insurance. The Company, and each Significant Subsidiary, maintains as part of a self-insurance program or with financially sound and reputable insurance companies insurance on all their Property in such amounts 24 (with such customary deductibles, exclusions and self-insurance) and covering such risks as is consistent with sound business practice. 5.14 Plan Assets; Prohibited Transactions. The Company is not an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the making of Loans hereunder gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. 5.15 Environmental Matters. In the ordinary course of its business, the officers of the Company consider the effect of Environmental Laws on the business of the Company and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Company due to Environmental Laws. On the basis of this consideration, the Company has concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a Material Adverse Effect. 5.16 Investment Company Act. Neither the Company nor any Subsidiary is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 5.17 Public Utility Holding Company Act. Neither the Company nor any Subsidiary is a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 5.18 Default. There exists no Default or Unmatured Default under Article VII of this Agreement. 5.19 Reportable Transaction. Neither the Company nor any Subsidiary intends to treat the Advances and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Company or any Subsidiary determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. ARTICLE VI. COVENANTS During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 25 6.1 Financial Reporting. The Company will maintain, for itself and each Subsidiary, a system of accounting established and administered in accordance with Agreement Accounting Principles, and furnish to the Lenders: (i) Within 120 days after the close of each of its fiscal years, an unqualified (except for qualifications relating to changes in accounting principles or practices reflecting changes in Agreement Accounting Principles and required or approved by the Company's independent certified public accountants) audit report certified by independent certified public accountants reasonably acceptable to the Lenders, prepared in accordance with Agreement Accounting Principles on a consolidated basis for itself and its Subsidiaries, including balance sheets as of the end of such period, related profit and loss statements, and a statement of cash flows. (ii) Within 60 days after the close of each of the first three quarterly periods of each fiscal year, for itself and its Subsidiaries, consolidated unaudited balance sheets as at the close of each such period and consolidated unaudited profit and loss statements and a consolidated unaudited statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its Chief Financial Officer, Controller, or Treasurer. (iii) Together with the financial statements required under Sections 6.1(i) and (ii), a compliance certificate in substantially the form of Exhibit B signed by its Chief Financial Officer, Controller, or Treasurer and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof. (iv) As soon as possible and in any event within 10 Business Days after the Company knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by the Chief Financial Officer, Controller, or Treasurer of the Company, describing said Reportable Event and the action which the Company proposes to take with respect thereto. (v) As soon as possible and in any event within 10 Business Days after receipt by the Company, a copy of (a) any notice or claim to the effect that the Company or any of its Subsidiaries is or may be liable to any Person as a result of the release by the Company, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (b) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Company or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect. (vi) Such other information (including non-financial information) as the Administrative Agent or any Lender may from time to time reasonably request. 6.2 Use of Proceeds. The Company will, and will cause each Subsidiary to, use the proceeds of the Advances for general corporate purposes, including Acquisitions and commercial paper back-up. The Company will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to purchase or carry any "margin stock" (as defined in Regulation U). 6.3 Notice of Default. 26 The Company will, and will cause each Borrower and Significant Subsidiary to, give prompt notice in writing to the Administrative Agent of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect. 6.4 Conduct of Business; Maintenance of Property. The Company will, and will cause each Significant Subsidiary to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted or fields related thereto (except that the Company and its Significant Subsidiaries shall have no duty to renew or extend contracts which expire by their terms) and do all things necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good standing as a domestic corporation, partnership or limited liability company in its jurisdiction of incorporation or organization, as the case may be, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, unless the failure to do so could not reasonably be expected to have a Material Adverse Effect. The Company will, and will cause each Significant Subsidiary, to maintain, preserve and protect all Property and keep such property in good repair, working order and condition and from time to time make, or cause to be made all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times in accordance with customary and prudent business practices for similar businesses, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.5 Taxes. The Company will, and will cause each Significant Subsidiary to, timely file complete and correct United States federal and applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.6 Insurance. The Company will, and will cause each Significant Subsidiary to, maintain as part of a self-insurance program or with financially sound and reputable insurance companies insurance on all their Property in such amounts (with such customary deductibles, exclusions and self-insurance) and covering such risks as is consistent with sound business practice. 6.7 Compliance with Laws. The Company will, and will cause each Significant Subsidiary to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Environmental Laws, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.8 Inspection. The Company will, and will cause each Significant Subsidiary to, permit the Administrative Agent and the Lenders, by their respective representatives and agents, to inspect any of the Property, 27 books and financial records of the Company and each Significant Subsidiary, to examine and make copies of the books of accounts and other financial records of the Company and each Significant Subsidiary, and to discuss the affairs, finances and accounts of the Company and each Significant Subsidiary with, and to be advised as to the same by, their respective officers upon reasonable prior notice at such reasonable times and intervals as the Administrative Agent or any Lender may designate, provided that neither the Company nor any of its Subsidiaries shall be responsible for the costs and expenses incurred by the Administrative Agent, any Lender, or their representatives in connection with such inspection prior to the occurrence and continuation of a Default. 6.9 Merger. The Company will not, nor will it permit any Significant Subsidiary to, merge or consolidate with or into any other Person, except that, provided that no Default or Unmatured Default shall have occurred and be continuing or would result therefrom on a pro forma basis reasonably acceptable to the Administrative Agent, the Company may merge or consolidate with any other U.S. corporation and each Significant Subsidiary may merge or consolidate with any other Person, provided, further, that (i) in the case of any such merger or consolidation involving the Company, the Company is the surviving corporation and (ii) in the case of any such merger or consolidation involving a Significant Subsidiary which is a Subsidiary Borrower, the surviving corporation assumes all of such Borrower's obligations under this Agreement and remains or becomes a Subsidiary Borrower. 6.10 Sale of Assets. The Company will not, nor will it permit any Significant Subsidiary to, lease, sell or otherwise dispose of its Property, to any other Person (other than the Company or another Subsidiary), except: (i) Sales of inventory in the ordinary course of business. (ii) Sales or other dispositions in the ordinary course of business of fixed assets for the purpose of replacing such fixed assets, provided that such fixed assets are replaced within 360 days of such sale or other disposition with other fixed assets which have a fair market value not materially less than the fixed assets sold or otherwise disposed of. (iii) Sales or other dispositions outside the ordinary course of business of accounts receivable, lease receivables, leases or equipment which had been leased by the Company or such Significant Subsidiary, provided that any such sale or other disposition is for reasonably equivalent value and could not reasonably be expected to have a Material Adverse Effect. (iv) Other leases, sales (including sale-leasebacks) or other dispositions of its Property that, together with all other Property of the Company and its Subsidiaries previously leased, sold or disposed of (other than as provided in clauses (i), (ii) and (iii) above) as permitted by this Section during the twelve-month period ending with the month prior to the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Company and its Subsidiaries, or together with all other Property of the Company and its Subsidiaries previously leased, sold or disposed of (other than as provided in clauses (i) and (ii) above) as permitted by this Section during the period from the date of this Agreement to the end of the month prior to the month in which any such lease, sale or other disposition occurs, do not constitute 35% of the consolidated assets of the Company and its Subsidiaries as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the fiscal year in which any such lease, sale or other disposition occurs. 28 Notwithstanding anything in this Section 6.10 to the contrary, (a) no such leases, sales or other dispositions of property may be made (other than pursuant to clause (i) above) if any Default or Unmatured Default has occurred and is continuing, and (b) all leases, sales and other dispositions of Property at any time shall be for not less than the fair market value of such Property as determined in good faith by the Company. 6.11 Investments. The Company will not, nor will it permit any Significant Subsidiary to, make or suffer to exist any Investments, or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, except: (i) Cash Equivalent Investments. (ii) Investments in Subsidiaries. (iii) other Investments in existence on the date hereof. (iv) Other Investments provided that the aggregate amount of such Investments made in any fiscal year does not exceed 25% of Adjusted Tangible Net Worth as of the beginning of such fiscal year. 6.12 Liens. The Company will not, nor will it permit any Significant Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Company or any of its Significant Subsidiaries, except: (i) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books. (ii) Liens imposed by law, such as landlord's, carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books. (iii) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation (other than Liens in favor of the PGBC). (iv) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Company or its Subsidiaries. (v) Liens existing on the date hereof. (vi) Liens on any assets which exist at the time of acquisition of such assets by the Company or any of its Subsidiaries, or liens to secure the payment of all of any part of the purchase price 29 of such assets upon the acquisition of such assets by the Company or any of its Subsidiaries or to secure any Indebtedness incurred or guaranteed by the Company or any of its Subsidiaries prior to, at the time, of or within 360 days after, such acquisition (or, in the case of real property, the completion of construction (including any improvements on an existing asset) or commencement of full operation of such asset, whichever is later), which Indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property, construction or improvements thereon, provided, however, that in the case of any such acquisition, construction or improvement, the Lien shall not apply to such assets theretofore owned by the Company or any of its Subsidiaries other than, in the case of any such construction or improvement, any real property on which the property so constructed, or the improvement, is located, provided further, however, that the aggregate outstanding principal amount of Indebtedness secured by Liens permitted by this Section 6.12(vi) shall not at any time exceed 10% of Adjusted Tangible Net Worth. (vii) Liens in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any Indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction), of the assets subject to such liens (including without limitation liens incurred in connection with pollution control, industrial revenue or similar financings). (viii) Any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any Lien referred to in the foregoing clauses, provided, however, that the principal amount of Indebtedness secured thereby shall not exceed the principal amount of Indebtedness so secured prior to such extension, renewal or replacement and that such extension, renewal or replacement Lien shall be limited to all or a part of the assets which secured the Lien so extended, renewed or replaced (plus improvements and construction on such real property). (ix) So long as no Default under Section 7.9 would occur in connection therewith, Liens created by or resulting from any litigation or other proceeding which is being contested in good faith by appropriate proceedings, including Liens arising out of judgments or awards against the Company or any of its Subsidiaries with respect to which the Company or such Subsidiary is in good faith prosecuting an appeal or proceeding for review or for which the time to make an appeal has not yet expired; or final unappealable judgment Liens which are satisfied within 15 days of the date of judgment; or Liens incurred by the Company or any of its Subsidiaries for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Company or such Subsidiary is a party. (x) Liens securing Indebtedness described in Section 6.15(iv) and (v). (xi) Liens securing Indebtedness and not otherwise permitted by the foregoing provisions of this Section 6.12, provided that the aggregate outstanding principal amount of the Indebtedness secured by all such Liens shall not at any time exceed 25% of Adjusted Tangible Net Worth. 6.13 Subsidiary Indebtedness. The Company will not permit any Subsidiary to create, incur or suffer to exist any Indebtedness, except: (i) The Loans. (ii) Indebtedness outstanding on the date of this Agreement or incurred pursuant to commitments in existence on the date of this Agreement. 30 (iii) Indebtedness of any Subsidiary to the Company or any other Subsidiary. (iv) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that such Indebtedness existed at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary. (v) Any refunding or refinancing of any Indebtedness referred to in clauses (i) through (iv) above, provided that any such refunding or refinancing of Indebtedness referred to in clause (ii), (iii) or (iv) does not increase the principal amount thereof. (vi) Indebtedness arising from (a) the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, or (b) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business. (vii) Indebtedness arising from guarantees of loans and advances by third parties to employees and officers of a Subsidiary in the ordinary course of business for bona fide business purposes, provided that the aggregate outstanding principal amount of such Indebtedness does not at any time exceed $100,000,000. (viii) Indebtedness of a Subsidiary arising from agreements providing for indemnification, adjustment of purchase price or similar obligations or from guarantees, letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Subsidiaries incurred or assumed in connection with the disposition of any business, property or Subsidiary. (ix) Indebtedness arising from Rate Hedging Obligations. (x) Contingent Obligations. (xi) Indebtedness outstanding under investment grade commercial paper programs. (xii) Other Indebtedness; provided that, at the time of the creation, incurrence or assumption of such other Indebtedness and after giving effect thereto, the aggregate amount of all such other Indebtedness of the Subsidiaries does not exceed an amount equal to 25% of Adjusted Tangible Net Worth at such time. 6.14 Limitation on Restrictions on Significant Subsidiary Distributions. The Company will not, and will not permit any Significant Subsidiary to, enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Significant Subsidiary of the Company to (i) pay dividends or make any other distributions in respect of any capital stock of such Subsidiary held by, or pay any Indebtedness owed to, the Company or any other Subsidiary of the Company, (ii) make loans or advances to the Company or any other Subsidiary of the Company or (iii) transfer any of its assets to the Company or any other Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of (a) any restrictions existing under the Loan Documents, (b) any restrictions with respect to a Significant Subsidiary imposed pursuant to an agreement which has been entered into in connection with the disposition of all or substantially all of the capital stock or assets of such Subsidiary, and (c) any restrictions with respect to assets encumbered by a Lien permitted by Section 6.12 so long as such restriction applies only to the asset encumbered by such permitted Lien. 31 6.15 Contingent Obligations. The Company will not, nor will it permit any Subsidiary to, make or suffer to exist any Contingent Obligation (including, without limitation, any Contingent Obligation with respect to the obligations of a Subsidiary), except (i) by endorsement of instruments for deposit or collection in the ordinary course of business, (ii) the Reimbursement Obligations (as defined in the Five Year Credit Agreement), (iii) the Guaranty, (iv) Contingent Obligations of special-purpose finance Subsidiaries, provided that no Person has recourse against the Company or any Significant Subsidiary for such Contingent Obligations, (v) Contingent Obligations arising from the sale by Pyxis Corporation of lease receivables, leases or equipment, provided that the aggregate amount of such Contingent Obligations do not at any time exceed 10% of Adjusted Tangible Net Worth, (vi) Contingent Obligations arising out of operating or synthetic leases entered into by Subsidiaries of the Company, provided that the aggregate amount of such Contingent Obligations do not at any time exceed 25% of Adjusted Tangible Net Worth, and (vii) Contingent Obligations in addition to, and including additional amounts of, those described in (i)-(vi) above, provided that the aggregate amount of such additional Contingent Obligations (without duplication) do not at any time exceed 25% of Adjusted Tangible Net Worth. 6.16 Minimum Net Worth. The Company shall not permit its Net Worth to be less than $4,100,000,000 at any time. ARTICLE VII. DEFAULTS The occurrence of any one or more of the following events shall constitute a Default: 7.1 Any representation or warranty made or deemed made by or on behalf of the Company or any of its Subsidiaries to the Lenders or the Administrative Agent under or in connection with this Agreement, any Loan, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be materially false on the date as of which made. 7.2 Nonpayment of principal of any Loan within one Business Day after the same becomes due, or nonpayment of interest upon any Loan or of any facility fee or other Obligations under any of the Loan Documents within five days after the same becomes due. 7.3 The breach by the Company of Sections 6.3, 6.9, 6.10, 6.13, 6.15, or 6.16. 7.4 The breach by any Borrower (other than a breach which constitutes a Default under another Section of this Article VII) of any of the terms or provisions of this Agreement which is not remedied within thirty days after written notice from the Administrative Agent or any Lender. 7.5 Failure of the Company or any of its Significant Subsidiaries to pay when due any principal, interest or other amounts, subject to any applicable grace period, or the default by the Company or any of its Significant Subsidiaries in the performance beyond the applicable grace period with respect thereto, if any, of any term, provision or condition contained in the Five Year Credit Agreement or any agreement or agreements under which any Indebtedness in excess of 2% of Adjusted Tangible Net Worth was created or is governed, or any other event shall occur or condition exist beyond any applicable grace period with respect thereto, the effect of which default or event is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of the Company or any of its Subsidiaries shall be declared to be due and payable 32 or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Company or any of its Significant Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as they become due. 7.6 The Company or any of its Significant Subsidiaries shall (i) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) take any corporate or partnership action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding described in Section 7.7. 7.7 Without the application, approval or consent of the Company or any of its Significant Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Company or any of its Significant Subsidiaries or any Substantial Portion of its Property, or a proceeding described in Section 7.6(iv) shall be instituted against the Company or any of its Significant Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days. 7.8 Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Company and its Subsidiaries which, when taken together with all other Property of the Company and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion. 7.9 The Company or any of its Significant Subsidiaries shall fail within 60 days to pay, bond or otherwise discharge one or more (i) judgments or orders for the payment of money (not covered by insurance) in excess of 2% of Adjusted Tangible Net Worth (or the equivalent thereof in currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in either such case, is/are not stayed on appeal or otherwise being appropriately contested in good faith. 7.10 Any member of the Controlled Group shall fail to pay when due an amount or amounts aggregating in excess of 2% of Adjusted Tangible Net Worth which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Single Employer Plan with Unfunded Liabilities in excess of $50,000,000 (a "Material Plan") shall be filed under Section 4041(c) of ERISA by any member of the Controlled Group, any plan administrator or any combination of the foregoing; or PBGC shall institute proceedings under which it is likely to prevail under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which causes one or more members of the Controlled Group to incur a current payment obligation in excess of 2% of Adjusted Tangible Net Worth. 7.11 Any Change in Control shall occur. 33 7.12 The Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of the Guaranty, or the Company shall fail to comply with any of the terms or provisions of the Guaranty, or the Company shall deny that it has any further liability under the Guaranty, or shall give notice to such effect. ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 8.1 Acceleration. If any Default described in Section 7.6 or 7.7 occurs with respect to the Company or any of its Significant Subsidiaries, the obligations of the Lenders to make Loans hereunder shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Administrative Agent or any Lender. If any other Default occurs and is continuing, the Required Lenders (or the Administrative Agent with the consent of the Required Lenders) may terminate or suspend the obligations of the Lenders to make Loans hereunder, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Company hereby expressly waives. If, within 60 days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans hereunder as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with respect to the Company) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Administrative Agent shall, by notice to the Company, rescind and annul such acceleration and/or termination. 8.2 Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Administrative Agent with the consent in writing of the Required Lenders) and the Borrowers may enter into written agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrowers hereunder or waiving any Default hereunder; provided, however, that no such supplemental written agreement shall, without the consent of all of the Lenders: (i) Extend the final maturity of any Loan or postpone any regularly scheduled payment of principal of any Loan or forgive all or any portion of the principal amount thereof or any accrued interest or accrued fees, or reduce the rate or extend the time of payment of interest or fees thereon. (ii) Reduce the percentage specified in the definition of Required Lenders or any provision that requires the unanimous consent or pro rata treatment of Lenders. (iii) Extend the Facility Termination Date or reduce the amount or extend the payment date for, the mandatory payments required under Section 2.2, or increase the amount of the Aggregate Commitment or of the Commitment of any Lender hereunder, or permit any Borrower to assign its rights under this Agreement (other than as may be permitted pursuant to Section 6.9). (iv) Amend this Section 8.2. 34 (v) Release the Company as guarantor of any Advance. No amendment of any provision of this Agreement relating to the Administrative Agent shall be effective without the written consent of the Administrative Agent. The Administrative Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this Agreement. Notwithstanding anything herein to the contrary, no Defaulting Lender shall be entitled to vote (whether to consent or to withhold its consent) with respect to any amendment, modification, termination or waiver requiring the consent of the Required Lenders, and, for purposes of determining the Required Lenders, the Commitments and the Loans of each Defaulting Lender shall be disregarded. 8.3 Preservation of Rights. No delay or omission of the Lenders or the Administrative Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Loan notwithstanding the existence of a Default or the inability of a Borrower to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Administrative Agent and the Lenders until the Obligations have been paid in full. ARTICLE IX. GENERAL PROVISIONS 9.1 Survival of Representations. All representations and warranties of the Borrowers contained in this Agreement shall survive the making of the Loans herein contemplated. 9.2 Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, no Lender shall be obligated to extend credit to the Borrowers in violation of any limitation or prohibition provided by any applicable statute or regulation. 9.3 Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 9.4 Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrowers, the Administrative Agent and the Lenders and supersede all prior agreements and understandings among the Borrowers, the Administrative Agent and the Lenders relating to the subject matter thereof other than the fee letter described in Section 10.13. 35 9.5 Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Administrative Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns, provided, however, that the parties hereto expressly agree that the Lead Arranger shall enjoy the benefits of the provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth therein and shall have the right to enforce such provisions on its own behalf and in its own name to the same extent as if it were a party to this Agreement. 9.6 Expenses; Indemnification. (i) The Borrowers shall reimburse the Administrative Agent and the Lead Arranger for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Administrative Agent, which attorneys may be employees of the Administrative Agent) paid or incurred by the Administrative Agent or the Lead Arranger in connection with the preparation, investigation, negotiation, execution, delivery, syndication, review, amendment, modification, and administration of the Loan Documents, whether incurred prior to or subsequent to the Closing Date. The Borrowers also agree to reimburse the Administrative Agent, the Lead Arranger and the Lenders for any costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Administrative Agent, the Lead Arranger and the Lenders, which attorneys may be employees of the Administrative Agent, the Lead Arranger or the Lenders) paid or incurred by the Administrative Agent, the Lead Arranger or any Lender in connection with the collection and enforcement of the Loan Documents. (ii) The Company hereby further agrees to indemnify the Administrative Agent, the Lead Arranger and each Lender, its directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all reasonable expenses of litigation or preparation therefor whether or not the Administrative Agent, the Lead Arranger or any Lender is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Loan hereunder except to the extent that they are determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the party seeking indemnification. The obligations of the Company under this Section 9.6 shall survive the termination of this Agreement. 9.7 Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Administrative Agent with sufficient counterparts so that the Administrative Agent may furnish one to each of the Lenders. 9.8 Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles except that any calculation or determination which is to be made on a consolidated basis shall 36 be made for the Company and all its Subsidiaries, including those Subsidiaries, if any, which are unconsolidated on the Company's audited financial statements. 9.9 Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 9.10 Nonliability of Lenders. The relationship between the Company on the one hand and the Lenders and the Administrative Agent on the other hand shall be solely that of borrower and lender. Neither the Administrative Agent, the Lead Arranger nor any Lender shall have any fiduciary responsibilities to the Company solely by reason of being a party to this Agreement. Neither the Administrative Agent, the Lead Arranger nor any Lender undertakes any responsibility to the Company to review or inform the Company of any matter in connection with any phase of the Company's business or operations. The Company agrees that neither the Administrative Agent, the Lead Arranger nor any Lender shall have liability to the Company (whether sounding in tort, contract or otherwise) for losses suffered by the Company in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. Neither the Administrative Agent, the Lead Arranger nor any Lender shall have any liability with respect to, and the Company hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Company in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. 9.11 Confidentiality; Disclosure. Each of the Administrative Agent and each Lender agrees to hold any confidential information which it may receive from the Company pursuant to this Agreement in confidence, except for disclosure (i) to its Affiliates and to other Lenders and their respective Affiliates, (ii) to legal counsel, accountants, and other professional advisors to such Lender or the Administrative Agent or, subject to Section 12.4, to a Transferee, (iii) to regulatory officials, (iv) to any Person as required by law, regulation, or legal process, (v) to any Person in connection with any legal proceeding to which such Lender is a party or in connection with any legal proceeding related to this facility, (vi) to such Lender's contractual counterparties in swap agreements or to legal counsel, accountants and other professional advisors to such counterparties, (vii) permitted by Section 12.4, and (viii) to rating agencies if requested or required by such agencies in connection with a rating relating to the Advances hereunder, provided that reasonable advance written notice is given to the Company. Neither the Administrative Agent nor any Lender will make any press release or other public announcement regarding this Agreement or the transactions contemplated hereby without the Company's express prior written consent, except with respect to league table submissions in connection with this Agreement, as required under applicable law or by any governmental agency, in which case the party required to make the press release or public announcement shall use commercially reasonable efforts to obtain the prior approval of the Company as to the form, nature and extent of the press release or public announcement prior to issuing the press release or making the public announcement. Notwithstanding anything herein to the contrary, confidential information shall not include, and the Administrative Agent and each Lender (and each employee, representative or other 37 agent of the Administrative Agent and any Lender) may disclose to any and all Persons, without limitation of any kind, the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are or have been provided to the Administrative Agent or any Lender relating to such "tax treatment" or "tax structure"; provided that with respect to any document or similar item that in either case contains information concerning the "tax treatment" or "tax structure" of the transactions contemplated hereby as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the "tax treatment" or "tax structure" of the transactions contemplated hereby. 9.12 Nonreliance. Each Lender hereby represents that it is not relying on or looking to any margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) for the repayment of the Loans provided for herein. ARTICLE X. THE AGENT 10.1 Appointment; Nature of Relationship. Bank One is hereby appointed by each of the Lenders as its contractual representative (herein referred to as the "Administrative Agent") hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Administrative Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Administrative Agent agrees to act as such contractual representative upon the express conditions contained in this Article X. Notwithstanding the use of the defined term "Administrative Agent," it is expressly understood and agreed that the Administrative Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Administrative Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Administrative Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives. 10.2 Powers. The Administrative Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Administrative Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Administrative Agent. 10.3 General Immunity. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to the Company, the Lenders or any Lender for any action taken or omitted to be taken by it or them 38 hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person. 10.4 No Responsibility for Loans, Recitals, etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered solely to the Administrative Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (g) the financial condition of the Company or any guarantor of any of the Obligations or of any of the Company's or any such guarantor's respective Subsidiaries. The Administrative Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by the Company to the Administrative Agent at such time, but is voluntarily furnished by the Company to the Administrative Agent (either in its capacity as Administrative Agent or in its individual capacity). 10.5 Action on Instructions of Lenders. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge that the Administrative Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 10.6 Employment of Agents and Counsel. The Administrative Agent may execute any of its duties as Administrative Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Administrative Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Administrative Agent and the Lenders and all matters pertaining to the Administrative Agent's duties hereunder and under any other Loan Document. 10.7 Reliance on Documents; Counsel. The Administrative Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the 39 opinion of counsel selected by the Administrative Agent, which counsel may be employees of the Administrative Agent. 10.8 Administrative Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Administrative Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Company for which the Administrative Agent is entitled to reimbursement by the Company under the Loan Documents (other than the fee payable pursuant to Section 10.13), (ii) for any other expenses incurred by the Administrative Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Administrative Agent in connection with any dispute between the Administrative Agent and any Lender or between two or more of the Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Administrative Agent in connection with any dispute between the Administrative Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Administrative Agent and (ii) any indemnification required pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant Lender in accordance with the provisions thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this Agreement. 10.9 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent has received written notice from a Lender or the Company referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. 10.10 Rights as a Lender. In the event the Administrative Agent is a Lender, the Administrative Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Loans as any Lender and may exercise the same as though it were not the Administrative Agent, and the term "Lender" or "Lenders" shall, at any time when the Administrative Agent is a Lender, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. The Administrative Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Company or any of its Subsidiaries in which the Company or such Subsidiary is not restricted hereby from engaging with any other Person. The Administrative Agent, in its individual capacity, is not obligated to remain a Lender. 40 10.11 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, the Lead Arranger or any other Lender and based on the financial statements prepared by the Company and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Lead Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 10.12 Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Company, such resignation to be effective upon the appointment of a successor Administrative Agent or, if no successor Administrative Agent has been appointed, forty-five days after the retiring Administrative Agent gives notice of its intention to resign. The Administrative Agent may be removed at any time with or without cause by written notice received by the Administrative Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Company and the Lenders, a successor Administrative Agent, which successor Administrative Agent shall (unless a Default shall have occurred and be continuing) be approved by the Company (which approval shall not be unreasonably withheld or delayed). If no successor Administrative Agent shall have been so appointed by the Required Lenders within thirty days after the resigning Administrative Agent's giving notice of its intention to resign, then the resigning Administrative Agent may appoint, on behalf of the Company and the Lenders, a successor Administrative Agent. Notwithstanding the previous sentence, without the consent of any Lender but upon thirty days prior written notice to the Lenders and the Company, the Administrative Agent may appoint any of its Affiliates which is a commercial bank as a successor Administrative Agent hereunder, which successor Administrative Agent shall (unless a Default shall have occurred and be continuing) be approved by the Company (which approval shall not be unreasonably withheld or delayed). If the Administrative Agent has resigned or been removed and no successor Administrative Agent has been appointed, the Lenders may perform all the duties of the Administrative Agent hereunder and the Company shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Administrative Agent shall be deemed to be appointed hereunder until such successor Administrative Agent has accepted the appointment. Any such successor Administrative Agent shall be a commercial bank having capital and retained earnings of at least $5,000,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Administrative Agent. Upon the effectiveness of the resignation or removal of the Administrative Agent, the resigning or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Administrative Agent, the provisions of this Article X shall continue in effect for the benefit of such Administrative Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Administrative Agent by merger, or the Administrative Agent assigns its duties and obligations to an Affiliate pursuant to this Section 10.12, then the term "Prime Rate" as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Administrative Agent. 10.13 Administrative Agent's Fee. 41 The Company agrees to pay to the Administrative Agent, for its own account, the fees agreed to by the Company, the Lead Arranger and the Administrative Agent pursuant to that certain letter agreement dated February 12, 2003 or as otherwise agreed from time to time. 10.14 Delegation to Affiliates. The Company and the Lenders agree that the Administrative Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Administrative Agent is entitled under Articles IX and X. 10.15 Administrative Agent, Syndication Agents, Documentation Agents, Lead Arranger, etc. Neither the Syndication Agents, the Documentation Agents nor the Lead Arranger shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders or the Administrative Agent shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect to the Administrative Agent in Section 10.11. ARTICLE XI. SETOFF; RATABLE PAYMENTS 11.1 Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if any Borrower becomes insolvent, however evidenced, or any Default occurs and is continuing, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender or any Affiliate of any Lender to or for the credit or account of any Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part hereof, shall then be due. 11.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Loans (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Loans held by the other Lenders so that after such purchase each Lender will hold its ratable proportion of Loans. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their Loans. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. If an amount to be setoff is to be applied to Indebtedness of the Company to a Lender other than Indebtedness comprised of Loans made by such Lender, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness comprised of such Loans. 42 ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 12.1 Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrowers and the Lenders and their respective successors and assigns, except that (i) the Borrowers shall not have the right to assign their rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 12.3. Notwithstanding clause (ii) of this Section, any Lender may at any time, without the consent of the Borrowers or the Administrative Agent, assign all or any portion of its rights under this Agreement and any Note to a Federal Reserve Bank; provided, however, that no such assignment to a Federal Reserve Bank shall release the transferor Lender from its obligations hereunder. The Administrative Agent may treat the Person which made any Loan or which holds any Note as the owner thereof for all purposes hereof unless and until such Person complies with Section 12.3 in the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with the Administrative Agent. Any assignee or transferee of the rights to any Loan or any Note agrees by acceptance of such transfer or assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder, transferee or assignee of the rights to such Loan. 12.2 Participations. 12.2.1. Permitted Participants; Effect. Any Lender may, in its sole discretion, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of its Loans and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrowers under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrowers and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. 12.2.2. Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment, extends the Facility Termination Date, postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Loan or Commitment, releases the Company as guarantor of any such Loan or releases any of the collateral, if any, securing any such Loan. 12.2.3. Benefit of Setoff. 43 The Company agrees that each Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender. 12.3 Assignments. 12.3.1. Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more financial institutions, mutual funds, insurance companies or other entities engaged in the business of extending credit for borrowed money ("Purchasers") all or any part of its rights and obligations under the Loan Documents. Such assignment shall be substantially in the form of Exhibit C or in such other form as may be agreed to by the parties thereto. The consent of the Company and the Administrative Agent shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof or an Approved Fund; provided, however, that if a Default has occurred and is continuing, the consent of the Company shall not be required. Such consent shall not be unreasonably withheld or delayed. The assignor shall give prompt written notice to the Company of any assignment becoming effective without the consent of the Company. Each such assignment with respect to a Purchaser which is not a Lender or an Affiliate thereof shall (unless each of the Company and the Administrative Agent otherwise consents) be in an amount not less than the lesser of (i) $5,000,000 and in multiples of $1,000,000 or (ii) the remaining amount of the assigning Lender's Commitment (calculated as at the date of such assignment) or outstanding Loans (if the applicable Commitment has been terminated). 12.3.2. Effect; Effective Date. Upon (i) delivery to the Administrative Agent of an assignment, together with any consents required by Section 12.3.1, and (ii) payment of a $3,500 fee to the Administrative Agent for processing such assignment (unless such fee is waived by the Administrative Agent), such assignment shall become effective on the effective date specified in such assignment. The assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment and Loans under the applicable assignment agreement constitutes "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Company, the Lenders or the Administrative Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment and Loans assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Administrative Agent and the Borrowers shall, if the transferor Lender or the Purchaser desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as appropriate, replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment. 44 12.4 Dissemination of Information. The Company authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Company and its Subsidiaries, provided that each Transferee and prospective Transferee agrees in writing to be bound by Section 9.11 of this Agreement. 12.5 Tax Treatment. If any interest in any Loan Document is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 3.5(iv). 12.6 Transfer to an SPC. Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an "SPC"), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Company, the option to provide to the Borrowers all or any part of any Loan (other than an Alternate Currency Loan) that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other 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 under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary in this Section 12.6, any SPC may (i) with notice to, but without the prior written consent of, the Company and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Company and the Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. As this Section applies to any particular SPC, this section may not be amended without the written consent of such SPC. ARTICLE XIII. NOTICES 13.1 Notices. Except as otherwise permitted by Section 2.15 with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic 45 transmission, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Borrowers or the Administrative Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth below its signature hereto or (z) in the case of any party, at such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Administrative Agent and the Borrowers in accordance with the provisions of this Section 13.1. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Administrative Agent under Article II shall not be effective until received. 13.2 Change of Address. The Borrowers, the Administrative Agent and any Lender may each change the address for service of notice upon it by 5 days' prior written notice to the other parties hereto. ARTICLE XIV. COUNTERPARTS This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrowers, the Administrative Agent and the Lenders and each party has notified the Administrative Agent by facsimile transmission or telephone that it has taken such action. ARTICLE XV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL 15.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 15.2 CONSENT TO JURISDICTION. EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A 46 COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY BORROWER AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS. 15.3 WAIVER OF JURY TRIAL. THE BORROWERS, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. 47 IN WITNESS WHEREOF, the Borrowers, the Lenders and the Administrative Agent have executed this Agreement as of the date first above written. CARDINAL HEALTH, INC. By: /s/ Donna Brandin -------------------------------------- Print Name: Donna Brandin Title: Senior Vice President and Treasurer 7000 Cardinal Place Dublin, Ohio 43017 Attention: Laura Warren Telephone: (614) 757-5391 FAX: (614) 757-4724 48 BANK ONE, NA (Main office Chicago), Individually and as Administrative Agent By: /s/ Richard J. Johnsen -------------------------------------- Print Name: Richard J. Johnsen Title: Managing Director 1111 Polaris Parkway Suite 3-A OH1-1085 Columbus, OH 43240 Attention: Paul A. Harris Telephone: (614) 213-4047 Fax: (614) 213-3135 49 BANK OF AMERICA, N.A. Individually and as Syndication Agent By: /s/ Richard Nichols ------------------------------------- Print Name: Richard Nichols Title: Managing Director 100 N. Tryon Street NC1-007-17-11 Charlotte, NC 28255-0001 Attention: Russ Matthews Telephone: (704) 386-3894 Fax: (704) 386-3893 50 WACHOVIA BANK, NATIONAL ASSOCIATION, Individually and as Syndication Agent By: /s/ Jeanette A. Griffin ------------------------------------- Title: Director 1339 Chestnut Street, PA4152 (12th Floor) Philadelphia, Pennsylvania 19107 Attention: Jeanette Griffin Telephone: (267) 321-6615 FAX: (267) 321-6702 51 CREDIT SUISSE FIRST BOSTON, acting through its Cayman Islands Branch Individually and as Documentation Agent By: /s/ Joseph Adipietro ------------------------------------- Print Name: Joseph Adipietro Title: Director By: /s/ Jennifer A. Pieza -------------------------------------- Print Name: Jennifer A. Pieza Title: Associate One Madison Avenue, 8th Floor New York, NY 10010-3629 Attention: Loan Administration Telephone: (212) 538-3386 Fax: (212) 538-6851 52 DEUTSCHE BANK AG NEW YORK BRANCH By: /s/ Iain Stewart ------------------------------------- Print Name: Iain Stewart Title: Director By: /s/ Thomas A. Foley ------------------------------------- Print Name: Thomas A. Foley Title: Vice President 31 W. 52nd Street, 23rd Floor New York, NY 10019 Attention: Iain Stewart Telephone: (212) 469-8279 Fax: (212) 469-8701 53 BARCLAYS BANK PLC, Individually and as Documentation Agent By: /s/ Douglas Bernegger ------------------------------------- Print Name: Douglas Bernegger Title: Director 200 Park Avenue - 4th Floor New York, NY 10166 Attention: Russell Johnson Telephone: 212-412-2595 FAX: 212-412-7511 54 UBS AG CAYMAN ISLANDS BRANCH By: /s/ Wilfred V. Saint ------------------------------------- Print Name: Wilfred V. Saint Title: Associate Director By: /s/ Thomas R. Salzano ------------------------------------- Print Name: Thomas R. Salzano Title: Director 677 Washington Boulevard Stamford, CT 06901 Attention: Marie Haddad Telephone: (203) 719-5609 FAX: (203) 719-3888 55 THE BANK OF TOKYO-MITSUBISHI, LTD. By: /s/ Shinichiro Munechika ------------------------------------- Print Name: Shinichiro Munechika Title: Deputy General Manager 227 West Monroe Street, Suite 2700 Chicago, Illinois 60606 Attention: William J. Murray Telephone: 312-696-4653 FAX: 312-696-4535 56 FLEET NATIONAL BANK By: /s/ Robert J. Milas ------------------------------------- Print Name: Robert J. Milas Title: Vice President 300 Broad Hollow Road Melville, NY 11747 Attention: Mr. Robert J. Milas Telephone: (631) 547-7857 FAX: (631) 547-7815 57 THE BANK OF NOVA SCOTIA By: /s/ Carolyn A. Calloway ------------------------------------- Print Name: Carolyn A. Calloway Title: Managing Director 600 Peachtree Street Atlanta, Georgia 30308 Attention: Dana Maloney Telephone: (404) 877-1524 FAX: (404) 888-8998 58 SUNTRUST BANK By: /s/ William D. Priester ------------------------------------- Print Name: William D. Priester Title: Director 201 4th Avenue, 3rd Floor Nashville, TN 37219 Attention: Bill Priester Telephone: (615) 748-5969 FAX: (615) 748-5269 59 PNC BANK, NATIONAL ASSOCIATION By: /s/ Jeffrey Stein Print Name: Jeffrey Stein Title: Vice President 201 East Fifth Street Cincinnati, OH 45202 Attention: Jeffrey L. Stein Telephone: (513) 651-8692 FAX: (513) 651-8951 60 NATIONAL CITY BANK By: /s/ Thomas E. Redmond ------------------------------------ Print Name: Thomas E. Redmond Title: Vice President 155 East Broad Street Columbus, Ohio 43251-0077 Attention: Thomas E. Redmond Telephone: (614) 463-8540 FAX: (614) 463-8572 61 BANCO BILBAO VIZCAYA ARGENTARIA S.A. By: /s/ Jay Levit ------------------------------------- Print Name: Jay Levit Title: Vice President By: /s/ Salustiano Machado ------------------------------------- Print Name: Salustiano Machado Title: Vice President 1345 Avenue of the Americas, 45th Floor New York, New York 10105 Attention: Francesc Alvarez Telephone: (212) 728-1634 FAX: (212) 333-2904 62 BANCA INTESA S.P.A. By: /s/ C. Dougherty ------------------------------------- Print Name: C. Dougherty Title: Vice President By: /s/ F. Maffei ------------------------------------- Print Name: F. Maffei Title: Vice President 1 William Street New York, New York Attention: Frank Maffei Telephone: (212) 607-3880 FAX: (212) 809-2124 63 THE BANK OF NEW YORK By: /s/ David C. Judge ------------------------------------- Print Name: David C. Judge Title: Senior Vice President One Wall Street New York, New York Attention: Patrick Vatel Telephone: (212) 635-7882 FAX: (212) 635-1481 64 ABN AMRO BANK N.V. By: /s/ James S. Kreitler ------------------------------------- Print Name: James S. Kreitler Title: Senior Vice President By: /s/ Todd J. Miller ------------------------------------- Print Name: Todd J. Miller Title: Assistant Vice President 55 E. 52nd St. 7th Floor New York, NY 10055 Attention: Michele Costello Telephone: (212) 409-1481 FAX: (212) 409-1641 65 FIFTH THIRD BANK (CENTRAL OHIO) By: /s/ Kim Dennis ------------------------------------- Print Name: Kim Dennis Title: Assistant Vice President 21 East State Street Columbus, Ohio Attention: John Beardslee Telephone: (614) 223-3982 FAX: (614) 341-2606 66 U.S. BANK NATIONAL ASSOCIATION By: /s/ Celia V. Conlon ------------------------------------- Print Name: Celia V. Conlon Title: Vice President 175 South Third Street, 4th Floor Columbus, Ohio 43215 Attention: J. Todd Price Telephone: (614) 232-8040 FAX: (614) 232-8098 67 ALLIED IRISH BANKS p.l.c. By: /s/ Cathal O'Connor ------------------------------------- Print Name: Cathal O'Connor Title: Vice President AIB International Corporate Banking Block C1, Bankcentre, Ballsbridge Dublin, Ireland Attention: Cathal O'Connor Telephone: O11 353 1 6414812 FAX: 011 353 1 6682508 68 CREDIT LYONNAIS-S.A. By: /s/ Serge Giannechini ------------------------------------- Print Name: Serge Giannechini Title: Directeur Regionale Entreprises Direction Regionale Entreprises Ile de France Sud Ouest 122 Avenue Du General Leclerc 92100 Boulogne Billancourt-France Attention: Serge Giannechini Telephone: 011-331-46842304 FAX: O11-331-48259130 69 SCHEDULE A-1 COMMITMENTS
COMMITMENT LENDER AMOUNT ------ ---------- Bank One, NA $ 67,500,000 Bank of America, N.A. $ 58,750,000 Wachovia Bank, National Association $ 58,750,000 Credit Suisse First Boston $ 58,750,000 Deutsche Bank AG New York Branch $ 58,750,000 Barclays Bank PLC $ 58,750,000 UBS AG Cayman Islands Branch $ 58,750,000 The Bank of Tokyo-Mitsubishi, Ltd. $ 50,000,000 Fleet National Bank $ 50,000,000 The Bank of Nova Scotia $ 42,500,000 SunTrust Bank $ 32,500,000 PNC Bank, National Association $ 32,500,000 National City Bank $ 25,000,000 Banco Bilbao Vizcaya Argentaria S.A. $ 15,000,000 Banca Intesa S.p.A $ 15,000,000 The Bank of New York $ 15,000,000 ABN AMRO Bank N.V. $ 12,500,000 Fifth Third Bank (Central Ohio) $ 12,500,000 U.S. Bank National Association $ 12,500,000 Allied Irish Banks p.l.c. $ 7,500,000 Credit Lyonnais $ 7,500,000 ------------ TOTAL $750,000,000
70 PRICING SCHEDULE The Applicable Margin shall be as determined by the matrix below:
Level I Level II Level III Level IV Level V Status Status Status Status Status - --------------------------------------------------------------------------------------------------------------- > than = to A+ or BBB+ or < than = to BBB or Reference Rating A1 A or A2 A- or A3 Baa1 Baa2 - --------------------------------------------------------------------------------------------------------------- Facility Fee 5.0 6.0 7.0 10.0 12.5 - --------------------------------------------------------------------------------------------------------------- Eurodollar Rate Applicable Margin 20.0 24.0 33.0 40.0 50.0 - --------------------------------------------------------------------------------------------------------------- Utilization fee > 50% 10.0 10.0 10.0 12.5 12.5 - ---------------------------------------------------------------------------------------------------------------
For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule: "Level I Status" exists at any date if, on such date, the Company's Moody's Rating is A1 or better or the Company's S&P Rating is A+ or better. "Level II Status" exists at any date if, on such date, (i) the Company has not qualified for Level I Status and (ii) the Company's Moody's Rating is A2 or better or the Company's S&P Rating is A or better. "Level III Status" exists at any date if, on such date, (i) the Company has not qualified for Level I Status or Level II Status and (ii) the Company's Moody's Rating is A3 or better or the Company's S&P Rating is A- or better. "Level IV Status" exists at any date if, on such date, (i) the Company has not qualified for Level I Status, Level II Status or Level III Status and (ii) the Company's Moody's Rating is Baa1 or better or the Company's S&P rating is BBB+ or better. "Level V Status" exists at any date if, on such date, the Company has not qualified for Level I Status, Level II Status, Level III Status or Level IV Status. "Moody's Rating" means, at any time, the rating issued by Moody's Investors Service, Inc. and then in effect with respect to the Company's senior unsecured long-term debt securities without third-party credit enhancement. "S&P Rating" means, at any time, the rating issued by Standard and Poor's Rating Services, a division of The McGraw Hill Companies, Inc., and then in effect with respect to the Company's senior unsecured long-term debt securities without third-party credit enhancement. 71 Status" means either Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status. The Applicable Margin shall be determined in accordance with the foregoing table based on the Company's Status as determined from its then-current Moody's and S&P Ratings. The credit rating in effect on any date for the purposes of this Schedule is that in effect at the close of business on such date. If at any time the Company has no Moody's Rating or no S&P Rating, Level V Status shall exist. Notwithstanding the foregoing, if at any time there exists a difference of more than one level between the Moody's Rating and the S&P Rating, the Company's Status shall be determined as if the higher rating were one level above the lower of the two ratings. 72 EXHIBIT A FORM OF OPINION March 27, 2003 The Administrative Agent and the Lenders who are parties to the Credit Agreement described below. Subject: CARDINAL HEALTH, INC. -- 364-DAY CREDIT AGREEMENT Gentlemen/Ladies: I am counsel for Cardinal Health, Inc., an Ohio corporation (the "COMPANY"), and have represented the Company in connection with its execution and delivery of a 364-Day Credit Agreement dated as of March 27, 2003 (the "AGREEMENT"), among the Company, the Subsidiary Borrowers, the Lenders named therein, and Bank One, NA, as Administrative Agent, providing for Advances in an aggregate principal amount not exceeding $750,000,000 at any one time outstanding. All capitalized terms used in this opinion and not otherwise defined herein shall have the meanings attributed to them in the Agreement. This opinion is being delivered to you pursuant to Section 4.1(a)(v) of the Agreement. In connection with the issuance of this opinion letter, I have examined the following documents: (a) A copy of the Agreement executed by the Company; (b) The Company's Articles of Incorporation; (c) The Company's Code of Regulations; (d) A certificate of good standing of the Company issued by the Ohio Secretary of State; (e) Resolutions of the Company's board of directors; (f) An executed copy of a $_________ Note from the Company to ___________________, dated March 27, 2003, an executed copy of a $_________ Note from the Company to ______________ [RESERVED]; (g) An executed copy of the Guaranty Agreement of the Company dated as of March 27, 2003; 73 (h) Certificates of certain officers of the Company as to certain factual matters; and (i) Such other documents and matters of law as I deemed necessary or advisable in order to render the opinions set forth in this letter. The documents referenced in items (a), (f), and (g) are sometimes referred to hereinafter as the "LOAN DOCUMENTS." In my review and in rendering the opinions expressed herein, I have assumed, without independent verification, the following: (I) the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified, facsimile, or photostatic copies, the completeness and correctness of any representations and certifications made to me by officers of the Company, and the completeness and correctness of any representations and certificates of public officials and public filing records; (II) that the Loan Documents have been duly and validly authorized, executed, and delivered by all parties thereto other than the Company, and that the Loan Documents are binding and legally enforceable against all of the parties thereto, other than the Company; (III) all parties to the Loan Documents other than the Company have received adequate consideration for their execution and delivery of, and performance of their respective obligations under, the Loan Documents to which each of them is a party; and (IV) all conditions and other transactions contemplated by the Agreement to have occurred at or prior to the funding of the initial Loans have occurred or have been waived by the appropriate parties and Loans in the amount of the Aggregate Commitment will be fully available pursuant to the terms of the Agreement. Based upon the foregoing, and subject to the qualifications set forth below, I am of the opinion that: 1. The Company is a corporation validly existing and in good standing under the laws of the State of Ohio. 2. The execution and delivery by the Company of the Loan Documents to which it is a party and the performance by the Company of its obligations thereunder have been duly authorized by proper corporate proceedings on the part of the Company and will not: (a) Require any consent of the Company's shareholders; (b) (i) Violate (A) any order, judgment, or decree of any court or governmental agency binding on the Company and known to me, (B) any statute of the State of Ohio or the United States, or any written regulation thereunder, (C) the Company's articles of incorporation or code of regulations, or (D) the provisions of any indenture, instrument, or agreement to which the Company is a party or is subject, or by which it, or its Property, is bound, and which is filed or incorporated by reference as 74 an exhibit to the Company's periodic reports under the Securities Exchange Act of 1934, pursuant to item 601(b)(l0) of Regulation S-K of the Securities and Exchange Commission, or (ii) conflict with or constitute a default under any such indenture, instrument, or agreement; or (c) Result in, or require, the creation or imposition of any Lien in or on the Property of the Company pursuant to the terms of any indenture, instrument or agreement binding upon the Company, and which is filed or incorporated by reference as an exhibit to the Company's periodic reports under the Securities Exchange Act of 1934, pursuant to item 601(b)(10) of Regulation S-K of the Securities and Exchange Commission. 2. The Loan Documents to which the Company is a party have been duly executed and delivered by the Company and, except for the "choice of law" provisions of the Loan Documents, constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms. Set forth later in this opinion letter is an opinion regarding the enforceability of the "choice of law" provisions of the Loan Documents. 3. To the best of my knowledge and except as set forth in Schedule 7 of the Agreement, there is no litigation, arbitration, governmental investigation, proceeding, or inquiry pending or threatened against the Company which, if adversely determined, could reasonably be expected to have a Material Adverse Effect. 4. No authorization or approval of, or filing with, any governmental agency of the United States or of the State of Ohio which has not been obtained or made is necessary for the execution and delivery of, and performance of the Company's obligations under the Loan Documents. In addition to any other qualification set forth herein, my opinions are qualified as (A) I wish to advise you that I do not express any opinion with respect to: (1) the power or authority of the Lenders to make the loans contemplated by the Agreement; (2) compliance by the Lenders with any federal or state banking law, rule, regulation, or restriction; or (3) compliance by the Lenders with any federal, state, or foreign law, rule, regulation, or restriction which is or was required to be complied with by the Lenders (as opposed to compliance therewith by the Company) in order to enforce any rights or remedies of the Lenders under the Loan Documents. Accordingly, all of the foregoing opinions expressed by me are qualified to the extent set forth in the preceding sentence. (B) To the extent that the foregoing opinions are stated to be to the best of my knowledge, or relate to matters which are known to me, I have, with your consent, relied on one or more certificates of officers of the Company as to 75 factual matters, and I have neither independently investigated nor attempted to verify any of such matters. (C) I have made no examination of and express no opinion as to: (1) the right, title, or interest of any person to any property; (2) the accuracy or sufficiency of the description in the Loan Documents of any real or personal property; or (3) the existence of or freedom of any property from any liens, security interests, or other encumbrances. (D) My opinions are subject to and affected by: (1) any bankruptcy, insolvency, avoidance, fraudulent conveyance, reorganization, moratorium, or similar laws affecting the rights and remedies of creditors generally; and (2) general principles of equity (whether considered in a proceeding in equity or at law). (E) I express no opinion as to whether a court would limit the exercise or enforcement of rights or remedies by the Lenders under the Loan Documents: (1) in the event of any default by the Company, if it is determined that such default is not material or if such exercise or enforcement is not reasonably necessary for the protection of the Lenders; or (2) if the exercise or enforcement thereof under the circumstances would violate an implied covenant of good faith and fair dealing. (F) Certain waivers and exculpatory clauses contained in the Loan Documents may be limited or unenforceable. (G) No opinion is expressed with respect to the validity or enforceability of those provisions of the Loan Documents which purport by their terms to relieve any party of, or to indemnify such party against, any liability for such party's own negligence, gross negligence, or willful misconduct, or to obligate the Company to bear the legal and other expenses of any other party. (H) I am authorized to practice law in Ohio, and no opinion is expressed herein other than as to the laws of the State of Ohio and federal law. With your permission, for purposes of the opinion set forth in paragraph 3, I have assumed that the substantive laws of the State of Ohio, except for conflict of laws principles, would govern the Loan Documents. In addition to the foregoing opinions, you have also requested my opinion regarding whether an Ohio court would enforce the "choice of law" provisions of the Loan Documents (the "CHOICE OF LAW PROVISIONS") against the Company. In Schulke Radio Prod. v. Midwestern Broadcast, 453 N.E. 2d 683 (Ohio 1983), the Ohio Supreme Court held that the rule set forth in the Restatement of Law 2d (1971) 561, Conflict of 76 Laws, Section 187, is to be applied in determining whether or not a contractual choice of law provision will be enforced by an Ohio court. The relevant part of Section 187 is set forth below: "(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of ss. 188, would be the state of the applicable law in the absence of an effective choice of law by the parties." In Schulke, the agreement at issue included a term providing that it was to be governed by New York law. One of the parties to the agreement was located in New York and executed the agreement in New York. In addition, performance under the agreement also took place in New York. Based upon the foregoing, the Ohio Supreme Court concluded that New York did bear a substantial relationship to the parties and the agreement. Schulke, 453 N.E. 2d 686. Similarly, Comment (f) to Section 187 of the Restatement states that a substantial relationship exists when the state of choice is where performance by one of the parties is to take place or where one of the parties has its principal place of business. In rendering the following opinion, I have assumed, with your approval and without independent verification, that the following facts and statements are true and accurate in all respects: (i) The Administrative Agent's principal office is located in Illinois; (ii) The terms of the Loan Documents were negotiated by certain representatives of the Administrative Agent from Illinois; (iii) The Loan Documents are being executed by certain of the Lenders in Illinois and are being delivered to the Administrative Agent in Illinois; (iv) In selecting the laws of the State of Illinois to govern the Loan Documents, the parties acted in good faith and without an intent to evade the law; and (v) The application of the laws of the State of Illinois to the Loan Documents will not be contrary to any fundamental policy of any state which has a materially greater interest than the State of Illinois in the determination of any particular right, duty, or obligation of any party under the Loan Documents. 77 Based upon the foregoing, and subject to the qualifications and assumptions set forth herein, I am of the opinion that it would be more likely than not that an Ohio court would enforce the Choice of Law Provisions based upon a determination by such court that the Loan Documents and the parties thereto have a substantial relationship with the State of Illinois. The opinions set forth herein are given as of the date hereof, and I disclaim any obligation to notify you or any other person or entity if any change in fact or law, or both (whether statutory, regulatory, regulatory interpretation or judicial interpretation), should change my opinion with respect to any matter set forth herein. This opinion may be relied upon and is solely for the benefit of the Addressees at the beginning of this opinion (and also any Purchasers, but not any Participants), and it is not to be made available to or relied upon by any other party or communicated or disclosed to any other person without my prior written consent. Sincerely, Brian V. Pero Assistant General Counsel-Finance and Real Estate 78 EXHIBIT B COMPLIANCE CERTIFICATE Date:_______________________________ _________________ Bank One, NA _________________ _________________ Dear __________: This notice serves to confirm that, to the best of my knowledge, Cardinal Health, Inc. (the "Company") has observed or performed in all material respects all of the covenants, conditions and agreements contained in the 364-Day Credit Agreement, dated March 27, 2003 and each among the Company, certain subsidiaries of the Company named therein, Bank One, NA, as Administrative Agent, and the lenders named therein. Detailed calculations are attached. In addition, please find enclosed a copy of our most recent financial statements as filed with the Securities and Exchange Commission. Sincerely, ______________________________________________ [Chief Financial Officer/Controller/Treasurer] 79 SECTION 6.16 MINIMUM NET WORTH [Insert calculation.] 80 EXHIBIT C ASSIGNMENT AGREEMENT This Assignment Agreement (this "Assignment Agreement") between (the "Assignor") and (the "Assignee") is dated as of __________, _____. The parties hereto agree as follows: 1) PRELIMINARY STATEMENT. The Assignor is a party to a 364-Day Credit Agreement dated as of March 27, 2003 (the "Agreement") among the Company, the Subsidiary Borrowers, the Lenders named therein, and Bank One, NA, as Administrative Agent (which, as it may be amended, modified, renewed or extended from time to time is herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2) ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitment (or Loans, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. 3) EFFECTIVE DATE. The effective date of this Assignment Agreement (the "Effective Date") shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Administrative Agent) after this Assignment Agreement, together with any consents required under the Credit Agreement, are delivered to the Administrative Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date. 4) PAYMENT OBLIGATIONS. In consideration for the sale and assignment of Loans hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Administrative Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Loans and fees received from the Administrative Agent which relate to the portion of the Commitment or Loans assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. 5) RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Administrative Agent in connection with this Assignment Agreement unless otherwise specified in Item 6 of Schedule 1. 6) REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S LIABILITY. The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor and (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made 81 without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including without limitation, documents granting the Assignor and the other Lenders a security interest in assets of the Company or any guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Company or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of the Company, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents. 7) REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (vi) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, (viii) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's non-performance of the obligations assumed under this Assignment Agreement, and (ix) if applicable, attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes. 8) GOVERNING LAW. This Assignment Agreement shall be governed by the internal law, and not the law of conflicts, of the State of Illinois. 9) NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. 10) COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement. 82 IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement by executing Schedule 1 hereto as of the date first above written. 83 SCHEDULE 1 TO ASSIGNMENT AGREEMENT 1) Description and Date of Credit Agreement: 2) Date of Assignment Agreement: _____________ , 200__ 3) Amounts (As of Date of Item 2 above): Facility ________ a. Assignee's percentage of Facility purchased under the Assignment Agreement ***, **** ____% b. Amount of Facility purchased under the Assignment Agreement ***, **** $____ _____________________________________ 4) Assignee's Commitment (or Loans with respect to terminated Commitments) purchased hereuner: $_____________________________________ 5) Proposed Effective Date: ______________________________________ N/A 6) Non-standard Recordation Fee [Assignor/Assignee to pay 100% of fee] Arrangement [Fee waived by Administrative Agent] 84 Accepted and Agreed: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By: _______________________________ By: ____________________ Title: ____________________________ Title: _________________ ACCEPTED AND CONSENTED TO BY ACCEPTED AND CONSENTED TO BY [NAME OF COMPANY] [NAME OF AGENT] By: _______________________________ By: ____________________ Title: ____________________________ Title: _________________ *Insert specific facility names per Credit Agreement **Percentage taken to 10 decimal places ***If fee is split 50-50, pick N/A as option ****Assignments must be pro rata 85 Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT ADMINISTRATIVE INFORMATION SHEET Attach Assignor's Administrative Information Sheet, which must include notice addresses for the Assignor and the Assignee (Sample form shown below) ASSIGNOR INFORMATION CONTACT: Name: _______________________________________ Telephone No.: ___________________ Fax No.: ____________________________________ Telex No.: _______________________ Answerback: ______________________ PAYMENT INFORMATION: Name & ABA # of Destination Bank: ______________________________________________ ___________________________________________________________________________ Account Name & Number for Wire Transfer: _______________________________________ _______________________________________ Other Instructions: ____________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Address for Notices for Assignor: ______________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ASSIGNEE INFORMATION CREDIT CONTACT: Name: ______________________________________ Telephone No.: ____________________ Fax No.: ___________________________________ Telex No.: ________________________ Answerback: _______________________ 86 KEY OPERATIONS CONTACTS: Booking Installation: _______________________ Booking Installation: ____________ Name: _______________________________________ Name: ____________________________ Telephone No.: ______________________________ Telephone No.: ___________________ Fax No.: ____________________________________ Fax No.: _________________________ Telex No.: __________________________________ Telex No.: _______________________ Answerback: _________________________________ Answerback: ______________________ PAYMENT INFORMATION: Name & ABA # of Destination Bank: ______________________________________________ Account Name & Number for Wire Transfer: _______________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Other Instructions: ____________________________________________________________ ________________________________________________________________________________ Address for Notices for Assignee: ______________________________________________ ________________________________________________________________________________ 87 EXHIBIT D LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION To Bank One, NA, as Administrative Agent (the "Administrative Agent") under the Credit Agreement Described Below. Re: Credit Agreement, dated March 27, 2003 (as the same may be amended or modified, the "Credit Agreement"), among Cardinal Health, Inc. (the "Company"), the Lenders named therein and the Administrative Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement. The Administrative Agent is specifically authorized and directed to act upon the following standing money transfer instructions with respect to the proceeds of Advances or other extensions of credit from time to time until receipt by the Administrative Agent of a specific written revocation of such instructions by the Company, provided, however, that the Administrative Agent may otherwise transfer funds as hereafter directed in writing by the Company in accordance with Section 13.1 of the Credit Agreement or based on any telephonic notice made in accordance with Section 2.15 of the Credit Agreement. Facility Identification Number(s) ______________________________________________ Customer/Account Name __________________________________________________________ Transfer Funds To ______________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ For Account No. ________________________________________________________________ Reference/Attention To _________________________________________________________ Authorized Officer (Customer Representative) Date ______________________________ _______________________________ (Please Print) Signature Bank Officer Name Date _________________________________ _______________________________ (Please Print) Signature 88 EXHIBIT E NOTE [Date] Cardinal Health, Inc., an Ohio corporation (the "Borrower"), promises to pay to the order of ____________________________________ (the "Lender") the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter defined), in immediately available funds at the place specified pursuant to Article II of the Agreement together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Loans in full on the Facility Termination Date. The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Loan and the date and amount of each principal payment hereunder. This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the 364-Day Credit Agreement dated as of March 27, 2003 (which, as it may be amended or modified and in effect from time to time, is herein called the "Agreement"), among the Borrower, the Subsidiary Borrowers and the lenders party thereto, including the Lender, and Bank One, NA, as Administrative Agent, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is guaranteed pursuant to the Guaranty, as more specifically described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement. This Note shall be governed by the internal law, and not the law of conflicts, of the State of Illinois. By: _______________________________ Print Name: _______________________ Title: ____________________________ 89 SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL TO NOTE OF ______________, DATED ______________,
Principal Amount Maturity of Principal Amount Date of Loan Interest Period Paid Unpaid Balance - --------------------------------------------------------------------------------------------------------------
90 SCHEDULE 1 LIST OF CARDINAL HEALTH, INC. SUBSIDIARIES (In Alphabetical Order - as of January 31, 2003) (See Sections 5.8 and 6.11)
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 1. Abilene Nuclear, LLC Texas - Cardinal Health, Inc. indirectly owns 80% - -------------------------------------------------------------------------------------------------------------------------------- 2. Alcon - Building Branch Puerto Rico * - -------------------------------------------------------------------------------------------------------------------------------- 3. Allcaps Weichgelatinkapseln GmbH & Co. KG Germany * - -------------------------------------------------------------------------------------------------------------------------------- 4. Allcaps Weichgelatinkapseln Verwaltungs GmbH Germany * - -------------------------------------------------------------------------------------------------------------------------------- 5. Allegiance (BVI) Holdings Co. Ltd. British Virgin Islands * - -------------------------------------------------------------------------------------------------------------------------------- 6. Allegiance AB Sweden * - -------------------------------------------------------------------------------------------------------------------------------- 7. Allegiance B.V. Netherlands * - -------------------------------------------------------------------------------------------------------------------------------- 8. Allegiance Corporation Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 9. Allegiance De Mexico, S.A. De C.V. Mexico * - -------------------------------------------------------------------------------------------------------------------------------- 10. Allegiance Healthcare (Labuan) Pte. Ltd. Malaysia * - -------------------------------------------------------------------------------------------------------------------------------- 11. Allegiance Healthcare (Thailand) Ltd. Thailand * - -------------------------------------------------------------------------------------------------------------------------------- 12. Allegiance Healthcare Canada Inc. Canada * - -------------------------------------------------------------------------------------------------------------------------------- 13. Allegiance Healthcare Deutschland GmbH Germany * - -------------------------------------------------------------------------------------------------------------------------------- 14. Allegiance Healthcare Deutschland Holding GmbH Germany * - --------------------------------------------------------------------------------------------------------------------------------
91
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 15. Allegiance Healthcare Distribution GmbH Austria * - -------------------------------------------------------------------------------------------------------------------------------- 16. Allegiance Healthcare GmbH Switzerland * - -------------------------------------------------------------------------------------------------------------------------------- 17. Allegiance Healthcare Holding B.V. Netherlands * - -------------------------------------------------------------------------------------------------------------------------------- 18. Allegiance Healthcare International GmbH Austria * - -------------------------------------------------------------------------------------------------------------------------------- 19. Allegiance Healthcare Limited United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 20. Allegiance International Manufacturing (Bermuda) Bermuda * Ltd. - -------------------------------------------------------------------------------------------------------------------------------- 21. Allegiance K. K. Japan * - -------------------------------------------------------------------------------------------------------------------------------- 22. Allegiance Labuan Holdings Pte. Ltd. Malaysia * - -------------------------------------------------------------------------------------------------------------------------------- 23. Allegiance Medica S.R.L. Italy * - -------------------------------------------------------------------------------------------------------------------------------- 24. Allegiance S.L. Spain * - -------------------------------------------------------------------------------------------------------------------------------- 25. Allegiance S.P.R.L. Belgium * - -------------------------------------------------------------------------------------------------------------------------------- 26. Allegiance Sante S.A.S France * - -------------------------------------------------------------------------------------------------------------------------------- 27. Allegiance Trading GmbH Switzerland * - -------------------------------------------------------------------------------------------------------------------------------- 28. Alsyn Corporativos, S.A. de C.V. Mexico * - -------------------------------------------------------------------------------------------------------------------------------- 29. Anem-IX S.A.R.L. France * - --------------------------------------------------------------------------------------------------------------------------------
92
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 30. Arclight Systems LLC Delaware - Cardinal indirectly has a 36.2% equity ownership. This ownership % will decrease over time (ultimately to 20%.) - Several other retail drugstore chains own the rest of the units. - -------------------------------------------------------------------------------------------------------------------------------- 31. Armand Scott, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 32. Axiom Healthcare Services Pty. Ltd. Australia * - -------------------------------------------------------------------------------------------------------------------------------- 33. Bauer Branc Dominican Republic * - -------------------------------------------------------------------------------------------------------------------------------- 34. Becquerel & Sievert Co., Ltd. Taiwan * - -------------------------------------------------------------------------------------------------------------------------------- 35. Beijing Syncor Medicine Corporation, Ltd. China - Cardinal Health, Inc. indirectly owns 89.5% - -------------------------------------------------------------------------------------------------------------------------------- 36. Beijing Syncor Star Medicine Technology Co., Ltd. China * - -------------------------------------------------------------------------------------------------------------------------------- 37. BLP-Dover Acquisition Corp. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 38. BLP-Liberty Acquisition Corp. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 39. Boron LePore, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 40. C. International, Inc. Ohio * - -------------------------------------------------------------------------------------------------------------------------------- 41. Cardal, Inc. Ohio * - -------------------------------------------------------------------------------------------------------------------------------- 42. Cardinal Distribution Holding Corporation - I Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 43. Cardinal Distribution Holding Corporation - II Nevada * - --------------------------------------------------------------------------------------------------------------------------------
93
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 44. Cardinal Health (Europe) GmbH Switzerland * - -------------------------------------------------------------------------------------------------------------------------------- 45. Cardinal Health 100, Inc. Indiana * (f/k/a Bindley Western Industries, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 46. Cardinal Health 101, Inc. Delaware * (f/k/a Cardinal Health Provider Pharmacy Services, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 47. Cardinal Health 102, Inc. Ohio * (f/k/a Cardinal Health Staffing Network, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 48. Cardinal Health 103, Inc. Mississippi * (f/k/a Cardinal Southeast, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 49. Cardinal Health 104 LP Ohio * (f/k/a Cardinal Distribution LP) - -------------------------------------------------------------------------------------------------------------------------------- 50. Cardinal Health 105, Inc. Ohio * (f/k/a CORD Logistics, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 51. Cardinal Health 106, Inc. Massachusetts * (f/k/a James W. Daly, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 52. Cardinal Health 107, Inc. Ohio * (f/k/a National Pharmpak Services, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 53. Cardinal Health 108, Inc. Tennessee * (f/k/a National Specialty Services, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 54. Cardinal Health 109, Inc. Texas * (f/k/a Owen Healthcare, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 55. Cardinal Health 110, Inc. Delaware * (f/k/a Whitmire Distribution Corporation) - -------------------------------------------------------------------------------------------------------------------------------- 56. Cardinal Health 2, Inc. Nevada * (f/k/a The Griffin Group, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 57. Cardinal Health 200, Inc. Delaware * (f/k/a Allegiance Healthcare Corporation) - -------------------------------------------------------------------------------------------------------------------------------- 58. Cardinal Health 201, Inc. Delaware * (f/k/a Allegiance Healthcare International, Inc.) - --------------------------------------------------------------------------------------------------------------------------------
94
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 59. Cardinal Health 3, Inc. Nevada * (f/k/a Red Wing Data Corporation) - -------------------------------------------------------------------------------------------------------------------------------- 60. Cardinal Health 301, Inc. Delaware * (f/k/a Pyxis Corporation) - -------------------------------------------------------------------------------------------------------------------------------- 61. Cardinal Health 400, Inc. Illinois * (f/k/a Automatic Liquid Packaging, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 62. Cardinal Health 401, Inc. Delaware * (f/k/a Boron, LePore & Associates, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 63. Cardinal Health 402, Inc. Delaware * (f/k/a Cardinal Health Pharmaceutical Technologies & Services Center, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 64. Cardinal Health 403, Inc. Delaware * (f/k/a Enhanced Derm Technologies, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 65. Cardinal Health 404, Inc. Delaware * (f/k/a International Processing Corporation) - -------------------------------------------------------------------------------------------------------------------------------- 66. Cardinal Health 405, Inc. North Carolina * (f/k/a Magellan Pharmaceutical Development, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 67. Cardinal Health 406, Inc. Pennsylvania * (f/k/a Packaging Coordinators, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 68. Cardinal Health 407, Inc. Delaware * (f/k/a PCI Services, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 69. Cardinal Health 408, Inc. New Jersey * (f/k/a PCI, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 70. Cardinal Health 409, Inc. Delaware * (f/k/a R.P. Scherer Corporation) - -------------------------------------------------------------------------------------------------------------------------------- 71. Cardinal Health 410, Inc. Delaware * (f/k/a R.P. Scherer West, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 72. Cardinal Health 411, Inc. Ohio * (f/k/a RedKey, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 73. Cardinal Health 412, Inc. Georgia * (f/k/a Central Pharmacy Services, Inc.) - --------------------------------------------------------------------------------------------------------------------------------
95
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 74. Cardinal Health 413, Inc. Delaware * (f/k/a PCI West, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 75. Cardinal Health 414, Inc. Delaware * (f/k/a Syncor International Corporation) - -------------------------------------------------------------------------------------------------------------------------------- 76. Cardinal Health 415, Inc. Delaware * (f/k/a Syncor Management Corporation) - -------------------------------------------------------------------------------------------------------------------------------- 77. Cardinal Health 416, Inc. Delaware * (f/k/a PCI Services II, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 78. Cardinal Health 417, Inc. Delaware * (f/k/a PCI Services III, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 79. Cardinal Health Australia 200 Pty Ltd Australia * (f/k/a Allegiance Healthcare Pty Ltd) - -------------------------------------------------------------------------------------------------------------------------------- 80. Cardinal Health Brasil 402 Ltda. Brazil * (f/k/a R.P. Scherer do Brasil Encapsulacoes, Ltda.) - -------------------------------------------------------------------------------------------------------------------------------- 81. Cardinal Health Canada 301, Inc. Canada * (f/k/a H.E.N. Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 82. Cardinal Health Canada 302, Inc. Canada * (f/k/a Pyxis Healthcare Systems, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 83. Cardinal Health Canada 403, Inc. Canada * (f/k/a R.P. Scherer Canada Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 84. Cardinal Health Capital Corporation Ohio * - -------------------------------------------------------------------------------------------------------------------------------- 85. Cardinal Health Finance United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 86. Cardinal Health Funding, LLC Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 87. Cardinal Health GbR Germany * - -------------------------------------------------------------------------------------------------------------------------------- 88. Cardinal Health Germany GmbH Germany * - --------------------------------------------------------------------------------------------------------------------------------
96
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 89. Cardinal Health Holding GmbH Germany * - -------------------------------------------------------------------------------------------------------------------------------- 90. Cardinal Health Holding International, Inc. New Jersey * - -------------------------------------------------------------------------------------------------------------------------------- 91. Cardinal Health Holding Pty Ltd Australia * - -------------------------------------------------------------------------------------------------------------------------------- 92. Cardinal Health Holdings Ltd. United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 93. Cardinal Health I, Inc. Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 94. Cardinal Health International Ventures, Ltd. Barbados * - -------------------------------------------------------------------------------------------------------------------------------- 95. Cardinal Health Ireland 406 Ltd. Ireland * (f/k/a Cardinal Health Technologies Ltd.) - -------------------------------------------------------------------------------------------------------------------------------- 96. Cardinal Health Japan 408 K.K. Japan * (f/k/a R.P. Scherer K.K.) - -------------------------------------------------------------------------------------------------------------------------------- 97. Cardinal Health Lease Funding 2002A LLC Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 98. Cardinal Health Lease Funding 2002AQ LLC Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 99. Cardinal Health Malaysia 211 Sdn. Bhd. Malaysia * (f/k/a Allegiance Healthcare Sdn. Bhd.) - -------------------------------------------------------------------------------------------------------------------------------- 100. Cardinal Health Manufacturing Services B. V. The Netherlands * - -------------------------------------------------------------------------------------------------------------------------------- 101. Cardinal Health N.Z. 217 Limited New Zealand * [f/k/a Cardinal Health (N.Z.) Limited] - -------------------------------------------------------------------------------------------------------------------------------- 102. Cardinal Health P.R. 218, Inc. Puerto Rico * (f/k/a Allegiance PRO, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 103. Cardinal Health P.R. 410, Inc. Puerto Rico * (f/k/a PCI Services I, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 104. Cardinal Health PTS, Inc. Delaware * - --------------------------------------------------------------------------------------------------------------------------------
97
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 105. Cardinal Health Systems, Inc. Ohio * - -------------------------------------------------------------------------------------------------------------------------------- 106. Cardinal Health Technologies, LLC Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 107. Cardinal Health, Inc. Ohio * - -------------------------------------------------------------------------------------------------------------------------------- 108. Cardinal.com Holdings, Inc. Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 109. Cascade Development, Inc. Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 110. CDI Investments, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 111. Central Source, Inc. Alabama * - -------------------------------------------------------------------------------------------------------------------------------- 112. Cheng du Syncor Pharmaceutical Co., Ltd. China * - -------------------------------------------------------------------------------------------------------------------------------- 113. Cirmex de Chihuahua S.A. de C.V. Mexico * - -------------------------------------------------------------------------------------------------------------------------------- 114. Cirpro de Delicias S.A. de C.V. Mexico * - -------------------------------------------------------------------------------------------------------------------------------- 115. CMI Net, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 116. Comprehensive Medical Imaging Centers, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 117. Comprehensive Medical Imaging, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 118. Comprehensive Medical Imaging--Anaheim Hills, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 119. Comprehensive Medical Imaging--Apple Valley, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 120. Comprehensive Medical Imaging--Bakersfield, Inc. Delaware * - --------------------------------------------------------------------------------------------------------------------------------
98
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 121. Comprehensive Medical Imaging--Biltmore, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 122. Comprehensive Medical Imaging--Boynton Beach, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 123. Comprehensive Medical Imaging--Downey, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 124. Comprehensive Medical Imaging--Encino, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 125. Comprehensive Medical Imaging--Fairfax, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 126. Comprehensive Medical Imaging--Fort Lauderdale, Delaware * Inc. - -------------------------------------------------------------------------------------------------------------------------------- 127. Comprehensive Medical Imaging--Fremont, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 128. Comprehensive Medical Imaging--Hesperia, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 129. Comprehensive Medical Imaging--Huntington Beach, Delaware * Inc. - -------------------------------------------------------------------------------------------------------------------------------- 130. Comprehensive Medical Imaging--Palm Beach Gardens, Delaware * Inc. - -------------------------------------------------------------------------------------------------------------------------------- 131. Comprehensive Medical Imaging--Palm Springs, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 132. Comprehensive Medical Imaging--Rancho Cucamonga, Delaware * Inc. - -------------------------------------------------------------------------------------------------------------------------------- 133. Comprehensive Medical Imaging--Rancho Mirage, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 134. Comprehensive Medical Imaging--Salisbury, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 135. Comprehensive Medical Imaging--San Francisco, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 136. Comprehensive Medical Imaging--Santa Maria, Inc. Delaware * - --------------------------------------------------------------------------------------------------------------------------------
99
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 137. Comprehensive Medical Imaging--Sherman Oaks, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 138. Comprehensive Medical Imaging--Tempe, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 139. Comprehensive Medical Imaging--Van Nuys, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 140. Comprehensive Medical Imaging--Victorville, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 141. Comprehensive Medical Imaging--Westlake Village, Delaware * Inc. - -------------------------------------------------------------------------------------------------------------------------------- 142. Comprehensive OPEN MRI - Carmichael, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 143. Comprehensive OPEN MRI--Carmichael/Folsom, LLC California * - -------------------------------------------------------------------------------------------------------------------------------- 144. Comprehensive OPEN MRI--East Mesa, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 145. Comprehensive OPEN MRI--Folsom, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 146. Comprehensive OPEN MRI--Fullerton, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 147. Comprehensive OPEN MRI--Garland, Inc. Texas * - -------------------------------------------------------------------------------------------------------------------------------- 148. Comprehensive OPEN MRI--Laguna Hills, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 149. Comprehensive OPEN MRI--Sacramento, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 150. Consumer2Patient, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 151. Converters Branch Dominican Republic * - -------------------------------------------------------------------------------------------------------------------------------- 152. Convertors de Mexico S.A. de C.V. Mexico * - --------------------------------------------------------------------------------------------------------------------------------
100
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - ----------------------------------------------------------------------------------------------------------------------------------- 153. Corona Regional Medical Imaging, LLC California * - ----------------------------------------------------------------------------------------------------------------------------------- 154. Desert PET, LLC California - Cardinal Health, Inc. indirectly owns 99% - ----------------------------------------------------------------------------------------------------------------------------------- 155. Diagnostic Purchasing Group, Inc. Delaware * - ----------------------------------------------------------------------------------------------------------------------------------- 156. Diversicor International Ltd. Bahamas * (This company is being dissolved) - ----------------------------------------------------------------------------------------------------------------------------------- 157. Dutch American Manufacturers (D.A.M.) B.V. Netherlands * - ----------------------------------------------------------------------------------------------------------------------------------- 158. EGIS Holdings, Inc. Delaware * - ----------------------------------------------------------------------------------------------------------------------------------- 159. Ellipticare, LLC Delaware * - ----------------------------------------------------------------------------------------------------------------------------------- 160. Eon Media Inc. Delaware * - ----------------------------------------------------------------------------------------------------------------------------------- 161. EPIC Insurance Company Vermont * - ----------------------------------------------------------------------------------------------------------------------------------- 162. Eurovac Limited Malta * - ----------------------------------------------------------------------------------------------------------------------------------- 163. F&F Holding GmbH Germany * - ----------------------------------------------------------------------------------------------------------------------------------- 164. Gala Design, Inc. Delaware - Cardinal Health, Inc. owns 60.8% - ----------------------------------------------------------------------------------------------------------------------------------- 165. Global Healthcare Exchange, LLC Delaware - A Delaware limited liability company of which HealthNexis LLC acquired a 20% equity interest. Cardinal Health, Inc. owns approximately 6% - ----------------------------------------------------------------------------------------------------------------------------------- 166. Greenville MRI, Ltd. Texas - Cardinal Health, Inc. indirectly owns 62.72% - ----------------------------------------------------------------------------------------------------------------------------------- 167. Griffin Capital, LLC Nevada * - -----------------------------------------------------------------------------------------------------------------------------------
101
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 168. Griffin Group Document Management Services, Inc. Nevada * (f/k/a Supplyline Holdings, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 169. Heartland Diagnostic Services, Inc. Wisconsin * - -------------------------------------------------------------------------------------------------------------------------------- 170. Herd Mundy Richardson (Holdings) Limited United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 171. Herd Mundy Richardson Limited United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 172. IMI Diagnostic Center, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 173. IMI of Arlington, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 174. IMI of Boca Raton, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 175. IMI of Kansas City, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 176. IMI of Miami, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 177. IMI of North Miami Beach, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 178. IMI-NET, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 179. InGel Technologies Ltd. United Kingdom - Cardinal Health, Inc. indirectly owns 5%. - -------------------------------------------------------------------------------------------------------------------------------- 180. Inland Empire Regional PET Center, LLC California - Cardinal Health, Inc. indirectly owns 50% - -------------------------------------------------------------------------------------------------------------------------------- 181. InteCardia-TN East Catheterization, LLC Tennessee - Cardinal Health, Inc. indirectly owns 75% - -------------------------------------------------------------------------------------------------------------------------------- 182. InteCardia-TN East Diagnostic, LLC North Carolina * - -------------------------------------------------------------------------------------------------------------------------------- 183. International Capsule Company S.r.l. Italy * - --------------------------------------------------------------------------------------------------------------------------------
102
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 184. International Medical Products B.V. Netherlands * - -------------------------------------------------------------------------------------------------------------------------------- 185. Jefferson MRI, JV Texas * - -------------------------------------------------------------------------------------------------------------------------------- 186. Jefferson MRI--Bala, JV Texas * - -------------------------------------------------------------------------------------------------------------------------------- 187. Killilea Development Company, Ltd. Ohio * - -------------------------------------------------------------------------------------------------------------------------------- 188. Lake Charles Pharmaceutical and Medical Equipment Louisiana - Cardinal Health, Inc. has indirect Supply Company, L.L.C. partial ownership. - -------------------------------------------------------------------------------------------------------------------------------- 189. Leader Drugstores, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 190. Los Gatos Imaging Center, JV Texas * - -------------------------------------------------------------------------------------------------------------------------------- 191. Managed Pharmacy Benefits, Inc. Missouri * - -------------------------------------------------------------------------------------------------------------------------------- 192. Medcon S.A. Luxembourg * - -------------------------------------------------------------------------------------------------------------------------------- 193. Medical Diagnostic Leasing, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 194. Medical Education Systems, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 195. Medical Media Communications, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 196. Medicine Shoppe Capital Corporation Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 197. Medicine Shoppe International, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 198. Medicine Shoppe Internet, Inc. Missouri * - -------------------------------------------------------------------------------------------------------------------------------- 199. MediQual Systems, Inc Delaware * - --------------------------------------------------------------------------------------------------------------------------------
103
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 200. Meditrol Automation Systems, Inc. Texas * - -------------------------------------------------------------------------------------------------------------------------------- 201. Meditrol, Inc. Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 202. Mesa MRI, JV Texas * - -------------------------------------------------------------------------------------------------------------------------------- 203. Moresville, Limited United Kingdom - Cardinal Heath, Inc. indirectly owns 50% - -------------------------------------------------------------------------------------------------------------------------------- 204. Mountain View MRI, JV Texas * - -------------------------------------------------------------------------------------------------------------------------------- 205. MRI Equipment Partners, Ltd. Texas - Cardinal Health, Inc. indirectly owns 59.16% - -------------------------------------------------------------------------------------------------------------------------------- 206. MRI of Woodbridge, JV Texas * - -------------------------------------------------------------------------------------------------------------------------------- 207. Multi-Medica S.A. Belgium * - -------------------------------------------------------------------------------------------------------------------------------- 208. NewHealthCo LLC Delaware - Cardinal Health, Inc. owns 31.029% - -------------------------------------------------------------------------------------------------------------------------------- 209. Orange County Regional PET Center-Irvine, LLC California - Cardinal Health, Inc. indirectly owns 50% - -------------------------------------------------------------------------------------------------------------------------------- 210. Owen Healthcare Building, Inc. Texas * - -------------------------------------------------------------------------------------------------------------------------------- 211. Owen Shared Services, Inc. Texas * - -------------------------------------------------------------------------------------------------------------------------------- 212. PCI Holdings (UK) Co. United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 213. PCI/Acquisition III, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 214. Pharmaceutical and Diagnostic Services, Inc. Utah - Cardinal Health, Inc. indirectly owns 50% - -------------------------------------------------------------------------------------------------------------------------------- 215. Pharmacy Automated Systems Incorporated Sdn Bhd Malaysia - Amend: Cardinal Health, Inc. indirectly owns 5% - --------------------------------------------------------------------------------------------------------------------------------
104
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 216. Pharmacy Operations of New York, Inc. New York * - -------------------------------------------------------------------------------------------------------------------------------- 217. Pharmacy Operations, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 218. Pharmatopes (Proprietary) Limited South Africa * - -------------------------------------------------------------------------------------------------------------------------------- 219. Phillipi Holdings, Inc. Ohio * - -------------------------------------------------------------------------------------------------------------------------------- 220. Phoenix Regional PET Center-Thunderbird, LLC Arizona - Cardinal Health, Inc. indirectly owns 50% - -------------------------------------------------------------------------------------------------------------------------------- 221. PhR Staffing, Inc. Texas * - -------------------------------------------------------------------------------------------------------------------------------- 222. Physicians Purchasing, Inc. Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 223. Pinnacle Intellectual Property Services Nevada * International, Inc. - -------------------------------------------------------------------------------------------------------------------------------- 224. Pinnacle Intellectual Property Services, Inc. Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 225. Princeton Diagnostic Isotopes, Inc. West Virginia * - -------------------------------------------------------------------------------------------------------------------------------- 226. Productos Urologos de Mexico S.A. de C.V Mexico * - -------------------------------------------------------------------------------------------------------------------------------- 227. Professional Health-Care Resources, Inc. Texas * - -------------------------------------------------------------------------------------------------------------------------------- 228. Pyxis Funding II, LLC Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 229. Pyxis Funding, LLC Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 230. Quiroproductos de Cuauhtemoc S.A. de C.V. Mexico * - -------------------------------------------------------------------------------------------------------------------------------- 231. R. P. Scherer Limited United Kingdom * - --------------------------------------------------------------------------------------------------------------------------------
105
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 232. R.P. Scherer (Europe) AG Switzerland * - -------------------------------------------------------------------------------------------------------------------------------- 233. R.P. Scherer (Spain) S.A. Spain * - -------------------------------------------------------------------------------------------------------------------------------- 234. R.P. Scherer Argentina S.A.I.C. Argentina * - -------------------------------------------------------------------------------------------------------------------------------- 235. R.P. Scherer DDS B.V. Netherlands * - -------------------------------------------------------------------------------------------------------------------------------- 236. R.P. Scherer Egypt Egypt - Cardinal Health, Inc. indirectly owns 10% - -------------------------------------------------------------------------------------------------------------------------------- 237. R.P. Scherer GmbH & Co. KG Germany * - -------------------------------------------------------------------------------------------------------------------------------- 238. R.P. Scherer Holdings II Limited United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 239. R.P. Scherer Holdings Limited United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 240. R.P. Scherer Holdings Pty. Ltd. Australia * - -------------------------------------------------------------------------------------------------------------------------------- 241. R.P. Scherer Inc. New Jersey * - -------------------------------------------------------------------------------------------------------------------------------- 242. R.P. Scherer Production S.A. France * - -------------------------------------------------------------------------------------------------------------------------------- 243. R.P. Scherer S.A. France * - -------------------------------------------------------------------------------------------------------------------------------- 244. R.P. Scherer S.p.A. Italy * - -------------------------------------------------------------------------------------------------------------------------------- 245. R.P. Scherer Technologies, Inc. Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 246. R.P. Scherer Verwaltungs GmbH Germany - Cardinal Health, Inc. indirectly owns 51% - -------------------------------------------------------------------------------------------------------------------------------- 247. Radiopharmacy of Boise, Inc. Delaware * - --------------------------------------------------------------------------------------------------------------------------------
106
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 248. Radiopharmacy of Lafayette, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 249. Radiopharmacy of Northern California, Inc. California * - -------------------------------------------------------------------------------------------------------------------------------- 250. Ransdell Surgical, Inc. Kentucky * - -------------------------------------------------------------------------------------------------------------------------------- 251. Riverside MRI, JV Texas * - -------------------------------------------------------------------------------------------------------------------------------- 252. RPS Technical Services, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 253. R(x)ealTIME, Inc. Nevada * - -------------------------------------------------------------------------------------------------------------------------------- 254. Sacramento High Field OPEN MRI, LLC California - Cardinal Health, Inc. indirectly owns 51% - -------------------------------------------------------------------------------------------------------------------------------- 255. San Fernando Valley Regional PET Center, LLC California - Cardinal Health, Inc. indirectly owns 50% - -------------------------------------------------------------------------------------------------------------------------------- 256. Santa Cruz Comprehensive Imaging LLC California - Cardinal Health, Inc. indirectly owns 57% - -------------------------------------------------------------------------------------------------------------------------------- 257. Santa Maria MRI, LLC California - Cardinal Health, Inc. indirectly owns 50% - -------------------------------------------------------------------------------------------------------------------------------- 258. Scela, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 259. Scherer DDS Limited United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 260. Shanghai Syncor Pharmaceutical Co., Ltd. China - Cardinal Health, Inc. indirectly owns 83.67% - -------------------------------------------------------------------------------------------------------------------------------- 261. Sierra Radiopharmacy, LLC Nevada - Cardinal Health, Inc. indirectly owns 51% - -------------------------------------------------------------------------------------------------------------------------------- 262. SOS Medical System S.A.R.L. France * - --------------------------------------------------------------------------------------------------------------------------------
107
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 263. Source Medical Corporation Canada - Cardinal Health, Inc. indirectly owns 50% of common shares & 100% of preferred share (1 share) - -------------------------------------------------------------------------------------------------------------------------------- 264. STI Deutschland GmbH Surgical Technologies Germany * International - -------------------------------------------------------------------------------------------------------------------------------- 265. Strategic Implications International, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 266. Supplyline Technologies Limited Ireland * - -------------------------------------------------------------------------------------------------------------------------------- 267. Surgical Technologies B.V. Netherlands * - -------------------------------------------------------------------------------------------------------------------------------- 268. Surgi-Tech Europa Divisione Surgi-Tech Italia SRL Italy * - -------------------------------------------------------------------------------------------------------------------------------- 269. Syncor (Nanjing) Medical Science Company, Ltd. China * - -------------------------------------------------------------------------------------------------------------------------------- 270. Syncor (Nanjing) Medical Science Company, Ltd. China * Beijing Branch Branch of Syncor (Nanjing) - -------------------------------------------------------------------------------------------------------------------------------- 271. Syncor (Trinidad & Tobago) Unlimited Trinidad & Tobago * - -------------------------------------------------------------------------------------------------------------------------------- 272. Syncor Advanced Isotopes, LLC Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 273. Syncor Australia Pty Ltd. Australia * - -------------------------------------------------------------------------------------------------------------------------------- 274. Syncor Belgium SPRL Belgium * - -------------------------------------------------------------------------------------------------------------------------------- 275. Syncor Cardiology Services, LLC Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 276. Syncor de Colombia Ltda. Colombia * - -------------------------------------------------------------------------------------------------------------------------------- 277. Syncor de Mexico S. de R.L. de C.V. Mexico * - --------------------------------------------------------------------------------------------------------------------------------
108
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 278. Syncor Diagnostics Bakersfield, LLC California * - -------------------------------------------------------------------------------------------------------------------------------- 279. Syncor Diagnostics Dallas, LLC Texas * - -------------------------------------------------------------------------------------------------------------------------------- 280. Syncor Diagnostics Encino, LLC California * - -------------------------------------------------------------------------------------------------------------------------------- 281. Syncor Diagnostics Fullerton LLC California * - -------------------------------------------------------------------------------------------------------------------------------- 282. Syncor Diagnostics Laguna Hills LLC California * - -------------------------------------------------------------------------------------------------------------------------------- 283. Syncor Diagnostics Plano, LLC Texas * - -------------------------------------------------------------------------------------------------------------------------------- 284. Syncor Diagnostics Sacramento LLC California * - -------------------------------------------------------------------------------------------------------------------------------- 285. Syncor do Brasil Ltda. Brazil * - -------------------------------------------------------------------------------------------------------------------------------- 286. Syncor Financing Corporation Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 287. Syncor Guyana Inc. Guyana * - -------------------------------------------------------------------------------------------------------------------------------- 288. Syncor Hong Kong Limited Hong Kong * - -------------------------------------------------------------------------------------------------------------------------------- 289. Syncor International (Thailand) Co., Ltd. Thailand * - -------------------------------------------------------------------------------------------------------------------------------- 290. Syncor Italy s.r.l. Italy * - -------------------------------------------------------------------------------------------------------------------------------- 291. Syncor Korea, Inc. South Korea * - -------------------------------------------------------------------------------------------------------------------------------- 292. Syncor Midland, Inc. Texas * - -------------------------------------------------------------------------------------------------------------------------------- 293. Syncor New Zealand Limited New Zealand * - -------------------------------------------------------------------------------------------------------------------------------- 294. Syncor Overseas Ltd. British Virgin Islands * - --------------------------------------------------------------------------------------------------------------------------------
109
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 295. Syncor Pharmaceuticals, Inc. Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 296. Syncor Philippines, Inc. Philippines * - -------------------------------------------------------------------------------------------------------------------------------- 297. Syncor Radiation Management, LLC Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 298. Syncor Radiofarmacos, S.L. Spain * - -------------------------------------------------------------------------------------------------------------------------------- 299. Syncor St. Lucia, Inc. Saint Lucia * - -------------------------------------------------------------------------------------------------------------------------------- 300. Syncor Taiwan, Inc. Taiwan * - -------------------------------------------------------------------------------------------------------------------------------- 301. Syncor Trinidad & Tobago Trinidad & Tobago * (Branch of Syncor Overseas) - -------------------------------------------------------------------------------------------------------------------------------- 302. Syncor Unidad Central de Radiofarmacia de Galicia, Spain - Cardinal Health, Inc. indirectly owns S.L. 70% - -------------------------------------------------------------------------------------------------------------------------------- 303. Syncor-Caribe Puerto Rico * - -------------------------------------------------------------------------------------------------------------------------------- 304. TME Arizona, Inc. Texas * - -------------------------------------------------------------------------------------------------------------------------------- 305. Unipack, Ltd. United Kingdom * - -------------------------------------------------------------------------------------------------------------------------------- 306. Valencia MRI, LLC California - Cardinal Health, Inc. indirectly owns 50% - -------------------------------------------------------------------------------------------------------------------------------- 307. Vallejo Open MRI, LLC California - Cardinal Health, Inc. indirectly owns 50% - -------------------------------------------------------------------------------------------------------------------------------- 308. Virginia Imaging Center, LLC Virginia - Cardinal Health, Inc. indirectly owns 90% - -------------------------------------------------------------------------------------------------------------------------------- 309. Vistant Corporation Delaware * - -------------------------------------------------------------------------------------------------------------------------------- 310. Vistant Holdings, Inc. Nevada * - --------------------------------------------------------------------------------------------------------------------------------
110
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME OF INCORPORATION by Cardinal Health, Inc.) - -------------------------------------------------------------------------------------------------------------------------------- 311. West Texas Nuclear Pharmacy Partners Texas - Cardinal Health, Inc. indirectly owns 50% - --------------------------------------------------------------------------------------------------------------------------------
111 SCHEDULE 1 (CONTINUED) SUBSIDIARY BORROWERS None as of the Effective Date. 112 SCHEDULE 3 EURODOLLAR PAYMENT OFFICES OF THE AGENT Eurodollar Payment Office Bank One, NA Chicago, Illinois 113 SCHEDULE 4 LENDING INSTALLATIONS
Lender Floating Rate Loans Eurocurrency Loans (list all) ------ ------------------- ---------------------------- Bank One, NA Bank One, NA, Chicago, Illinois Bank One, NA, Chicago, Illinois Bank One, NA, London Branch (for Multicurrency Loans) Bank of America, N.A. Bank of America, N.A. Bank of America, N.A. Deutsche Bank AG New York Branch Deutsche Bank AG New York Branch Deutsche Bank AG New York Branch Barclays Bank PLC Barclays Bank PLC Barclays Bank PLC Wachovia Bank, National Association Wachovia Bank, National Association Wachovia Bank, National Association Credit Suisse First Boston, acting through Credit Suisse First Boston, acting through Credit Suisse First Boston, acting its Cayman Islands Branch its Cayman Islands Branch through its Cayman Islands Branch UBS AG Cayman Islands Branch UBS AG Cayman Islands Branch UBS AG Cayman Islands Branch The Bank of Tokyo-Mitsubishi., LTD., Chicago The Bank of Tokyo-Mitsubishi, LTD., Chicago The Bank of Tokyo-Mitsubishi, LTD., Branch Branch Chicago Branch Fleet National Bank Fleet National Bank Fleet National Bank The Bank of Nova Scotia The Bank of Nova Scotia The Bank of Nova Scotia SunTrust Bank SunTrust Bank SunTrust Bank PNC Bank, National Association PNC Bank, National Association PNC Bank, National Association National City Bank National City Bank National City Bank Banco Bilbao Vizcaya Argentaria S.A. Banco Bilbao Vizcaya Argentaria S.A. Banco Bilbao Vizcaya Argentaria S.A. Banca Intesa S.P.A. Banca Intesa S.P.A. Banca Intesa S.P.A. The Bank of New York The Bank of New York The Bank of New York ABN AMRO Bank N.V. ABN AMRO Bank N.V. ABN AMRO Bank N.V. Fifth Third Bank (Central Ohio) Fifth Third Bank (Central Ohio) Fifth Third Bank (Central Ohio) U.S. Bank National Association U.S. Bank National Association U.S. Bank National Association Allied Irish Banks p.l.c. Allied Irish Banks p.l.c. Allied Irish Banks p.l.c. Credit Lyonnais-S.A. Credit Lyonnais-S.A. Credit Lyonnais-S.A.
114 SCHEDULE 7 LITIGATION/CONTINGENT LIABILITIES Those litigation/contingent liabilities items disclosed in Part II, Item I of the Company's Form 10-Q for the quarter ended December 31, 2002 filed with the Securities and Exchange Commission on February 14, 2003. 115 SCHEDULE 8 PERSONS AUTHORIZED TO GIVE TELEPHONE INSTRUCTIONS Donna Brandin, SVP and Treasurer Alex Choi, VP and Asst. Treasurer Jared Poff, Director - Finance and Investments 116 EX-10.03 5 l00848aexv10w03.txt EX-10.03 FIVE YEAR CREDIT AGREEMENT Exhibit 10.03 CARDINAL HEALTH, INC. FIVE-YEAR CREDIT AGREEMENT DATED AS OF MARCH 27, 2003 THE SUBSIDIARY BORROWERS PARTY HERETO, THE LENDERS PARTY HERETO AND BANK ONE, NA, AS ADMINISTRATIVE AGENT BANK OF AMERICA N.A., AS SYNDICATION AGENT WACHOVIA BANK, NATIONAL ASSOCIATION, AS SYNDICATION AGENT BARCLAYS BANK PLC, AS DOCUMENTATION AGENT CREDIT SUISSE FIRST BOSTON, AS DOCUMENTATION AGENT DEUTSCHE BANK SECURITIES, INC., AS DOCUMENTATION AGENT BANC ONE CAPITAL MARKETS, INC., AS LEAD ARRANGER AND BOOK MANAGER TABLE OF CONTENTS Article I. DEFINITIONS................................................................................ 1 Article II. THE CREDITS............................................................................... 17 2.1 Commitments of the Lenders and Swing Line Facility.................................. 17 2.2 Determination of Dollar Amounts; Termination........................................ 21 2.3 Ratable Loans....................................................................... 21 2.4 Types of Advances................................................................... 21 2.5 Facility Fee; Reductions in Aggregate Commitment; Utilization Fee................... 21 2.6 Minimum Amount of Each Advance...................................................... 22 2.7 Prepayments......................................................................... 22 2.8 Method of Selecting Types and Interest Periods for New Advances..................... 23 2.9 Conversion and Continuation of Outstanding Advances................................. 23 2.10 Method of Borrowing................................................................. 24 2.11 Changes in Interest Rate, etc....................................................... 25 2.12 Rates Applicable After Default...................................................... 25 2.13 Method of Payment................................................................... 25 2.14 Noteless Agreement; Evidence of Indebtedness........................................ 26 2.15 Telephonic Notices.................................................................. 27 2.16 Interest Payment Dates; Interest and Fee Basis...................................... 27 2.17 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions..... 27 2.18 Lending Installations............................................................... 28 2.19 Non-Receipt of Funds by the Administrative Agent.................................... 28 2.20 Facility LCs........................................................................ 29 2.21 Market Disruption................................................................... 33 2.22 Judgment Currency................................................................... 33 2.23 Payment Provisions Relating to the Euro............................................. 33 2.24 Redenomination and Alternative Currencies........................................... 34
2.25 Replacement of Lender............................................................... 34 2.26 Application of Payments with Respect to Defaulting Lenders.......................... 35 Article III. YIELD PROTECTION; TAXES.................................................................. 35 3.1 Yield Protection.................................................................... 35 3.2 Changes in Capital Adequacy Regulations............................................. 36 3.3 Availability of Types of Advances................................................... 37 3.4 Funding Indemnification............................................................. 37 3.5 Taxes............................................................................... 37 3.6 Lender Statements; Survival of Indemnity............................................ 39 Article IV. CONDITIONS PRECEDENT...................................................................... 39 4.1 Initial Credit Extension............................................................ 39 4.2 Each Credit Extension............................................................... 41 Article V. REPRESENTATIONS AND WARRANTIES............................................................. 41 5.1 Existence and Standing.............................................................. 41 5.2 Authorization and Validity.......................................................... 42 5.3 No Conflict; Government Consent..................................................... 42 5.4 Financial Statements................................................................ 42 5.5 Material Adverse Change............................................................. 42 5.6 Taxes............................................................................... 42 5.7 Litigation and Contingent Obligations............................................... 43 5.8 Subsidiaries........................................................................ 43 5.9 ERISA............................................................................... 43 5.10 Accuracy of Information............................................................. 44 5.11 Regulation U........................................................................ 44 5.12 Maintenance of Property............................................................. 44 5.13 Insurance........................................................................... 44 5.14 Plan Assets; Prohibited Transactions................................................ 44 5.15 Environmental Matters............................................................... 44 5.16 Investment Company Act.............................................................. 45 5.17 Public Utility Holding Company Act.................................................. 45
5.18 Default............................................................................. 45 5.19 Reportable Transaction.............................................................. 45 Article VI. COVENANTS................................................................................. 45 6.1 Financial Reporting................................................................. 45 6.2 Use of Proceeds..................................................................... 46 6.3 Notice of Default................................................................... 46 6.4 Conduct of Business; Maintenance of Property........................................ 46 6.5 Taxes............................................................................... 47 6.6 Insurance........................................................................... 47 6.7 Compliance with Laws................................................................ 47 6.8 Inspection.......................................................................... 47 6.9 Merger.............................................................................. 47 6.10 Sale of Assets...................................................................... 47 6.11 Investments......................................................................... 48 6.12 Liens............................................................................... 48 6.13 Subsidiary Indebtedness. ........................................................... 50 6.14 Limitation on Restrictions on Significant Subsidiary Distributions. ................ 51 6.15 Contingent Obligations.............................................................. 51 6.16 Minimum Net Worth................................................................... 52 Article VII. DEFAULTS................................................................................. 52 Article VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.......................................... 53 8.1 Acceleration; Facility LC Collateral Account........................................ 53 8.2 Amendments.......................................................................... 54 8.3 Preservation of Rights.............................................................. 55 Article IX. GENERAL PROVISIONS........................................................................ 56 9.1 Survival of Representations......................................................... 56 9.2 Governmental Regulation............................................................. 56 9.3 Headings............................................................................ 56 9.4 Entire Agreement.................................................................... 56 9.5 Several Obligations; Benefits of this Agreement..................................... 56
9.6 Expenses; Indemnification........................................................... 56 9.7 Numbers of Documents................................................................ 57 9.8 Accounting.......................................................................... 57 9.9 Severability of Provisions.......................................................... 57 9.10 Nonliability of Lenders............................................................. 57 9.11 Confidentiality; Disclosure......................................................... 58 9.12 Nonreliance......................................................................... 58 Article X. THE AGENT.................................................................................. 58 10.1 Appointment; Nature of Relationship................................................. 58 10.2 Powers.............................................................................. 59 10.3 General Immunity.................................................................... 59 10.4 No Responsibility for Loans, Recitals, etc.......................................... 59 10.5 Action on Instructions of Lenders................................................... 59 10.6 Employment of Agents and Counsel.................................................... 60 10.7 Reliance on Documents; Counsel...................................................... 60 10.8 Administrative Agent's Reimbursement and Indemnification............................ 60 10.9 Notice of Default................................................................... 61 10.10 Rights as a Lender.................................................................. 61 10.11 Lender Credit Decision.............................................................. 61 10.12 Successor Administrative Agent...................................................... 61 10.13 Administrative Agent's Fee.......................................................... 62 10.14 Delegation to Affiliates............................................................ 62 10.15 Administrative Agent, Syndication Agents, Documentation Agents, Lead Arranger, etc.. 62 Article XI. SETOFF; RATABLE PAYMENTS.................................................................. 62 11.1 Setoff.............................................................................. 62 11.2 Ratable Payments.................................................................... 63 Article XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS........................................ 63 12.1 Successors and Assigns.............................................................. 63 12.2 Participations...................................................................... 63
12.3 Assignments......................................................................... 64 12.4 Dissemination of Information........................................................ 65 12.5 Tax Treatment....................................................................... 65 12.6 Transfer to an SPC.................................................................. 66 Article XIII. NOTICES................................................................................. 66 13.1 Notices............................................................................. 66 13.2 Change of Address................................................................... 67 Article XIV. COUNTERPARTS............................................................................. 67 Article XV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL......................................................................................... 67 15.1 CHOICE OF LAW....................................................................... 67 15.2 CONSENT TO JURISDICTION............................................................. 67 15.3 WAIVER OF JURY TRIAL................................................................ 68
Exhibits: Exhibit A Form of Opinion Exhibit B Compliance Certificate Exhibit C Assignment Agreement Exhibit D Loan/Credit Related Money Transfer instructions Exhibit E Note Exhibit F Swingline Note Schedules: Pricing Schedule Schedule 1 Subsidiary and Other Investments Schedule 3 Euro currency Payment Offices of the Agent Schedule 4 Lending Installations Schedule 5 Alternate Currency Commitment Schedule 6 Multicurrency Commitment Schedule 7 Litigation/Contingent Liabilities Schedule 8 Persons Authorized to Give Telephone Instructions FIVE-YEAR CREDIT AGREEMENT This Agreement, dated as of March 27, 2003, is among Cardinal Health, Inc. (the "Company"), certain Subsidiaries of the Company (the "Subsidiary Borrowers", and together with the Company, the "Borrowers"), the lenders party hereto from time to time (the "Lenders"), and Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as Administrative Agent and as LC Issuer. The parties hereto agree as follows: ARTICLE I. DEFINITIONS As used in this Agreement: "364-Day Credit Agreement" means the 364-Day Credit Agreement dated the date hereof between the Company, the Subsidiary Borrowers party thereto, the Lenders and the Administrative Agent, as Administrative Agent, as such agreement may be amended, restated or extended from time to time. "Acquisition" means any transaction, or any series of related transactions, consummated on or after the date of this Agreement, by which the Company or any of its Subsidiaries (i) acquires any going business or all or substantially all of the assets of any firm, corporation or limited liability company, or division thereof, whether through purchase of assets, merger or otherwise or (ii) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the securities of a corporation which have ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) or a majority (by percentage or voting power) of the outstanding ownership interests of a partnership or limited liability company. "Adjusted Tangible Net Worth" means, as of any date, (i) the amount of any capital stock, paid in capital and similar equity accounts plus (or minus in the case of a deficit) the capital surplus and retained earnings of the Company and its consolidated Subsidiaries, but excluding the amount of any foreign currency translation adjustment account shown as a capital account, less (ii) the net book value of all items of the following character which are included in the assets of the Company and its consolidated Subsidiaries: (a) goodwill, including, without limitation, the excess of cost over book value of any asset, (b) organization or experimental expenses, (c) unamortized debt discount and expense, (d) patents, trademarks, trade names and copyrights, (e) treasury stock, (f) franchises, licenses and permits, and (g) other assets which are deemed intangible assets under Agreement Accounting Principles. "Administrative Agent" means Bank One, NA in its capacity as contractual representative of the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Article X. "Advance" means a borrowing hereunder, (i) made by one or more Lenders on the same Borrowing Date, or (ii) converted or continued by the Lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurocurrency Loans, in the same Agreed Currency and for the same Interest Period. The term "Advance" shall include Swingline Loans unless otherwise expressly provided. 1 "Affiliate" of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 10% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "Aggregate Commitment" means the aggregate of the Commitments of all the Lenders, as reduced from time to time pursuant to the terms hereof. As of the date of this Agreement, the original Aggregate Commitment was $750,000,000. "Aggregate Dollar Commitments" means at any date of determination with respect to all Lenders, an amount equal to the Dollar Commitments of all Lenders on such date. "Aggregate Dollar Outstanding Credit Exposure" means as at any date of determination with respect to any Lender, the sum of (i) aggregate unpaid principal amount of such Lender's Dollar Loans on such date, plus (ii) an amount equal to its Pro Rata Share of the LC Obligations on such date, plus (iii) an amount equal to its Pro Rata Share of the aggregate principal amount of Swingline Loans outstanding on such date. "Aggregate Multicurrency Commitments" means at any date of determination with respect to all Multicurrency Lenders, an amount equal to the Multicurrency Commitments of all Multicurrency Lenders on such date. "Aggregate Multicurrency Outstanding Credit Exposure" means as at any date of determination with respect to any Lender, the Equivalent Amount of the aggregate unpaid principal amount of such Lender's Multicurrency Loans and Alternate Currency Loans on such date. "Aggregate Outstanding Credit Exposure" means as at any date of determination with respect to any Lender, the sum of such Lender's Aggregate Dollar Outstanding Credit Exposure and Aggregate Multicurrency Outstanding Credit Exposure on such date. "Agreed Currencies" means (i) Dollars, and (ii) so long as such currencies remain Eligible Currencies, (A) with respect to any Multicurrency Commitment, the Euro and British Pounds Sterling, (B) with respect to any Alternate Currency Commitment, any Alternate Currency and (C) with respect to the Swingline Commitment, Euros, Australian Dollars, Canadian Dollars and any other Eligible Currency acceptable to the Swingline Lender. "Agreement" means this credit agreement, as it may be amended or modified and in effect from time to time. "Agreement Accounting Principles" means generally accepted accounting principles in the United States of America in effect from time to time, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.4; provided, however, that if any change in Agreement Accounting Principles from those applied in preparing such financial statements affects the calculation of any financial covenant contained in this Agreement, the Borrowers and the Administrative Agent hereby agree to negotiate in good faith towards making appropriate amendments acceptable to the Required Lenders to the provisions of this Agreement to reflect as nearly as possible the effect of the financial covenants as in effect on the date hereof. 2 "Alternate Base Rate" means, for any day, a rate of interest per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum. "Alternate Currency" means any Eligible Currency which the Company requests the Administrative Agent to include as an Alternate Currency hereunder and which is acceptable to one or more of the applicable Alternate Currency Lenders, and with respect to which an Alternate Currency Addendum has been executed among the Company, a Subsidiary Borrower, one or more Alternate Currency Lenders and the Administrative Agent in connection therewith. "Alternate Currency Addendum" means a schedule and addendum entered into among the Company, a Subsidiary Borrower, one or more Alternate Currency Lenders and the Administrative Agent, in form and substance satisfactory to the Administrative Agent, the Company, such Subsidiary Borrower and such Alternate Currency Lenders party thereto. "Alternate Currency Commitment" means a portion of the Multicurrency Commitment equal to, for each Alternate Currency Lender and for each Alternate Currency, the obligation of such Alternate Currency Lender to make Alternate Currency Loans not exceeding the Equivalent Amount set forth in Schedule 5 or the applicable Alternate Currency Addendum, as such amount may be modified from time to time pursuant to the terms of this Agreement and the applicable Alternate Currency Addendum. "Alternate Currency Lender" means any Lender (including any Lending Installation) party to an Alternate Currency Addendum. "Alternate Currency Loan" means any Loan denominated in an Alternate Currency made by the Administrative Agent or one or more of the Alternate Currency Lenders to a Borrower pursuant to this Agreement and the applicable Alternate Currency Addendum. "Alternate Currency Rate" means, with respect to any Alternate Currency Loan, such publicly announced interbank rate as is customary for prime bank deposits or loans in the currency of such Alternate Currency Loan and in the financial center where the Alternate Currency Lenders would fund such Loan, or such other rate as may be set forth in the applicable Alternate Currency Addendum. "Alternate Currency Share" means, with respect to any Alternate Currency Lender for any particular Alternate Currency, the percentage obtained by dividing (a) such Alternate Currency Lender's Alternate Currency Commitment at such time as set forth in the applicable Alternate Currency Addendum by (b) the aggregate of the Alternate Currency Commitments at such time of all Alternate Currency Lenders with respect to such Alternate Currency as set forth in the applicable Alternate Currency Addendum. "Applicable Fee Rate" means, at any time, the percentage rate per annum at which Facility Fees are accruing on the Aggregate Commitment (without regard to usage) at such time as set forth in the Pricing Schedule. "Applicable Margin" means, with respect to any Eurocurrency Loan, Floating Rate Loan, the Facility Fee or the LC Fee, as the case may be at any time, the applicable percentage which is applicable at such time set forth in the Pricing Schedule provided that upon the occurrence and during the continuation of a Default, the Applicable Margin shall be the highest Applicable Margin set forth in the Pricing Schedule. 3 "Approved Fund" means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. "Article" means an article of this Agreement unless another document is specifically referenced. "Australian Dollars" or "AUS$" shall mean the lawful currency of the Commonwealth of Australia. "Authorized Officer" means any of the Chairman, Chief Executive Officer, President, Vice Chairman, Chief Financial Officer, Controller, or Treasurer of a Borrower, or their equivalent, acting singly. "Available Dollar Commitment" means at any date of determination with respect to any Lender, the amount of such Lender's Dollar Commitment in effect on such date reduced by the Aggregate Dollar Outstanding Credit Exposure of such Lender on such date. "Available Multicurrency Commitment" means at any date of determination with respect to any Multicurrency Lender, the amount of such Multicurrency Lender's Multicurrency Commitment in effect on such date reduced by the sum of (i) the Equivalent Amount of any unused Alternate Currency Commitment of such Multicurrency Lender on such date, and (ii) the Aggregate Multicurrency Outstanding Credit Exposure of such Multicurrency Lender on such date. "Bank One" means Bank One, NA, in its individual capacity, and its successors. "Borrowers" means the Company and the Subsidiary Borrowers, and "Borrower" means any of them, as the context may require. "Borrowing Date" means a date on which an Advance is made hereunder. "Borrowing Notice" is defined in Section 2.8. "British Pounds Sterling" or "(pound)" means the lawful currency of the United Kingdom of Great Britain. "Business Day" means (i) with respect to any borrowing, payment or rate selection of Eurocurrency Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities and on which dealings in the Agreed Currencies of the relevant Eurocurrency Advances are carried on in the London interbank market and (and, if the Advances which are the subject of such borrowing, payment or rate selection are denominated in Euros, a day upon which a clearing system as determined by the Administrative Agent to be suitable for clearing or settlement of the Euro is open for business), and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities. "Canadian Dollars" or "C$" shall mean the lawful currency of the Dominion of Canada. "Capitalized Lease" of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. 4 "Capitalized Lease Obligations" of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles. "Cash Equivalent Investments" means (i) short-term obligations of, or fully guaranteed by, the United States of America, (ii) commercial paper rated A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts maintained in the ordinary course of business, (iv) certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000, (v) banker's acceptances, (vi) money-market funds, provided that such funds invest solely in securities otherwise described in this definition, (vii) variable rate demand notes, (viii) municipal preferred stock, (ix) cash market preferred stock, and (x) short term municipal notes; provided in each case that the same provides for payment of both principal and interest (and not principal alone or interest alone) and is not subject to any contingency regarding the payment of principal or interest. "Change in Control" means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding shares of voting stock of the Company, provided, however, that the acquisitions by or on behalf of a Plan, an employee stock purchase plan of the Company, or by Persons who before such acquisition were officers, directors, employees or who held in the aggregate not less than 5% of the outstanding shares of voting stock of the Company shall not be included in determining whether a Change in Control shall have occurred. "Closing Date" shall mean March 27, 2003. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "Collateral Shortfall Amount" is defined in Section 8.1. "Commitment" means, for each Lender, the obligation of such Lender to make Loans to, and participate in Swingline Loans and Facility LCs issued upon the application of, a Borrower in an aggregate amount not exceeding the amount set forth opposite its signature below or as set forth in any assignment that has become effective pursuant to Section 12.3.2, as such amount may be modified from time to time pursuant to the terms hereof. "Commitment Percentage" means as to any Lender, the percentage which such Lender's Commitment then constitutes of the Aggregate Commitment (or, if the Commitments have terminated or expired, the percentage which (a) the Aggregate Outstanding Credit Exposure of such Lender at such time constitutes of (b) the Aggregate Outstanding Credit Exposure of all Lenders at such time). "Company" means Cardinal Health, Inc., an Ohio corporation, and it successors and assigns. "Computation Date" is defined in Section 2.2. "Consolidated or "consolidated" means, when used with reference to any financial term in this Agreement, the aggregate for two or more Persons of the amounts signified by such term for all such Persons determined on a consolidated basis in accordance with Agreement Accounting Principles. 5 "Contingent Obligation" of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person for Indebtedness, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract, operating lease, securitization transaction or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership, provided, however, that any assumption, guaranty, endorsement or undertaking with respect to any liability of any of its Subsidiaries to any other of its Subsidiaries shall not be a Contingent Obligation of the Company. "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. "Conversion/Continuation Notice" is defined in Section 2.9. "Cost Rate" means 1. The cost of compliance with existing requirements of the Bank of England and/or the Financial Services Authority (or any authority which replaces all or any of their functions) in respect of Advances denominated in British Pounds Sterling will be calculated by the Administrative Agent in relation to each Advance on the basis of rates supplied by the Administrative Agent by reference to the circumstances existing on the first day of each Interest Period in respect of such Advance and, if any such Interest Period exceeds three months, at three calendar monthly intervals from the first day of such Interest Period during its duration in accordance with the following formula: AB +C(B-D) + E x 0.01 per cent per annum 100 - (A+C) Where: A. is the percentage of eligible liabilities (assuming these to be in excess of any stated minimum) which the Administrative Agent is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements. B. is the percentage rate per annum at which British Pounds Sterling deposits are offered by the Administrative Agent in accordance with its normal practice, for a period equal to (a) the relevant Interest Period (or, as the case may be, remainder of such Interest Period) in respect of the relevant Advance of (b) three months, whichever is the shorter, to a leading bank in the London Interbank Market at or about 11:00 a.m. in a sum approximately equal to the amount of such Advance. C. is the percentage of eligible liabilities which the Administrative Agent is required from time to time to maintain as interest bearing special deposits with the Bank of England. D. is the percentage rate per annum payable by the Bank of England to the Administrative Agent on interest bearing special deposits. E. is the rate payable by the Administrative Agent to the Financial Services Authority pursuant to the Fees Regulations (but, for this purpose, the figure at paragraph [2.02b]/[2.03b] of the Fees 6 Regulations shall be deemed to be zero) and expressed in pounds per L1,000,000 of the Fee Base of the Administrative Agent. 2. For the purposes of this definition: (a) "eligible liabilities" and "special deposits" shall bear the meanings ascribed to them from time to time under or pursuant to the Bank of England Act 1998 or (as appropriate) by the Bank of England; (b) "Fees Regulations" shall mean the Banking Supervision (Fees) Regulations 1998 or such other regulations as may be in force from time to time in respect of the payment of fees for banking supervision; and (c) "Fee Base" shall bear the meaning ascribed to it, and shall be calculated in accordance with, the Fees Regulations. 3. The percentages used in A and C above shall be those required to be maintained on the first day of the relevant period as determined in accordance with B above. 4. In application of the above formula, A, B, C and D will be included in the formula as figures and not as percentages e.g. if A is 0.5 per cent and B is 12 per cent, AB will be calculated as 0.5 x 12 and not as 0.5 per cent x 12 per cent. 5. Calculations will be made on the basis of a 365 day year (or, if market practice differs, in accordance with market practice). 6. A negative result obtained by subtracting D from B shall be taken as zero. 7. The resulting figures shall be rounded upwards, if not already such a multiple, to the nearest whole multiple of one-thirty second of one percent per annum. 8. Additional amounts calculated in accordance with this definition are payable at the same time that accrued interest is payable for the Interest Period to which they relate. 9. The determination of the Cost Rate by the Administrative Agent in relation to any period shall, in the absence of manifest error, be conclusive and binding on all of the parties hereto. 10. The Administrative Agent may from time to time, after consultation with the Company and the Lenders, determine and notify to all parties any amendments or variations which are required to be made to the formula set out above in order to comply with any requirements from time to time imposed by the Bank of England or the Financial Services Authority (or any other authority which replaces all or any of their functions) in relation to Advances denominated in British Pounds Sterling (including any requirements relating to sterling primary liquidity) and, any such determination shall, in the absence of manifest error, be conclusive and binding on all the parties hereto. "Credit Extension" means the making of an Advance or the issuance of a Facility LC hereunder. "Credit Extension Date" means the Borrowing Date for an Advance or the issuance date for a Facility LC. "Default" means an event described in Article VII. 7 "Defaulting Lender" means any Lender that (a) on any Borrowing Date fails to make available to the Administrative Agent such Lender's Loans required to be made to a Borrower on such Borrowing Date or any payment required to be made pursuant to Section 2.1(a)(iv), (b) shall not have made a payment to the Swingline Lender pursuant to Section 2.1(b)(iii), or (c) shall not have made available to the Administrative Agent its proportionate share of the Unpaid Amount as required pursuant to Section 2.19(b). Once a Lender becomes a Defaulting Lender, such Lender shall continue as a Defaulting Lender until such time as such Defaulting Lender makes available to the Administrative Agent the amount of such Defaulting Lender's Loans together with all other amounts required to be paid to the Administrative Agent, the Swingline Lender or any other Lender pursuant to this Agreement. "Documentation Agents" means Credit Suisse First Boston, Deutsche Bank Securities, Inc. and Barclays Bank PLC. "Dollar Advance" means a borrowing hereunder (or continuation or a conversion thereof) consisting of the several Dollar Loans made on the same Borrowing Date (or date of conversion or continuation) by the Lenders to a Borrower of the same Type and for the same Interest Period. "Dollar Amount" of any currency at any date shall mean (i) the amount of such currency if such currency is Dollars or (ii) the Equivalent Amount of Dollars if such currency is any currency other than Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Administrative Agent for such currency on the London market at 11:00 a.m., London time, on or as of the most recent Computation Date provided for in Section 2.2. "Dollar Commitment" means for each Lender the aggregate amount set forth opposite its name on Schedule 6, provided, however that the Aggregate Dollar Commitments of the Lenders shall not exceed $650,000,000. "Dollar Commitment Percentage" means as to any Lender, the percentage which such Lender's Dollar Commitment then constitutes of the aggregate Dollar Commitments of all Lenders (or, if the Commitments have terminated or expired, the percentage which (a) the Aggregate Dollar Outstanding Credit Exposure of such Lender at such time constitutes of (b) the Aggregate Dollar Outstanding Credit Exposure of all Lenders at such time). "Dollar Loans" means, with respect to a Lender, such Lender's Loans made pursuant to Section 2.1(a)(i). "Dollars" and "$" shall mean the lawful currency of the United States of America. "Eligible Currency" means any currency (i) that is readily available, (ii) that is freely traded, (iii) in which deposits are customarily offered to banks in the London interbank market, (iv) which is convertible into Dollars in the international interbank market and (v) as to which an Equivalent Amount may be readily calculated. If, after the designation of any currency as an Agreed Currency, (x) currency control or other exchange regulations are imposed in the country in which such currency is issued with the result that different types of such currency are introduced, (y) such currency is, in the determination of the Administrative Agent, no longer readily available or freely traded or (z) in the determination of the Administrative Agent, an Equivalent Amount of such currency is not readily calculable, the Administrative Agent shall promptly notify the Lenders and the Borrowers, and such currency shall no longer be an Agreed Currency until such time as the requisite Lenders agree to reinstate such currency as an Agreed Currency and promptly, but in any event within five Business Days of receipt of such notice from the Administrative Agent, the Borrowers shall repay all Loans in such affected currency or convert such Loans into Loans in Dollars or another Agreed Currency, subject to the other terms set forth in Article II. 8 "EMU Legislation" means legislative measures of the European Union for the introduction of, changeover to or operation of the Euro in one or more member states. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (i) the protection of the environment, (ii) the effect of the environment on human health, (iii) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (iv) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "Equivalent Amount" of any currency with respect to any amount of Dollars at any date shall mean the equivalent in such currency of such amount of Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Administrative Agent for such other currency at 11:00 a.m., London time, on the date on or as of which such amount is to be determined. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder. "Euro" and/or "EUR" means euro referred to in Council Regulation (EC) No. 1103/97 dated June 17, 1997 passed by the Council of the European Union, or, if different, the then lawful currency of the member states of the European Union that participate in the third stage of Economic and Monetary Union. "Eurocurrency" means any Agreed Currency. "Eurocurrency Advance" means an Advance comprised of Eurocurrency Loans. "Eurocurrency Loan" means a Loan which, except as otherwise provided in Section 2.12, bears interest at the applicable Eurocurrency Rate. "Eurocurrency Payment Office" of the Administrative Agent shall mean, for each of the Agreed Currencies, the office, branch, affiliate or correspondent bank of the Administrative Agent specified as the "Eurocurrency Payment Office" for such currency in Schedule 3 hereto or such other office, branch, affiliate or correspondent bank of the Administrative Agent as it may from time to time specify to the Borrowers and each Lender as its Eurocurrency Payment Office. "Eurocurrency Rate" means, with respect to a Eurocurrency Advance for the relevant Interest Period, the sum of (i) the quotient of (a) the Eurocurrency Reference Rate applicable to such Interest Period, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the Applicable Margin. The Eurocurrency Rate shall be expressed as a percentage rounded to four decimal places. "Eurocurrency Reference Rate" means, with respect to each Interest Period for a Multicurrency Advance: (a) the rate per annum quoted at or about 11:00 a.m. (London time) on the Quotation Date for such period on that page of the Telerate Screen, Reuters or Bloombergs which displays British Bankers Association Interest Settlement Rates for deposits in the relevant Agreed Currency for such period or, if such page or service shall cease to be available, such other page or such other service (as the 9 case may be) for the purpose of displaying British Bankers Association Interest Settlement Rates for such currency as the Administrative Agent, in its discretion, shall select. (b) If no such rate is displayed for the relevant currency and the relevant period and there is no alternative service on which two or more such quotations for the Agreed Currency are displayed, "Eurocurrency Reference Rate" will be the rate at which deposits in the Agreed Currency of that amount are offered by the Administrative Agent for that period to prime banks in the London interbank market at or about 11:00 a.m. (London time) on the Quotation Date for such period. Plus, in each case, the Cost Rate; and with respect to a Dollar Advance for the relevant Interest Period, the rate determined by the Administrative Agent to be the rate at which Bank One offers to place Eurodollar deposits with first-class banks in the London interbank market at 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period in the approximate amount of the relevant Dollar Loan of Bank One and having a maturity equal to such Interest Period. "Excluded Taxes" means, in the case of each Lender or applicable Lending Installation and the Administrative Agent, taxes imposed on its overall net income, and franchise taxes (and any interest, fees or penalties for late payment thereof) imposed on it by (i) the jurisdiction under the laws of which such Lender or the Administrative Agent is incorporated or organized or (ii) the jurisdiction in which the Administrative Agent's or such Lender's principal executive office or such Lender's applicable Lending Installation is located. "Exhibit" refers to an exhibit to this Agreement, unless another document is specifically referenced. "Facility LC" is defined in Section 2.20.1. "Facility LC Application" is defined in Section 2.20.3. "Facility LC Collateral Account" is defined in Section 2.20.11. "Facility Termination Date" means March 27, 2008, or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof. "Federal Funds Effective Rate" means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for such day, the average of the quotations at approximately 10:00 a.m. (Chicago time) on such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion. "Financial Contract" of a Person means (a) any exchange-traded or over the counter futures, forward, swap or option contract or other financial instrument with similar characteristics or (b) any Rate Hedging Agreement. "Floating Rate" means, for any day, a rate per annum equal to the Alternate Base Rate for such day in each case changing when and as the Alternate Base Rate changes. "Floating Rate Advance" means an Advance comprised of Floating Rate Loans. 10 "Floating Rate Loan" means a Dollar Loan which, except as otherwise provided in Section 2.12, bears interest at the Floating Rate. "Fund" means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. "Guarantor" means the Company and its successors and assigns. "Guaranty" means that certain Guaranty dated the date hereof executed by the Guarantor in favor of the Administrative Agent, for the ratable benefit of the Lenders, as it may be amended or modified and in effect from time to time. "Indebtedness" of a Person means, as of any date, such Person's (i) obligations for borrowed money or evidenced by bonds, notes, acceptances, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or bankers' acceptances, (ii) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (iv) obligations of such Person to purchase securities or other Property arising out of or in connection with the sale of the same or substantially similar securities or Property, (v) Capitalized Lease Obligations, (vi) any other obligation for borrowed money or other financial accommodation which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person, (vii) any Rate Hedging Obligations of such Person, and (viii) all Contingent Obligations of such Person with respect to or relating to the indebtedness, obligations and liabilities of others similar in character to those described in clauses (i) through (vii) of this definition. "Interest Period" means, with respect to a Eurocurrency Advance, a period of one, two, three or six months (or such longer or shorter period requested by the Borrower and acceptable to all of the Lenders), commencing on a Business Day selected by the Borrower pursuant to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such date one, two, three or six months thereafter (or such longer or shorter period requested by the Borrower and acceptable to all of the Lenders), provided, however, that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month, such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month. If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided, however, that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day. "Investment" of a Person means any loan, advance (other than commission, travel and similar advances to officers and employees made in the ordinary course of business), extension of credit (other than accounts receivable arising in the ordinary course of business on terms customary in the trade) or contribution of capital by such Person; stocks, bonds, mutual funds, partnership interests, notes, debentures or other securities owned by such Person; any certificate of deposit owned by such Person; and structured notes, derivative financial instruments and other similar instruments or contracts owned by such Person. "LC Fee" is defined in Section 2.20.4. "LC Issuer" means Bank One (or any subsidiary or affiliate of Bank One designated by Bank One) in its capacity as issuer of Facility LCs hereunder. 11 "LC Obligations" means, at any time, the sum, without duplication, of (i) the aggregate undrawn stated amount under all Facility LCs outstanding at such time plus (ii) the aggregate unpaid amount at such time of all Reimbursement Obligations. "LC Payment Date" is defined in Section 2.20.5. "Lead Arranger" means Banc One Capital Markets, Inc., a Delaware corporation, and its successors. "Lenders" means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. "Lending Installation" means, with respect to a Lender or the Administrative Agent, the office, branch, subsidiary or Affiliate of such Lender or the Administrative Agent with respect to each Agreed Currency listed on Schedule 4, or otherwise selected by such Lender and the Administrative Agent pursuant to Section 2.18. "Letter of Credit" of a Person means a letter of credit or similar instrument which is issued upon the application of such Person or upon which such Person is an account party or for which such Person is in any way liable. "Lien" means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement). "Loan" means, with respect to a Lender, such Lender's loan made pursuant to Article II (or any conversion or continuation thereof). "Loan Documents" means this Agreement, the Facility LC Applications, the Notes, the Guaranty and any other instrument or document executed in connection with any of the foregoing at any time. "Material Adverse Effect" means a material adverse effect on (i) the business, Property, condition (financial or otherwise), results of operations, or prospects of the Company and its Subsidiaries taken as a whole, (ii) the ability of the Company to perform its obligations under the Loan Documents to which it is a party, or (iii) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent, the LC Issuer or the Lenders thereunder. "Modify" and "Modification" are defined in Section 2.20.1. "Moody's" means Moody's Investors Service, Inc. "Multicurrency Advance" means a borrowing hereunder (or continuation or a conversion thereof) consisting of the several Multicurrency Loans made on the same Borrowing Date (or date of conversion or continuation) by the Lenders to a Borrower of the same Type and for the same Interest Period. "Multicurrency Commitment" means for each Lender the aggregate amount set forth as its Multicurrency Commitment on Schedule 6 or as set forth in any assignment that has become effective pursuant to Section 12.3.2, as such amount shall be modified from time to time pursuant to the terms hereof, provided, however that the Aggregate Multicurrency Commitments of the Lenders shall not exceed the Equivalent Amount of $100,000,000. 12 "Multicurrency Commitment Percentage" means as to any Multicurrency Lender, the percentage which such Multicurrency Lender's Multicurrency Commitment then constitutes of the Aggregate Multicurrency Commitments (or, if the Multicurrency Commitments have terminated or expired, the percentage which (a) the Aggregate Multicurrency Outstanding Credit Exposure of such Multicurrency Lender at such time constitutes of (b) the Aggregate Multicurrency Outstanding Credit Exposure of all Multicurrency Lenders at such time). "Multicurrency Lender" means each Lender having a Multicurrency Commitment. "Multicurrency Loans" means, with respect to a Multicurrency Lender, such Lender's Loans made pursuant to Section 2.1(a)(ii). "Multiemployer Plan" means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which the Company is a party to which more than one employer is obligated to make contributions. "National Currency Unit" means the unit of currency (other than a Euro) of a Participating Member State. "Net Worth" means at any time the consolidated stockholder's equity of the Company and its Subsidiaries calculated on a consolidated basis as of such time in accordance with Agreement Accounting Principles. "Non-U.S. Borrower" is defined in Section 3.1(b). "Non-U.S. Lender" is defined in Section 3.5(iv). "Note" means any promissory note issued at the request of a Lender pursuant to Section 2.14 in the form of Exhibit E. "Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrowers to the Lenders or to any Lender, the LC Issuer, the Administrative Agent or any indemnified party arising under the Loan Documents. "Other Taxes" is defined in Section 3.5(ii). "Overdue Rate" means a per annum rate that is equal to the sum of two percent (2%) plus the Alternate Base Rate, changing as and when the Alternate Base Rate changes or, with respect to any Alternate Currency Loan, such other overdue rate, if any, as specified in the applicable Alternate Currency Addendum. "Participants" is defined in Section 12.2.1. "Participating Member State" means any member state of the European Union which has the Euro as its lawful currency. "Payment Date" means the last day of each calendar quarter, commencing June 30, 2003. "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. 13 "Person" means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof. "Plan" means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and as to which the Company or any member of the Controlled Group may have any liability. "Pricing Schedule" means the Schedule attached hereto identified as such. "Prime Rate" means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes. "Property" of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned or leased by such Person. "Pro Rata Share" means, with respect to a Lender, (i) in reference to the Dollar Commitment, a portion equal to a fraction the numerator of which is such Lender's Dollar Commitment and the denominator of which is the Aggregate Dollar Commitment, (ii) in reference to the Multicurrency Commitment, a portion equal to a fraction the numerator of which is such Lender's Multicurrency Commitment and the denominator of which is the Aggregate Multicurrency Commitment, and (iii) in reference to the Aggregate Commitment, a portion equal to a fraction the numerator of which is such Lender's Commitment and the denominator of which is the Aggregate Commitment. "Purchasers" is defined in Section 12.3.1. "Quotation Date" in relation to any period for which a Eurocurrency Reference Rate for an Agreed Currency other than Dollars is to be determined hereunder, means the date on which quotations would ordinarily be given by prime lenders in the London inter-bank market for deposits in the Agreed Currency in relation to which such rate is to be determined for delivery on the first day of that period, provided that, if, for such period, quotations would ordinarily be given on more than one date, the Quotation Date for that period shall be the last of those dates. "Rate Hedging Agreement" means an agreement, device or arrangement providing for payments which are related to fluctuations of interest rates, exchange rates or forward rates, including, but not limited to, dollar-denominated or cross-currency interest rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate currency or interest rate options, puts and warrants. "Rate Hedging Obligations" of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Rate Hedging Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Rate Hedging Agreement. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System. 14 "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System. "Reimbursement Obligations" means, at any time, the aggregate of all obligations of the Borrowers then outstanding under Section 2.20 to reimburse the LC Issuer for amounts paid by the LC Issuer in respect of any one or more drawings under Facility LCs. "Reportable Event" means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided, however, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code. "Required Lenders" means Lenders in the aggregate having at least 51% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least 51% of the Aggregate Outstanding Credit Exposure. "Reserve Requirement" means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities. "Significant Subsidiary" means any Subsidiary of the Company that would be a "significant subsidiary" within the meaning of Rule 1-02 of the Securities and Exchange Commission's Regulation S-X if 5% were substituted for 10% wherever it occurs in such Rule. "S&P" means Standard and Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. "Schedule" refers to a specific schedule to this Agreement, unless another document is specifically referenced. "Section" means a numbered section of this Agreement, unless another document is specifically referenced. "Single Employer Plan" means a Plan maintained by the Company or any member of the Controlled Group for employees of the Company or any member of the Controlled Group. "Subsequent Participant" means any member state of the European Union that adopts the Euro as its lawful currency after the date of this Agreement. "Subsidiary" of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a "Subsidiary" shall mean a Subsidiary of the Company. 15 "Subsidiary Borrower" means each Subsidiary of the Company listed as a Subsidiary Borrower on Schedule 1 as amended from time to time in accordance with Section 5.8. "Substantial Portion" means, with respect to the Property of the Company and its Subsidiaries, Property which (i) represents more than 20% of the consolidated assets of the Company and its Subsidiaries as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the twelve-month period ending with the month in which such determination is made, or (ii) is responsible for more than 20% of the consolidated net sales or of the consolidated net income of the Company and its Subsidiaries as reflected in the financial statements referred to in clause (i) above. "Swingline Commitment" means the obligation of the Swingline Lender to make Swingline Loans up to a maximum principal amount of $50,000,000 at any one time outstanding. "Swingline Lender" means Bank One or such other Lender which may succeed to its rights and obligations as Swingline Lender pursuant to the terms of this Agreement. "Swingline Loan" means any borrowing under Section 2.8 evidenced by the Swingline Note and made by the Swingline Lender pursuant to Section 2.1(b). "Swingline Note" means the promissory note of the Company evidencing the Swingline Loans, in substantially the same form as Exhibit F hereto, as amended or modified at the time such Swingline Loan is made to the Company. "Syndication Agents" means Bank of America N.A. and Wachovia Bank, National Association. "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes. "Transferee" is defined in Section 12.4. "Type" means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurocurrency Advance. "Unfunded Liabilities" means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Single Employer Plans exceeds the fair market value of all such Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plans using PBGC actuarial assumptions for single employer plan terminations. "Unpaid Amount" is defined in Section 2.19(b). "Unmatured Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. "Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. 16 The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. ARTICLE II. THE CREDITS 2.1 Commitments of the Lenders and Swing Line Facility. (a) Revolving Credit Advances. (i) From and including the date of this Agreement and prior to the Facility Termination Date, each Lender severally agrees, for itself only, subject to the terms and conditions set forth in this Agreement, to (i) make Loans to the Borrowers in Dollars from time to time and (ii) participate in (A) Facility LCs denominated in Dollars issued upon the request of a Borrower and (B) Swingline Loans, in aggregate amounts not to exceed in the aggregate at any one time outstanding the amount of its Dollar Commitment. Each Dollar Advance of Loans pursuant to this Section 2.1(a)(i) shall consist of Dollar Loans made by each Lender ratably in proportion to such Lender's respective Available Dollar Commitment divided by the aggregate Available Dollar Commitments of all Lenders at such time. The LC Issuer will issue Facility LCs hereunder on the terms and conditions set forth in Section 2.20. (ii) From and including the date of this Agreement and prior to the Facility Termination Date, each Multicurrency Lender agrees, for itself only, subject to the terms and conditions set forth in this Agreement, to make Multicurrency Loans to the Borrowers in Agreed Currencies from time to time prior to the Facility Termination Date so long as after giving effect thereto and any concurrent repayment or prepayment of Loans (x) the Available Multicurrency Commitment of each Multicurrency Lender is greater than or equal to zero, (y) the Equivalent Amount of the Aggregate Multicurrency Outstanding Credit Exposure of all Lenders does not exceed $100,000,000 and (z) the Aggregate Outstanding Credit Exposure of all Lenders does not exceed the Aggregate Commitment; provided, however, that the Borrowers shall not request, and the Multicurrency Lenders shall not make Multicurrency Loans in Dollars at any time that Available Dollar Commitment exists. Each Multicurrency Advance shall consist of Multicurrency Loans made by each Multicurrency Lender ratably in proportion to such Multicurrency Lender's respective Available Multicurrency Commitment divided by the aggregate Available Multicurrency Commitments of all Multicurrency Lenders at such time. (iii) Subject to the terms of this Agreement, the Borrowers may borrow, repay and reborrow at any time prior to the Facility Termination Date. The Commitments to lend hereunder shall expire on the Facility Termination Date. (iv) Immediately and automatically upon the occurrence of a Default under Sections 7.2, 7.6 or 7.7, (A) each Lender shall be deemed to have unconditionally and irrevocably purchased from each Multicurrency Lender, without recourse or warranty, an undivided interest in and participation in each Multicurrency Loan ratably in accordance with such Lender's Commitment Percentage, (B) immediately and automatically all Multicurrency Loans outstanding in Agreed Currencies other than Dollars shall be converted to and redenominated in Dollars equal to the Equivalent Amount of each such Multicurrency Loan determined as of the date of such conversion, (C) each Multicurrency Lender shall be deemed to have unconditionally and 17 irrevocably purchased from each Dollar Lender, without recourse or warranty, an undivided interest in and participation in each Dollar Loan ratably in accordance with such Multicurrency Lender's Commitment Percentage. Each of the Lenders shall pay to the applicable Multicurrency Lender not later than two (2) Business Days following a request for payment from such Lender, in Dollars, an amount equal to the undivided interest in and participation in the Multicurrency Loan purchased by such Lender pursuant to this Section 2.1(a)(iv), and each of the Multicurrency Lenders shall pay to the applicable Dollar Lender not later than two (2) Business Days following a request for payment from such Lender, in Dollars, an amount equal to the undivided interest in and participation in the Dollar Loan purchased by such Multicurrency Lender pursuant to this Section 2.1(a)(iv), it being the intent of the Lenders that following such equalization payments, each Lender shall hold its Commitment Percentage of the Aggregate Outstanding Credit Exposure. (b) Swingline Loans. (i) Subject to the terms and conditions of this Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrowers from time to time on any Business Day during the period from the date hereof to but excluding the Facility Termination Date in the aggregate principal outstanding amount not to exceed the Swingline Commitment, provided that after giving effect to such Swingline Loan the Equivalent Amount of the Aggregate Outstanding Credit Exposure at any time shall not exceed the Aggregate Commitment, and provided further that at no time shall the Equivalent Amount of the Aggregate Outstanding Credit Exposure of the Swingline Lender exceed the Aggregate Commitment of the Swingline Lender. Swingline Loans may be denominated in any Agreed Currency, provided, that the obligation of the Swingline Lender to make Swingline Loans in any Agreed Currency other than Dollars shall be in the Swingline Lender's sole discretion, and any such Swingline Loans shall be deemed to utilize the Swingline Lender's Multicurrency Commitment. Each Lender's Commitment shall be deemed utilized by an amount equal to such Lender's Commitment Percentage of the Dollar Amount of each Swingline Loan for purposes of determining the amount of Loans required to be made by such Lender. All Swingline Loans shall bear interest at the Alternate Base Rate or such other rate as shall be agreed between the relevant Borrower and the Swingline Lender with respect to any Swingline Loan at the time such Swingline Loan is made. If any Swingline Loan is not repaid by the Borrower on the date when due, each Lender will make a Floating Rate Loan the proceeds of which will be used to repay the Swingline Loan as described in Section 2.1(b)(ii). (ii) The Swingline Lender may at any time in its sole and absolute discretion require that any Swingline Loan be refunded by a Floating Rate Advance from the Lenders, and upon written notice thereof by the Swingline Lender to the Administrative Agent, the Lenders and the relevant Borrower, such Borrower shall be deemed to have requested a Floating Rate Advance in an amount equal to the Dollar Amount of such Swingline Loan and such Floating Rate Advance shall be made to refund such Swingline Loan. Any Swingline Loan outstanding in an Agreed Currency other than Dollars, shall, upon the giving of such notice by the Swingline Lender, immediately and automatically be converted to and redenominated in Dollars equal to the Equivalent Amount of each such Swingline Loan determined as of the date of such conversion. Each Lender shall be absolutely and unconditionally obligated to fund its Commitment Percentage of such Floating Rate Advance or, if applicable, to purchase a participation interest in the Swingline Loans pursuant to Section 2.1(b)(iii) and such obligation shall not be affected by any circumstance, including, without limitation, (A) any set-off, counterclaim, recoupment, defense or other right which such Lender has or may have against the Administrative Agent or any Borrower or any of their respective Subsidiaries or anyone else for any reason whatsoever 18 (including without limitation any failure to comply with the requirements of Section 4.2, other than the Swingline Lender making a Swingline Loan when it had actual knowledge of the existence of a Default); (B) the occurrence or continuance of a Default, subject to Section 2.1(b)(iii); (C) any adverse change in the condition (financial or otherwise) of the Company or any of its Subsidiaries; (D) any breach of this Agreement by any Borrower or any of their respective Subsidiaries or any other Lender; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing (including without limitation any Borrower's failure to satisfy any conditions contained in Article IV or any other provision of this Agreement). (iii) If, for any reason (including without limitation as a result of the occurrence of a Default with respect to any Borrower pursuant to Article VII) Floating Rate Loans may not be made by the Lenders as described in Section 2.1(b)(ii), then (A) each Borrower agrees that each Swingline Loan not paid pursuant to Section 2.1(b)(ii) shall bear interest, payable on demand by the Swingline Lender, at the Overdue Rate, (B) each Borrower agrees that each Swingline Loan outstanding in an Agreed Currency other than Dollars shall be immediately and automatically converted to and redenominated in Dollars equal to the Equivalent Amount of each such Swingline Loan determined as of the date of such conversion, and (C) effective on the date each such Floating Rate Loan would otherwise have been made, each Lender severally agrees that it shall unconditionally and irrevocably, without regard to the occurrence of any Default, in lieu of deemed disbursement of loans, to the extent of such Lender's Commitment, purchase a participation interest in the Swingline Loans by paying its Commitment Percentage thereof, provided, however, that no Lender shall be obligated to purchase such participation in a Swingline Loan made by the Swingline Lender when it had actual knowledge of the existence of a Default. Each Lender will immediately transfer to the Swingline Lender, in same day funds, the amount of its participation. Each Lender shall share based on its Commitment Percentage in any interest which accrues thereon and in all repayments thereof. If and to the extent that any Lender shall not have so made the amount of such participating interest available to the Swingline Lender, such Lender and the Borrowers severally agree to pay to the Swingline Lender forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Swingline Lender until the date such amount is paid to the Swingline Lender, at (x) in the case of the Company, at the interest rate specified above and (y) in the case of such Lender, the Federal Funds Effective Rate. (c) Alternate Currency Loans. (i) Subject to the terms and conditions of this Agreement and the applicable Alternate Currency Addendum, from and including the later of the date of this Agreement and the date of execution of the applicable Alternate Currency Addendum and prior to the Facility Termination Date (unless an earlier termination date shall be specified in the applicable Alternate Currency Addendum), the Administrative Agent and the applicable Alternate Currency Lenders agree, on the terms and conditions set forth in this Agreement and in the applicable Alternate Currency Addendum, to make Alternate Currency Loans under such Alternate Currency Addendum to the applicable Borrower party to such Alternate Currency Addendum from time to time in the applicable Alternate Currency, in an amount not to exceed each such Alternate Currency Lender's applicable Alternate Currency Commitment; provided, however, (i) at no time shall the outstanding principal amount of all Alternate Currency Loans exceed the Alternate Currency Commitment for such currency, (ii) at not time shall the Aggregate Multicurrency Outstanding Credit Exposure exceed the Aggregate Multicurrency Commitments, (iii) at no time shall the aggregate outstanding principal amount of the Alternate Currency Loans for any specific 19 Alternate Currency exceed the amount specified as the maximum amount for such Alternate Currency in the applicable Alternate Currency Addendum and (iv) at no time shall the aggregate Alternate Currency Commitments exceed $50,000,000. The Equivalent Amount of any Alternate Currency Commitment of an Alternate Currency Lender shall be deemed to utilize such Lender's Multicurrency Commitment. Each Alternate Currency Loan shall consist of Alternate Currency Loans made by each applicable Alternate Currency Lender ratably in proportion to such Alternate Currency Lender's respective Alternate Currency Share. Subject to the terms of this Agreement and the applicable Alternate Currency Addendum, the Borrowers may borrow, repay and reborrow Alternate Currency Loans at any time prior to the Facility Termination Date. On the Facility Termination Date, the outstanding principal balance of the Alternate Currency Loans shall be paid in full by the applicable Borrower and prior to the Facility Termination Date prepayments of the Alternate Currency Loans shall be made by the applicable Borrower if and to the extent required by this Agreement. Subject to the applicable Alternate Currency Addendum, each Alternate Currency Loan shall have a maturity of one, two, three or six months and bear interest at the Alternate Currency Rate for such period plus the Applicable Margin as if such Loan were a Eurocurrency Loan. (ii) The Company may, by written notice to the Administrative Agent request the establishment of additional Alternate Currency Commitments in additional Alternate Currencies provided the Equivalent Amount of the Alternate Currency Commitment requested together with the Aggregate Multicurrency Outstanding Credit Exposure does not exceed the Aggregate Multicurrency Commitments ("Request for a New Alternate Currency Facility"). The Administrative Agent will promptly forward to the Multicurrency Lenders any Request for a New Alternate Currency Facility received from the Company; provided each Lender shall be deemed not to have agreed to such request unless its written consent thereto has been received by the Administrative Agent within ten (10) Business Days from the date of such notification by the Administrative Agent to such Lender (or such shorter period as shall be specified by the Company in the Request for a New Alternate Currency Facility). In the event that one or more Multicurrency Lenders consent to such Request for a New Alternate Currency Facility and agree to make Alternate Currency Loans in such Alternate Currency in an amount not less than that requested by the Company, upon execution of the applicable Alternate Currency Addendum and the other documents, instruments and agreements required pursuant to this Agreement and such Alternate Currency Addendum, the Alternate Currency Loans with respect thereto may be made. (iii) Except as otherwise required by applicable law, in no event shall the Administrative Agent or Alternate Currency Lenders have the right to accelerate the Alternate Currency Loans outstanding under any Alternate Currency Addendum or to terminate their Alternate Currency Commitments (if any) thereunder to make Alternate Currency Loans prior to the stated termination date in respect thereof, except that such Administrative Agent and Alternate Currency Lenders shall, in each case, have such rights upon an acceleration of the Loans and a termination of the Commitments pursuant to Section 8.1. (iv) Immediately and automatically upon the occurrence of a Default under Sections 7.2, 7.6 or 7.7, each Lender shall be deemed to have unconditionally and irrevocably purchased from each Alternate Currency Lender, without recourse or warranty, an undivided interest in and participation in each Alternate Currency Loan ratably in accordance with such Lender's Commitment Percentage, and immediately and automatically all Alternate Currency Loans shall be converted to and redenominated in Dollars equal to the Equivalent Amount of each such Alternate Currency Loan determined as of the date of such conversion. Each of the Lenders shall pay to the applicable Alternate Currency Lender not later than two (2) Business Days following a 20 request for payment from such Lender, in Dollars, an amount equal to the undivided interest in and participation in the Alternate Currency Loan purchased by such Lender pursuant to this Section 2.1(c)(iv). 2.2 Determination of Dollar Amounts; Termination. (i) The Administrative Agent will determine the Dollar Amount of: (a) each Advance as of the date two Business Days prior to the Borrowing Date or, if applicable, date of conversion/continuation of such Advance, (b) all outstanding Advances, LC Obligations and Alternate Currency Loans on and as of the last day of each Interest Period (but not less frequently than quarterly), on receipt of any notice from the Company as to the reduction of the Aggregate Commitment, and on any other Business Day elected by the Administrative Agent in its discretion or upon instruction by the Required Lenders; and (c) all outstanding Advances, LC Obligations and Alternate Currency Loans on each Business Day during which Aggregate Dollar Outstanding Credit Exposure together with outstanding Swingline Loans exceed $600,000,000 (or such ratable amount of any reduced Aggregate Dollar Commitments) or Aggregate Multicurrency Outstanding Credit Exposure exceeds $75,000,000 (or such ratable amount of any reduced Aggregate Multicurrency Commitments). Each day upon or as of which the Administrative Agent determines Dollar Amounts as described in the preceding clauses (a), (b) and (c) is herein described as a "Computation Date" with respect to each Advance for which a Dollar Amount is determined on or as of such day. (ii) Any outstanding Advances together with any other unpaid Obligations then due and payable shall be paid in full by the Borrowers on the Facility Termination Date. 2.3 Ratable Loans. Other than Alternate Currency Loans, each Multicurrency Advance hereunder shall consist of Multicurrency Loans made from the several Multicurrency Lenders ratably in proportion to such Multicurrency Lenders' respective Available Multicurrency Commitment divided by the aggregate Available Multicurrency Commitments of all Multicurrency Lenders at such time, and each Dollar Advance hereunder shall consist of Dollar Loans made from the Lenders ratably according to their Dollar Commitment Percentage. 2.4 Types of Advances. The Advances may be Floating Rate Advances or Eurocurrency Advances, on the one hand, and Dollar Advances or Multicurrency Advances on the other hand, or a combination thereof, selected by the relevant Borrowers in accordance with Sections 2.8 and 2.9, provided, however, that a Floating Rate Advance must also be a Dollar Advance or a Multicurrency Advance denominated in Dollars. 2.5 Facility Fee; Reductions in Aggregate Commitment; Utilization Fee. The Company agrees to pay to the Administrative Agent for the account of each Lender a facility fee, determined in accordance with the Pricing Schedule, calculated on the Aggregate Commitment, whether used or unused, payable quarterly in arrears for the ratable benefit of the Lenders from the date of this Agreement until the Facility Termination Date. The Aggregate Commitment may permanently and ratably be reduced by the Company in multiples of $10,000,000 upon three Business Days' prior written 21 notice. Any such reduction shall be allocated ratably between the Dollar Commitment and the Multicurrency Commitment. For each day on which the Aggregate Outstanding Credit Exposure exceeds 50% of the Aggregate Commitment, a utilization fee at the per annum rate set forth on the Pricing Schedule will accrue on the aggregate principal amount of outstanding Advances for the ratable benefit of the Lenders, payable in arrears on each Payment Date until the Facility Termination Date. 2.6 Minimum Amount of Each Advance. Each Eurocurrency Advance shall be in the minimum Equivalent Amount of $5,000,000 (and in multiples of Equivalent Amounts of $1,000,000 in excess thereof, or in the case of a Multicurrency Advance, such other lesser multiple as the Administrative Agent deems appropriate), and each Floating Rate Advance (other than an Advance to repay Swingline Loans) shall be in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess thereof), provided, however, that any Floating Rate Advance may be in the amount of the unused Aggregate Commitment. Each Swingline Loan denominated in Dollars shall be in the minimum amount of $5,000,000 (and in multiples of $500,000 if in excess thereof) or in the case of Swingline Loans demoninated in any currency other than Dollars, such other minimum amounts and multiples as the Swingline Lender shall determine, provided however, that any Swingline Loan may be in the amount of the unused Swingline Commitment. Alternate Currency Loans shall be in such minimum amounts as are set forth in the applicable Alternate Currency Addendum. 2.7 Prepayments. (a) The Borrowers may from time to time pay, without penalty or premium, all outstanding Floating Rate Advances, or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof, any portion of the outstanding Floating Rate Advances upon one Business Days' prior notice to the Administrative Agent, who shall give prompt notice thereof to the Lenders. (b) The Borrowers may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Eurocurrency Advances, or, in a minimum aggregate Equivalent Amount of $5,000,000 or any integral multiple Equivalent Amount of $1,000,000 in excess thereof, or in the case of a Multicurrency Advance, such other lesser multiple as the Administrative Agent deems appropriate, any portion of the outstanding Eurocurrency Advances upon three Business Days' prior notice to the Administrative Agent, who shall give prompt notice thereof to the Lenders. (c) If at any time, for any reason, the Aggregate Outstanding Credit Exposure of all Lenders shall exceed the Aggregate Commitment then in effect, the Borrowers shall, without notice or demand, immediately prepay the Dollar Loans and/or Multicurrency Loans such that the sum of the aggregate principal amount of Dollar Loans so prepaid and the Equivalent Amount of the aggregate principal amount of Multicurrency Loans so prepaid, at least equals the amount of such excess. (d) If, at any time for any reason, either (i) the Aggregate Multicurrency Outstanding Credit Exposure of all Multicurrency Lenders exceed the Aggregate Multicurrency Commitments of the Multicurrency Lenders or (ii) the Aggregate Dollar Outstanding Credit Exposure of all Lenders exceed the aggregate Dollar Commitments of all Lenders, the Borrowers shall, without notice or demand, immediately prepay the Multicurrency Loans in the Equivalent Amount at least equal to the excess referred to in (i) and the Dollar Loans in an amount at least equal to the excess referred to in (ii). 22 (e) Each prepayment pursuant to this Section 2.7 shall be accompanied by accrued and unpaid interest on the amount prepaid to the date of prepayment and any amounts payable under Section 3.4 in connection with such payment. (f) Notwithstanding the foregoing, mandatory prepayments of Multicurrency Loans that would otherwise be required pursuant to this Section 2.7 solely as a result of fluctuations in exchange rates from time to time shall only be required to be made pursuant to this Section 2.7 on a Computation Date on the basis of the exchange rates in effect on such Computation Date. 2.8 Method of Selecting Types and Interest Periods for New Advances. The Company or the relevant Borrower shall select the Type of Advance and, in the case of each Eurocurrency Advance, the Interest Period and Agreed Currency applicable thereto from time to time. The Company or the relevant Borrower shall give the Administrative Agent irrevocable notice (a "Borrowing Notice") not later than 10:00 a.m. (Chicago time) on the Borrowing Date of each Floating Rate Advance (other than Swingline Loans), not later than 11:00 a.m. (Chicago time) three Business Days before the Borrowing Date for each Eurocurrency Advance in Dollars, and not later than 11:00 a.m. (London time) three Business Days before the Borrowing Date for each Multicurrency Advance in an Agreed Currency other than Dollars, specifying: (i) the Borrower, (ii) the Borrowing Date, which shall be a Business Day, of such Advance, (iii) the aggregate amount of such Advance, (iv) the Type of Advance selected, (v) in the case of each Eurocurrency Advance, the Interest Period, and Agreed Currency applicable thereto, and (vi) details relating to funds transfer for such Advance. The Company or the relevant Borrower shall give the Administrative Agent notice of its request not later than 2:00 p.m. Chicago time on the same Business Day such Swingline Loan is requested to be made for each Swingline Loan in Dollars and not later than 2:00 p.m. London time on the same Business Day such Swingline Loan is requested to be made for each Swingline Loan in any Agreed Currency other than Dollars. Not later than noon (Chicago time) on each Borrowing Date, each Lender shall make available its Loan or Loans in funds immediately available to the Administrative Agent at its address specified pursuant to Article XIII. The Administrative Agent will make the funds so received from the Lenders available to the Borrower at the Administrative Agent's aforesaid address. 2.9 Conversion and Continuation of Outstanding Advances. Floating Rate Advances shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurocurrency Advances pursuant to this Section 2.9 or are repaid in accordance with Section 2.7. Each Eurocurrency Advance shall continue as a Eurocurrency Advance until the end of the then applicable Interest Period therefor, at which time: 23 (i) each such Eurocurrency Advance denominated in Dollars shall be automatically converted into a Floating Rate Advance unless (x) such Eurocurrency Advance is or was repaid in accordance with Section 2.7 or (y) the Borrower shall have given the Administrative Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurocurrency Advance either continue as a Eurocurrency Advance for the same or another Interest Period or be converted into a Floating Rate Advance; and (ii) each such Multicurrency Advance shall automatically continue as a Multicurrency Advance in the same Agreed Currency with an Interest Period of one month unless (x) such Multicurrency Advance is or was repaid in accordance with Section 2.7 or (y) the Borrower shall have given the Administrative Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Multicurrency Advance continue as a Multicurrency Advance for the same or another Interest Period. Subject to the terms of Section 2.6, the Borrower may elect from time to time to convert all or any part of an Advance of any Type into any other Type or Types of Advances denominated in the same or any other Agreed Currency (other than an Alternate Currency); provided that any conversion of any Eurocurrency Advance shall be made on, and only on, the last day of the Interest Period applicable thereto. The Borrower shall give the Administrative Agent irrevocable notice (a "Conversion/Continuation Notice") of each conversion of an Advance or continuation of a Eurocurrency Advance not later than 10:00 a.m. (Chicago time) at least one Business Day, in the case of a conversion into a Floating Rate Advance, three Business Days, in the case of a conversion into or continuation of a Eurocurrency Advance denominated in Dollars, or four Business Days, in the case of a conversion into or continuation of a Multicurrency Advance, prior to the date of the requested conversion or continuation, specifying: i. the requested date, which shall be a Business Day, of such conversion or continuation, and ii. the Agreed Currency, amount and Type(s) of Advance(s) into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of a Eurocurrency Advance, the duration of the Interest Period applicable thereto. 2.10 Method of Borrowing. On each Borrowing Date, each Lender shall make available its Loan or Loans, if any, (i) if such Loan is a Dollar Loan or a Multicurrency Loan denominated in Dollars, not later than noon, Chicago time, in Federal or other funds immediately available to the Administrative Agent, in Chicago, Illinois at its address specified in or pursuant to Article XIII and, (ii) if such Loan is a Multicurrency Loan, denominated in Agreed Currency other than Dollars and subject to any applicable Alternate Currency Addendum, not later than noon, local time, in the city of the Administrative Agent's Eurocurrency Payment Office for such currency, in such funds as may then be customary for the settlement of international transactions in such currency in the city of and at the address of the Administrative Agent's Eurocurrency Payment Office for such currency. Unless the Administrative Agent determines that any applicable condition specified in Article IV has not been satisfied, the Administrative Agent will make the funds so received from the Lenders available to the relevant Borrower at the Administrative Agent's aforesaid address. Notwithstanding the foregoing provisions of this Section 2.10, to the extent that a Loan made by a Lender matures on the Borrowing Date of a requested Loan in the same currency, such Lender shall apply the proceeds of the Loan it is then making to the repayment of principal of the maturing Loan. 24 2.11 Changes in Interest Rate, etc. Each Floating Rate Advance shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is converted from a Eurocurrency Advance into a Floating Rate Advance pursuant to Section 2.9 to but excluding the date it becomes due or is converted into a Eurocurrency Advance pursuant to Section 2.9 hereof, at a rate per annum equal to the Floating Rate for such day. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance will take effect simultaneously with each change in the Alternate Base Rate. Each Eurocurrency Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined by the Administrative Agent as applicable to such Eurocurrency Advance based upon the Borrower's selections under Sections 2.8 and 2.9 and otherwise in accordance with the terms hereof. No Interest Period may end after the Facility Termination Date. 2.12 Rates Applicable After Default. Notwithstanding anything to the contrary contained in Section 2.8 or 2.9, during the continuance of a Default or Unmatured Default the Required Lenders may, at their option, by notice to the Borrowers (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that no Advance may be made as, converted into or continued as a Eurocurrency Advance. During the continuance of a Default the Required Lenders may, at their option, by notice to the Borrowers (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates), declare that (i) each Eurocurrency Advance shall bear interest for the remainder of the applicable Interest Period at the rate otherwise applicable to such Interest Period plus 2% per annum and (ii) each Floating Rate Advance shall bear interest at a rate per annum equal to the Floating Rate in effect from time to time plus 2% per annum, and (iii) the LC Fee shall be increased by 2% per annum, provided that, during the continuance of a Default under Section 7.6 or 7.7, the interest rates set forth in clauses (i) and (ii) above and the increase in the LC Fee set forth in clause (iii) above shall be applicable to all Credit Extensions without any election or action on the part of the Administrative Agent or any Lender. 2.13 Method of Payment. (i) Each Advance shall be repaid and each payment of interest thereon shall be paid in the currency in which such Advance was made or converted into. All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds by wire transfer to the Administrative Agent at (except as set forth in the next sentence) the Administrative Agent's address specified pursuant to Article XIII, or at any other Lending Installation of the Administrative Agent specified in writing by the Administrative Agent to the Borrower, by noon (local time) on the date when due and (except for payments on Swingline Loans and Alternate Currency Loans and except in the case of Reimbursement Obligations for which the LC Issuer has not been fully indemnified by the Lenders or except as otherwise specifically required hereunder), shall be applied ratably by the Administrative Agent among the Lenders. All payments to be made by the Borrowers hereunder in any currency other than Dollars shall be made in such currency on the date due in such funds as may then be customary for the settlement of international transactions in such currency for the account of the Administrative Agent, at its Eurocurrency Payment Office for such currency and, except for payments of Alternate Currency Loans, shall be applied ratably by the Administrative Agent among the Lenders. Each payment delivered to the Administrative Agent for the account of any Lender shall be delivered promptly by the Administrative Agent to such Lender in the same type of funds that the Administrative Agent received at, (a) with respect to Floating Rate Loans and 25 Eurocurrency Loans denominated in Dollars, its address specified pursuant to Article XIII or at any Lending Installation specified in a notice received by the Administrative Agent from such Lender and (b) with respect to Eurocurrency Loans denominated in an Agreed Currency other than Dollars, in the funds received from the Borrower at the address of the Administrative Agent's Eurocurrency Payment Office for such currency. In relation to the payment of any amount of Euro, such amount shall be made available to the Administrative Agent in immediately available, freely transferable, cleared funds to such account with such bank in London (or such other principal financial center in such Participating Member State as the Administrative Agent may from time to time nominate for this purpose) as the Administrative Agent shall from time to time nominate for this purpose. (ii) Notwithstanding the foregoing provisions of this Section, if, after the making of any Advance in any currency other than Dollars, currency control or exchange regulations are imposed in the country which issues such currency with the result that the type of currency in which the Advance was made (the "Original Currency") no longer exists or the relevant Borrower is not able to make payment to the Administrative Agent for the account of the Lenders in such Original Currency, then all payments to be made by the Borrowers hereunder in such currency shall instead be made when due in Dollars in an amount equal to the Dollar Amount (as of the date of repayment) of such payment due, it being the intention of the parties hereto that the Borrowers take all risks of the imposition of any such currency control or exchange regulations. For purposes of this Section 2.13(ii), the commencement of the third stage of European Economic and Monetary Union shall not constitute the imposition of currency control or exchange regulations. 2.14 Noteless Agreement; Evidence of Indebtedness. (i) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (ii) The Administrative Agent shall maintain accounts in which it will record (a) the amount of each Loan made hereunder, the Agreed Currency and Type thereof and, if applicable, the Interest Period with respect thereto, (b) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder, (c) the original stated amount of each Facility LC and the amount of LC Obligations outstanding at any time, and (d) the amount of any sum received by the Administrative Agent hereunder from the Borrowers and each Lender's share thereof. (iii) The entries maintained in the accounts maintained pursuant to paragraphs (i) and (ii) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Obligations in accordance with their terms. (iv) Any Lender may request that its Loans be evidenced by a promissory note (a "Note"). In such event, the relevant Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender in a form supplied by the Administrative Agent and reasonably acceptable to the Company. Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be 26 represented by one or more Notes (but not more than one Note for each Agreed Currency) payable to the order of the payee named therein or any assignee pursuant to Section 12.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (i) and (ii) above. 2.15 Telephonic Notices. The Borrowers hereby authorize the Lenders and the Administrative Agent to extend, convert or continue Advances, effect selections of Agreed Currencies and Types of Advances and to transfer funds based on telephonic notices given to the Administrative Agent by any person or persons listed on Schedule 8, as such Schedule may be revised by the Company from time to time in accordance with Section 13.1, it being understood that the foregoing authorization is specifically intended to allow Borrowing Notices and Conversion/Continuation Notices to be given telephonically. The Borrowers agree to deliver promptly to the Administrative Agent a written confirmation, if such confirmation is requested by the Administrative Agent or any Lender, of each telephonic notice signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Administrative Agent and the Lenders, the records of the Administrative Agent regarding the telephonic notice shall govern absent manifest error. 2.16 Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which the Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest on Floating Rate Loans shall be calculated for actual days elapsed on the basis of a 365 or 366-day year, as appropriate. Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurocurrency Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurocurrency Advance shall be payable in arrears on the last day of its applicable Interest Period, on any date on which the Eurocurrency Advance is prepaid, whether by acceleration or otherwise, and at maturity, and with respect to any Alternate Currency Loan, the date specified as the date on which interest is payable in the applicable Alternate Currency Addendum. Interest accrued on each Eurocurrency Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest, facility fees and LC Fees shall be calculated for actual days elapsed on the basis of a 360-day year, except for interest on Loans denominated in British Pounds Sterling which shall be calculated for actual days elapsed on the basis of a 365-day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (local time) at the place of payment. If any payment of principal of or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment. 2.17 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions. Promptly after receipt thereof, the Administrative Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. Promptly after notice from the LC Issuer, the Administrative Agent shall notify each Lender of the contents of each request for issuance of a Facility LC hereunder. The Administrative Agent will notify each Lender, the Company and the relevant Borrower of the interest rate applicable to each Eurocurrency Advance promptly upon determination of 27 such interest rate and will give each Lender and the Company prompt notice of each change in the Alternate Base Rate. 2.18 Lending Installations. Each Lender will book its Loans and its participation in LC Obligations and the LC Issuer may book the Facility LCs at the appropriate Lending Installation listed on Schedule 4 or such other Lending Installation designated by such Lender or the LC Issuer in accordance with the final sentence of this Section 2.18. All terms of this Agreement shall apply to any such Lending Installation and the Loans, Facility LCs, participation in LC Obligations and any Notes issued hereunder shall be deemed held by each Lender or the LC Issuer, as the case may be, for the benefit of any such Lending Installation. Each Lender and the LC Issuer may, by not less than one days' prior written notice to the Administrative Agent and the Borrowers in accordance with Article XIII, designate replacement or additional Lending Installations through which Loans will be made by it or Facility LCs will be issued by it and for whose account Loan payments or payments with respect to Facility LCs are to be made. 2.19 Non-Receipt of Funds by the Administrative Agent. (a) Unless the relevant Borrower or a Lender, as the case may be, notifies the Administrative Agent prior to the date on which it is scheduled to make payment to the Administrative Agent of (i) in the case of a Lender, the proceeds of a Loan or any payment by such Lender pursuant to Sections 2.1(a)(iv), 2.1(b)(iii) or 2.1(c)(iv), or (ii) in the case of such Borrower, a payment of principal, interest or fees to the Administrative Agent for the account of the Lenders, that it does not intend to make such payment, the Administrative Agent may assume that such payment has been made. The Administrative Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or the Borrower, as the case may be, has not in fact made such payment to the Administrative Agent, the recipient of such payment shall, on demand by the Administrative Agent, repay to the Administrative Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to (x) in the case of payment by a Lender, the Federal Funds Effective Rate for such day or such other rate which is customary for the settlement of overnight interbank transactions in the currency of such payment, or (y) in the case of payment by the Borrower, the interest rate applicable to the relevant Loan. With respect to Multicurrency Advances, a payment shall be deemed to have been made by the Administrative Agent on the date on which it is required to be made under this Agreement if the Administrative Agent has, on or before that date, taken all relevant steps to make that payment. With respect to the payment of any amount denominated in Euro, the Administrative Agent shall not be liable to any Borrower or any of the Lenders in any way whatsoever for any delay, or the consequences of any delay, in the crediting to any account of any amount required by this Agreement to be paid by the Administrative Agent if the Administrative Agent shall have taken all relevant steps to achieve, on the date required by this Agreement, the payment of such amount in immediately available, freely transferable, cleared funds in Euros to the account with the bank in the principal financial center in the Participating Member State which the relevant Borrower or, as the case may be, any Lender shall have specified for such purpose. In this Section 2.19, "all relevant steps" means all such steps as may be prescribed from time to time by the regulations or operating procedures of such clearing or settlement system as the Administrative Agent may from time to time determine for the purpose of clearing or settling payments of Euros. (b) The failure of any Lender to make the Loan to be made by it as part of any Advance shall not relieve any other Lender of its obligation hereunder to make its Loan on the date of such Advance, but no Lender, except as otherwise provided in the next sentence of this Section 2.19(b), shall be responsible for the failure of a Defaulting Lender to make the Loan to be made by such Defaulting 28 Lender on the date of any Advance. Notwithstanding the foregoing sentence, but otherwise subject to the terms and conditions of this Agreement, the Administrative Agent shall notify each Lender of the failure by a Defaulting Lender to make a Dollar Loan required to be made by it hereunder (the amount not made available being the "Unpaid Amount"), and each Lender shall immediately transfer to the Administrative Agent on such date the lesser of such Lender's proportionate share (based on its Dollar Commitment divided by the Dollar Commitments of all Lenders that have not so failed to fund their Loans) of the Unpaid Amount and its unused Commitment. Any such transfer shall be deemed to be a Floating Rate Loan by such Lender. Each Defaulting Lender shall pay on demand to each other Lender that makes a payment under this Section 2.19(b) the amount paid by such other Lender to cover such failure, together with interest thereon, for each day from the date such payment was made until the date such other Lender has been paid such amount in full, at a rate per annum equal to the Federal Funds Effective Rate plus two percent (2%). 2.20 Facility LCs. 2.20.1. Issuance. The LC Issuer hereby agrees, on the terms and conditions set forth in this Agreement, to issue commercial and standby letters of credit (each, a "Facility LC") and to renew, extend, increase, decrease or otherwise modify each Facility LC ("Modify," and each such action a "Modification"), from time to time from and including the date of this Agreement and prior to the Facility Termination Date upon the request of a Borrower; provided that immediately after each such Facility LC is issued or Modified, (i) the aggregate amount of the outstanding LC Obligations shall not exceed $150,000,000, (ii) the Aggregate Dollar Outstanding Credit Exposure shall not exceed the Aggregate Dollar Commitments, and (iii) the Aggregate Outstanding Credit Exposure shall not exceed the Aggregate Commitment. No Facility LC shall have an expiry date later than the earlier of (x) the fifth Business Day prior to the Facility Termination Date and (y) one year after its issuance. 2.20.2. Participations. Upon the issuance or Modification by the LC Issuer of a Facility LC in accordance with this Section 2.20, the LC Issuer shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably sold to each Lender, and each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the LC Issuer, a participation in such Facility LC (and each Modification thereof) and the related LC Obligations in proportion to its Pro Rata Share. 2.20.3. Notice. Subject to Section 2.20.1, a Borrower shall give the LC Issuer notice prior to 10:00 a.m. (Chicago time) at least three Business Days prior to the proposed date of issuance or Modification of each Facility LC, specifying the beneficiary, the proposed date of issuance (or Modification) and the expiry date of such Facility LC, and describing the proposed terms of such Facility LC and the nature of the transactions proposed to be supported thereby. Upon receipt of such notice, the LC Issuer shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify each Lender, of the contents thereof (including whether it is a standby or commercial letter of credit) and of the amount of such Lender's participation in such proposed Facility LC. The issuance or Modification by the LC Issuer of any Facility LC shall, in addition to the conditions precedent set forth in Article IV (the satisfaction of which the LC Issuer shall have no duty to ascertain), be subject to the conditions precedent that such Facility LC shall be satisfactory to the LC Issuer and that the Borrower shall have executed and delivered such application agreement and/or such other instruments and agreements relating to such Facility LC as the LC Issuer shall have reasonably requested (each, a "Facility LC Application"). In the event of any conflict between the terms of this Agreement and the terms of any Facility LC Application, the terms of this Agreement shall control. 29 2.20.4. LC Fees. The Borrower shall pay to the Administrative Agent, for the account of the Lenders ratably in accordance with their respective Pro Rata Shares, (i) with respect to each standby Facility LC, a letter of credit fee at a per annum rate equal to the Applicable Margin in effect from time to time on the average daily undrawn stated amount under such standby Facility LC, such fee to be payable in arrears on each Payment Date and (ii) with respect to each commercial Facility LC, a one-time letter of credit fee in an amount agreed upon between the LC Issuer and the Borrower at the time of issuance calculated on the initial stated amount (or, with respect to any Modification of any such commercial Facility LC which increases the stated amount thereof, such increase in the stated amount) thereof, such fee to be payable on the date of such issuance of increase (such fee described in this sentence an "LC Fee"). The Borrower shall also pay to the LC Issuer for its own account (x) at the time of issuance of each Facility LC, a fronting fee (A) in the amount of 0.125% per annum calculated on the stated amount of each standby Facility LC, and (B) in an amount to be agreed upon between the LC Issuer and the Borrower with respect to each commercial Facility LC, and (y) documentary and processing charges in connection with the issuance or Modification of and draws under Facility LCs in accordance with the LC Issuer's standard schedule for such charges as in effect from time to time. 2.20.5. Administration; Reimbursement by Lenders. Upon receipt from the beneficiary of any Facility LC of any demand for payment under such Facility LC, the LC Issuer shall notify the Administrative Agent and the Administrative Agent shall promptly notify the Borrower and each other Lender as to the amount to be paid by the LC Issuer as a result of such demand and the proposed payment date (the "LC Payment Date"). The responsibility of the LC Issuer to the Borrower and each Lender shall be only to determine that the documents (including each demand for payment) delivered under each Facility LC in connection with such presentment shall be in conformity in all material respects with such Facility LC. The LC Issuer shall endeavor to exercise the same care in the issuance and administration of the Facility LCs as it does with respect to letters of credit in which no participations are granted, it being understood that in the absence of any gross negligence or willful misconduct by the LC Issuer, each Lender shall be unconditionally and irrevocably liable without regard to the occurrence of any Default or any condition precedent whatsoever, to reimburse the LC Issuer on demand for (i) such Lender's Pro Rata Share of the amount of each payment made by the LC Issuer under each Facility LC to the extent such amount is not reimbursed by the Borrower pursuant to Section 2.20.6 below, plus (ii) interest on the foregoing amount to be reimbursed by such Lender, for each day from the date of the LC Issuer's demand for such reimbursement (or, if such demand is made after 11:00 a.m. (Chicago time) on such date, from the next succeeding Business Day) to the date on which such Lender pays the amount to be reimbursed by it, at a rate of interest per annum equal to the Federal Funds Effective Rate for the first three days and, thereafter, at a rate of interest equal to the rate applicable to Floating Rate Advances. 2.20.6. Reimbursement by Borrowers. The Borrower shall be irrevocably and unconditionally obligated to reimburse the LC Issuer on or before the applicable LC Payment Date for any amounts to be paid by the LC Issuer upon any drawing under any Facility LC issued for such Borrower's account, without presentment, demand, protest or other formalities of any kind; provided that neither any Borrower nor any Lender shall hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by such Borrower or such Lender to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of the LC Issuer in determining whether a request presented under any Facility LC issued by it complied with the terms of such Facility LC or (ii) the LC Issuer's failure to pay under any Facility LC issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC. All such amounts paid by the LC Issuer and remaining unpaid by a Borrower shall bear interest, payable on demand, for each day until paid at a rate per 30 annum equal to (x) the rate applicable to Floating Rate Advances for such day if such day falls on or before the applicable LC Payment Date and (y) the sum of 2% plus the rate applicable to Floating Rate Advances for such day if such day falls after such LC Payment Date. The LC Issuer will pay to each Lender ratably in accordance with its Pro Rata Share all amounts received by it from a Borrower for application in payment, in whole or in part, of the Reimbursement Obligation in respect of any Facility LC issued by the LC Issuer, but only to the extent such Lender has made payment to the LC Issuer in respect of such Facility LC pursuant to Section 2.20.5. Subject to the terms and conditions of this Agreement (including without limitation the submission of a Borrowing Notice in compliance with Section 2.8 and the satisfaction of the applicable conditions precedent set forth in Article IV), a Borrower may request an Advance hereunder for the purpose of satisfying any Reimbursement Obligation. 2.20.7. Obligations Absolute. Each Borrower's obligations under this Section 2.20 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which a Borrower may have or have had against the LC Issuer, any Lender or any beneficiary of a Facility LC. Each Borrower further agrees with the LC Issuer and the Lenders that the LC Issuer and the Lenders shall not be responsible for, and the Borrower's Reimbursement Obligation in respect of any Facility LC shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or any dispute between or among the Borrower, any of its Affiliates, the beneficiary of any Facility LC or any financing institution or other party to whom any Facility LC may be transferred or any claims or defenses whatsoever of the Borrower or of any of its Affiliates against the beneficiary of any Facility LC or any such transferee. The LC Issuer shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Facility LC. Each Borrower agrees that any action taken or omitted by the LC Issuer or any Lender under or in connection with each Facility LC and the related drafts and documents, if done without gross negligence or willful misconduct, shall be binding upon the Borrower and shall not put the LC Issuer or any Lender under any liability to the Borrower. Nothing in this Section 2.20.7 is intended to limit the right of a Borrower to make a claim against the LC Issuer for damages as contemplated by the proviso to the first sentence of Section 2.20.6. 2.20.8. Actions of LC Issuer. The LC Issuer shall be entitled to rely, and shall be fully protected in relying, upon any Facility LC, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the LC Issuer. The LC Issuer shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first have received such advice or concurrence of the Required Lenders or all Lenders, as the case may be in accordance with Section 8.2.2, as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Notwithstanding any other provision of this Section 2.20, the LC Issuer shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Lenders or, if required pursuant to Section 8.2.2, all Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and any future holders of a participation in any Facility LC. 2.20.9. Indemnification. Each Borrower hereby agrees to indemnify and hold harmless each Lender, the LC Issuer and the Administrative Agent, and their respective directors, officers, 31 agents and employees from and against any and all claims and damages, losses, liabilities, costs or expenses which such Lender, the LC Issuer or the Administrative Agent may incur (or which may be claimed against such Lender, the LC Issuer or the Administrative Agent by any Person whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment or failure to pay under any Facility LC or any actual or proposed use of any Facility LC, including, without limitation, any claims, damages, losses, liabilities, costs or expenses which the LC Issuer may incur by reason of or in connection with (i) the failure of any other Lender to fulfill or comply with its obligations to the LC Issuer hereunder (but nothing herein contained shall affect any rights the Borrower may have against any defaulting Lender) or (ii) by reason of or on account of the LC Issuer issuing any Facility LC which specifies that the term "Beneficiary" included therein includes any successor by operation of law of the named Beneficiary, but which Facility LC does not require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to the LC Issuer, evidencing the appointment of such successor Beneficiary; provided that the Borrower shall not be required to indemnify any Lender, the LC Issuer or the Administrative Agent for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or gross negligence of the LC Issuer in determining whether a request presented under any Facility LC complied with the terms of such Facility LC or (y) the LC Issuer's failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC. Nothing in this Section 2.20.9 is intended to limit the obligations of the Borrower under any other provision of this Agreement. 2.20.10. Lenders' Indemnification. Each Lender shall, ratably in accordance with its Pro Rata Share, indemnify the LC Issuer, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct or the LC Issuer's failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of the Facility LC) that such indemnitees may suffer or incur in connection with this Section 2.20 or any action taken or omitted by such indemnitees hereunder. 2.20.11. Facility LC Collateral Account. Each Borrower agrees that it will, upon the request of the Administrative Agent or the Required Lenders and until the final expiration date of any Facility LC and thereafter as long as any amount is payable to the LC Issuer or the Lenders in respect of any Facility LC, maintain a special collateral account pursuant to arrangements satisfactory to the Administrative Agent (the "Facility LC Collateral Account") at the Administrative Agent's office at the address specified pursuant to Article XIII, in the name of such Borrower but under the sole dominion and control of the Administrative Agent, for the benefit of the Lenders and in which such Borrower shall have no interest other than as set forth in Section 8.1. Each Borrower hereby pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Lenders and the LC Issuer, a security interest in all of the Borrower's right, title and interest in and to all funds which may from time to time be on deposit in the Facility LC Collateral Account to secure the prompt and complete payment and performance of the Obligations. The Administrative Agent will invest any funds on deposit from time to time in the Facility LC Collateral Account in certificates of deposit of Bank One having a maturity not exceeding 30 days. Nothing in this Section 2.20.11 shall either obligate the Administrative Agent to require the Borrower to deposit any funds in the Facility LC Collateral Account, obligate the Borrower to deposit any funds in the Facility LC Collateral Account or limit the right of the Administrative Agent to release any funds held in the Facility LC Collateral Account in each case other than as required by Section 8.1. 32 2.20.12. Rights as a Lender. In its capacity as a Lender, the LC Issuer shall have the same rights and obligations as any other Lender 2.21 Market Disruption. Notwithstanding the satisfaction of all conditions referred to in Article II and Article IV with respect to any Advance in any Agreed Currency other than Dollars, if there shall occur on or prior to the date of such Advance any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which would in the reasonable opinion of the Administrative Agent or the Required Lenders make it impracticable for the Eurocurrency Loans comprising such Advance to be denominated in the Agreed Currency specified by the relevant Borrower, then the Administrative Agent shall forthwith give notice thereof to the Borrowers and the Lenders, and such Loans shall not be denominated in such Agreed Currency but shall be made on such Borrowing Date in Dollars, in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice or Conversion/Continuation Notice, as the case may be, as Floating Rate Loans, unless the relevant Borrower notifies the Administrative Agent at least two Business Days before such date that (i) it elects not to borrow on such date or (ii) it elects to borrow on such date in a different Agreed Currency, as the case may be, in which the denomination of such Loans would in the opinion of the Administrative Agent and the Required Lenders be practicable and in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice or Conversion/Continuation Notice, as the case may be. 2.22 Judgment Currency. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from any Borrower hereunder in the currency expressed to be payable herein (the "specified currency") into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the specified currency with such other currency at the Administrative Agent's main Chicago office on the Business Day preceding that on which final, non-appealable judgment is given. The obligations of the Borrowers in respect of any sum due to any Lender or the Administrative Agent hereunder shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender or the Administrative Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Administrative Agent, as the case may be, in the specified currency, the Borrowers agree, to the fullest extent that they may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Lender or the Administrative Agent, as the case may be, in the specified currency and (b) any amounts shared with other Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under Section 12.2, such Lender or the Administrative Agent, as the case may be, agrees to remit such excess to the relevant Borrower. 2.23 Payment Provisions Relating to the Euro. (a) Any amount payable by the Administrative Agent to the Lenders under this Agreement in the currency of a Participating Member State shall be paid in the Euro. 33 (b) If, in relation to the currency of any Subsequent Participant, the basis of accrual of interest or fees expressed in this Agreement with respect to such currency shall be inconsistent with any convention or practice in the London Interbank Market or, as the case may be, the Paris Interbank Market for the basis of accrual of interest or fees in respect of the Euro, such convention or practice shall replace such expressed basis effective as of and from the date on which such Subsequent Participant becomes a Participating Member State; provided, that if any Loan in the currency of such Subsequent Participant is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Loan, at the end of the then current Interest Period. (c) Without prejudice and in addition to any method of conversion or rounding prescribed by any EMU legislation and (i) without prejudice to the respective liabilities for indebtedness of the Borrowers to the Lenders and the Lenders to the Borrowers under or pursuant to this Agreement and (ii) without increasing the Multicurrency Commitment of any Lender: (y) each reference in this Agreement to a minimum amount (or an integral multiple thereof) in a national currency denomination of a Subsequent Participant to be paid to or by the Administrative Agent shall, immediately upon such Subsequent Participant becoming a Participating Member State, be replaced by a reference to such reasonably comparable and convenient amount (or an integral multiple thereof) in Euros as the Administrative Agent may from time to time specify; and (z) except as expressly provided in this Section 2.23, each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be necessary or appropriate. 2.24 Redenomination and Alternative Currencies. Each obligation under this Agreement of a party to this Agreement which has been denominated in the national currency unit of a Subsequent Participant state shall be redenominated into the Euro in accordance with EMU legislation immediately upon such Subsequent Participant becoming a Participating Member State (but otherwise in accordance with EMU Legislation). 2.25 Replacement of Lender. If any Borrower is required pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender or if any Lender's obligation to make or continue, or to convert Floating Rate Advances into, Eurocurrency Advances shall be suspended pursuant to Section 3.3, or if any Lender shall become a Defaulting Lender (any Lender so affected an "Affected Lender"), the Company may elect, if such amounts continue to be charged or such suspension is still effective, to replace such Affected Lender as a Lender party to this Agreement, provided that no Default or Unmatured Default shall have occurred and be continuing at the time of such replacement, and provided further that, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to the Company and the Administrative Agent shall agree, as of such date, to purchase for cash the Advances and other Obligations due to the Affected Lender pursuant to an assignment substantially in the form of Exhibit C and to become a Lender for all purposes under this Agreement and to assume all obligations of the Affected Lender to be terminated as of such date and to comply with the requirements of Section 12.3 applicable to assignments, and (ii) the Borrowers shall pay to such Affected Lender in same day funds on the day of such replacement all interest, fees and other amounts then accrued but unpaid to such Affected Lender by the Borrowers hereunder to and including the date of termination, including without limitation payments due to such Affected Lender under Sections 3.1, 3.2 and 3.5. Nothing herein shall release any Defaulting Lender from any obligation it may have to any Borrower, the Administrative Agent or any other Lender. 34 2.26 Application of Payments with Respect to Defaulting Lenders. No payments of principal, interest or fees delivered to the Administrative Agent for the account of any Defaulting Lender shall be delivered by the Administrative Agent to such Defaulting Lender. Instead, such payments shall, for so long as such Defaulting Lender shall be a Defaulting Lender, be held by the Administrative Agent, and the Administrative Agent is hereby authorized and directed by all parties hereto to hold such funds in escrow and apply such funds as follows: (a) First, if applicable to any payments due to the Swingline Lender under Section 2.1(b)(iii); and (b) Second, to Loans required to be made by such Defaulting Lender on any Borrowing Date to the extent such Defaulting Lender fails to make such Loans. Notwithstanding the foregoing, upon the termination of the Commitments and the payment and performance of all of the Obligations (other than those owing to a Defaulting Lender), any funds then held in escrow by the Administrative Agent pursuant to the preceding sentence shall be distributed to each Defaulting Lender, pro rata in proportion to amounts that would be due to each Defaulting Lender but for the fact that it is a Defaulting Lender. ARTICLE III. YIELD PROTECTION; TAXES 3.1 Yield Protection. (a) If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or applicable Lending Installation or the LC Issuer with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency: (i) subjects any Lender or any applicable Lending Installation or the LC Issuer to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender or the LC Issuer in respect of its Eurocurrency Loans, Facility LCs or participations therein, or (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation or the LC Issuer (other than reserves and assessments taken into account in determining the interest rate applicable to Eurocurrency Advances), or (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation or the LC Issuer of maintaining its Commitment or making, funding or maintaining its Eurocurrency Loans (including, without limitation, any conversion of any Loan denominated in an Agreed Currency other than Euro into a Loan denominated in Euro), or of issuing or participating in Facility LCs, or reduces any amount 35 receivable by any Lender or any applicable Lending Installation or the LC Issuer in connection with its Eurocurrency Loans, Facility LCs or participations therein, or requires any Lender or any applicable Lending Installation or the LC Issuer to make any payment calculated by reference to its Commitment or the amount of Eurocurrency Loans, Facility LCs or participations therein held or interest or LC fees received by it, by an amount deemed material by such Lender or the LC Issuer as the case may be, and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation or the LC Issuer, as the case may be, of making or maintaining its Eurocurrency Loans (including, without limitation, any conversion of any Loan denominated in an Agreed Currency other than Euro into a Loan denominated in Euro) or Commitment or of issuing or participating in Facility LCs or to reduce the return received by such Lender or applicable Lending Installation or the LC Issuer, as the case may be, in connection with such Eurocurrency Loan, or Commitment, Facility LCs or participations therein, then, within 30 days of demand by such Lender or the LC Issuer, as the case may be, the relevant Borrower shall pay such Lender or the LC Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the LC Issuer for such increased cost or reduction in amount received. (b) Non-U.S. Reserve Costs or Fees With Respect to Loans to Non-U.S. Borrowers. If any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive of any jurisdiction outside of the United States of America or any subdivision thereof (whether or not having the force of law) imposes or deems applicable any reserve requirement against or fee with respect to assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation or the LC Issuer, and the result of the foregoing is to increase the cost to such Lender or applicable Lending Installation or the LC Issuer of making or maintaining its Eurocurrency Loans or of issuing or participating in Facility LCs to any Borrower that is not incorporated under the laws of the United States of America or a state thereof (each a "Non-U.S. Borrower") or its Commitment to any Non-U.S. Borrower or to reduce the return received by such Lender or applicable Lending Installation or the LC Issuer in connection with such Eurocurrency Loans, Facility LCs or participations therein to any Non-U.S. Borrower or Commitment to any Non-U.S. Borrower, then, within 30 days of demand by such Lender or the LC Issuer, such Non-U.S. Borrower shall pay such Lender or the LC Issuer such additional amount or amounts as will compensate such Lender or the LC Issuer, as the case may be, for such increased cost or reduction in amount received, provided that such Non-U.S. Borrower shall not be required to compensate any Lender or the LC Issuer for such non-U.S. reserve costs or fees to the extent that an amount equal to such reserve costs or fees is received by such Lender or LC Issuer as a result of the calculation of the interest rate applicable to Eurocurrency Advances pursuant to clause (i)(b) of the definition of "Eurocurrency Rate." 3.2 Changes in Capital Adequacy Regulations. If a Lender or the LC Issuer determines the amount of capital required or expected to be maintained by such Lender or the LC Issuer, any Lending Installation of such Lender or the LC Issuer or any corporation controlling such Lender or the LC Issuer is increased as a result of a Change (as defined below), then, within 15 days of demand by such Lender or the LC Issuer, the Company shall pay such Lender or the LC Issuer the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender or the LC Issuer determines is attributable to this Agreement, its Outstanding Credit Exposure or its Commitment to make Loans and issue or participate in Facility LCs, as the case may be, hereunder (after taking into account such Lender's or the LC Issuer's policies as to capital adequacy). "Change" means (i) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to 36 be maintained by any Lender or the LC Issuer or any Lending Installation or any corporation controlling any Lender or the LC Issuer. "Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (ii) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled "International Convergence of Capital Measurements and Capital Standards," including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement. 3.3 Availability of Types of Advances. If any Lender determines that maintenance of its Eurocurrency Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (i) deposits of a type, currency and maturity appropriate to match fund Eurocurrency Advances are not available or (ii) the interest rate applicable to Eurocurrency Advances does not accurately reflect the cost of making or maintaining Eurocurrency Advances, then the Administrative Agent shall suspend the availability of Eurocurrency Advances and require any affected Eurocurrency Advances to be repaid or converted to Floating Rate Advances at the end of the then current Interest Period for the affected Eurocurrency Advance. 3.4 Funding Indemnification. If any payment of a Eurocurrency Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurocurrency Advance is not made on the date specified by a Borrower for any reason other than default by the Lenders, the Borrowers will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurocurrency Advance. 3.5 Taxes. (i) All payments by the Borrowers to or for the account of any Lender, the LC Issuer or the Administrative Agent hereunder or under any Note or Facility LC Application shall be made free and clear of and without deduction for any and all Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender, the LC Issuer or the Administrative Agent, (a) 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 3.5) such Lender, the LC Issuer or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b) the Borrower shall make such deductions, (c) the Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) the Borrower shall furnish to the Administrative Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made. (ii) In addition, the Borrowers hereby agree to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or Facility LC Application or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note or Facility LC Application ("Other Taxes"). (iii) The Borrowers hereby agree to indemnify the Administrative Agent, the LC Issuer and each Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by 37 the Administrative Agent, the LC Issuer or such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Administrative Agent, the LC Issuer or such Lender makes demand therefor pursuant to Section 3.6. (iv) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a "Non-U.S. Lender") agrees that it will, not less than ten Business Days after the date of this Agreement, (i) deliver to each of the Company and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case that such Lender is entitled to receive payments under this Agreement from the Company and any other Borrower that is not a Non-U.S. Borrower without deduction or withholding of any United States federal income taxes, or (ii) deliver to each of the Company and the Administrative Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Company and the Administrative Agent (x) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (y) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by the Company or the Administrative Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises the Company and the Administrative Agent that it is not capable of receiving payments from the Company and any other Borrower other than a Non-U.S. Borrower without any deduction or withholding of United States federal income tax. (v) For any period during which a Non-U.S. Lender has failed to provide the Company with an appropriate form pursuant to clause (iv), above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (iv), above, the Company shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes. (vi) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note pursuant to the law of any relevant jurisdiction or any treaty 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 as will permit such payments to be made without withholding or at a reduced rate. Each Multicurrency Lender which is neither a resident of the United Kingdom nor a bank carrying on a bona fide banking business in the United Kingdom agrees to furnish, on or before the date such Lender makes a Loan to a Borrower in the United Kingdom or denominated in British Pounds Sterling, to the Administrative Agent, the Company and any relevant Subsidiary Borrower evidence satisfactory to the Administrative Agent and the 38 Company that such Lender has filed with the United Kingdom Inland Revenue a "Claim on Behalf of a United States Domestic Corporation to Relief from United Kingdom Income Tax on Interest and Royalties Arising in the United Kingdom" or other appropriate form or forms of exemption from withholding tax and received from the Inland Revenue authority that payments to such Lender by the relevant Borrower hereunder may be made gross; provided that such Lender's failure to furnish such evidence shall not relieve the Company or any Subsidiary Borrower of any of their respective obligations under this Agreement, except as otherwise provided in this Section 3.5. (vii) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because such Lender failed to notify the Administrative Agent of a change in circumstances which rendered its exemption from withholding ineffective), such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Administrative Agent under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Administrative Agent, which attorneys may be employees of the Administrative Agent). The obligations of the Lenders under this Section 3.5(vii) shall survive the payment of the Obligations and termination of this Agreement. 3.6 Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurocurrency Loans to reduce any liability of the Borrowers to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurocurrency Advances under Section 3.3, so long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Borrowers (with a copy to the Administrative Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrowers in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurocurrency Loan shall be calculated as though each Lender funded its Eurocurrency Loan through the purchase of a deposit of the type, currency and maturity corresponding to the deposit used as a reference in determining the Eurocurrency Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrowers of such written statement. The obligations of the Borrowers under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement. ARTICLE IV. CONDITIONS PRECEDENT 4.1 Initial Credit Extension. The Lenders shall not be required to make the initial Credit Extension hereunder unless the Borrowers have satisfied the following conditions: 39 (a) Each Borrower has furnished to the Administrative Agent with sufficient copies for the Lenders: (i) Copies of the articles or certificate of incorporation of such Borrower, together with all amendments, and a certificate of good standing, each certified by the appropriate governmental officer in its jurisdiction of incorporation. (ii) Copies, certified by the Secretary or Assistant Secretary of such Borrower, of its by-laws or code of regulations and of its Board of Directors' resolutions and of resolutions or actions of any other body authorizing the execution of the Loan Documents to which such Borrower is a party. (iii) An incumbency certificate, executed by the Secretary or Assistant Secretary of such Borrower, which shall identify by name and title and bear the signatures of the Authorized Officers and any other officers of such Borrower authorized to sign the Loan Documents to which such Borrower is a party, upon which certificate the Administrative Agent and the Lenders shall be entitled to rely until informed of any change in writing by such Borrower. (iv) A certificate, signed by the Chief Financial Officer or Treasurer of such Borrower, stating that on the initial Credit Extension Date no Default or Unmatured Default has occurred and is continuing. (v) A written opinion of such Borrower's counsel, addressed to the Lenders in substantially the form of Exhibit A. (vi) Any Notes requested by a Lender pursuant to Section 2.14 payable to the order of each such requesting Lender. (vii) Written money transfer instructions, in substantially the form of Exhibit D, addressed to the Administrative Agent and signed by an Authorized Officer, together with such other related money transfer authorizations as the Administrative Agent may have reasonably requested. (viii) A pro forma covenant compliance certificate in form and substance reasonably satisfactory to the Administrative Agent from the Chief Financial Officer or Treasurer of the Company. (ix) The Guaranty, duly executed by the Company. (x) If the initial Credit Extension will be the issuance of a Facility LC, a properly completed Facility LC Application. (xi) Such other documents as any Lender or its counsel may have reasonably requested. (b) The presentation of evidence satisfactory to the Administrative Agent that the Five-Year Credit Agreement dated as of March 31, 1999 among the Borrowers, and the lenders party 40 thereto and the agent named therein shall terminate and all indebtedness, liabilities, and obligations outstanding thereunder shall be paid in full or will be paid from the proceeds of the initial Advance. (c) The presentation of evidence satisfactory to the Administrative Agent that the 364-Day Credit Agreement dated March 28, 2002, among the Borrowers and the lenders party thereto and the agent named therein shall have been terminated and all indebtedness, liabilities, and obligations outstanding thereunder shall have been paid in full or will be paid from the proceeds of the initial Advance. (d) Payment of the fees described in the letter agreement referred to in Section 10.13. 4.2 Each Credit Extension The Lenders shall not be required to make, continue or convert any Credit Extension, and the Swingline Lender shall not be required to make any Swingline Loan, unless on the applicable Credit Extension Date or date of conversion or continuation: (i) There exists no Default or Unmatured Default. (ii) The representations and warranties contained in Article V (other than Section 5.5, 5.7 and 5.15) are true and correct in all material respects as of such Credit Extension Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date. (iii) All legal matters incident to the making of such Credit Extension shall be satisfactory to the Lenders and their counsel. (iv) Each Borrowing Notice or request for the issuance of a Facility LC with respect to each such Credit Extension shall constitute a representation and warranty by the Borrower that the conditions contained in Sections 4.2(i) and (ii) have been satisfied. ARTICLE V. REPRESENTATIONS AND WARRANTIES The Company and each of the Borrowers represents and warrants to the Lenders that: 5.1 Existence and Standing. Each of the Company and its Significant Subsidiaries is a corporation, partnership (in the case of Subsidiaries only) or limited liability company duly and properly incorporated or organized, as the case may be, validly existing and (to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 41 5.2 Authorization and Validity. Each Borrower has the power and authority and legal right to execute and deliver the Loan Documents to which it is a party and to perform its obligations thereunder. The execution and delivery by each Borrower of the Loan Documents to which it is a party and the performance of its obligations thereunder have been duly authorized by proper corporate or other proceedings, and the Loan Documents to which such Borrower is a party constitute legal, valid and binding obligations of such Borrower enforceable against such Borrower in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally. 5.3 No Conflict; Government Consent. Neither the execution and delivery by the Borrowers of the Loan Documents to which they are a party, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate (i) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on any Borrower or (ii) any Borrower's articles or certificate of incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, by-laws, code or regulations, or operating or other management agreement, as the case may be, or (iii) the provisions of any indenture, instrument or agreement to which any Borrower is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in, or require, the creation or imposition of any Lien in, of or on the Property of any Borrower pursuant to the terms of any such indenture, instrument or agreement. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, which has not been obtained by a Borrower, is required to be obtained by any Borrower in connection with the execution and delivery of the Loan Documents, the borrowings under this Agreement, the payment and performance by such Borrower of the Obligations or the legality, validity, binding effect or enforceability of any of the Loan Documents. 5.4 Financial Statements. The following consolidated financial statements heretofore delivered to the Lenders were prepared in accordance with Agreement Accounting Principles in effect on the date such statements were prepared and fairly present the consolidated financial condition and operations of the Company and its Subsidiaries at such date and the consolidated results of their operations for the period then ended, subject, in the case of such interim statements, to routine year-end audit adjustments: (i) June 30, 2002 audited consolidated financial statements of the Company and its Subsidiaries; and; (ii) December 31, 2002 unaudited interim consolidated financial statements of the Company and its Subsidiaries. 5.5 Material Adverse Change. Since June 30, 2002 there has been no change in the business, Property, prospects, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries which could reasonably be expected to have a Material Adverse Effect. 5.6 Taxes. The Company and its Subsidiaries have filed all United States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Company or any of its Subsidiaries, except such taxes, if any, as are being 42 contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien exists. No tax liens have been filed and no claims are being asserted with respect to any such taxes which could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of any taxes or other governmental charges are adequate. 5.7 Litigation and Contingent Obligations. Except as set forth on Schedule 7, there is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Company or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of any Credit Extensions. As of the date of this Agreement, other than any liability incident to any litigation, arbitration or proceeding which (i) could not reasonably be expected to have a Material Adverse Effect or (ii) is set forth on Schedule 7, the Company has no material Contingent Obligations not provided for or disclosed in the financial statements referred to in Section 5.4. 5.8 Subsidiaries. Schedule 1 contains an accurate list of all Subsidiaries of the Company (other than immaterial or inactive Subsidiaries) and each Subsidiary Borrower as of the date of this Agreement, setting forth their respective jurisdictions of organization and the percentage of their respective capital stock or other ownership interests owned by the Company or other Subsidiaries. All of the issued and outstanding shares of capital stock or other ownership interests of such Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable, except to the extent that the lack of such status could not reasonably be expected to have a Material Adverse Effect. The Company may amend Schedule 1 from time to time by delivering to the Administrative Agent an updated list of Subsidiaries, and the Company may designate any Subsidiary thereon which is directly or indirectly 80% (or, in the case of R.P. Scherer S.A., 75%) or more owned by the Company as a Subsidiary Borrower hereunder so long as (a) the Company guarantees the obligations of such new Subsidiary Borrower pursuant to the terms of the Guaranty, (b) such new Subsidiary Borrower delivers all corporate or organizational documents and authorizing resolutions and legal opinions reasonably requested by the Administrative Agent and (c) such new Subsidiary Borrower agrees to the terms and conditions of this Agreement and the Borrowers and the new Subsidiary Borrower execute all agreements and take such other action reasonably requested by Administrative Agent. Schedule 1 may be amended to remove any Subsidiary as a Subsidiary Borrower upon (i) written notice by the Company to the Administrative Agent to such effect and (ii) repayment in full of all outstanding Loans of such Subsidiary Borrower. 5.9 ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the aggregate exceed 2% of Adjusted Tangible Net Worth. Each Single Employer Plan complies in all material respects with all applicable requirements of law and regulations where the failure to so comply could reasonably be expected to have a Material Adverse Effect. No Reportable Event has occurred with respect to any Plan where such occurrence could reasonably be expected to have a Material Adverse Effect. Neither the Company or any of its Significant Subsidiaries has withdrawn from any Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Single Employer Plan where in either instance a liability in excess of 2% of Adjusted Tangible Net Worth could reasonably be expected to result. 43 5.10 Accuracy of Information. No information, exhibit or report furnished by the Company or any of its Subsidiaries to the Administrative Agent or to any Lender in connection with the negotiation of, or compliance with, the Loan Documents contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not misleading; provided, however, that to the extent any such information, exhibits or reports include or incorporate by reference any forward-looking statement (each, a "Forward-Looking Statement") which reflects the Company's current view (as of the date such Forward-Looking Statement is made) with respect to future events, prospects, projections or financial performance, such Forward-Looking Statement is subject to uncertainties and other factors which could cause actual results to differ materially from such Forward-Looking Statement. 5.11 Regulation U. Margin stock (as defined in Regulation U) constitutes less than 25% of the value of those assets of the Company and its Subsidiaries which are subject to any limitation on sale, pledge, or other restriction hereunder. 5.12 Maintenance of Property. The Company and its Subsidiaries, maintain all Property and keep such Property in good repair, working order and condition in accordance with customary and prudent business practices for similar businesses, except where the failure to do so could not reasonably be expected to cause a Material Adverse Effect. 5.13 Insurance. The Company, and each Significant Subsidiary, maintains as part of a self-insurance program or with financially sound and reputable insurance companies insurance on all their Property in such amounts (with such customary deductibles, exclusions and self-insurance) and covering such risks as is consistent with sound business practice. 5.14 Plan Assets; Prohibited Transactions. The Company is not an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the making of Credit Extensions hereunder gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code. 5.15 Environmental Matters. In the ordinary course of its business, the officers of the Company consider the effect of Environmental Laws on the business of the Company and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Company due to Environmental Laws. On the basis of this consideration, the Company has concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action could reasonably be expected to have a Material Adverse Effect. 44 5.16 Investment Company Act. Neither the Company nor any Subsidiary is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 5.17 Public Utility Holding Company Act. Neither the Company nor any Subsidiary is a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 5.18 Default. There exists no Default or Unmatured Default under Article VII of this Agreement. 5.19 Reportable Transaction. Neither the Company nor any Subsidiary intends to treat the Advances and related transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Company or any Subsidiary determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. ARTICLE VI. COVENANTS During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing: 6.1 Financial Reporting. The Company will maintain, for itself and each Subsidiary, a system of accounting established and administered in accordance with Agreement Accounting Principles, and furnish to the Lenders: (i) Within 120 days after the close of each of its fiscal years, an unqualified (except for qualifications relating to changes in accounting principles or practices reflecting changes in Agreement Accounting Principles and required or approved by the Company's independent certified public accountants) audit report certified by independent certified public accountants reasonably acceptable to the Lenders, prepared in accordance with Agreement Accounting Principles on a consolidated basis for itself and its Subsidiaries, including balance sheets as of the end of such period, related profit and loss statements, and a statement of cash flows. (ii) Within 60 days after the close of each of the first three quarterly periods of each fiscal year, for itself and its Subsidiaries, consolidated unaudited balance sheets as at the close of each such period and consolidated unaudited profit and loss statements and a consolidated unaudited statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by its Chief Financial Officer, Controller, or Treasurer. (iii) Together with the financial statements required under Sections 6.1(i) and (ii), a compliance certificate in substantially the form of Exhibit B signed by its Chief Financial Officer, 45 Controller, or Treasurer and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof. (iv) As soon as possible and in any event within 10 Business Days after the Company knows that any Reportable Event has occurred with respect to any Plan, a statement, signed by the Chief Financial Officer, Controller, or Treasurer of the Company, describing said Reportable Event and the action which the Company proposes to take with respect thereto. (v) As soon as possible and in any event within 10 Business Days after receipt by the Company, a copy of (a) any notice or claim to the effect that the Company or any of its Subsidiaries is or may be liable to any Person as a result of the release by the Company, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (b) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Company or any of its Subsidiaries, which, in either case, could reasonably be expected to have a Material Adverse Effect. (vi) Such other information (including non-financial information) as the Administrative Agent or any Lender may from time to time reasonably request. 6.2 Use of Proceeds. The Company will, and will cause each Subsidiary to, use the proceeds of the Credit Extensions for general corporate purposes, including Acquisitions. The Company will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to purchase or carry any "margin stock" (as defined in Regulation U). 6.3 Notice of Default. The Company will, and will cause each Borrower and Significant Subsidiary to, give prompt notice in writing to the Administrative Agent of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect. 6.4 Conduct of Business; Maintenance of Property. The Company will, and will cause each Significant Subsidiary to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted or fields related thereto (except that the Company and its Significant Subsidiaries shall have no duty to renew or extend contracts which expire by their terms) and do all things necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good standing as a domestic corporation, partnership or limited liability company in its jurisdiction of incorporation or organization, as the case may be, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, unless the failure to do so could not reasonably be expected to have a Material Adverse Effect. The Company will, and will cause each Significant Subsidiary, to maintain, preserve and protect all Property and keep such property in good repair, working order and condition and from time to time make, or cause to be made all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times in accordance with customary and prudent business practices for similar businesses, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 46 6.5 Taxes. The Company will, and will cause each Significant Subsidiary to, timely file complete and correct United States federal and applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.6 Insurance. The Company will, and will cause each Significant Subsidiary to, maintain as part of a self-insurance program or with financially sound and reputable insurance companies insurance on all their Property in such amounts (with such customary deductibles, exclusions and self-insurance) and covering such risks as is consistent with sound business practice. 6.7 Compliance with Laws. The Company will, and will cause each Significant Subsidiary to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Environmental Laws, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 6.8 Inspection. The Company will, and will cause each Significant Subsidiary to, permit the Administrative Agent and the Lenders, by their respective representatives and agents, to inspect any of the Property, books and financial records of the Company and each Significant Subsidiary, to examine and make copies of the books of accounts and other financial records of the Company and each Significant Subsidiary, and to discuss the affairs, finances and accounts of the Company and each Significant Subsidiary with, and to be advised as to the same by, their respective officers upon reasonable prior notice at such reasonable times and intervals as the Administrative Agent or any Lender may designate, provided that neither the Company nor any of its Subsidiaries shall be responsible for the costs and expenses incurred by the Administrative Agent, any Lender, or their representatives in connection with such inspection prior to the occurrence and continuation of a Default. 6.9 Merger. The Company will not, nor will it permit any Significant Subsidiary to, merge or consolidate with or into any other Person, except that, provided that no Default or Unmatured Default shall have occurred and be continuing or would result therefrom on a pro forma basis reasonably acceptable to the Administrative Agent, the Company may merge or consolidate with any other U.S. corporation and each Significant Subsidiary may merge or consolidate with any other Person, provided, further, that (i) in the case of any such merger or consolidation involving the Company, the Company is the surviving corporation and (ii) in the case of any such merger or consolidation involving a Significant Subsidiary which is a Subsidiary Borrower, the surviving corporation assumes all of such Borrower's obligations under this Agreement and remains or becomes a Subsidiary Borrower. 6.10 Sale of Assets. The Company will not, nor will it permit any Significant Subsidiary to, lease, sell or otherwise dispose of its Property, to any other Person (other than the Company or another Subsidiary), except: (i) Sales of inventory in the ordinary course of business. 47 (ii) Sales or other dispositions in the ordinary course of business of fixed assets for the purpose of replacing such fixed assets, provided that such fixed assets are replaced within 360 days of such sale or other disposition with other fixed assets which have a fair market value not materially less than the fixed assets sold or otherwise disposed of. (iii) Sales or other dispositions outside the ordinary course of business of accounts receivable, lease receivables, leases or equipment which had been leased by the Company or such Significant Subsidiary, provided that any such sale or other disposition is for reasonably equivalent value and could not reasonably be expected to have a Material Adverse Effect. (iv) Other leases, sales (including sale-leasebacks) or other dispositions of its Property that, together with all other Property of the Company and its Subsidiaries previously leased, sold or disposed of (other than as provided in clauses (i), (ii) and (iii) above) as permitted by this Section during the twelve-month period ending with the month prior to the month in which any such lease, sale or other disposition occurs, do not constitute a Substantial Portion of the Property of the Company and its Subsidiaries, or together with all other Property of the Company and its Subsidiaries previously leased, sold or disposed of (other than as provided in clauses (i) and (ii) above) as permitted by this Section during the period from the date of this Agreement to the end of the month prior to the month in which any such lease, sale or other disposition occurs, do not constitute 35% of the consolidated assets of the Company and its Subsidiaries as would be shown in the consolidated financial statements of the Company and its Subsidiaries as at the beginning of the fiscal year in which any such lease, sale or other disposition occurs. Notwithstanding anything in this Section 6.10 to the contrary, (a) no such leases, sales or other dispositions of property may be made (other than pursuant to clause (i) above) if any Default or Unmatured Default has occurred and is continuing, and (b) all leases, sales and other dispositions of Property at any time shall be for not less than the fair market value of such Property as determined in good faith by the Company. 6.11 Investments. The Company will not, nor will it permit any Significant Subsidiary to, make or suffer to exist any Investments, or commitments therefor, or to create any Subsidiary or to become or remain a partner in any partnership or joint venture, except: (i) Cash Equivalent Investments. (ii) Investments in Subsidiaries. (iii) other Investments in existence on the date hereof. (iv) Other Investments provided that the aggregate amount of such Investments made in any fiscal year does not exceed 25% of Adjusted Tangible Net Worth as of the beginning of such fiscal year. 6.12 Liens. The Company will not, nor will it permit any Significant Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Company or any of its Significant Subsidiaries, except: 48 (i) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books. (ii) Liens imposed by law, such as landlord's, carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books. (iii) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation (other than Liens in favor of the PGBC). (iv) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Company or its Subsidiaries. (v) Liens existing on the date hereof. (vi) Liens on any assets which exist at the time of acquisition of such assets by the Company or any of its Subsidiaries, or liens to secure the payment of all of any part of the purchase price of such assets upon the acquisition of such assets by the Company or any of its Subsidiaries or to secure any Indebtedness incurred or guaranteed by the Company or any of its Subsidiaries prior to, at the time, of or within 360 days after, such acquisition (or, in the case of real property, the completion of construction (including any improvements on an existing asset) or commencement of full operation of such asset, whichever is later), which Indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property, construction or improvements thereon, provided, however, that in the case of any such acquisition, construction or improvement, the Lien shall not apply to such assets theretofore owned by the Company or any of its Subsidiaries other than, in the case of any such construction or improvement, any real property on which the property so constructed, or the improvement, is located, provided further, however, that the aggregate outstanding principal amount of Indebtedness secured by Liens permitted by this Section 6.12(vi) shall not at any time exceed 10% of Adjusted Tangible Net Worth. (vii) Liens in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, or in favor of any other country or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any Indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction), of the assets subject to such liens (including without limitation liens incurred in connection with pollution control, industrial revenue or similar financings). (viii) Any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of any Lien referred to in the foregoing clauses, provided, 49 however, that the principal amount of Indebtedness secured thereby shall not exceed the principal amount of Indebtedness so secured prior to such extension, renewal or replacement and that such extension, renewal or replacement Lien shall be limited to all or a part of the assets which secured the Lien so extended, renewed or replaced (plus improvements and construction on such real property). (ix) So long as no Default under Section 7.9 would occur in connection therewith, Liens created by or resulting from any litigation or other proceeding which is being contested in good faith by appropriate proceedings, including Liens arising out of judgments or awards against the Company or any of its Subsidiaries with respect to which the Company or such Subsidiary is in good faith prosecuting an appeal or proceeding for review or for which the time to make an appeal has not yet expired; or final unappealable judgment Liens which are satisfied within 15 days of the date of judgment; or Liens incurred by the Company or any of its Subsidiaries for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Company or such Subsidiary is a party. (x) Liens securing Indebtedness described in Section 6.15(iv) and (v). (xi) Liens securing Indebtedness and not otherwise permitted by the foregoing provisions of this Section 6.12, provided that the aggregate outstanding principal amount of the Indebtedness secured by all such Liens shall not at any time exceed 25% of Adjusted Tangible Net Worth. 6.13 Subsidiary Indebtedness. The Company will not permit any Subsidiary to create, incur or suffer to exist any Indebtedness, except: (i) The Loans and the Reimbursement Obligations. (ii) Indebtedness outstanding on the date of this Agreement or incurred pursuant to commitments in existence on the date of this Agreement. (iii) Indebtedness of any Subsidiary to the Company or any other Subsidiary. (iv) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that such Indebtedness existed at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary. (v) Any refunding or refinancing of any Indebtedness referred to in clauses (i) through (iv) above, provided that any such refunding or refinancing of Indebtedness referred to in clause (ii), (iii) or (iv) does not increase the principal amount thereof. (vi) Indebtedness arising from (a) the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, or (b) the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business. 50 (vii) Indebtedness arising from guarantees of loans and advances by third parties to employees and officers of a Subsidiary in the ordinary course of business for bona fide business purposes, provided that the aggregate outstanding principal amount of such Indebtedness does not at any time exceed $100,000,000. (viii) Indebtedness of a Subsidiary arising from agreements providing for indemnification, adjustment of purchase price or similar obligations or from guarantees, letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Subsidiaries incurred or assumed in connection with the disposition of any business, property or Subsidiary. (ix) Indebtedness arising from Rate Hedging Obligations. (x) Contingent Obligations. (xi) Indebtedness outstanding under investment grade commercial paper programs. (xii) Other Indebtedness; provided that, at the time of the creation, incurrence or assumption of such other Indebtedness and after giving effect thereto, the aggregate amount of all such other Indebtedness of the Subsidiaries does not exceed an amount equal to 25% of Adjusted Tangible Net Worth at such time. 6.14 Limitation on Restrictions on Significant Subsidiary Distributions. The Company will not, and will not permit any Significant Subsidiary to, enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Significant Subsidiary of the Company to (i) pay dividends or make any other distributions in respect of any capital stock of such Subsidiary held by, or pay any Indebtedness owed to, the Company or any other Subsidiary of the Company, (ii) make loans or advances to the Company or any other Subsidiary of the Company or (iii) transfer any of its assets to the Company or any other Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of (a) any restrictions existing under the Loan Documents, (b) any restrictions with respect to a Significant Subsidiary imposed pursuant to an agreement which has been entered into in connection with the disposition of all or substantially all of the capital stock or assets of such Subsidiary, and (c) any restrictions with respect to assets encumbered by a Lien permitted by Section 6.12 so long as such restriction applies only to the asset encumbered by such permitted Lien. 6.15 Contingent Obligations. The Company will not, nor will it permit any Subsidiary to, make or suffer to exist any Contingent Obligation (including, without limitation, any Contingent Obligation with respect to the obligations of a Subsidiary), except (i) by endorsement of instruments for deposit or collection in the ordinary course of business, (ii) the Reimbursement Obligations, (iii) the Guaranty, (iv) Contingent Obligations of special-purpose finance Subsidiaries, provided that no Person has recourse against the Company or any Significant Subsidiary for such Contingent Obligations, (v) Contingent Obligations arising from the sale by Pyxis Corporation of lease receivables, leases or equipment, provided that the aggregate amount of such Contingent Obligations do not at any time exceed 10% of Adjusted Tangible Net Worth, (vi) Contingent Obligations arising out of operating or synthetic leases entered into by Subsidiaries of the Company, provided that the aggregate amount of such Contingent Obligations do not at any time exceed 25% of Adjusted Tangible Net Worth, and (vii) Contingent Obligations in addition to, 51 and including additional amounts of, those described in (i)-(vi) above, provided that the aggregate amount of such additional Contingent Obligations (without duplication) do not at any time exceed 25% of Adjusted Tangible Net Worth. 6.16 Minimum Net Worth. The Company shall not permit its Net Worth to be less than $4,100,000,000 at any time. ARTICLE VII. DEFAULTS The occurrence of any one or more of the following events shall constitute a Default: 7.1. Any representation or warranty made or deemed made by or on behalf of the Company or any of its Subsidiaries to the Lenders or the Administrative Agent under or in connection with this Agreement, any Credit Extension, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be materially false on the date as of which made. 7.2. Nonpayment of principal of any Loan within one Business Day after the same becomes due, nonpayment of any Reimbursement Obligation within one Business Day after the same becomes due, or nonpayment of interest upon any Loan or of any facility fee, LC Fee or other Obligations under any of the Loan Documents within five days after the same becomes due. 7.3. The breach by the Company of Sections 6.3, 6.9, 6.10, 6.13, 6.15, or 6.16. 7.4. The breach by any Borrower (other than a breach which constitutes a Default under another Section of this Article VII) of any of the terms or provisions of this Agreement which is not remedied within thirty days after written notice from the Administrative Agent or any Lender. 7.5. Failure of the Company or any of its Significant Subsidiaries to pay when due any principal, interest or other amounts, subject to any applicable grace period, or the default by the Company or any of its Significant Subsidiaries in the performance beyond the applicable grace period with respect thereto, if any, of any term, provision or condition contained in the 364-Day Credit Agreement or any agreement or agreements under which any Indebtedness in excess of 2% of Adjusted Tangible Net Worth was created or is governed, or any other event shall occur or condition exist, the effect of which default or event is to cause, or to permit the holder or holders of such Indebtedness to cause, such Indebtedness to become due prior to its stated maturity; or any such Indebtedness of the Company or any of its Subsidiaries shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Company or any of its Significant Subsidiaries shall not pay, or admit in writing its inability to pay, its debts generally as they become due. 7.6. The Company or any of its Significant Subsidiaries shall (i) have an order for relief entered with respect to it under the Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (iv) institute any proceeding seeking an order for relief under the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) take any 52 corporate or partnership action to authorize or effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail to contest in good faith any appointment or proceeding described in Section 7.7. 7.7. Without the application, approval or consent of the Company or any of its Significant Subsidiaries, a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Company or any of its Significant Subsidiaries or any Substantial Portion of its Property, or a proceeding described in Section 7.6(iv) shall be instituted against the Company or any of its Significant Subsidiaries and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days. 7.8. Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Company and its Subsidiaries which, when taken together with all other Property of the Company and its Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion. 7.9. The Company or any of its Significant Subsidiaries shall fail within 60 days to pay, bond or otherwise discharge one or more (i) judgments or orders for the payment of money (not covered by insurance)in excess of 2% of Adjusted Tangible Net Worth (or the equivalent thereof in currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in either such case, is/are not stayed on appeal or otherwise being appropriately contested in good faith. 7.10. Any member of the Controlled Group shall fail to pay when due an amount or amounts aggregating in excess of 2% of Adjusted Tangible Net Worth which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Single Employer Plan with Unfunded Liabilities in excess of $50,000,000 (a "Material Plan") shall be filed under Section 4041(c) of ERISA by any member of the Controlled Group, any plan administrator or any combination of the foregoing; or PBGC shall institute proceedings under which it is likely to prevail under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which causes one or more members of the Controlled Group to incur a current payment obligation in excess of 2% of Adjusted Tangible Net Worth. 7.11. Any Change in Control shall occur. 7.12. The Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of the Guaranty, or the Company shall fail to comply with any of the terms or provisions of the Guaranty, or the Company shall deny that it has any further liability under the Guaranty, or shall give notice to such effect. ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 8.1 Acceleration; Facility LC Collateral Account. (i) If any Default described in Section 7.6 or 7.7 occurs with respect to the Company or any of its Significant Subsidiaries, the obligations of the Lenders to make Loans hereunder and the obligation and 53 power of the LC Issuer to issue Facility LCs shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Administrative Agent, the LC Issuer or any Lender and the Borrowers will be and become thereby unconditionally obligated, without any further notice, act or demand, to pay to the Administrative Agent an amount in immediately available funds, which funds shall be held in the Facility LC Collateral Account, equal to the difference of (x) the amount of LC Obligations at such time, less (y) the amount on deposit in the Facility LC Collateral Account at such time which is free and clear of all rights and claims of third parties and has not been applied against the Obligations (such difference, the "Collateral Shortfall Amount"). If any other Default occurs and is continuing, the Required Lenders (or the Administrative Agent with the consent of the Required Lenders) may (a) terminate or suspend the obligations of the Lenders to make Loans hereunder and the obligation and power of the LC Issuer to issue Facility LCs, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which the Company hereby expressly waives and (b) upon notice to the Borrowers and in addition to the continuing right to demand payment of all amounts payable under this Agreement, make demand on the Borrowers to pay, and the Borrowers will, forthwith upon such demand and without any further notice or act, pay to the Administrative Agent the Collateral Shortfall Amount, which funds shall be deposited in the Facility LC Collateral Account. (ii) If at any time while any Default is continuing, the Administrative Agent determines that the Collateral Shortfall Amount at such time is greater than zero, the Administrative Agent may make demand on the Borrowers to pay, and the Borrowers will, forthwith upon such demand and without any further notice or act, pay to the Administrative Agent the Collateral Shortfall Amount, which funds shall be deposited in the Facility LC Collateral Account. (iii) The Administrative Agent may at any time or from time to time after funds are deposited in the Facility LC Collateral Account, apply such funds to the payment of the Obligations and any other amounts as shall from time to time have become due and payable by the Borrowers to the Lenders or the LC Issuer under the Loan Documents. (iv) At any time while any Default is continuing, neither any Borrower nor any Person claiming on behalf of or through any Borrower shall have any right to withdraw any of the funds held in the Facility LC Collateral Account. After all of the Obligations have been indefeasibly paid in full and the Aggregate Commitment has been terminated, any funds remaining in the Facility LC Collateral Account shall be returned by the Administrative Agent to the Borrowers or paid to whomever may be legally entitled thereto at such time. (v) If, within 60 days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans and the obligation and power of the LC Issuer to issue Facility LCs hereunder as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with respect to the Company) and before any judgment or decree for the payment of the Obligations due shall have been obtained or entered, the Required Lenders (in their sole discretion) shall so direct, the Administrative Agent shall, by notice to the Company, rescind and annul such acceleration and/or termination. 8.2 Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Administrative Agent with the consent in writing of the Required Lenders) and the Borrowers may enter into written agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or the Borrowers hereunder or waiving any Default hereunder; provided, however, that no such supplemental written agreement shall, without the consent of all of the Lenders: 54 (i) Extend the final maturity of any Loan, or extend the expiry date of any Facility LC to a date after the Facility Termination Date or postpone any regularly scheduled payment of principal of any Loan or forgive all or any portion of the principal amount thereof, any Reimbursement Obligation related thereto or any accrued interest or accrued fees, or reduce the rate or extend the time of payment of interest or fees thereon or Reimbursement Obligation related thereto. (ii) Reduce the percentage specified in the definition of Required Lenders or any provision that requires the unanimous consent or pro rata treatment of Lenders. (iii) Extend the Facility Termination Date or reduce the amount or extend the payment date for, the mandatory payments required under Section 2.2, or increase the amount of the Aggregate Commitment or of the Commitment of any Lender hereunder or the commitment to issue Facility LCs, or permit any Borrower to assign its rights under this Agreement (other than as may be permitted pursuant to Section 6.9). (iv) Amend this Section 8.2. (v) Release the Company as guarantor of any Advance. No amendment of any provision of this Agreement relating to the Administrative Agent shall be effective without the written consent of the Administrative Agent, and no amendment of any provisions relating to the LC Issuer shall be effective without the written consent of the LC Issuer, and no amendment of any provision of this Agreement relating to the Swingline Loans shall be effective without the written consent of the Swingline Lender. The Administrative Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this Agreement. Notwithstanding anything herein to the contrary, no Defaulting Lender shall be entitled to vote (whether to consent or to withhold its consent) with respect to any amendment, modification, termination or waiver requiring the consent of the Required Lenders, and, for purposes of determining the Required Lenders, the Commitments and the Loans of each Defaulting Lender shall be disregarded. 8.3 Preservation of Rights No delay or omission of the Lenders, the LC Issuer or the Administrative Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Credit Extension notwithstanding the existence of a Default or the inability of a Borrower to satisfy the conditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set forth. All remedies contained in the Loan Documents or by law afforded shall be cumulative and all shall be available to the Administrative Agent, the LC Issuer and the Lenders until the Obligations have been paid in full. 55 ARTICLE IX. GENERAL PROVISIONS 9.1 Survival of Representations. All representations and warranties of the Borrowers contained in this Agreement shall survive the making of the Credit Extensions herein contemplated. 9.2 Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, neither the LC Issuer nor any Lender shall be obligated to extend credit to the Borrowers in violation of any limitation or prohibition provided by any applicable statute or regulation. 9.3 Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents. 9.4 Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrowers, the Administrative Agent, the LC Issuer and the Lenders and supersede all prior agreements and understandings among the Borrowers, the Administrative Agent, the LC Issuer and the Lenders relating to the subject matter thereof other than the fee letter described in Section 10.13. 9.5 Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Administrative Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns, provided, however, that the parties hereto expressly agree that the Lead Arranger shall enjoy the benefits of the provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth therein and shall have the right to enforce such provisions on its own behalf and in its own name to the same extent as if it were a party to this Agreement. 9.6 Expenses; Indemnification. (i) The Borrowers shall reimburse the Administrative Agent and the Lead Arranger for any reasonable costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Administrative Agent, which attorneys may be employees of the Administrative Agent), paid or incurred by the Administrative Agent or the Lead Arranger in connection with the preparation, investigation, negotiation, execution, delivery, syndication, review, amendment, modification, and administration of the Loan Documents, whether incurred prior to or subsequent to closing. The Borrowers also agree to reimburse the Administrative Agent, the Lead Arranger, the LC Issuer and the Lenders for any costs, internal charges and out-of-pocket expenses (including reasonable attorneys' fees and time charges of attorneys for the Administrative Agent, the Lead Arranger, the LC Issuer and the Lenders, which attorneys may be employees of the Administrative Agent, the Lead Arranger, the LC Issuer or the 56 Lenders) paid or incurred by the Administrative Agent, the Lead Arranger, the LC Issuer or any Lender in connection with the collection and enforcement of the Loan Documents. (ii) The Company hereby further agrees to indemnify the Administrative Agent, the Lead Arranger, the LC Issuer and each Lender, its directors, officers and employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all reasonable expenses of litigation or preparation therefor whether or not the Administrative Agent, the Lead Arranger, the LC Issuer or any Lender is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Credit Extension hereunder except to the extent that they are determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the party seeking indemnification. The obligations of the Company under this Section 9.6 shall survive the termination of this Agreement. 9.7 Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Administrative Agent with sufficient counterparts so that the Administrative Agent may furnish one to each of the Lenders. 9.8 Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles except that any calculation or determination which is to be made on a consolidated basis shall be made for the Company and all its Subsidiaries, including those Subsidiaries, if any, which are unconsolidated on the Company's audited financial statements. 9.9 Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable. 9.10 Nonliability of Lenders. The relationship between the Company on the one hand and the Lenders, the LC Issuer and the Administrative Agent on the other hand shall be solely that of borrower and lender. Neither the Administrative Agent, the Lead Arranger, the LC Issuer nor any Lender shall have any fiduciary responsibilities to the Company solely by reason of being a party to this Agreement. Neither the Administrative Agent, the Lead Arranger, the LC Issuer nor any Lender undertakes any responsibility to the Company to review or inform the Company of any matter in connection with any phase of the Company's business or operations. The Company agrees that neither the Administrative Agent, the Lead Arranger, the LC Issuer nor any Lender shall have liability to the Company (whether sounding in tort, contract or otherwise) for losses suffered by the Company in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross 57 negligence or willful misconduct of the party from which recovery is sought. Neither the Administrative Agent, the Lead Arranger, the LC Issuer nor any Lender shall have any liability with respect to, and the Company hereby waives, releases and agrees not to sue for, any special, indirect or consequential damages suffered by the Company in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby. 9.11 Confidentiality; Disclosure. Each of the Administrative Agent and each Lender agrees to hold any confidential information which it may receive from the Company pursuant to this Agreement in confidence, except for disclosure (i) to its Affiliates and to other Lenders and their respective Affiliates, (ii) to legal counsel, accountants, and other professional advisors to such Lender or the Administrative Agent or, subject to Section 12.4, to a Transferee, (iii) to regulatory officials, (iv) to any Person as required by law, regulation, or legal process, (v) to any Person in connection with any legal proceeding to which such Lender is a party or in connection with any legal proceeding related to this facility, (vi) to such Lender's contractual counterparties in swap agreements or to legal counsel, accountants and other professional advisors to such counterparties, (vii) permitted by Section 12.4, and (viii) to rating agencies if requested or required by such agencies in connection with a rating relating to the Advances hereunder, provided that reasonable advance written notice is given to the Company. Neither the Administrative Agent nor any Lender will make any press release or other public announcement regarding this Agreement or the transactions contemplated hereby without the Company's express prior written consent, except with respect to league table submissions in connection with this Agreement, as required under applicable law or by any governmental agency, in which case the party required to make the press release or public announcement shall use commercially reasonable efforts to obtain the prior approval of the Company as to the form, nature and extent of the press release or public announcement prior to issuing the press release or making the public announcement. Notwithstanding anything herein to the contrary, confidential information shall not include, and the Administrative Agent and each Lender (and each employee, representative or other agent of the Administrative Agent and any Lender) may disclose to any and all Persons, without limitation of any kind, the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are or have been provided to the Administrative Agent or any Lender relating to such "tax treatment" or "tax structure"; provided that with respect to any document or similar item that in either case contains information concerning the "tax treatment" or "tax structure" of the transactions contemplated hereby as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to the "tax treatment" or "tax structure" of the transactions contemplated hereby. 9.12 Nonreliance. Each Lender hereby represents that it is not relying on or looking to any margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) for the repayment of the Credit Extensions provided for herein. ARTICLE X. THE AGENT 10.1 Appointment; Nature of Relationship. Bank One, NA is hereby appointed by each of the Lenders as its contractual representative (herein referred to as the "Administrative Agent") hereunder and under each other Loan Document, and 58 each of the Lenders irrevocably authorizes the Administrative Agent to act as the contractual representative of such Lender with the rights and duties expressly set forth herein and in the other Loan Documents. The Administrative Agent agrees to act as such contractual representative upon the express conditions contained in this Article X. Notwithstanding the use of the defined term "Administrative Agent," it is expressly understood and agreed that the Administrative Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Administrative Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set forth in this Agreement and the other Loan Documents. In its capacity as the Lenders' contractual representative, the Administrative Agent (i) does not hereby assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives. 10.2 Powers. The Administrative Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Administrative Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Administrative Agent. 10.3 General Immunity. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable to the Company, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person. 10.4 No Responsibility for Loans, Recitals, etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered solely to the Administrative Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (g) the financial condition of the Company or any guarantor of any of the Obligations or of any of the Company's or any such guarantor's respective Subsidiaries. The Administrative Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by the Company to the Administrative Agent at such time, but is voluntarily furnished by the Company to the Administrative Agent (either in its capacity as Administrative Agent or in its individual capacity). 10.5 Action on Instructions of Lenders. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by 59 the Required Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge that the Administrative Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action. 10.6 Employment of Agents and Counsel. The Administrative Agent may execute any of its duties as Administrative Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Administrative Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Administrative Agent and the Lenders and all matters pertaining to the Administrative Agent's duties hereunder and under any other Loan Document. 10.7 Reliance on Documents; Counsel. The Administrative Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Administrative Agent, which counsel may be employees of the Administrative Agent. 10.8 Administrative Agent's Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Administrative Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (i) for any amounts not reimbursed by the Company for which the Administrative Agent is entitled to reimbursement by the Company under the Loan Documents (other than the fee payable pursuant to Section 10.13), (ii) for any other expenses incurred by the Administrative Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Administrative Agent in connection with any dispute between the Administrative Agent and any Lender or between two or more of the Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation, for any such amounts incurred by or asserted against the Administrative Agent in connection with any dispute between the Administrative Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Administrative Agent and (ii) any indemnification required pursuant to Section 3.5(vii) shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant Lender in accordance with the provisions thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this Agreement. 60 10.9 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent on the account of the Lenders, unless the Administrative Agent has received written notice from a Lender or the Company referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. 10.10 Rights as a Lender. In the event the Administrative Agent is a Lender, the Administrative Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Loans as any Lender and may exercise the same as though it were not the Administrative Agent, and the term "Lender" or "Lenders" shall, at any time when the Administrative Agent is a Lender, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. The Administrative Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with the Company or any of its Subsidiaries in which the Company or such Subsidiary is not restricted hereby from engaging with any other Person. The Administrative Agent, in its individual capacity, is not obligated to remain a Lender. 10.11 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, the Lead Arranger or any other Lender and based on the financial statements prepared by the Company and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Lead Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents. 10.12 Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Company, such resignation to be effective upon the appointment of a successor Administrative Agent or, if no successor Administrative Agent has been appointed, forty-five days after the retiring Administrative Agent gives notice of its intention to resign. The Administrative Agent may be removed at any time with or without cause by written notice received by the Administrative Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Company and the Lenders, a successor Administrative Agent, which successor Administrative Agent shall (unless a Default shall have occurred and be continuing) be approved by the Company (which approval shall not be unreasonably withheld or delayed). If no successor Administrative Agent shall have been so appointed by the Required Lenders within thirty days after the resigning Administrative Agent's giving notice of its intention to resign, then the resigning Administrative Agent may appoint, on behalf of the Company and the Lenders, a successor Administrative Agent. Notwithstanding the previous sentence, without the consent of any Lender but upon thirty days prior written notice to the Lenders and the Company, the Administrative Agent may appoint any of its Affiliates which is a commercial bank as a successor Administrative Agent hereunder, which successor Administrative Agent shall (unless a Default shall have occurred and be continuing) be approved by the Company (which approval shall not be 61 unreasonably withheld or delayed). If the Administrative Agent has resigned or been removed and no successor Administrative Agent has been appointed, the Lenders may perform all the duties of the Administrative Agent hereunder and the Company shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Administrative Agent shall be deemed to be appointed hereunder until such successor Administrative Agent has accepted the appointment. Any such successor Administrative Agent shall be a commercial bank having capital and retained earnings of at least $5,000,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Administrative Agent. Upon the effectiveness of the resignation or removal of the Administrative Agent, the resigning or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Administrative Agent, the provisions of this Article X shall continue in effect for the benefit of such Administrative Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Administrative Agent by merger, or the Administrative Agent assigns its duties and obligations to an Affiliate pursuant to this Section 10.12, then the term "Prime Rate" as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Administrative Agent. 10.13 Administrative Agent's Fee. The Company agrees to pay to the Administrative Agent, for its own account, the fees agreed to by the Company and the Administrative Agent pursuant to that certain letter agreement dated February 12, 2003 or as otherwise agreed from time to time. 10.14 Delegation to Affiliates. The Company and the Lenders agree that the Administrative Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Administrative Agent is entitled under Articles IX and X. 10.15 Administrative Agent, Syndication Agents, Documentation Agents, Lead Arranger, etc. Neither the Syndication Agents, the Documentation Agents nor the Lead Arranger shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders or the Administrative Agent shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect to the Administrative Agent in Section 10.11. ARTICLE XI. SETOFF; RATABLE PAYMENTS 11.1 Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if any Borrower becomes insolvent, however evidenced, or any Default occurs and is continuing, any and all deposits (including all account balances, whether provisional or final and whether or not collected or 62 available) and any other Indebtedness at any time held or owing by any Lender or any Affiliate of any Lender to or for the credit or account of any Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part hereof, shall then be due. 11.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Outstanding Credit Exposure (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5 or payments of Alternate Currency Loans) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Outstanding Credit Exposure held by the other Lenders so that after such purchase each Lender will hold its Pro Rata Share of the Aggregate Outstanding Credit Exposure. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their respective Pro Rata Shares of the Aggregate Outstanding Credit Exposure. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made. If an amount to be setoff is to be applied to Indebtedness of the Company to a Lender other than Indebtedness comprised of Loans made by such Lender, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness comprised of such Loans. ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 12.1 Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrowers and the Lenders and their respective successors and assigns, except that (i) the Borrowers shall not have the right to assign their rights or obligations under the Loan Documents and (ii) any assignment by any Lender must be made in compliance with Section 12.3. Notwithstanding clause (ii) of this Section, any Lender may at any time, without the consent of the Borrowers or the Administrative Agent, assign all or any portion of its rights under this Agreement and any Note to a Federal Reserve Bank; provided, however, that no such assignment to a Federal Reserve Bank shall release the transferor Lender from its obligations hereunder. The Administrative Agent may treat the Person which made any Loan or which holds any Note as the owner thereof for all purposes hereof unless and until such Person complies with Section 12.3 in the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with the Administrative Agent. Any assignee or transferee of the rights to any Loan or any Note agrees by acceptance of such transfer or assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder, transferee or assignee of the rights to such Loan. 12.2 Participations. 12.2.1. Permitted Participants; Effect. 63 Any Lender may, in its sole discretion, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities ("Participants") participating interests in any Outstanding Credit Exposure of such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of its Outstanding Credit Exposure and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrowers under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrowers and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under the Loan Documents. 12.2.2. Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Credit Extension or Commitment in which such Participant has an interest which forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Credit Extension or Commitment, extends the Facility Termination Date, postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Credit Extension or Commitment, releases the Company as guarantor of any such Loan or releases any of the collateral, if any, securing any such Credit Extension. 12.2.3. Benefit of Setoff. The Company agrees that each Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender. 12.3 Assignments. 12.3.1. Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more financial institutions, mutual funds, insurance companies or other entities engaged in the business of extending credit for borrowed money ("Purchasers") all or any part of its rights and obligations under the Loan Documents. Such assignment shall be substantially in the form of Exhibit C or in such other form as may be agreed to by the parties thereto. The consent of the Company and the Administrative Agent and the LC Issuer shall be required prior to an assignment becoming effective with respect to a Purchaser which is not a Lender or an Affiliate thereof or an Approved Fund; provided, however, that if a Default has occurred and is continuing, the consent of the Company shall not be required. Such consent shall not be unreasonably withheld or delayed. The assignor shall give prompt written notice to the Company of any assignment becoming effective without the consent of the Company. The Administrative Agent shall give written notice to each Lender of any assignment 64 becoming effective to an assignor other than a Lender or an Affiliate thereof. Each such assignment with respect to a Purchaser which is not a Lender or an Affiliate thereof shall (unless each of the Company and the Administrative Agent otherwise consents) be in an amount not less than the lesser of (i) $5,000,000 and in multiples of $1,000,000 or (ii) the remaining amount of the assigning Lender's Commitment (calculated as at the date of such assignment) or outstanding Loans (if the applicable Commitment has been terminated). If any Lender assigns a part of its rights and obligations in respect of its Dollar Loans and/or its Dollar Commitment under this Agreement to a Purchaser other than a Lender or an Affiliate thereof, such Lender shall assign proportionate interests in its respective Multicurrency Loans and Multicurrency Commitment and other related rights and obligations hereunder to such Purchaser, and if any Lender assigns a part of its rights and obligations under this Agreement in respect of its Multicurrency Loans and/or Multicurrency Commitments to a Purchaser other than a Lender or an Affiliate thereof, such Lender shall assign proportionate interests in its Dollar Loans and Dollar Commitments to such Purchaser. Any assignment of an Alternate Currency Loan shall be for the entire amount of such Alternate Currency Loan of such Lender. 12.3.2. Effect; Effective Date. Upon (i) delivery to the Administrative Agent of an assignment, together with any consents required by Section 12.3.1, and (ii) payment of a $3,500 fee to the Administrative Agent for processing such assignment (unless such fee is waived by the Administrative Agent), such assignment shall become effective on the effective date specified in such assignment. The assignment shall contain a representation by the Purchaser to the effect that none of the consideration used to make the purchase of the Commitment and Outstanding Credit Exposure under the applicable assignment agreement constitutes "plan assets" as defined under ERISA and that the rights and interests of the Purchaser in and under the Loan Documents will not be "plan assets" under ERISA. On and after the effective date of such assignment, such Purchaser shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Company, the Lenders or the Administrative Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment and Outstanding Credit Exposure assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 12.3.2, the transferor Lender, the Administrative Agent and the Borrowers shall, if the transferor Lender or the Purchaser desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as appropriate, replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacement Notes, are issued to such Purchaser, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment. 12.4 Dissemination of Information. The Company authorizes each Lender to disclose to any Participant or Purchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee") and any prospective Transferee any and all information in such Lender's possession concerning the creditworthiness of the Company and its Subsidiaries, provided that each Transferee and prospective Transferee agrees in writing to be bound by Section 9.11 of this Agreement. 12.5 Tax Treatment. If any interest in any Loan Document is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 3.5(iv). 65 12.6 Transfer to an SPC. Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an "SPC"), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Company, the option to provide to the Borrowers all or any part of any Loan (other than an Alternate Currency Loan) that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other 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 under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary in this Section 12.6, any SPC may (i) with notice to, but without the prior written consent of, the Company and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Company and the Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. As this Section applies to any particular SPC, this section may not be amended without the written consent of such SPC. ARTICLE XIII. NOTICES 13.1 Notices. Except as otherwise permitted by Section 2.15 with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission, facsimile transmission or similar writing) and shall be given to such party: (x) in the case of the Borrowers or the Administrative Agent, at its address or facsimile number set forth on the signature pages hereof, (y) in the case of any Lender, at its address or facsimile number set forth below its signature hereto or (z) in the case of any party, at such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Administrative Agent and the Borrowers in accordance with the provisions of this Section 13.1. Each such notice, request or other communication shall be effective (i) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Administrative Agent under Article II shall not be effective until received. 66 13.2 Change of Address. The Borrowers, the Administrative Agent and any Lender may each change the address for service of notice upon it by 5 days' prior written notice to the other parties hereto. ARTICLE XIV. COUNTERPARTS This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrowers, the Administrative Agent, the LC Issuer and the Lenders and each party has notified the Administrative Agent by facsimile transmission or telephone that it has taken such action. ARTICLE XV. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL 15.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 15.2 CONSENT TO JURISDICTION. EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, THE LC ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY BORROWER AGAINST THE AGENT, THE LC ISSUER OR ANY LENDER OR ANY AFFILIATE OF THE AGENT, THE LC ISSUER OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS. 67 15.3 WAIVER OF JURY TRIAL. THE BORROWERS, THE AGENT, THE LC ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER. 68 IN WITNESS WHEREOF, the Borrowers, the Lenders, the LC Issuer and the Administrative Agent have executed this Agreement as of the date first above written. CARDINAL HEALTH, INC. By: /s/ Donna Brandin -------------------------------------- Title: Senior Vice President and Treasurer 7000 Cardinal Place Dublin, Ohio 43017 Attention: Laura Warren Telephone: (614) 757-5391 FAX: (614) 757-4724 69 Commitment: $67,500,000 BANK ONE, NA, Individually and as Administrative Agent and LC Issuer By: /s/ Richard J. Johnsen ------------------------------------ Title: Managing Director 1111 Polaris Parkway Suite 3-A OH1-1085 Columbus, OH 43240 Attention: Paul A. Harris Telephone: (614) 213-4047 FAX: (614) 213-3135 70 Commitment: $58,750,000 BANK OF AMERICA, N.A., Individually and as Syndication Agent By: /s/ Richard Nichols -------------------------------------- Title: Managing Director 100 N. Tryon Street NC1-007-17-11 Charlotte, NC 28255-0001 Attention: Russ Matthews Telephone: (704) 386-3894 FAX: (704) 386-3893 71 Commitment: $58,750,000 WACHOVIA BANK, NATIONAL ASSOCIATION, Individually and as Syndication Agent By: /s/ Jeanette A. Griffin -------------------------------------- Title: Director 1339 Chestnut Street, PA4152 (12th Floor) Philadelphia, Pennsylvania 19107 Attention: Jeanette Griffin Telephone: (267) 321-6615 FAX: (267) 321-6702 72 Commitment: $58,750,000 CREDIT SUISSE FIRST BOSTON, acting through its Cayman Islands Branch, Individually and as Documentation Agent By: /s/ Joseph Adipietro --------------------------------------- Title: Director By: /s/ Jennifer A. Pieza --------------------------------------- Title: Associate One Madison Avenue, 8th Floor New York, NY 10010-3629 Attention: Loan Administration Telephone: (212) 538-3386 FAX: (212) 538-6851 73 Commitment: $58,750,000 BARCLAYS BANK PLC, Individually and as Documentation Agent By: /s/ Douglas Bernegger -------------------------------------- Title: Director 200 Park Avenue - 4th Floor New York, NY 10166 Attention: Russell Johnson Telephone: 212-412-2895 FAX: 212-412-7511 74 Commitment: $58,750,000 DEUTSCHE BANK AG - NEW YORK BRANCH By: /s/ Iain Stewart -------------------------------------- Title: Director By: /s/ Thomas A. Foley ------------------------------------- Title: Vice President 31 W. 52nd Street, 23rd Floor New York, NY 10019 Attention: Iain Stewart Telephone: (212) 469-8279 FAX: (212) 469-8701 75 Commitment: $58,750,000 UBS AG CAYMAN ISLANDS BRANCH By: /s/ Wilfred V. Saint ------------------------------------- Title: Associate Director By: /s/ Thomas R. Salzano ------------------------------------- Title: Director 677 Washington Boulevard Stamford, CT 06901 Attention: Marie Haddad Telephone: (203) 719-5609 FAX: (203) 719-3888 76 Commitment: $50,000,000 THE BANK OF TOKYO-MITSUBISHI, LTD By: /s/ Shinichiro Munechika ------------------------------------- Title: Deputy General Manager 227 West Monroe Street, Suite 2700 Chicago, Illinois 60606 Attention: William J. Murray Telephone: 312-696-4653 FAX: 312-696-4535 77 Commitment: $50,000,000 FLEET NATIONAL BANK By: /s/ Robert J. Milas ------------------------------------- Title: Vice President 300 Broad Hollow Road Melville, NY 11747 Attention: Mr. Robert J. Milas Telephone: (631) 547-7857 FAX: (631)547-7815 78 Commitment: $42,500,000 THE BANK OF NOVA SCOTIA By: /s/ Carolyn A. Calloway ------------------------------------- Title: Managing Director 600 Peachtree Street, Suite 2700 Atlanta, Georgia 30308 Attention: Dana Maloney Telephone: (404) 877-1524 FAX: (404) 888-8998 79 Commitment: $32,500,000 SUNTRUST BANK By: /s/ William D. Priester ------------------------------------ Title: Director 201 4th Avenue North, 3rd Floor Nashville, TN 37219 Attention: Bill Priester Telephone: (615) 748-5969 FAX: (615) 748-5269 80 Commitment: $32,500,000 PNC BANK, NATIONAL ASSOCIATION By: /s/ Jeffrey L. Stein ------------------------------------ Title: Vice President 201 East Fifth Street Cincinnati, OH 45202 Attention: Jeffrey L. Stein Telephone: (513) 651-8692 FAX: (513) 651-8951 81 Commitment: $25,000,000 NATIONAL CITY BANK By: /s/ Thomas E. Redmond ------------------------------------ Title: Vice President 155 East Broad Street Columbus, Ohio 43251-0077 Attention: Thomas E. Redmond Telephone: (614) 463-8540 FAX: (614) 463-8572 82 Commitment: $15,000,000 BANCO BILBAO VIZCAYA ARGENTARIA S.A. By: /s/ Jay Levit ------------------------------------- Title: Vice President By: /s/ Salustiano Machado ------------------------------------- Title: Vice President 1345 Avenue of the Americas, 45th Floor New York, New York 10105 Attention: Francesc Alvarez Telephone: (212) 728-1634 FAX: (212) 333-2904 83 Commitment: $15,000,000 BANCA INTESA S.P.A. By: /s/ C. Dougherty ------------------------------------- Title: Vice President By: /s/ F. Maffei ------------------------------------- Title: Vice President 1 William Street New York, New York Attention: Frank Maffei Telephone: (212) 607-3880 FAX: (212) 809-2124 84 Commitment: $15,000,000 THE BANK OF NEW YORK By: /s/ David C. Judge Title: Senior Vice President One Wall Street New York, New York Attention: Patrick Vatel Telephone: (212) 635-7882 FAX: (212) 635-1481 85 Commitment: $12,500,000 ABN AMRO BANK N.V. By: /s/ James S. Kreitler ------------------------------------ Title: Senior Vice President By: /s/ Todd J. Miller ------------------------------------ Title: Assistant Vice President 55 E. 52nd St., 7th Floor New York, NY 10055 Attention: Michele Costello Telephone: (212) 409-1481 FAX: (212) 409-1641 86 Commitment: $12,500,000 FIFTH THIRD BANK (CENTRAL OHIO) By: /s/ Kim Dennis ------------------------------------ Title: Assistant Vice President 21 East State Street Columbus, Ohio Attention: John Beardslee Telephone: (614) 223-3982 FAX: (614) 341-2606 87 Commitment: $12,500,000 U.S. BANK NATIONAL ASSOCIATION By: /s/ Celia V. Conlon ------------------------------------- Title: Vice President 175 South Third Street, 4th Floor Columbus, Ohio 43215 Attention: J. Todd Price Telephone: (614) 232-8040 FAX: (614) 232-8098 88 Commitment: $7,500,000 ALLIED IRISH BANKS p.l.c. By: /s/ Cathal O'Connor ------------------------------------ Title: Vice President AIB International Corporate Banking Block C1, Bankcentre, Ballsbridge Dublin, Ireland Attention: Cathal O'Connor Telephone: 011 353 1 6414812 FAX: 011 353 1 6682508 89 Commitment: $7,500,000 CREDIT LYONNAIS-S.A. By: /s/ Serge Giannechini ------------------------------------- Title: Directeur Regional Entreprises DIRECTION REGIONALE ENTREPRISES ILE DE FRANCE SUD OUEST 122 AVENUE DU GENERAL LECLERC 92100 BOULOGNE BILLANCOURT-FRANCE Attention: Serge Giannechini Telephone: 011-331-46842304 FAX: 011-331-48259130 90 PRICING SCHEDULE The Applicable Margin shall be as determined by the matrix below:
Level I Level II Level III Level IV Level V Status Status Status Status Status - -------------------------------------------------------------------------------------------------------------------- BBB+ or < than = to BBB or Reference Rating > than = to A+ or A1 A or A2 A- or A3 Baa1 Baa2 - -------------------------------------------------------------------------------------------------------------------- Facility Fee 7.0 8.0 9.0 12.5 15.0 - -------------------------------------------------------------------------------------------------------------------- Eurocurrency Rate Applicable Margin 18.0 22.0 31.0 37.5 47.5 and LC Fee - -------------------------------------------------------------------------------------------------------------------- Utilization fee > 10.0 10.0 10.0 12.5 12.5 50% - --------------------------------------------------------------------------------------------------------------------
For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule: "Level I Status" exists at any date if, on such date, the Company's Moody's Rating is A1 or better or the Company's S&P Rating is A+ or better. "Level II Status" exists at any date if, on such date, (i) the Company has not qualified for Level I Status and (ii) the Company's Moody's Rating is A2 or better or the Company's S&P Rating is A or better. "Level III Status" exists at any date if, on such date, (i) the Company has not qualified for Level I Status or Level II Status and (ii) the Company's Moody's Rating is A3 or better or the Company's S&P Rating is A- or better. "Level IV Status" exists at any date if, on such date, (i) the Company has not qualified for Level I Status, Level II Status or Level III Status and (ii) the Company's Moody's Rating is Baa1 or better or the Company's S&P rating is BBB+ or better. "Level V Status" exists at any date if, on such date, the Company has not qualified for Level I Status, Level II Status, Level III Status or Level IV Status. "Moody's Rating" means, at any time, the rating issued by Moody's Investors Service, Inc. and then in effect with respect to the Company's senior unsecured long-term debt securities without third-party credit enhancement. "S&P Rating" means, at any time, the rating issued by Standard and Poor's Rating Services, a division of The McGraw Hill Companies, Inc., and then in effect with respect to the Company's senior unsecured long-term debt securities without third-party credit enhancement. "Status" means either Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status. 91 The Applicable Margin shall be determined in accordance with the foregoing table based on the Company's Status as determined from its then-current Moody's and S&P Ratings. The credit rating in effect on any date for the purposes of this Schedule is that in effect at the close of business on such date. If at any time the Company has no Moody's Rating or no S&P Rating, Level V Status shall exist. Notwithstanding the foregoing, if at any time there exists a difference of more than one level between the Moody's Rating and the S&P Rating, the Company's Status shall be determined as if the higher rating were one level above the lower of the two ratings. 92 EXHIBIT A FORM OF OPINION March 27, 2003 The Administrative Agent and the Lenders who are parties to the Credit Agreement described below. Subject: CARDINAL HEALTH, INC. -- FIVE-YEAR CREDIT AGREEMENT Gentlemen/Ladies: I am counsel for Cardinal Health, Inc., an Ohio corporation (the "COMPANY"), and have represented the Company in connection with its execution and delivery of a Five-Year Credit Agreement dated as of March 27, 2003 (the "AGREEMENT"), among the Company, the Subsidiary Borrowers, the Lenders named therein, and Bank One, NA, as Administrative Agent, providing for Advances in an aggregate principal amount not exceeding $750,000,000 at any one time outstanding. All capitalized terms used in this opinion and not otherwise defined herein shall have the meanings attributed to them in the Agreement. This opinion is being delivered to you pursuant to Section 4.1(a)(v) of the Agreement. In connection with the issuance of this opinion letter, I have examined the following documents: (a) A copy of the Agreement executed by the Company; (b) The Company's Articles of Incorporation; (c) The Company's Code of Regulations; (d) A certificate of good standing of the Company issued by the Ohio Secretary of State; (e) Resolutions of the Company's board of directors; 93 (f) An executed copy of a $_________ Note from the Company to ___________________, dated March 27, 2003, an executed copy of a $_________ Note from the Company to ______________ [RESERVED]; (g) An executed copy of the Guaranty Agreement of the Company dated as of March 27, 2003; (h) Certificates of certain officers of the Company as to certain factual matters; and (i) Such other documents and matters of law as I deemed necessary or advisable in order to render the opinions set forth in this letter. The documents referenced in items (a), (f), and (g) are sometimes referred to hereinafter as the "LOAN DOCUMENTS." In my review and in rendering the opinions expressed herein, I have assumed, without independent verification, the following: (I) the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified, facsimile, or photostatic copies, the completeness and correctness of any representations and certifications made to me by officers of the Company, and the completeness and correctness of any representations and certificates of public officials and public filing records; (II) that the Loan Documents have been duly and validly authorized, executed, and delivered by all parties thereto other than the Company, and that the Loan Documents are binding and legally enforceable against all of the parties thereto, other than the Company; (III) all parties to the Loan Documents other than the Company have received adequate consideration for their execution and delivery of, and performance of their respective obligations under, the Loan Documents to which each of them is a party; and (IV) all conditions and other transactions contemplated by the Agreement to have occurred at or prior to the funding of the initial Loans have occurred or have been waived by the appropriate parties and Loans in the amount of the Aggregate Commitment will be fully available pursuant to the terms of the Agreement. Based upon the foregoing, and subject to the qualifications set forth below, I am of the opinion that: 1. The Company is a corporation validly existing and in good standing under the laws of the State of Ohio. 94 2. The execution and delivery by the Company of the Loan Documents to which it is a party and the performance by the Company of its obligations thereunder have been duly authorized by proper corporate proceedings on the part of the Company and will not: (a) Require any consent of the Company's shareholders; (b) (i) Violate (A) any order, judgment, or decree of any court or governmental agency binding on the Company and known to me, (B) any statute of the State of Ohio or the United States, or any written regulation thereunder, (C) the Company's articles of incorporation or code of regulations, or (D) the provisions of any indenture, instrument, or agreement to which the Company is a party or is subject, or by which it, or its Property, is bound, and which is filed or incorporated by reference as an exhibit to the Company's periodic reports under the Securities Exchange Act of 1934, pursuant to item 601(b)(l0) of Regulation S-K of the Securities and Exchange Commission, or (ii) conflict with or constitute a default under any such indenture, instrument, or agreement; or (c) Result in, or require, the creation or imposition of any Lien in or on the Property of the Company pursuant to the terms of any indenture, instrument or agreement binding upon the Company, and which is filed or incorporated by reference as an exhibit to the Company's periodic reports under the Securities Exchange Act of 1934, pursuant to item 601(b)(10) of Regulation S-K of the Securities and Exchange Commission. 3. The Loan Documents to which the Company is a party have been duly executed and delivered by the Company and, except for the "choice of law" provisions of the Loan Documents, constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms. Set forth later in this opinion letter is an opinion regarding the enforceability of the "choice of law" provisions of the Loan Documents. 4. To the best of my knowledge and except as set forth in Schedule 7 of the Agreement, there is no litigation, arbitration, governmental investigation, proceeding, or inquiry pending or threatened against the Company which, if adversely determined, could reasonably be expected to have a Material Adverse Effect. 5. No authorization or approval of, or filing with, any governmental agency of the United States or of the State of Ohio which has not been obtained or made is necessary for the execution and delivery of, and performance of the Company's obligations under the Loan Documents. 95 In addition to any other qualification set forth herein, my opinions are qualified as (A) I wish to advise you that I do not express any opinion with respect to: (1) the power or authority of the Lenders to make the loans contemplated by the Agreement; (2) compliance by the Lenders with any federal or state banking law, rule, regulation, or restriction; or (3) compliance by the Lenders with any federal, state, or foreign law, rule, regulation, or restriction which is or was required to be complied with by the Lenders (as opposed to compliance therewith by the Company) in order to enforce any rights or remedies of the Lenders under the Loan Documents. Accordingly, all of the foregoing opinions expressed by me are qualified to the extent set forth in the preceding sentence. (B) To the extent that the foregoing opinions are stated to be to the best of my knowledge, or relate to matters which are known to me, I have, with your consent, relied on one or more certificates of officers of the Company as to factual matters, and I have neither independently investigated nor attempted to verify any of such matters. (C) I have made no examination of and express no opinion as to: (1) the right, title, or interest of any person to any property; (2) the accuracy or sufficiency of the description in the Loan Documents of any real or personal property; or (3) the existence of or freedom of any property from any liens, security interests, or other encumbrances. (D) My opinions are subject to and affected by: (1) any bankruptcy, insolvency, avoidance, fraudulent conveyance, reorganization, moratorium, or similar laws affecting the rights and remedies of creditors generally; and (2) general principles of equity (whether considered in a proceeding in equity or at law). (E) I express no opinion as to whether a court would limit the exercise or enforcement of rights or remedies by the Lenders under the Loan Documents: (1) in the event of any default by the Company, if it is determined that such default is not material or if such exercise or enforcement is not reasonably necessary for the protection of the Lenders; or (2) if the exercise or enforcement thereof under the circumstances would violate an implied covenant of good faith and fair dealing. (F) Certain waivers and exculpatory clauses contained in the Loan Documents may be limited or unenforceable. 96 (G) No opinion is expressed with respect to the validity or enforceability of those provisions of the Loan Documents which purport by their terms to relieve any party of, or to indemnify such party against, any liability for such party's own negligence, gross negligence, or willful misconduct, or to obligate the Company to bear the legal and other expenses of any other party. (H) I am authorized to practice law in Ohio, and no opinion is expressed herein other than as to the laws of the State of Ohio and federal law. With your permission, for purposes of the opinion set forth in paragraph 3, I have assumed that the substantive laws of the State of Ohio, except for conflict of laws principles, would govern the Loan Documents. In addition to the foregoing opinions, you have also requested my opinion regarding whether an Ohio court would enforce the "choice of law" provisions of the Loan Documents (the "CHOICE OF LAW PROVISIONS") against the Company. In Schulke Radio Prod. v. Midwestern Broadcast, 453 N.E. 2d 683 (Ohio 1983), the Ohio Supreme Court held that the rule set forth in the Restatement of Law 2d (1971) 561, Conflict of Laws, Section 187, is to be applied in determining whether or not a contractual choice of law provision will be enforced by an Ohio court. The relevant part of Section 187 is set forth below: "(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of Section 188, would be the state of the applicable law in the absence of an effective choice of law by the parties." In Schulke, the agreement at issue included a term providing that it was to be governed by New York law. One of the parties to the agreement was located in New York and executed the 97 agreement in New York. In addition, performance under the agreement also took place in New York. Based upon the foregoing, the Ohio Supreme Court concluded that New York did bear a substantial relationship to the parties and the agreement. Schulke, 453 N.E. 2d 686. Similarly, Comment (f) to Section 187 of the Restatement states that a substantial relationship exists when the state of choice is where performance by one of the parties is to take place or where one of the parties has its principal place of business. In rendering the following opinion, I have assumed, with your approval and without independent verification, that the following facts and statements are true and accurate in all respects: (i) The Administrative Agent's principal office is located in Illinois; (ii) The terms of the Loan Documents were negotiated by certain representatives of the Administrative Agent from Illinois; (iii) The Loan Documents are being executed by certain of the Lenders in Illinois and are being delivered to the Administrative Agent in Illinois; (iv) In selecting the laws of the State of Illinois to govern the Loan Documents, the parties acted in good faith and without an intent to evade the law; and (v) The application of the laws of the State of Illinois to the Loan Documents will not be contrary to any fundamental policy of any state which has a materially greater interest than the State of Illinois in the determination of any particular right, duty, or obligation of any party under the Loan Documents. Based upon the foregoing, and subject to the qualifications and assumptions set forth herein, I am of the opinion that it would be more likely than not that an Ohio court would enforce the Choice of Law Provisions based upon a determination by such court that the Loan Documents and the parties thereto have a substantial relationship with the State of Illinois. The opinions set forth herein are given as of the date hereof, and I disclaim any obligation to notify you or any other person or entity if any change in fact or law, or both (whether statutory, regulatory, regulatory interpretation or judicial interpretation), should change my opinion with respect to any matter set forth herein. This opinion may be relied upon and is solely for the benefit of the Addressees at the beginning of this opinion (and also any Purchasers, but not any Participants), and it is not to be made available to or relied upon by any other party or communicated or disclosed to any other person without my prior written consent. 98 Sincerely, Brian V. Pero Assistant General Counsel-Finance and Real Estate 99 EXHIBIT B COMPLIANCE CERTIFICATE Date: ______________________________ _______________ Bank One, NA _______________ _______________ Dear _________: This notice serves to confirm that, to the best of my knowledge, Cardinal Health, Inc. (the "Company") has observed or performed in all material respects all of the covenants, conditions and agreements contained in the Five-Year Credit Agreement and the 364-Day Credit Agreement, each dated March 27, 2003 and each among the Company, certain subsidiaries of the Company named therein, Bank One, NA, as Administrative Agent and LC Issuer, and the lenders named therein. Detailed calculations are attached. In addition, please find enclosed a copy of our most recent financial statements as filed with the Securities and Exchange Commission. Sincerely, ________________________________________________ [Chief Financial Officer/Controller/Treasurer] 100 Section 6.16, Minimum Net Worth. [INSERT CALCULATION] 101 EXHIBIT C ASSIGNMENT AGREEMENT This Assignment Agreement (this "Assignment Agreement") between (the "Assignor") and (the "Assignee") is dated as of _____________, 200_. The parties hereto agree as follows: 1) PRELIMINARY STATEMENT. The Assignor is a party to a Five-Year Credit Agreement dated as of March 27, 2003 (the "Agreement") among the Company, the Subsidiary Borrowers, the Lenders named therein, and Bank One, NA, as Administrative Agent (which, as it may be amended, modified, renewed or extended from time to time is herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2) ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitment (or Outstanding Credit Exposure, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. 3) EFFECTIVE DATE. The effective date of this Assignment Agreement (the "Effective Date") shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Administrative Agent) after this Assignment Agreement, together with any consents required under the Credit Agreement, are delivered to the Administrative Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date. 4) PAYMENT OBLIGATIONS. In consideration for the sale and assignment of Outstanding Credit Exposure hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Administrative Agent all payments of principal, interest, Reimbursement Obligations and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Loans and fees received from the Administrative Agent which relate to the portion of the Commitment or Outstanding Credit Exposure assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. 102 5) RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Administrative Agent in connection with this Assignment Agreement unless otherwise specified in Item 6 of Schedule 1. 6) REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S LIABILITY. The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor and (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including without limitation, documents granting the Assignor and the other Lenders a security interest in assets of the Company or any guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Company or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of the Company, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents. 7) REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (vi) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, (viii) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's non-performance of the obligations assumed under this Assignment Agreement, and (ix) if applicable, attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes. 103 8) GOVERNING LAW. This Assignment Agreement shall be governed by the internal law, and not the law of conflicts, of the State of Illinois. 9) NOTICES. Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. 10) COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement. IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement by executing Schedule 1 hereto as of the date first above written. 104 SCHEDULE 1 TO ASSIGNMENT AGREEMENT 1) Description and Date of Credit Agreement: 2) Date of Assignment Agreement: , 200_ 3) Amounts (As of Date of Item 2 above):
Facility Facility Facility Facility 1* 2 3* 4* ________ _________ ________ _______ * ______ ________ _________ ________ a. Assignee's percentage of each Facility purchased under the Assignment Agreement ***, **** ____% ____% ____% _____% b. Amount of each Facility purchased under the Assignment Agreement ***, ****t $____ $____ $____ $
4) Assignee's Commitment (or Outstanding Credit Exposure with respect to terminated Commitments) purchased hereunder: $______________________________ 5) Proposed Effective Date: ___________________________ N/A 6) Non-standard Recordation Fee Arrangement [Assignor/Assignee to pay 100% of fee] [Fee waived by Administrative Agent] Accepted and Agreed: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By: _____________________ By: _________________________ 105 Title: __________________ Title: ______________________ ACCEPTED AND CONSENTED TO BY: ACCEPTED AND CONSENTED TO BY [NAME OF COMPANY] [NAME OF AGENT] By: ____________________ By: _________________________ Title: _________________ Title: ______________________ *Insert specific facility names per Credit Agreement **Percentage taken to 10 decimal places ***If fee is split 50-50, pick N/A as option ****Assignments must be pro rata 106 Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT ADMINISTRATIVE INFORMATION SHEET Attach Assignor's Administrative Information Sheet, which must include notice addresses for the Assignor and the Assignee (Sample form shown below) ASSIGNOR INFORMATION CONTACT: Name: ___________________ Telephone No.: ___________________ Fax No.: ________________ Telex No.: _______________________ Answerback: ______________________ PAYMENT INFORMATION: Name & ABA # of Destination Bank: _____________________________________ Account Name & Number for Wire Transfer: ______________________________ ____________________________________ Other Instructions: _________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Address for Notices for Assignor: _________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ASSIGNEE INFORMATION CREDIT CONTACT: Name: ___________________ Telephone No.: ___________________ Fax No.: ________________ Telex No.: _______________________ Answerback: ______________________ KEY OPERATIONS CONTACTS: Booking Installation: _________ Booking Installation: Name: _________________________ Name: ____________________________ Telephone No.: ________________ Telephone No.: ___________________ 107 Fax No.: ______________________ Fax No.: _________________________ Telex No.: ____________________ Telex No.: _______________________ Answerback: __________________ Answerback: ______________________ PAYMENT INFORMATION: Name & ABA # of Destination Bank: ____________________________________ Account Name & Number for Wire Transfer: _____________________________ ________________________________________________________________________________ ________________________________________________________________________________ Other Instructions: ___________________________________________________ Address for Notices for Assignee: _____________________________________ 108 EXHIBIT D LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION To Bank One, NA, as Administrative Agent (the "Administrative Agent") under the Credit Agreement Described Below. Re: Credit Agreement, dated March 27, 2003 (as the same may be amended or modified, the "Credit Agreement"), among Cardinal Health, Inc. (the "Company"), the Lenders named therein, the LC Issuer and the Administrative Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement. The Administrative Agent is specifically authorized and directed to act upon the following standing money transfer instructions with respect to the proceeds of Advances or other extensions of credit from time to time until receipt by the Administrative Agent of a specific written revocation of such instructions by the Company, provided, however, that the Administrative Agent may otherwise transfer funds as hereafter directed in writing by the Company in accordance with Section 13.1 of the Credit Agreement or based on any telephonic notice made in accordance with Section 2.14 of the Credit Agreement. Facility Identification Number(s)______________________________________ Customer/Account Name ________________________________________________ Transfer Funds To _____________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ For Account No. _______________________________________________________ Reference/Attention To ________________________________________________ Authorized Officer (Customer Representative) Date _______________________________ ________________________ (Please Print) Signature Bank Officer Name Date _______________________________ ________________________ (Please Print) Signature 109 EXHIBIT E NOTE [Date] Cardinal Health, Inc., an Ohio corporation (the "Borrower"), promises to pay to the order of ____________________________________ (the "Lender") the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to Article II of the Agreement (as hereinafter defined), in immediately available funds at the place specified pursuant to Article II of the Agreement together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Loans in full on the Facility Termination Date. The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Loan and the date and amount of each principal payment hereunder. This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Five-Year Credit Agreement dated as of March 27, 2003 (which, as it may be amended or modified and in effect from time to time, is herein called the "Agreement"), among the Borrower, the lenders party thereto, including the Lender, the LC Issuer and Bank One, NA, as Administrative Agent, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is guaranteed pursuant to the Guaranty, as more specifically described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement. By: ______________________________ Print Name: ______________________ Title: ___________________________ 110 EXHIBIT F SWINGLINE NOTE March __, 2003 _________, ___________ FOR VALUE RECEIVED, CARDINAL HEALTH INC., an Ohio corporation (the "Borrower"), hereby unconditionally promises to pay to the order of Bank One, NA (the "Lender"), at the principal banking office of the Administrative Agent in lawful money of the United States of America and in immediately available funds, the unpaid principal amount of the Swingline Loans as evidenced by the books and records of the Lender, on the Facility Termination Date or such earlier date as the Lender may require under the Credit Agreement referred to below, when the entire outstanding principal amount of the Swingline Loans evidenced hereby, and all accrued interest thereon, shall be due and payable; and to pay interest on the unpaid principal balance hereof from time to time outstanding, in like money and funds, for the period from the date hereof until the Swingline Loans evidenced hereby shall be paid in full, at the rates per annum on and the dates provided in the Credit Agreement referred to below. The Lender is hereby authorized by the Borrower to record on its books and records the date, currency and the amount of each Swingline Loan, the applicable interest rate, the amount of each payment or prepayment of principal thereon, and the other information provided for in such books and records, which books and records shall constitute prime facie evidence of the information so recorded, provided, however, that any failure by the Lender to record any such notation shall not relieve the Borrower of its obligation to repay the outstanding principal amount of this Swingline Note, all accrued interest hereon and any amount payable with respect hereto in accordance with the terms of this Swingline Note and the Credit Agreement. The Borrower waives presentment, protest, notice of dishonor and any other formality in connection with this Swingline Note. Should the indebtedness evidenced by this Swingline Note or any part thereof be collected in any proceeding or be placed in the hands of attorneys for collection, the Borrower agrees to pay, in addition to the principal, interest and other sums due and payable hereon, all costs of collecting this Swingline Note, including reasonable attorneys' fees and expenses. This Swingline Note evidences Swingline Loans made under a Five-Year Credit Agreement, dated as of March 27, 2003 (as amended or modified from time to time, the "Credit Agreement"), by and among the Borrower, the Lenders (including the Lender) named therein, the LC Issuer and Bank One, NA, as Administrative Agent for the Lenders, to which reference is hereby made for a statement of the circumstances under which this Swingline Note is subject to prepayment and under which its due date may be accelerated. Capitalized terms used but not defined in this Swingline Note shall have the respective meanings assigned to them in the Credit Agreement. This Swingline Note is made under, and shall be governed by and construed in accordance with, the Laws of the State of Illinois in the same manner applicable to contracts made and to be performed entirely within such State and without giving effect to choice of law principles of such State. CARDINAL HEALTH INC. By: ________________________ Its: 111 SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL TO NOTE OF ______________, DATED ______________,
Principal Maturity of Principal Unpaid Date Amount of Loan Interest Period Amount Paid Balance - ---------------------------------------------------------------------------------------------
112 SCHEDULE 1 LIST OF CARDINAL HEALTH, INC. SUBSIDIARIES (In Alphabetical Order - as of January 31, 2003) (See Sections 5.8 and 6.11)
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 1. Abilene Nuclear, LLC Texas - Cardinal Health, Inc.indirectly owns 80% - ---------------------------------------------------------------------------------------------------------------------------------- 2. Alcon - Building Branch Puerto Rico * - ---------------------------------------------------------------------------------------------------------------------------------- 3. Allcaps Weichgelatinkapseln GmbH & Co. KG Germany * - ---------------------------------------------------------------------------------------------------------------------------------- 4. Allcaps Weichgelatinkapseln Verwaltungs Germany * GmbH - ---------------------------------------------------------------------------------------------------------------------------------- 5. Allegiance (BVI) Holdings Co. Ltd. British Virgin Islands * - ---------------------------------------------------------------------------------------------------------------------------------- 6. Allegiance AB Sweden * - ---------------------------------------------------------------------------------------------------------------------------------- 7. Allegiance B.V. Netherlands * - ---------------------------------------------------------------------------------------------------------------------------------- 8. Allegiance Corporation Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 9. Allegiance De Mexico, S.A. De C.V. Mexico * - ---------------------------------------------------------------------------------------------------------------------------------- 10. Allegiance Healthcare (Labuan) Pte. Ltd. Malaysia * - ---------------------------------------------------------------------------------------------------------------------------------- 11. Allegiance Healthcare (Thailand) Ltd. Thailand * - ---------------------------------------------------------------------------------------------------------------------------------- 12. Allegiance Healthcare Canada Inc. Canada * - ---------------------------------------------------------------------------------------------------------------------------------- 13. Allegiance Healthcare Deutschland GmbH Germany * - ---------------------------------------------------------------------------------------------------------------------------------- 14. Allegiance Healthcare Deutschland Holding Germany * GmbH - ----------------------------------------------------------------------------------------------------------------------------------
113
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 15. Allegiance Healthcare Distribution GmbH Austria * - ---------------------------------------------------------------------------------------------------------------------------------- 16. Allegiance Healthcare GmbH Switzerland * - ---------------------------------------------------------------------------------------------------------------------------------- 17. Allegiance Healthcare Holding B.V. Netherlands * - ---------------------------------------------------------------------------------------------------------------------------------- 18. Allegiance Healthcare International GmbH Austria * - ---------------------------------------------------------------------------------------------------------------------------------- 19. Allegiance Healthcare Limited United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 20. Allegiance International Manufacturing Bermuda * (Bermuda) Ltd. - ---------------------------------------------------------------------------------------------------------------------------------- 21. Allegiance K. K. Japan * - ---------------------------------------------------------------------------------------------------------------------------------- 22. Allegiance Labuan Holdings Pte. Ltd. Malaysia * - ---------------------------------------------------------------------------------------------------------------------------------- 23. Allegiance Medica S.R.L. Italy * - ---------------------------------------------------------------------------------------------------------------------------------- 24. Allegiance S.L. Spain * - ---------------------------------------------------------------------------------------------------------------------------------- 25. Allegiance S.P.R.L. Belgium * - ---------------------------------------------------------------------------------------------------------------------------------- 26. Allegiance Sante S.A.S. France * - ---------------------------------------------------------------------------------------------------------------------------------- 27. Allegiance Trading GmbH Switzerland * - ---------------------------------------------------------------------------------------------------------------------------------- 28. Alsyn Corporativos, S.A. de C.V. Mexico * - ---------------------------------------------------------------------------------------------------------------------------------- 29. Anem-IX S.A.R.L. France * - ----------------------------------------------------------------------------------------------------------------------------------
114
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 30. Arclight Systems LLC Delaware - Cardinal indirectly has a 36.2% equity ownership. This ownership % will decrease over time (ultimately to 20%.) - Several other retail drugstore chains own the rest of the units. - ---------------------------------------------------------------------------------------------------------------------------------- 31. Armand Scott, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 32. Axiom Healthcare Services Pty. Ltd. Australia * - ---------------------------------------------------------------------------------------------------------------------------------- 33. Bauer Branc Dominican Republic * - ---------------------------------------------------------------------------------------------------------------------------------- 34. Becquerel & Sievert Co., Ltd. Taiwan * - ---------------------------------------------------------------------------------------------------------------------------------- 35. Beijing Syncor Medicine Corporation, Ltd. China - Cardinal Health, Inc. indirectly owns 89.5% - ---------------------------------------------------------------------------------------------------------------------------------- 36. Beijing Syncor Star Medicine Technology Co., Ltd. China * - ---------------------------------------------------------------------------------------------------------------------------------- 37. BLP-Dover Acquisition Corp. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 38. BLP-Liberty Acquisition Corp. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 39. Boron LePore, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 40. C. International, Inc. Ohio * - ---------------------------------------------------------------------------------------------------------------------------------- 41. Cardal, Inc. Ohio * - ---------------------------------------------------------------------------------------------------------------------------------- 42. Cardinal Distribution Holding Corporation - I Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 43. Cardinal Distribution Holding Corporation - II Nevada * - ----------------------------------------------------------------------------------------------------------------------------------
115 % OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 44. Cardinal Health (Europe) GmbH Switzerland * - ---------------------------------------------------------------------------------------------------------------------------------- 45. Cardinal Health 100, Inc. Indiana * (f/k/a Bindley Western Industries, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 46. Cardinal Health 101, Inc. Delaware * (f/k/a Cardinal Health Provider Pharmacy Services, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 47. Cardinal Health 102, Inc. Ohio * (f/k/a Cardinal Health Staffing Network, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 48. Cardinal Health 103, Inc. Mississippi * (f/k/a Cardinal Southeast, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 49. Cardinal Health 104 LP Ohio * (f/k/a Cardinal Distribution LP) - ---------------------------------------------------------------------------------------------------------------------------------- 50. Cardinal Health 105, Inc. Ohio * (f/k/a CORD Logistics, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 51. Cardinal Health 106, Inc. Massachusetts * (f/k/a James W. Daly, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 52. Cardinal Health 107, Inc. Ohio * (f/k/a National Pharmpak Services, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 53. Cardinal Health 108, Inc. Tennessee * (f/k/a National Specialty Services, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 54. Cardinal Health 109, Inc. Texas * (f/k/a Owen Healthcare, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 55. Cardinal Health 110, Inc. Delaware * (f/k/a Whitmire Distribution Corporation) - ---------------------------------------------------------------------------------------------------------------------------------- 56. Cardinal Health 2, Inc. Nevada * (f/k/a The Griffin Group, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 57. Cardinal Health 200, Inc. Delaware * (f/k/a Allegiance Healthcare Corporation) - ---------------------------------------------------------------------------------------------------------------------------------- 58. Cardinal Health 201, Inc. Delaware * (f/k/a Allegiance Healthcare International, Inc.) - ----------------------------------------------------------------------------------------------------------------------------------
116
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 59. Cardinal Health 3, Inc. Nevada * (f/k/a Red Wing Data Corporation) - ---------------------------------------------------------------------------------------------------------------------------------- 60. Cardinal Health 301, Inc. Delaware * (f/k/a Pyxis Corporation) - ---------------------------------------------------------------------------------------------------------------------------------- 61. Cardinal Health 400, Inc. Illinois * (f/k/a Automatic Liquid Packaging, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 62. Cardinal Health 401, Inc. Delaware * (f/k/a Boron, LePore & Associates, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 63. Cardinal Health 402, Inc. Delaware * (f/k/a Cardinal Health Pharmaceutical Technologies & Services Center, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 64. Cardinal Health 403, Inc. Delaware * (f/k/a Enhanced Derm Technologies, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 65. Cardinal Health 404, Inc. Delaware * (f/k/a International Processing Corporation) - ---------------------------------------------------------------------------------------------------------------------------------- 66. Cardinal Health 405, Inc. North Carolina * (f/k/a Magellan Pharmaceutical Development, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 67. Cardinal Health 406, Inc. Pennsylvania * (f/k/a Packaging Coordinators, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 68. Cardinal Health 407, Inc. Delaware * (f/k/a PCI Services, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 69. Cardinal Health 408, Inc. New Jersey * (f/k/a PCI, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 70. Cardinal Health 409, Inc. Delaware * (f/k/a R.P. Scherer Corporation) - ---------------------------------------------------------------------------------------------------------------------------------- 71. Cardinal Health 410, Inc. Delaware * (f/k/a R.P. Scherer West, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 72. Cardinal Health 411, Inc. Ohio * (f/k/a RedKey, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 73. Cardinal Health 412, Inc. Georgia * (f/k/a Central Pharmacy Services, Inc.) - ----------------------------------------------------------------------------------------------------------------------------------
117
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 74. Cardinal Health 413, Inc. Delaware * (f/k/a PCI West, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 75. Cardinal Health 414, Inc. Delaware * (f/k/a Syncor International Corporation) - ---------------------------------------------------------------------------------------------------------------------------------- 76. Cardinal Health 415, Inc. Delaware * (f/k/a Syncor Management Corporation) - ---------------------------------------------------------------------------------------------------------------------------------- 77. Cardinal Health 416, Inc. Delaware * (f/k/a PCI Services II, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 78. Cardinal Health 417, Inc. Delaware * (f/k/a PCI Services III, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 79. Cardinal Health Australia 200 Pty Ltd Australia * (f/k/a Allegiance Healthcare Pty Ltd) - ---------------------------------------------------------------------------------------------------------------------------------- 80. Cardinal Health Brasil 402 Ltda. Brazil * (f/k/a R.P. Scherer do Brasil Encapsulacoes, Ltda.) - ---------------------------------------------------------------------------------------------------------------------------------- 81. Cardinal Health Canada 301, Inc. Canada * (f/k/a H.E.N. Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 82. Cardinal Health Canada 302, Inc. Canada * (f/k/a Pyxis Healthcare Systems, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 83. Cardinal Health Canada 403, Inc. Canada * (f/k/a R.P. Scherer Canada Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 84. Cardinal Health Capital Corporation Ohio * - ---------------------------------------------------------------------------------------------------------------------------------- 85. Cardinal Health Finance United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 86. Cardinal Health Funding, LLC Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 87. Cardinal Health GbR Germany * - ---------------------------------------------------------------------------------------------------------------------------------- 88. Cardinal Health Germany GmbH Germany * - ----------------------------------------------------------------------------------------------------------------------------------
118
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 89. Cardinal Health Holding GmbH Germany * - ---------------------------------------------------------------------------------------------------------------------------------- 90. Cardinal Health Holding International, Inc. New Jersey * - ---------------------------------------------------------------------------------------------------------------------------------- 91. Cardinal Health Holding Pty Ltd Australia * - ---------------------------------------------------------------------------------------------------------------------------------- 92. Cardinal Health Holdings Ltd. United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 93. Cardinal Health I, Inc. Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 94. Cardinal Health International Ventures, Ltd. Barbados * - ---------------------------------------------------------------------------------------------------------------------------------- 95. Cardinal Health Ireland 406 Ltd. Ireland * (f/k/a Cardinal Health Technologies Ltd.) - ---------------------------------------------------------------------------------------------------------------------------------- 96. Cardinal Health Japan 408 K.K. Japan * (f/k/a R.P. Scherer K.K.) - ---------------------------------------------------------------------------------------------------------------------------------- 97. Cardinal Health Lease Funding 2002A LLC Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 98. Cardinal Health Lease Funding 2002AQ LLC Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 99. Cardinal Health Malaysia 211 Sdn. Bhd. Malaysia * (f/k/a Allegiance Healthcare Sdn. Bhd.) - ---------------------------------------------------------------------------------------------------------------------------------- 100. Cardinal Health Manufacturing Services B. V. The Netherlands * - ---------------------------------------------------------------------------------------------------------------------------------- 101. Cardinal Health N.Z. 217 Limited New Zealand * [f/k/a Cardinal Health (N.Z.) Limited] - ---------------------------------------------------------------------------------------------------------------------------------- 102. Cardinal Health P.R. 218, Inc. Puerto Rico * (f/k/a Allegiance PRO, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 103. Cardinal Health P.R. 410, Inc. Puerto Rico * (f/k/a PCI Services I, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 104. Cardinal Health PTS, Inc. Delaware * - ----------------------------------------------------------------------------------------------------------------------------------
119
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 105. Cardinal Health Systems, Inc. Ohio * - ---------------------------------------------------------------------------------------------------------------------------------- 106. Cardinal Health Technologies, LLC Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 107. Cardinal Health, Inc. Ohio * - ---------------------------------------------------------------------------------------------------------------------------------- 108. Cardinal.com Holdings, Inc. Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 109. Cascade Development, Inc. Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 110. CDI Investments, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 111. Central Source, Inc. Alabama * - ---------------------------------------------------------------------------------------------------------------------------------- 112. Cheng du Syncor Pharmaceutical Co., Ltd. China * - ---------------------------------------------------------------------------------------------------------------------------------- 113. Cirmex de Chihuahua S.A. de C.V. Mexico * - ---------------------------------------------------------------------------------------------------------------------------------- 114. Cirpro de Delicias S.A. de C.V. Mexico * - ---------------------------------------------------------------------------------------------------------------------------------- 115. CMI Net, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 116. Comprehensive Medical Imaging Centers, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 117. Comprehensive Medical Imaging, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 118. Comprehensive Medical Imaging--Anaheim Delaware * Hills, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 119. Comprehensive Medical Imaging--Apple Delaware * Valley, Inc - ---------------------------------------------------------------------------------------------------------------------------------- 120. Comprehensive Medical Imaging--Bakersfield, Delaware * Inc. - ----------------------------------------------------------------------------------------------------------------------------------
120
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 121. Comprehensive Medical Imaging--Biltmore, Delaware * Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 122. Comprehensive Medical Imaging--Boynton Delaware * Beach, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 123. Comprehensive Medical Imaging--Downey, Delaware * Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 124. Comprehensive Medical Imaging--Encino, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 125. Comprehensive Medical Imaging--Fairfax, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 126. Comprehensive Medical Imaging--Fort Delaware * Lauderdale, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 127. Comprehensive Medical Imaging--Fremont, Delaware * Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 128. Comprehensive Medical Imaging--Hesperia, Delaware * Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 129. Comprehensive Medical Imaging--Huntington Delaware * Beach, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 130. Comprehensive Medical Imaging--Palm Delaware * Beach Gardens, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 131. Comprehensive Medical Imaging--Palm Delaware * Springs, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 132. Comprehensive Medical Imaging--Rancho Delaware * Cucamonga, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 133. Comprehensive Medical Imaging--Rancho Delaware * Mirage, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 134. Comprehensive Medical Imaging--Salisbury, Delaware * Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 135. Comprehensive Medical Imaging--San Delaware * Francisco, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 136. Comprehensive Medical Imaging--Santa Delaware * Maria, Inc. - ----------------------------------------------------------------------------------------------------------------------------------
121
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 137. Comprehensive Medical Imaging--Sherman Delaware * Oaks, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 138. Comprehensive Medical Imaging--Tempe, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 139. Comprehensive Medical Imaging--Van Nuys, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 140. Comprehensive Medical Imaging--Victorville, Delaware * Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 141. Comprehensive Medical Imaging--Westlake Delaware * Village, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 142. Comprehensive OPEN MRI - Carmichael, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 143. Comprehensive OPEN MRI- California * Carmichael/Folsom, LLC - ---------------------------------------------------------------------------------------------------------------------------------- 144. Comprehensive OPEN MRI--East Mesa, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 145. Comprehensive OPEN MRI--Folsom, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 146. Comprehensive OPEN MRI--Fullerton, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 147. Comprehensive OPEN MRI--Garland, Inc. Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 148. Comprehensive OPEN MRI--Laguna Hills, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 149. Comprehensive OPEN MRI--Sacramento, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 150. Consumer2Patient, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 151. Converters Branch Dominican Republic * - ---------------------------------------------------------------------------------------------------------------------------------- 152. Convertors de Mexico S.A. de C.V. Mexico * - ----------------------------------------------------------------------------------------------------------------------------------
122
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 153. Corona Regional Medical Imaging, LLC California * - ---------------------------------------------------------------------------------------------------------------------------------- 154. Desert PET, LLC California - Cardinal Health, Inc. indirectly owns 99% - ---------------------------------------------------------------------------------------------------------------------------------- 155. Diagnostic Purchasing Group, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 156. Diversicor International Ltd. Bahamas * (This company is being dissolved) - ---------------------------------------------------------------------------------------------------------------------------------- 157. Dutch American Manufacturers (D.A.M.) B.V. Netherlands * - ---------------------------------------------------------------------------------------------------------------------------------- 158. EGIS Holdings, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 159. Ellipticare, LLC Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 160. Eon Media Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 161. EPIC Insurance Company Vermont * - ---------------------------------------------------------------------------------------------------------------------------------- 162. Eurovac Limited Malta * - ---------------------------------------------------------------------------------------------------------------------------------- 163. F&F Holding GmbH Germany * - ---------------------------------------------------------------------------------------------------------------------------------- 164. Gala Design, Inc. Delaware - Cardinal Health, Inc. owns 60.8% - ---------------------------------------------------------------------------------------------------------------------------------- 165. Global Healthcare Exchange, LLC Delaware - A Delaware limited liability company of which HealthNexis LLC acquired a 20% equity interest. Cardinal Health, Inc. owns approximately 6% - ---------------------------------------------------------------------------------------------------------------------------------- 166. Greenville MRI, Ltd. Texas - Cardinal Health, Inc. indirectly owns 62.72% - ---------------------------------------------------------------------------------------------------------------------------------- 167. Griffin Capital, LLC Nevada * - ----------------------------------------------------------------------------------------------------------------------------------
123
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 168. Griffin Group Document Management Nevada * Services, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 169. Heartland Diagnostic Services, Inc. Wisconsin * - ---------------------------------------------------------------------------------------------------------------------------------- 170. Herd Mundy Richardson (Holdings) Limited United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 171. Herd Mundy Richardson Limited United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 172. IMI Diagnostic Center, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 173. IMI of Arlington, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 174. IMI of Boca Raton, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 175. IMI of Kansas City, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 176. IMI of Miami, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 177. IMI of North Miami Beach, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 178. IMI-NET, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 179. InGel Technologies Ltd. United Kingdom - Cardinal Health, Inc. indirectly owns 5%. - ---------------------------------------------------------------------------------------------------------------------------------- 180. Inland Empire Regional PET Center, LLC California - Cardinal Health, Inc. indirectly owns 50% - ---------------------------------------------------------------------------------------------------------------------------------- 181. InteCardia-TN East Catheterization, LLC Tennessee - Cardinal Health, Inc. indirectly owns 75% - ---------------------------------------------------------------------------------------------------------------------------------- 182. InteCardia-TN East Diagnostic, LLC North Carolina * - ---------------------------------------------------------------------------------------------------------------------------------- 183. International Capsule Company S.r.l. Italy * - ----------------------------------------------------------------------------------------------------------------------------------
124
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 184. International Medical Products B.V. Netherlands * - ---------------------------------------------------------------------------------------------------------------------------------- 185. Jefferson MRI, JV Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 186. Jefferson MRI--Bala, JV Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 187. Killilea Development Company, Ltd. Ohio * - ---------------------------------------------------------------------------------------------------------------------------------- 188. Lake Charles Pharmaceutical and Medical Louisiana - Cardinal Health, Inc. has Equipment Supply Company, L.L.C. indirect partial ownership. - ---------------------------------------------------------------------------------------------------------------------------------- 189. Leader Drugstores, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 190. Los Gatos Imaging Center, JV Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 191. Managed Pharmacy Benefits, Inc. Missouri * - ---------------------------------------------------------------------------------------------------------------------------------- 192. Medcon S.A. Luxembourg * - ---------------------------------------------------------------------------------------------------------------------------------- 193. Medical Diagnostic Leasing, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 194. Medical Education Systems, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 195. Medical Media Communications, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 196. Medicine Shoppe Capital Corporation Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 197. Medicine Shoppe International, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 198. Medicine Shoppe Internet, Inc. Missouri * - ---------------------------------------------------------------------------------------------------------------------------------- 199. MediQual Systems, Inc. Delaware * - ----------------------------------------------------------------------------------------------------------------------------------
125
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 200. Meditrol Automation Systems, Inc. Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 201. Meditrol, Inc. Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 202. Mesa MRI, JV Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 203. Moresville, Limited United Kingdom - Cardinal Heath, Inc. indirectly owns 50% - ---------------------------------------------------------------------------------------------------------------------------------- 204. Mountain View MRI, JV Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 205. MRI Equipment Partners, Ltd. Texas - Cardinal Health, Inc. indirectly owns 59.16% - ---------------------------------------------------------------------------------------------------------------------------------- 206. MRI of Woodbridge, JV Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 207. Multi-Medica S.A. Belgium * - ---------------------------------------------------------------------------------------------------------------------------------- 208. NewHealthCo LLC Delaware - Cardinal Health, Inc. owns 31.029% - ---------------------------------------------------------------------------------------------------------------------------------- 209. Orange County Regional PET Center-Irvine, LLC California - Cardinal Health, Inc. indirectly owns 50% - ---------------------------------------------------------------------------------------------------------------------------------- 210. Owen Healthcare Building, Inc. Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 211. Owen Shared Services, Inc. Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 212. PCI Holdings (UK) Co. United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 213. PCI/Acquisition III, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 214. Pharmaceutical and Diagnostic Services, Inc. Utah - Cardinal Health, Inc. indirectly owns 50% - ---------------------------------------------------------------------------------------------------------------------------------- 215. Pharmacy Automated Systems Incorporated Sdn Bhd Malaysia - Amend: Cardinal Health, Inc. indirectly owns 5% - ----------------------------------------------------------------------------------------------------------------------------------
126
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 216. Pharmacy Operations of New York, Inc. New York * - ---------------------------------------------------------------------------------------------------------------------------------- 217. Pharmacy Operations, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 218. Pharmatopes (Proprietary) Limited South Africa * - ---------------------------------------------------------------------------------------------------------------------------------- 219. Phillipi Holdings, Inc. Ohio * - ---------------------------------------------------------------------------------------------------------------------------------- 220. Phoenix Regional PET Center-Thunderbird, Arizona - Cardinal Health, Inc. indirectly LLC owns 50% - ---------------------------------------------------------------------------------------------------------------------------------- 221. PhR Staffing, Inc. Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 222. Physicians Purchasing, Inc. Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 223. Pinnacle Intellectual Property Services Nevada * International, Inc. - ---------------------------------------------------------------------------------------------------------------------------------- 224. Pinnacle Intellectual Property Services, Inc. Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 225. Princeton Diagnostic Isotopes, Inc. West Virginia * - ---------------------------------------------------------------------------------------------------------------------------------- 226. Productos Urologos de Mexico S.A. de C.V Mexico * - ---------------------------------------------------------------------------------------------------------------------------------- 227. Professional Health-Care Resources, Inc. Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 228. Pyxis Funding II, LLC Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 229. Pyxis Funding, LLC Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 230. Quiroproductos de Cuauhtemoc S.A. de C.V. Mexico * - ---------------------------------------------------------------------------------------------------------------------------------- 231. R. P. Scherer Limited United Kingdom * - ----------------------------------------------------------------------------------------------------------------------------------
127
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 232. R.P. Scherer (Europe) AG Switzerland * - ---------------------------------------------------------------------------------------------------------------------------------- 233. R.P. Scherer (Spain) S.A. Spain * - ---------------------------------------------------------------------------------------------------------------------------------- 234. R.P. Scherer Argentina S.A.I.C. Argentina * - ---------------------------------------------------------------------------------------------------------------------------------- 235. R.P. Scherer DDS B.V. Netherlands * - ---------------------------------------------------------------------------------------------------------------------------------- 236. R.P. Scherer Egypt Egypt - Cardinal Health, Inc. indirectly owns 10% - ---------------------------------------------------------------------------------------------------------------------------------- 237. R.P. Scherer GmbH & Co. KG Germany * - ---------------------------------------------------------------------------------------------------------------------------------- 238. R.P. Scherer Holdings II Limited United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 239. R.P. Scherer Holdings Limited United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 240. R.P. Scherer Holdings Pty. Ltd. Australia * - ---------------------------------------------------------------------------------------------------------------------------------- 241. R.P. Scherer Inc. New Jersey * - ---------------------------------------------------------------------------------------------------------------------------------- 242. R.P. Scherer Production S.A. France * - ---------------------------------------------------------------------------------------------------------------------------------- 243. R.P. Scherer S.A. France * - ---------------------------------------------------------------------------------------------------------------------------------- 244. R.P. Scherer S.p.A. Italy * - ---------------------------------------------------------------------------------------------------------------------------------- 245. R.P. Scherer Technologies, Inc. Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 246. R.P. Scherer Verwaltungs GmbH Germany o Cardinal Health, Inc. indirectly owns 51% - ---------------------------------------------------------------------------------------------------------------------------------- 247. Radiopharmacy of Boise, Inc. Delaware * - ----------------------------------------------------------------------------------------------------------------------------------
128
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 248. Radiopharmacy of Lafayette, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 249. Radiopharmacy of Northern California, Inc. California * - ---------------------------------------------------------------------------------------------------------------------------------- 250. Ransdell Surgical, Inc. Kentucky * - ---------------------------------------------------------------------------------------------------------------------------------- 251. Riverside MRI, JV Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 252. RPS Technical Services, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 253. R(x)ealTIME, Inc. Nevada * - ---------------------------------------------------------------------------------------------------------------------------------- 254. Sacramento High Field OPEN MRI, LLC California - Cardinal Health, Inc. indirectly owns 51% - ---------------------------------------------------------------------------------------------------------------------------------- 255. San Fernando Valley Regional PET Center, LLC California - Cardinal Health, Inc. indirectly owns 50% - ---------------------------------------------------------------------------------------------------------------------------------- 256. Santa Cruz Comprehensive Imaging LLC California - Cardinal Health, Inc. indirectly owns 57% - ---------------------------------------------------------------------------------------------------------------------------------- 257. Santa Maria MRI, LLC California - Cardinal Health, Inc. indirectly owns 50% - ---------------------------------------------------------------------------------------------------------------------------------- 258. Scela, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 259. Scherer DDS Limited United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 260. Shanghai Syncor Pharmaceutical Co., Ltd. China - Cardinal Health, Inc. indirectly owns 83.67% - ---------------------------------------------------------------------------------------------------------------------------------- 261. Sierra Radiopharmacy, LLC Nevada - Cardinal Health, Inc. indirectly owns 51% - ---------------------------------------------------------------------------------------------------------------------------------- 262. SOS Medical System S.A.R.L. France * - ---------------------------------------------------------------------------------------------------------------------------------- 263. Source Medical Corporation Canada - Cardinal Health, Inc. indirectly owns 50% of common shares & 100% of preferred share (1 share) - ----------------------------------------------------------------------------------------------------------------------------------
129
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 264. STI Deutschland GmbH Surgical Germany * Technologies - ---------------------------------------------------------------------------------------------------------------------------------- 265. Strategic Implications International, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 266. Supplyline Technologies Limited Ireland * - ---------------------------------------------------------------------------------------------------------------------------------- 267. Surgical Technologies B.V. Netherlands * - ---------------------------------------------------------------------------------------------------------------------------------- 268. Surgi-Tech Europa Divisione Surgi-Tech Italia SRL Italy * - ---------------------------------------------------------------------------------------------------------------------------------- 269. Syncor (Nanjing) Medical Science Company, Ltd. China * - ---------------------------------------------------------------------------------------------------------------------------------- 270. Syncor (Nanjing) Medical Science Company, China * Ltd. Beijing Branch Branch of Syncor (Nanjing) - ---------------------------------------------------------------------------------------------------------------------------------- 271. Syncor (Trinidad & Tobago) Unlimited Trinidad & Tobago * - ---------------------------------------------------------------------------------------------------------------------------------- 272. Syncor Advanced Isotopes, LLC Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 273. Syncor Australia Pty Ltd. Australia * - ---------------------------------------------------------------------------------------------------------------------------------- 274. Syncor Belgium SPRL Belgium * - ---------------------------------------------------------------------------------------------------------------------------------- 275. Syncor Cardiology Services, LLC Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 276. Syncor de Colombia Ltda. Colombia * - ---------------------------------------------------------------------------------------------------------------------------------- 277. Syncor de Mexico S. de R.L. de C.V. Mexico * - ---------------------------------------------------------------------------------------------------------------------------------- 278. Syncor Diagnostics Bakersfield, LLC California * - ----------------------------------------------------------------------------------------------------------------------------------
130
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 279. Syncor Diagnostics Dallas, LLC Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 280. Syncor Diagnostics Encino, LLC California * - ---------------------------------------------------------------------------------------------------------------------------------- 281. Syncor Diagnostics Fullerton LLC California * - ---------------------------------------------------------------------------------------------------------------------------------- 282. Syncor Diagnostics Laguna Hills LLC California * - ---------------------------------------------------------------------------------------------------------------------------------- 283. Syncor Diagnostics Plano, LLC Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 284. Syncor Diagnostics Sacramento LLC California * - ---------------------------------------------------------------------------------------------------------------------------------- 285. Syncor do Brasil Ltda. Brazil * - ---------------------------------------------------------------------------------------------------------------------------------- 286. Syncor Financing Corporation Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 287. Syncor Guyana Inc. Guyana * - ---------------------------------------------------------------------------------------------------------------------------------- 288. Syncor Hong Kong Limited Hong Kong * - ---------------------------------------------------------------------------------------------------------------------------------- 289. Syncor International (Thailand) Co., Ltd. Thailand * - ---------------------------------------------------------------------------------------------------------------------------------- 290. Syncor Italy s.r.l. Italy * - ---------------------------------------------------------------------------------------------------------------------------------- 291. Syncor Korea, Inc. South Korea * - ---------------------------------------------------------------------------------------------------------------------------------- 292. Syncor Midland, Inc. Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 293. Syncor New Zealand Limited New Zealand * - ---------------------------------------------------------------------------------------------------------------------------------- 294. Syncor Overseas Ltd. British Virgin Islands * - ----------------------------------------------------------------------------------------------------------------------------------
131
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 295. Syncor Pharmaceuticals, Inc. Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 296. Syncor Philippines, Inc. Philippines * - ---------------------------------------------------------------------------------------------------------------------------------- 297. Syncor Radiation Management, LLC Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 298. Syncor Radiofarmacos, S.L. Spain * - ---------------------------------------------------------------------------------------------------------------------------------- 299. Syncor St. Lucia, Inc. Saint Lucia * - ---------------------------------------------------------------------------------------------------------------------------------- 300. Syncor Taiwan, Inc. Taiwan * - ---------------------------------------------------------------------------------------------------------------------------------- 301. Syncor Trinidad & Tobago Trinidad & Tobago * (Branch of Syncor Overseas) - ---------------------------------------------------------------------------------------------------------------------------------- 302. Syncor Unidad Central de Radiofarmacia de Spain - Cardinal Health, Inc. indirectly Galicia, S.L. owns 70% - ---------------------------------------------------------------------------------------------------------------------------------- 303. Syncor-Caribe Puerto Rico * - ---------------------------------------------------------------------------------------------------------------------------------- 304. TME Arizona, Inc. Texas * - ---------------------------------------------------------------------------------------------------------------------------------- 305. Unipack, Ltd. United Kingdom * - ---------------------------------------------------------------------------------------------------------------------------------- 306. Valencia MRI, LLC California - Cardinal Health, Inc. indirectly owns 50% - ---------------------------------------------------------------------------------------------------------------------------------- 307. Vallejo Open MRI, LLC California - Cardinal Health, Inc. indirectly owns 50% - ---------------------------------------------------------------------------------------------------------------------------------- 308. Virginia Imaging Center, LLC Virginia - Cardinal Health, Inc. indirectly owns 90% - ---------------------------------------------------------------------------------------------------------------------------------- 309. Vistant Corporation Delaware * - ---------------------------------------------------------------------------------------------------------------------------------- 310. Vistant Holdings, Inc. Nevada * - ----------------------------------------------------------------------------------------------------------------------------------
132
% OF OWNERSHIP BY CARDINAL HEALTH, INC. (*Unless otherwise indicated, the ownership STATE / JURISDICTION OF shall be directly or indirectly 100% owned NO. SUBSIDIARY NAME INCORPORATION by Cardinal Health, Inc.) - ---------------------------------------------------------------------------------------------------------------------------------- 311. West Texas Nuclear Pharmacy Partners Texas - Cardinal Health, Inc. indirectly owns 50% - ----------------------------------------------------------------------------------------------------------------------------------
133 SCHEDULE 1 CONTINUED SUBSIDIARY BORROWERS None as of the Effective Date. 134 SCHEDULE 3 EUROCURRENCY PAYMENT OFFICES OF THE AGENT Currency Eurocurrency Payment Office - --------- --------------------------- Dollars Bank One, NA Chicago, Illinois British Pounds Sterling Bank One, NA London Branch Euros Bank One, NA London Branch
135 SCHEDULE 4 LENDING INSTALLATIONS
Lender Floating Rate Loans Eurocurrency Loans (list all) ------ ------------------- ----------------- Bank One, NA Bank One, NA, Chicago, Illinois Bank One, NA, Chicago, Illinois Bank One, NA, London Branch (for Multicurrency Loans) Bank of America, N.A. Bank of America, N.A. Bank of America, N.A. Deutsche Bank AG New York Deutsche Bank AG New York Deutsche Bank AG New York Branch Branch Branch Barclays Bank PLC Barclays Bank PLC Barclays Bank PLC Wachovia Bank, National Wachovia Bank, National Association Wachovia Bank, National Association Association Credit Suisse First Boston, acting Credit Suisse First Boston, acting Credit Suisse First Boston, acting through its Cayman Islands through its Cayman Islands through its Cayman Islands Branch Branch Branch UBS AG Cayman Islands Branch UBS AG Cayman Islands Branch UBS AG Cayman Islands Branch The Bank of Tokyo-Mitsubishi., The Bank of Tokyo-Mitsubishi, LTD., The Bank of Tokyo-Mitsubishi, LTD., Chicago Branch Chicago Branch LTD., Chicago Branch Fleet National Bank Fleet National Bank Fleet National Bank The Bank of Nova Scotia The Bank of Nova Scotia The Bank of Nova Scotia SunTrust Bank SunTrust Bank SunTrust Bank PNC Bank, National Association PNC Bank, National Association PNC Bank, National Association National City Bank National City Bank National City Bank Banco Bilbao Vizcaya Argentaria Banco Bilbao Vizcaya Argentaria S.A. Banco Bilbao Vizcaya Argentaria S.A. S.A. Banca Intesa S.P.A. Banca Intesa S.P.A. Banca Intesa S.P.A. The Bank of New York The Bank of New York The Bank of New York ABN AMRO Bank N.V. ABN AMRO Bank N.V. ABN AMRO Bank N.V. Fifth Third Bank (Central Ohio) Fifth Third Bank (Central Ohio) Fifth Third Bank (Central Ohio) U.S. Bank National Association U.S. Bank National Association U.S. Bank National Association Allied Irish Banks p.l.c. Allied Irish Banks p.l.c. Allied Irish Banks p.l.c. Credit Lyonnais-S.A. Credit Lyonnais-S.A. Credit Lyonnais-S.A.
136 SCHEDULE 5 ALTERNATE CURRENCY COMMITMENT No Alternate Currency Commitments as of the Effective Date. 137 SCHEDULE 6 MULTICURRENCY COMMITMENT Commitments
Lender Multi Currency Dollar ------ -------------- ------ Bank One, NA $ 25,000,000 $ 42,500,000 Bank of America, N.A. $ 25,000,000 $ 33,750,000 Deutsche Bank AG New York Branch $ 25,000,000 $ 33,750,000 Barclays Bank PLC $ 25,000,000 $ 33,750,000 Wachovia Bank, National Association $ 0 $ 58,750,000 Credit Suisse First Boston $ 0 $ 58,750,000 UBS AG Cayman Islands Branch $ 0 $ 58,750,000 The Bank of Tokyo-Mitsubishi, Ltd. $ 0 $ 50,000,000 Fleet National Bank $ 0 $ 50,000,000 The Bank of Nova Scotia $ 0 $ 42,500,000 SunTrust Bank $ 0 $ 32,500,000 PNC Bank, National Association $ 0 $ 32,500,000 National City Bank $ 0 $ 25,000,000 Banco Bilbao Vizcaya Argentaria S.A. $ 0 $ 15,000,000 Banca Intesa S.p.A. $ 0 $ 15,000,000 The Bank of New York $ 0 $ 15,000,000 ABN AMRO Bank N.V. $ 0 $ 12,500,000 Fifth Third Bank (Central Ohio) $ 0 $ 12,500,000 U.S. Bank National Association $ 0 $ 12,500,000 Allied Irish Banks p.l.c. $ 0 $ 7,500,000 Credit Lyonnais $ 0 $ 7,500,000
138 SCHEDULE 7 LITIGATION/CONTINGENT OBLIGATIONS Those litigation/contingent liabilities items disclosed in Part II, Item I of the Company's Form 10-Q for the quarter ended December 31, 2002 filed with the Securities and Exchange Commission on February 14, 2003. 139 SCHEDULE 8 PERSONS AUTHORIZED TO GIVE TELEPHONE INSTRUCTIONS Donna Brandin, SVP and Treasurer Alex Choi, VP and Asst. Treasurer Jared Poff, Director - Finance and Investments 140 EX-99.02 6 l00848aexv99w02.txt EX-99.02 CERTIFICATIONS Exhibit 99.02 I, Robert D. Walter, Chairman and Chief Executive Officer, of Cardinal Health, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2003, (the "Periodic Report") containing the financial statements of the Company, which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m), and (2) the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 15, 2003 /s/ Robert D. Walter -------------------- Robert D. Walter Chairman, and Chief Executive Officer A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO CARDINAL HEALTH, INC., AND WILL BE RETAINED BY CARDINAL HEALTH, INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. Page 1 I, Richard J. Miller, Executive Vice President and Chief Financial Officer, of Cardinal Health, Inc. (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2003, (the "Periodic Report") containing the financial statements of the Company, which this statement accompanies, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m), and (2) the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 15, 2003 /s/ Richard J. Miller ----------------------------- Richard J. Miller Executive Vice President, and Chief Financial Officer A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO CARDINAL HEALTH, INC., AND WILL BE RETAINED BY CARDINAL HEALTH, INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. Page 2 -----END PRIVACY-ENHANCED MESSAGE-----