FOURTH AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

Exhibit 10.80

FOURTH AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

      THIS FOURTH AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT (the “Agreement” ) dated as of April 30, 2009, is entered into among UNITED STATES PHARMACEUTICAL GROUP, L.L.C. d/b/a NATIONSHEALTH , a Delaware limited liability company (“ USPG ”), NATIONSHEALTH HOLDINGS, L.L.C., a Florida limited liability company (“ NHH ”), NATIONSHEALTH, INC ., a Delaware corporation (“ NationsHealth ”), DIABETES CARE & EDUCATION, INC ., a South Carolina corporation (“ DCE ”), and NATIONAL PHARMACEUTICALS AND MEDICAL PRODUCTS (USA), LLC , a Florida limited liability company (“ National Pharmaceuticals ” and sometimes individually, collectively and jointly and severally with USPG, NHH, NationsHealth and DCE, “Borrower” ) and CAPITALSOURCE FINANCE LLC , a Delaware limited liability company, in its capacity as agent for Lender (as herein defined) (in such capacity, the “Agent” ).

     WHEREAS, pursuant to a certain Revolving Credit and Security Agreement dated as of April 30, 2004 by and among USPG, NHH and CapitalSource Finance LLC (together with its successors and assigns, “ Lender ”) (the “ Original Credit Agreement ”), Lender made available to USPG and NHH a revolving credit facility (the “Revolving Facility” ) in a maximum principal amount at any time outstanding of up to Ten Million Dollars ($10,000,000) (the “Facility Cap” ); and

     WHEREAS, USPG, NHH and Lender amended and restated the Original Credit Agreement pursuant to a certain Amended and Restated Revolving Credit and Security Agreement by and among USPG, NHH and Lender dated as of June 29, 2004 (the “ First Restated Credit Agreement ”) and a certain Second Amended and Restated Revolving Credit and Security Agreement by and among USPG, NHH and Lender dated March 21, 2006 (the “ Second Restated Credit Agreement ”); and

     WHEREAS, USPG, NHH, NationsHealth and Lender amended and restated the Second Restated Credit Agreement to continue the Revolving Facility and to make available to Borrower a multi-draw term loan (the “Term Loan” ) in a maximum principal amount of Seven Million Dollars ($7,000,000) pursuant to a certain Third Amended and Restated Revolving Credit, Term Loan and Security Agreement by and among USPG, NHH, NationsHealth and Lender dated as of April 11, 2007 (as amended and in effect from time to time, the “ Third Restated Credit Agreement ”); and

     WHEREAS, DCE was joined as a party to and as borrower under the Third Restated Credit Agreement pursuant to a certain Joinder Agreement and Second Amendment to Third Amended and Restated Revolving Credit, Term Loan and Security Agreement by and among USPG, NHH, NationsHealth, DCE and Lender dated September 4, 2007; and

     WHEREAS, National Pharmaceuticals was joined as a party to and borrower under the Third Restated Credit Agreement pursuant to a certain Consent, Waiver, Joinder and Eighth Amendment to Third Amended and Restated Revolving Credit, Term Loan and Security Agreement by and among USPG, NHH, NationsHealth, DCE, National Pharmaceuticals and Lender dated April 30, 2009; and

     WHEREAS, Lender designated Agent as its agent for taking certain actions on its behalf pursuant to Section 12.12 of the Third Restated Credit Agreement; and

     WHEREAS, Borrower has requested that Lender amend and restate the Third Restated Credit Agreement to continue the Revolving Facility and the Term Loan in connection with (A) the consummation of the transactions contemplated by that certain Agreement and Plan of Merger dated as of April 30, 2009 by and among ComVest NationsHealth Holdings, LLC (“ ComVest ”), NationsHealth Acquisition Corporation (“ NAC ”) and NationsHealth (the “ Merger Agreement ”) or (B), in the event of the termination of the Merger Agreement and the failure of Borrower to repay the Bridge Loan (as defined herein), the consummation of the Voluntary Series A Conversion (as defined herein); and

     WHEREAS, Agent on behalf of Lender is willing to amend and restate the terms and conditions of the Third Restated Credit Agreement to continue the Revolving Facility and the Term Loan at the Closing Date upon the terms and subject to the conditions set forth herein;

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which hereby are acknowledged, Borrower and Agent on behalf of Lender hereby agree that the Third Restated Credit Agreement shall be amended and restated at the Closing Date as follows:

I. DEFINITIONS

      1.1 General Terms

     For purposes of this Agreement, in addition to the definitions above and elsewhere in this Agreement, the terms listed in Appendix A , Annex I.A. and Annex I.B. hereto shall have the meanings given such terms in Appendix A , Annex I.A. and Annex I.B. , which are incorporated herein and made a part hereof. All capitalized terms used which are not specifically defined herein shall have meanings provided in Article 9 of the UCC in effect on the date hereof to the extent the same are used or defined therein. Unless otherwise specified herein or in Appendix A , Annex I.A. or Annex I.B. , any agreement, contract or instrument referred to herein or in Appendix A , Annex I.A. or Annex I.B. , shall mean such agreement, contract or instrument as modified, amended, restated or supplemented from time to time. Unless otherwise specified, as used in the Loan Documents or in any certificate, report, instrument or other document made or delivered pursuant to any of the Loan Documents, all accounting terms not defined in Appendix A , Annex I.A. , Annex I.B. or elsewhere in this Agreement shall have the meanings given to such terms in and shall be interpreted in accordance with GAAP.

II. ADVANCES, PAYMENT AND INTEREST

      2.1 The Revolving Facility

     (a) Subject to the provisions of this Agreement, Lender shall continue the Existing Advances and make Advances to Borrower under the Revolving Facility from time to time during the Term, provided that, notwithstanding any other provision of this Agreement, the aggregate amount of all Advances at any one time outstanding under the Revolving Facility shall not exceed the lesser of (a) the Facility Cap, or (b) the Availability. The Revolving Facility is a revolving credit facility, which may be drawn, repaid and redrawn, from time to time as permitted under this Agreement. Any determination as to whether there is Availability for Advances shall be made by Lender in its sole discretion and, absent demonstrable error, is final and binding upon Borrower. Unless otherwise permitted by Lender, each Advance shall be in an amount of at least $1,000. Subject to the provisions of this Agreement, Borrower may request Advances under the Revolving Facility up to and including the value, in U.S. Dollars, of the sum of:

Notwithstanding any provision of this Agreement or any definition contained in Appendix A attached hereto to the contrary, in no event shall any Accounts or Inventory of National Pharmaceuticals be included in the calculation of the Borrowing Base or the Availability under this Agreement. Advances under the Revolving Facility automatically shall be made for the payment of interest on the Advances and the Term Loan and other Obligations on the date when due to the extent available and as provided for herein. The proceeds of Advances under the Revolving Facility shall be used by Borrower (i) as a provider of health care services, (ii) as a wholesaler, retailer and provider of medical supplies and services, (iii) for the generation of receivables/inventory, (iv) for the refinancing of existing indebtedness, (v) for payments to Lender hereunder, and (vii) for any other lawful purpose permitted under this Agreement.

     (b) Lender has established the above-referenced advance rate for Availability and, in its sole credit judgment, may further adjust the Availability and such advance rates by applying percentages (known as “liquidity factors”) to Eligible Receivables by payor class based upon Borrower’s actual recent collection history for each such payor class (i.e., Medicare, Medicaid, commercial insurance, etc.) and to Eligible Inventory in a manner consistent with Lender’s underwriting practices and procedures, including without limitation Lender’s review and analysis of, among other things, Borrower’s historical returns, rebates, discounts, credits and allowances (collectively, the “Dilution Items” ). Such liquidity factors and the advance rate for Availability may be adjusted by Lender throughout the Term as warranted by Lender’s underwriting practices and procedures in its sole credit judgment. Also, Lender shall have the right to establish from time to time, in its sole credit judgment, reserves against the Borrowing Base, which reserves shall have the effect of reducing the amounts otherwise eligible to be disbursed to Borrower under the Revolving Facility pursuant to this Agreement.

      2.2 Revolving Facility Maturity Date

     All amounts outstanding under the Revolving Facility and other Obligations relating to Advances shall be due and payable in full, if not earlier in accordance with this Agreement, on the earlier of (i) the occurrence and continuance of an Event of Default if required pursuant hereto or Lender’s demand upon the occurrence and continuance of an Event of Default, and (ii) the last day of the Term (such earlier date being the “Revolving Facility Maturity Date” ). The Revolving Facility shall be subject to extension for up to one year at the option of Lender, in its sole and absolute discretion, upon written notice to Borrower at any time prior to the then applicable Revolving Facility Maturity Date.

      2.3 Revolving Facility Disbursements; Requirement to Deliver Borrowing Certificate

     So long as no Default or Event of Default shall have occurred and be continuing, Borrower may give Lender irrevocable written notice requesting an Advance under the Revolving Facility by delivering to Lender not later than 11:00 a.m. (Eastern Standard Time) at least one (1) but not more than four (4) Business Days before the proposed borrowing date of such requested Advance (the “Borrowing Date” ), a completed Borrowing Certificate and relevant supporting documentation satisfactory to Lender, which shall (i) specify the proposed Borrowing Date of such Advance which shall be a Business Day, (ii) specify the principal amount of such requested Advance, (iii) certify the matters contained in Section 4.2 , and (iv) specify the amount of any Medicare or Medicaid recoupments and/or recoupments of any third-party payor being sought, requested or claimed, or, to Borrower’s knowledge, threatened against Borrower or Borrower’s Affiliates. Each time a request for an Advance is made, and, in any event and regardless of whether an Advance is being requested, on Tuesday of each week during the Term (and so long as a Default or Event of Default exists, more frequently if Lender shall so request) until the Obligations are indefeasibly paid in cash in full and this Agreement is terminated, Borrower shall deliver to Lender a Borrowing Certificate accompanied by a separate detailed aging and categorizing of Borrower’s accounts receivable and accounts payable and such other supporting documentation with respect to the figures and information in the Borrowing Certificate as Lender shall reasonably request from a credit or security perspective or otherwise. On each Borrowing Date, Borrower irrevocably authorizes Lender to disburse the proceeds of the requested Advance to the appropriate Borrower’s account(s) as set forth on Schedule 2.4 , in all cases for credit to the appropriate Borrower (or to such other account as to which the appropriate Borrower shall instruct Lender) via Federal funds wire transfer no later than 4:00 p.m. (Eastern Standard Time). Notwithstanding any provision of this Agreement to the contrary, if the average outstanding balance under the Revolving Facility during any calendar month is less than Two Million Five Hundred Thousand Dollars ($2,500,000) (the “ Minimum Balance ”), Borrower acknowledges and agrees that Lender shall be entitled to calculate interest and fees hereunder, including, without limitation, the calculations set forth in Sections 2.4, 3.1 and 3.5 , as if the average outstanding balance for such calendar month was Two Million Five Hundred Thousand Dollars ($2,500,000). Notwithstanding the requirement of Borrower delivering a Borrowing Certificate in connection with each requested Advance, Borrower may give Lender irrevocable written notice requesting an Advance under the Revolving Facility in an amount necessary to make the total outstanding Advances at such time equal Two Million Five Hundred Thousand Dollars ($2,500,000), and so long as (i) no Default or Event of Default shall have occurred and be continuing, and (ii) Lender has a Borrowing Certificate that is not more than four (4) Business Days before the proposed borrowing date of such requested Advance, subject to Availability, Lender shall disburse the proceeds of such requested Advance.

      2.4 Revolving Facility Collections; Repayment; Borrowing Availability and Lockbox

     Each Borrower shall maintain one or more lockbox accounts (individually and collectively, the “Lockbox Account” ) with one or more banks acceptable to Lender (each, a “Lockbox Bank” ), and shall execute with each Lockbox Bank one or more agreements acceptable to Lender (individually and collectively, the “Lockbox Agreement” ), and such other agreements related thereto as Lender may require. Each Borrower shall ensure that all collections of their respective Accounts and all other cash payments received by any Borrower, including CIGNA Receipts, are paid and delivered directly from Account Debtors and other Persons into the appropriate Lockbox Account. The Lockbox Agreements shall provide that the Lockbox Banks will transfer on the same Business Day all funds paid into the Lockbox Accounts into a depository account or accounts maintained by Lender or an Affiliate of Lender at such bank as Lender may communicate to Borrower and the applicable Lockbox Bank from time to time in accordance with the Lockbox Agreement (the “Concentration Account” ), except, with respect only to Accounts payable by Medicaid/Medicare Account Debtors, as instructed by the applicable Borrower to whom such Accounts are payable as permitted pursuant to the applicable Lockbox Agreement. Notwithstanding and without limiting any other provision of any Loan Document, Lender shall apply, on a daily basis, all funds transferred into the Concentration Account pursuant to the Lockbox Agreement and this Section 2.4 in such order and manner as determined by Lender. To the extent that any Accounts are collected by any Borrower or any other cash payments received by any Borrower are not sent directly to the appropriate Lockbox Account but are received by any Borrower or any of their Affiliates, such collections and proceeds shall be held in trust for the benefit of Lender and immediately remitted (and in any event within two (2) Business Days), in the form received, to the appropriate Lockbox Account for immediate transfer to the Concentration Account. Borrower acknowledges and agrees that compliance with the terms of this Section 2.4 is an essential term of this Agreement, and that, in addition to and notwithstanding any other rights Lender may have hereunder, under any other Loan Document, under applicable law or at equity, upon each and every failure by any Borrower or any of their Affiliates to comply with any such terms Lender shall be entitled to assess a non-compliance fee which shall operate to increase the Applicable Rate by two percent (2.0%) per annum during any period of non-compliance, whether or not a Default or an Event of Default occurs or is declared, provided that nothing shall prevent Lender from considering any failure to comply with the terms of this Section 2.4 to be a Default or an Event of Default. All funds transferred to the Concentration Account for application to the Obligations under the Revolving Facility shall be applied to reduce the Obligations under the Revolving Facility, but, for purposes of calculating interest hereunder shall be subject to a five (5) Business Day clearance period. If as the result of collections of Accounts and/or any other cash payments received by any Borrower pursuant to this Section 2.4 a credit balance exists with respect to the Concentration Account, such credit balance shall not accrue interest in favor of a Borrower, but shall be available to Borrower upon Borrower’s written request. If applicable, at any time prior to the execution of all or any of the Lockbox Agreements and operation of all or any of the Lockbox Accounts, each Borrower and their Affiliates shall direct all collections or proceeds it receives on Accounts or from other Collateral to the accounts(s) and in the manner specified by Lender in its sole discretion.

      2.5 The Term Loan

     Borrower acknowledges and agrees that Lender extended the Term Loan to Borrower pursuant to the Third Restated Credit Agreement. Borrower acknowledges and agrees that the outstanding principal amount of the Term Loan as of April 30, 2009 is Three Million Forty Three Thousand Five Hundred Forty Six and 3/100 Dollars ($3,043,546.03). Lender hereby agrees to continue the Term Loan in accordance with the terms and conditions of this Agreement. Borrower acknowledges that it has no further right to request loans or advances under the Term Loan and that no portion of the Term Loan may be re-borrowed.

      2.6 Repayment of Term Loan; Maturity

     Payment of the outstanding principal balance of the Term Loan (in addition to the interest payments in Section 3.2 ) and all other amounts (other than interest) outstanding under the Term Loan shall be made as follows:

     (a) Commencing on the first day of the first calendar month following the Closing Date, and continuing on the first day of each calendar month thereafter, the then outstanding principal balance of the Term Loan shall be payable in consecutive monthly installments of $234,118.93 plus accrued and unpaid interest thereon, and, if not sooner paid, a final installment, together with accrued and unpaid interest thereon and all other amounts due and owing under this Agreement with respect to the Term Loan, shall be due and payable on April 30, 2010.

     (b) All Term Loan Obligations shall be due and payable in full, if not earlier in accordance with this Agreement, on the earlier of (i) the occurrence and continuance of an Event of Default if required pursuant hereto or Lender’s demand upon the occurrence and continuance of an Event of Default, (ii) a Revolver Termination and (iii) April 30, 2010, the earlier of the foregoing (i), (ii) or (iii) being the “ Term Loan Maturity Date ”.

      2.7 Promise to Pay; Manner of Payment

     Borrower absolutely and unconditionally promises to pay principal, interest and all other amounts payable hereunder, or under any other Loan Document, without any right of rescission and without any deduction whatsoever, including any deduction for any setoff, counterclaim or recoupment, and notwithstanding any damage to, defects in or destruction of the Collateral or any other event, including obsolescence of any property or improvements. All payments made by Borrower (other than payments automatically paid through Advances under the Revolving Facility as provided herein), shall be made only by wire transfer on the date when due, without offset or counterclaim, in U.S. Dollars, in immediately available funds to such account as may be indicated in writing by Lender to Borrower from time to time. Any such payment received after 2:00 p.m. (Eastern Standard Time) on the date when due shall be deemed received on the following Business Day. Whenever any payment hereunder shall be stated to be due or shall become due and payable on a day other than a Business Day, the due date thereof shall be extended to, and such payment shall be made on, the next succeeding Business Day, and such extension of time in such case shall be included in the computation of payment of any interest (at the interest rate then in effect during such extension) and/or fees, as the case may be.

      2.8 Repayment of Excess Advances

     Any balance of Advances under the Revolving Facility outstanding at any time in excess of the lesser of the Facility Cap or the Availability shall be immediately due and payable by Borrower without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred or is continuing and shall be paid in the manner specified in Section 2.7 .

      2.9 Payments by Lender

     Should any amount required to be paid under any Loan Document be unpaid, such amount may be paid by Lender, which payment shall be deemed a request for an Advance under the Revolving Facility as of the date such payment is due, and Borrower irrevocably authorizes disbursement of any such funds to Lender by way of direct payment of the relevant amount, interest or Obligations. No payment or prepayment of any amount by Lender or any other Person shall entitle any Person to be subrogated to the rights of Lender under any Loan Document unless and until the Obligations have been fully performed and paid irrevocably in cash and this Agreement has been terminated. Any sums expended by Lender as a result of any Borrower’s or any Guarantor’s failure to pay, perform or comply with any Loan Document or any of the Obligations may be charged to Borrower’s account as an Advance under the Revolving Facility and added to the Obligations.

      2.10 Evidence of Loans

     (a) Lender shall maintain, in accordance with its usual practice, electronic or written records evidencing the Indebtedness and Obligations to Lender resulting from each Loan made by Lender from time to time, including without limitation, the amounts of principal and interest payable and paid to Lender from time to time under this Agreement.

     (b) The entries made in the electronic or written records maintained pursuant to subsection (a) of this Section 2.10 (the “ Register ”) shall be prima facie evidence, absent manifest error, of the existence and amounts of the Obligations and Indebtedness therein recorded; provided however , that the failure of Lender to maintain such records or any error therein shall not in any manner affect the joint and several obligations of Credit Parties to repay the Loans or Obligations in accordance with their terms.

     (c) Lender will account to Borrower monthly with a statement of Advances under the Revolving Facility, and any charges and payments made pursuant to this Agreement, and in the absence of manifest error, such accounting rendered by Lender shall be deemed final, binding and conclusive unless Lender is notified by Borrower in writing to the contrary within fifteen calendar days of Receipt of such accounting, which notice shall be deemed an objection only to items specifically objected to therein.

     (d) Borrower agrees that:

          (i) upon written notice by Lender to Borrower that a Note or other evidence of Indebtedness is requested by Lender to evidence the Loans and other Obligations owing or payable to, or to be made by, Lender, Borrower shall promptly (and in any event within three (3) Business Days of any such request) execute and deliver to Lender an appropriate Note or Notes in form and substance reasonably acceptable to Lender and Borrower;

          (ii) all references to Notes in the Loan Documents shall mean Notes, if any, to the extent issued (and not returned to Borrower for cancellation) hereunder, as the same may be amended, modified, divided, supplemented, extended or restated from time to time; and

          (iii) upon Lender’s written request, and in any event within three (3) Business Days of any such request, Borrower shall execute and deliver to Lender new Notes and divide the Notes in exchange for then existing Notes in such smaller amounts or denominations as Lender shall specify in its sole and absolute discretion; provided , that the aggregate principal amount of such new Notes shall not exceed the aggregate principal amount of the Notes outstanding at the time such request is made; and provided, further, that such Notes that are to be replaced shall then be deemed no longer outstanding hereunder and replaced by such new Notes and returned to Borrower within a reasonable period of time after Lender’s receipt of the replacement Notes.

      2.11 Grant of Security Interest; Collateral

     (a) To secure the payment and performance in full of the Obligations, each Borrower hereby grants to Lender a continuing security interest in and Lien upon, and pledges to Lender, all of its right, title and interest in and to the following (collectively and each individually, the “ Collateral ”), which security interest is intended to be a first priority security interest:

          (i) all of such Borrower’s tangible personal property, including without limitation all present and future Inventory and Equipment (including items of equipment which are or become Fixtures), now owned or hereafter acquired or arising;

          (ii) all of such Borrower’s intangible personal property, including without limitation all present and future Accounts, contract rights, Permits, General Intangibles, Chattel Paper, Documents, Instruments, Deposit Accounts, Investment Property, Letter-of-Credit Rights, Supporting Obligations, rights to the payment of money or other forms of consideration of any kind, tax refunds, insurance proceeds, now owned or hereafter acquired, and all intangible and tangible personal property relating to or arising out of any of the foregoing;

          (iii) all of such Borrower’s present and future Government Contracts and rights thereunder and the related Government Accounts and proceeds thereof, now or hereafter owned or acquired by such Borrower; provided , however , that Lender shall not have a security interest in any rights under any Government Contract of such Borrower or in the related Government Account where the taking of such security interest is a violation of an express prohibition contained in the Government Contract (for purposes of this limitation, the fact that a Government Contract is subject to, or otherwise refers to, Title 31, § 203 or Title 41, § 15 of the United States Code shall not be deemed an express prohibition against assignment thereof) or is prohibited by applicable law, unless in any case consent is otherwise validly obtained; and

          (iv) any and all additions and accessions to any of the foregoing, and any and all replacements, products and proceeds (including insurance proceeds) of any of the foregoing.

     (b) Notwithstanding the foregoing provisions of this Section 2.11 , such grant of a security interest shall not extend to, and the term “Collateral” shall not include, any General Intangibles, now or hereafter held or owned by Borrower to the extent that (i) such General Intangibles are not assignable or capable of being encumbered as a matter of law or under the terms of any license or other agreement applicable thereto (but solely to the extent that any such restriction shall be enforceable under applicable law) without the consent of the licensor thereof or other applicable party thereto, and (ii) such consent has not been obtained; provided , however , that the foregoing grant of a security interest shall extend to, and the term “Collateral” shall include, each of the following: (a) any General Intangible which is in the nature of an Account or a right to the payment of money or a proceed of, or otherwise related to the enforcement or collection of, any Account or right to the payment of money, or goods which are the subject of any Account or right to the payment of money, (b) any and all proceeds of any General Intangible that is otherwise excluded to the extent that the assignment, pledge or encumbrance of such proceeds is not so restricted, and (c) upon obtaining the consent of any such licensor or other applicable party with respect to any such otherwise excluded General Intangible, such General Intangible as well as any and all proceeds thereof that might theretofore have been excluded from such grant of a security interest and from the term “Collateral.”

     (c) Upon the execution and delivery of this Agreement, and upon the proper filing of the necessary financing statements, recordation of the Collateral Patent, Trademark and Copyright Assignment in the United States Patent and Trademark Office and/or the United States Copyright Office without any further action, Lender will have a good, valid and perfected first priority Lien and security interest in the Collateral, subject to no transfer or other restrictions or Liens of any kind in favor of any other Person except for Permitted Liens. No financing statement relating to any of the Collateral is on file in any public office except those (i) on behalf of Lender, (ii) in connection with Permitted Liens and/or (iii) those being terminated.

      2.12 Collateral Administration

     (a) All Collateral (except Deposit Accounts) will at all times be kept by Borrower at the locations set forth on Schedule 5.18B hereto and shall not, without thirty (30) calendar days prior written notice to Lender, be moved therefrom unless Lender has entered into the necessary documents to perfect and enforce its security interest therein at such new location, and in any case shall not be moved outside the continental United States.

     (b) Borrower shall keep accurate and complete records of its Accounts and all payments and collections thereon and shall submit such records to Lender on such periodic bases as Lender may request. In addition, if Accounts of Borrower in an aggregate face amount in excess of $30,000 become ineligible because they fall within one of the specified categories of ineligibility set forth in the definition of Eligible Receivables, Borrower shall notify Lender of such occurrence on the first Business Day following such occurrence and the Borrowing Base shall thereupon be adjusted to reflect such occurrence. Following the occurrence and during the continuance of an Event of Default, if requested by Lender, Borrower shall execute and deliver to Lender formal written assignments (or, in the case of Medicaid/Medicare Account Debtors, documents necessary to comply with the Federal Assignment of Claims Act) of all of its Accounts weekly or daily as Lender may request, including all Accounts created since the date of the last assignment, together with copies of claims, invoices and/or other information related thereto. To the extent that collections from such assigned accounts exceed the amount of the Obligations, such excess amount shall not accrue interest in favor of Borrower, but shall be available to Borrower upon Borrower’s written request.

     (c) Following an occurrence or during the continuance of an Event of Default, any of Lender’s officers, employees, representatives or agents shall have the right, at any time during normal business hours, in the name of Lender, any designee of Lender or Borrower, to verify the validity, amount or any other matter relating to any Accounts or Inventory of Borrower. Borrower shall cooperate fully with Lender in an effort to facilitate and promptly conclude such verification process.

     (d) To expedite collection, Borrower shall endeavor in the first instance to make collection of its Accounts for Lender. Lender shall have the right at all times after the occurrence and during the continuance of an Event of Default to notify (i) Account Debtors owing Accounts to Borrower other than Medicaid/Medicare Account Debtors that their Accounts have been assigned to Lender and to collect such Accounts directly in its own name and to charge collection costs and expenses, including reasonable attorney’s fees, to Borrower, and (ii) Medicaid/Medicare Account Debtors that Borrower has waived any and all defenses and counterclaims it may have or could interpose in any such action or procedure brought by Lender to obtain a court order recognizing the collateral assignment or security interest and lien of Lender in and to any Account or other Collateral and that Lender is seeking or may seek to obtain a court order recognizing the collateral assignment or security interest and lien of Lender in and to all Accounts and other Collateral payable by Medicaid/Medicare Account Debtors.

     (e) As and when determined by Lender in its sole discretion but not more often than four (4) times per year prior to the occurrence and continuance of an Event of Default, Lender will perform the searches described in clauses (i) and (ii) below against Borrower (the results of which are to be consistent with Borrower’s representations and warranties under this Agreement), all at Borrower’s expense: (i) UCC searches with the Secretary of State of the jurisdiction of organization of each Borrower and Guarantor and the Secretary of State and local filing offices of each jurisdiction where each Borrower and/or any Guarantors maintain their respective executive offices, a place of business or assets; (ii) lien searches with the United States Patent and Trademark Office and the United States Copyright Office; and (iii) judgment, federal tax lien and corporate and partnership tax lien searches, in each jurisdiction searched under clause (i) above.

     (f) Borrower (i) shall provide prompt written notice to its current bank to transfer all items, collections and remittances to the Concentration Account, (ii) shall provide prompt written notice to each Account Debtor (other than Medicaid/Medicare Account Debtors) that Lender has been granted a lien and security interest in, upon and to all Accounts applicable to such Account Debtor and shall direct each Account Debtor to make payments to the appropriate Lockbox Account, and Borrower hereby authorizes Lender, upon any failure to send such notices and directions within ten (10) calendar days after the date of this Agreement (or ten (10) calendar days after the Person becomes an Account Debtor), to send any and all similar notices and directions to such Account Debtors, and (iii) shall do anything further that may be lawfully required by Lender to create and perfect Lender’s lien on any collateral and effectuate the intentions of the Loan Documents. At Lender’s request, Borrower shall immediately deliver or make arrangements to deliver to Lender all items for which Lender must receive possession to obtain a perfected security interest and all notes, certificates, and documents of title, Chattel Paper, warehouse receipts, Instruments, and any other similar instruments constituting Collateral.

      2.13 Power of Attorney

     Lender is hereby irrevocably made, constituted and appointed the true and lawful attorney for Borrower (without requiring Lender to act as such) with full power of substitution to do the following: (i) endorse the name of any such Person upon any and all checks, drafts, money orders, and other instruments for the payment of money that are payable to such Person and constitute collections on its or their Accounts; (ii) execute in the name of such Person any financing statements, schedules, assignments, instruments, documents, and statements that it is or they or are obligated to give Lender under any of the Loan Documents; and (iii) do such other and further acts and deeds in the name of such Person that Lender may deem necessary or desirable to enforce any Account or other Collateral or to perfect Lender’s security interest or lien in any Collateral. In addition, if any such Person breaches its obligation hereunder to direct payments of Accounts or the proceeds of any other Collateral to the appropriate Lockbox Account, Lender, as the irrevocably made, constituted and appointed true and lawful attorney for such Person pursuant to this paragraph, may, by the signature or other act of any of Lender’s officers or authorized signatories (without requiring any of them to do so), direct any federal, state or private payor or fiscal intermediary to pay proceeds of Accounts or any other Collateral to the appropriate Lockbox Account.

III. INTEREST, FEES AND OTHER CHARGES

      3.1 Interest on the Revolving Facility

     Commencing on the first day of the first calendar month following the Closing Date, and continuing until the later of the expiration of the Term and the Payment in Full and full performance of all of the Obligations and termination of this Agreement, interest on outstanding Advances under the Revolving Facility shall be payable monthly in arrears on the first day of each calendar month at an annual rate of Prime Rate plus 3.0% in accordance with the procedures provided for in Section 2.7 and Section 2.4, provided however, that, notwithstanding any provision of any Loan Document, for the purpose of calculating interest at any time hereunder, the Prime Rate shall be not less than 5.25%, in each case calculated on the basis of a 360-day year and for the actual number of calendar days elapsed in each interest calculation period.

      3.2 Interest on the Term Loan

     Commencing on the first day of the first calendar month following the Closing Date, and continuing until the later of April 30, 2010 and the Payment in Full and full performance of all of the Obligations and termination of this Agreement interest on the outstanding principal balance of the Term Loan shall be payable monthly in arrears on the first day of each calendar month at an annual rate of Prime Rate plus 6.0% in accordance with the procedures provided for in Section 2.7 and Section 2.4 , provided however, that, notwithstanding any provision of any Loan Document, for the purpose of calculating interest at any time hereunder, the Prime Rate shall be not less than 5.25%, in each case calculated on the basis of a 360-day year and for the actual number of calendar days elapsed in each interest calculation period. Advances under the Revolving Facility shall be made automatically for the payment of Obligations under the Term Loan on the date when due to the extent available and as provided for herein.

      3.3 Restatement Fee and Amended and Restated Equity Participation Fee

     (a) In consideration of Lender’s consent and agreement to the amendment and restatement of the Third Restated Credit Agreement as provided in this Agreement, Borrower hereby agrees to pay a non-refundable restatement fee in the amount of Six Hundred Thousand Dollars ($600,000) (the “ Restatement Fee ”). The Restatement Fee shall be earned as of the Closing Date and be due and payable in three (3) installments of Two Hundred Thousand Dollars ($200,000) on (i) the earlier of the Merger Effective Date, the Voluntary Series A Conversion Effective Date and June 30, 2009, (ii) June 30, 2010 and (iii) April 30, 2011; provided, however, that any unpaid installment of the Restatement Fee shall be immediately due and payable upon the termination of this Agreement (whether at maturity, by reason of acceleration, by notice of intention to prepay, by required prepayment or otherwise).

     (b) In consideration of the amendment and restatement of the Third Restated Credit Agreement, Borrower hereby agrees to execute and deliver the Equity Participation Fee Agreement as of the Closing Date and obligate itself to pay the fee set forth therein in accordance with the terms and conditions of the Equity Participation Fee Agreement.

      3.4 Unused Line Fee

     Borrower shall pay to Lender monthly an unused line fee (the “Unused Line Fee” ) in an amount equal to 0.04167% (per month) of the difference derived by subtracting (i) the daily average amount of the balances under the Revolving Facility outstanding during the preceding month, from (ii) the Facility Cap. The Unused Line Fee shall be payable monthly in arrears on the first day of each calendar month commencing on the first day of the first calendar month following the Closing Date (which monthly payment shall include any accrued and unpaid Unused Line Fee existing under the Third Restated Credit Agreement).

      3.5 Collateral Management Fee

     Borrower shall pay Lender as additional interest a monthly collateral management fee (the “Collateral Management Fee” ) equal to 0.0833% per month calculated on the basis of the daily average amount of the balances under the Revolving Facility outstanding during the preceding month. The Collateral Management Fee shall be payable monthly in arrears on the first day of each successive calendar month commencing on the first day of the first calendar month following the Closing Date (which monthly payment shall include any accrued and unpaid Collateral Management Fee existing under the Third Restated Credit Agreement).

      3.6 Computation of Fees; Lawful Limits

     All fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed in each calculation period, as applicable. In no contingency or event whatsoever, whether by reason of acceleration or otherwise, shall the interest and other charges paid or agreed to be paid to Lender for the use, forbearance or detention of money hereunder exceed the maximum rate permissible under applicable law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. If, due to any circumstance whatsoever, fulfillment of any provision hereof, at the time performance of such provision shall be due, shall exceed any such limit, then, the obligation to be so fulfilled shall be reduced to such lawful limit, and, if Lender shall have received interest or any other charges of any kind which might be deemed to be interest under applicable law in excess of the maximum lawful rate, then such excess shall be applied first to any unpaid fees and charges hereunder, then to unpaid principal balance owed by Borrower hereunder, and if the then remaining excess interest is greater than the previously unpaid principal balance, Lender shall promptly refund such excess amount to Borrower and the provisions hereof shall be deemed amended to provide for such permissible rate. The terms and provisions of this Section 3.6 shall control to the extent any other provision of any Loan Document is inconsistent herewith.

      3.7 Default Rate of Interest

     Upon the occurrence and during the continuation of an Event of Default, the Applicable Rate of interest in effect at such time with respect to the Obligations shall be increased by 3.0% per annum (the “Default Rate” ).

IV. CONDITIONS PRECEDENT

      4.1 Conditions to Restatement and Advances on or after the Closing Date

     The obligations of Lender to amend and restate the Third Restated Credit Agreement as provided in this Agreement, to consummate the transactions contemplated herein and to make Advances and continue the Term Loan on or after the Closing Date are subject to the satisfaction, in the sole judgment of Agent, of the following:

     (a) Borrower shall have delivered to Agent this Agreement and, if required by Agent, amendments to, or confirmations of, any of the other Loan Documents, each duly executed by an authorized officer of Borrower and the other parties thereto;

     (b) all in form and substance satisfactory to Agent in its sole discretion, Agent shall have received (i) a report of Uniform Commercial Code financing statement, tax and judgment lien searches performed with respect to Borrower and Guarantor, if any, in each jurisdiction determined by Agent in its sole discretion, and such report shall show no Liens on the Collateral (other than Permitted Liens), (ii) each document (including, without limitation, any Uniform Commercial Code financing statement) required by any Loan Document or under law or requested by Agent to be filed, registered or recorded to create or continue in favor of Agent, a perfected first priority security interest upon the Collateral, and (iii) evidence of each such filing, registration or recordation and of the payment by Borrower of any necessary fee, tax or expense relating thereto;

     (c) Agent shall have received (i) the Charter and Good Standing Documents, all in form and substance acceptable to Agent, (ii) a certificate of the corporate secretary or assistant secretary of each Borrower dated the Closing Date, as to the incumbency and signature of the Persons executing this Agreement, in form and substance acceptable to Agent, and (iii) the written legal opinion of counsel for Borrower in form and substance satisfactory to Agent and its counsel;

     (d) Agent shall have received a certificate of the chief financial officer (or, in the absence of a chief financial officer, the chief executive officer) of each Borrower, in form and substance satisfactory to Agent (each, a “Solvency Certificate” ), certifying (i) the solvency of such Person after giving effect to the transactions and the Indebtedness contemplated by the Loan Documents, and (ii) as to such Person’s financial resources and ability to meet its obligations and liabilities as they become due, to the effect that as of the Closing Date and after giving effect to such transactions and Indebtedness: (A) the assets of such Person, at a Fair Valuation, exceed the total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person, and (B) no unreasonably small capital base with which to engage in its anticipated business exists with respect to such Person;

     (e) Agent shall have completed examinations, the results of which shall be satisfactory in form and substance to Agent, of the Collateral, the financial statements and the books, records, business, obligations, financial condition and operational state of Borrower and Guarantor, and each such Person shall have demonstrated to Agent’s satisfaction that (i) its operations comply, in all respects deemed material by Agent, in its sole judgment, with all applicable federal, state, foreign and local laws, statutes and regulations, (ii) its operations are not the subject of any governmental investigation, evaluation or any remedial action which could result in any expenditure or liability deemed material by Agent, in its sole judgment, and (iii) it has no liability (whether contingent or otherwise) that is deemed material by Agent, in its sole judgment;

     (f) all in form and substance satisfactory to Agent in its sole discretion, Agent shall have received such consents, approvals and agreements, including, without limitation, any applicable Landlord Waivers and Consents with respect to any and all leases set forth on Schedule 5.4 , from such third parties as Agent and its counsel shall determine are necessary or desirable with respect to (i) the Loan Documents and/or the transactions contemplated thereby, and/or (ii) claims against Borrower or Guarantor or the Collateral;

     (g) Borrower shall be in compliance with Section 6.5 , and Agent shall have received copies of all insurance policies or binders, original certificates of all insurance policies of Borrower confirming that they are in effect and that the premiums due and owing with respect thereto have been paid in full and naming Agent as loss payee or additional insured, as appropriate;

     (h) Agent shall have received all fees, charges and expenses payable to Agent on or prior to the Closing Date pursuant to the Loan Documents;

     (i) all corporate and other proceedings, documents, instruments and other legal matters in connection with the transactions contemplated by the Loan Documents (including, but not limited to, those relating to corporate and capital structures of Borrower) shall be satisfactory to Agent;

     (j) Borrower shall have executed and filed an updated IRS Form 8821 with the appropriate office of the Internal Revenue Service;

     (k) Agent shall have received a counterpart of the ComVest Subordination Agreement, executed by ComVest;

     (l) Agent shall have received a counterpart of the Management Fee Subordination Agreement executed by ComVest Advisors, LLC;

     (m) Borrower shall have delivered to Agent true and correct copies of the Merger Agreement and all other Merger Documents, together with all schedules and exhibits thereto;

     (n) Borrower shall have delivered to Agent true and correct copies of the Series A Preferred Stock Purchase Agreement and all other Preferred Stock Documents, together with all schedules and exhibits thereto;

     (o) Borrower shall have delivered to Agent true and correct copies of the Bridge Loan Agreement and all other Bridge Loan Documents, together with all schedules and exhibits thereto;

     (p) Borrower shall have delivered to Agent and its legal counsel true and correct copies of the MHR Subordinated Note and any related documents, agreements and instruments;

     (q) the MHR Noteholders, and MHR Capital Partners (500) LP, as collateral agent for the MHR Noteholders shall have executed and delivered to Agent a confirmation and amendment with respect to the MHR Subordination Agreement;

     (r) the Bridge Loan shall have closed in accordance with the terms and conditions of the Bridge Loan Documents and Borrower shall have received the proceeds thereof;

     (s) Borrower shall have deposited the Bridge Loan Liquidity Amount in the Minimum Liquidity Account; and

     (s) Agent shall have received such other documents, certificates, information or legal opinions as Agent may reasonably request, all in form and substance reasonably satisfactory to Agent.

      4.2 Conditions to Merger and Preferred Stock Investment

     The obligations of Lender to make Advances and continue the Term Loan on or after the Merger Effective Date and the consummation of the Merger and the transactions contemplated by the Preferred Stock Purchase Documents are subject to the satisfaction, in the sole judgment of Agent, of the following:

     (a) Agent shall have received (i) the Charter and Good Standing Documents, all in form and substance acceptable to Agent and (ii) a certificate of the corporate secretary or assistant secretary of each Borrower dated the Merger Effective Date, as to the incumbency and signature of the Persons executing this Agreement, in form and substance acceptable to Agent;

     (b) each of the representations and warranties made by Borrower in or pursuant to this Agreement shall be accurate in all material respects (except for any representations and warranties that are qualified by materiality or by Material Adverse Effect which shall be accurate in all respects), before and after giving effect to the Merger and any such Advance, and no Default or Event of Default shall have occurred or be continuing or would exist after giving effect to the consummation of the Merger or the Preferred Stock Purchase and the other transactions contemplated thereby;

     (c) Agent shall have received a certificate of the chief financial officer (or, in the absence of a chief financial officer, the chief executive officer) of each Borrower, in form and substance satisfactory to Agent (each, a “Solvency Certificate” ), certifying (i) the solvency of such Person after giving effect to the transactions and the Indebtedness contemplated by the Merger Documents and the Preferred Stock Purchase Documents, and (ii) as to such Person’s financial resources and ability to meet its obligations and liabilities as they become due, to the effect that as of the Merger Effective Date and after giving effect to such transactions and Indebtedness: (A) the assets of such Person, at a Fair Valuation, exceed the total liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of such Person, and (B) no unreasonably small capital base with which to engage in its anticipated business exists with respect to such Person;

     (d) all corporate and other proceedings, documents, instruments and other legal matters in connection with the consummation of the Merger and the Preferred Stock Purchase and the other transactions contemplated thereby (including, but not limited to, those relating to corporate and capital structures of Borrower) shall be satisfactory to Agent;

     (e) Agent shall have received a certificate of an authorized officer of each Borrower, in form and substance satisfactory to Agent, certifying that (i) all conditions precedent to the consummation of the Merger and the Preferred Stock Purchase have been satisfied or waived as permitted under this Agreement and (ii) all conditions set forth in this Section 4.2 have been satisfied or waived by Agent;

     (e) regarding the Merger,

     (i) the Merger Documents shall not have been amended, modified or waived in any manner (except for amendments and supplements to the Company Disclosure Schedule or the Parent Disclosure Schedule (as such terms are defined in the Merger Agreement), amendments pursuant to Section 5.3(c) of the Merger Agreement and waivers of conditions precedent pursuant to Article VI of the Merger Agreement) without the written consent of Agent; and

     (ii) Agent shall have received evidence that the Merger shall have been consummated in accordance with the terms of the Merger Documents without any amendment, modification or waiver (other than as permitted under Section 7.14 );

     (f) The Bridge Loan shall have been converted to Series A Preferred Stock upon the consummation of the Merger as contemplated by the Bridge Loan Agreement, the Merger Agreement and the Preferred Stock Purchase Agreement and all liens and security interests securing the Bridge Loan shall have been released and terminated;

     (g) The Remaining Investment Amount shall have been invested in accordance with the Merger Agreement and the Preferred Stock Purchase Agreement; and

     (h) Borrower shall have delivered to Agent true and correct copies of any Merger Documents and Preferred Stock Purchase Documents not previously delivered to Agent under Section 4.1 .

      4.3 Conditions to Voluntary Series A Conversion

     The obligations of Lender to make Advances and continue the Term Loan on or after the Voluntary Series A Conversion Effective Date and the consummation of the Voluntary Series A Conversion are subject to the satisfaction, in the sole judgment of Agent, of the following:

     (a) The Agent shall have received at least five (5) Business Days prior written notice of the intention of ComVest to exercise the Voluntary Series A Conversion;

     (b) The Bridge Loan shall be converted to Series A Preferred Stock as contemplated by the Bridge Loan Agreement, the Merger Agreement and the Preferred Stock Purchase Agreement and all liens and security interests securing the Bridge Loan shall be released and terminated;

     (c) The Agent shall have received a certificate from a duly authorized officer of ComVest certifying that all conditions precedent to the exercise by ComVest of the Voluntary Series A Conversion under the Merger Agreement, the ComVest/MHR Subordination Agreement and any related side letters shall have been satisfied or waived and the exercise of the Voluntary Series A Conversion shall otherwise be in accordance with the terms and conditions thereof;

     (d) There shall be no Company Parent Dispute which has not been finally resolved and no action, suit, proceeding or investigation pending that questions or could prevent the right of ComVest to consummate the consummate the Voluntary Series A Conversion;

     (e) The amount of any unpaid Transaction Fees due to ComVest, the Termination Fee or any Parent Damages (as the foregoing are defined in the Merger Agreement) shall be converted into unsecured Permitted Subordinated Indebtedness and be repaid only pursuant to the terms and conditions of the ComVest Subordination Agreement;

     (f) ComVest shall have made the Voluntary Series A Conversion Equity Investment and Borrower shall have received the proceeds thereof; and

     (h) ComVest shall deliver to Agent true and correct copies of any documents, agreements and instruments executed and delivered in connection with the Voluntary Series A Conversion.

      4.4 Conditions to Each Advance

     The obligations of Lender to make any Advance are subject to the satisfaction, in the Permitted Discretion of Agent, of the following additional conditions precedent:

     (a) Borrower shall have delivered to Agent a Borrowing Certificate for the Advance executed by an authorized officer of Borrower, which shall constitute a representation and warranty by Borrower as of the Borrowing Date of such Advance that the conditions contained in this Section 4.2 have been satisfied; provided , however , that any determination as to whether the conditions contained in this Section 4.2 and the other conditions set forth in this Agreement to Lender’s obligation to make Advances have been satisfied shall be made by Agent in its Permitted Discretion;

     (b) each of the representations and warranties made by Borrower in or pursuant to this Agreement shall be accurate, before and after giving effect to such Advance, and no Default or Event of Default shall have occurred or be continuing or would exist after giving effect to the Advance under the Revolving Facility on such date;

     (c) immediately after giving effect to the requested Advance, the aggregate outstanding principal amount of Advances under the Revolving Facility shall not exceed either the Availability or the Facility Cap;

     (d) except as disclosed in the historical financial statements, there shall be no liabilities or obligations with respect to Borrower of any nature whatsoever which, either individually or in the aggregate, would reasonably be likely to have a Material Adverse Effect; and

     (e) Agent shall have received all fees, charges and expenses payable to Lender on or prior to such date pursuant to the Loan Documents.

V. REPRESENTATIONS AND WARRANTIES

     Borrower, jointly and severally, represents and warrants as of the date hereof, on the Closing Date and each Borrowing Date as follows:

      5.1 Organization and Authority

     Each Borrower is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its state of formation. Borrower (i) has all requisite corporate or limited liability company power and authority to own its properties and assets and to carry on its business as now being conducted and as contemplated in the Loan Documents, (ii) is duly qualified to do business in every jurisdiction in which failure so to qualify would reasonably be expected to have a Material Adverse Effect, and (iii) has all requisite corporate or limited liability company power and authority (A) to execute, deliver and perform the Loan Documents to which it is a party, (B) to borrow hereunder, (C) to consummate the transactions contemplated under the Loan Documents, and (D) to grant the Liens with regard to the Collateral pursuant to the Security Documents to which it is a party. No Borrower is an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended, or is controlled by such an “investment company.”

      5.2 Loan Documents

     The execution, delivery and performance by Borrower of the Loan Documents to which it is a party, and the consummation of the transactions contemplated thereby, (i) have been duly authorized by all requisite action of each such Person and have been duly executed and delivered by or on behalf of each such Person; (ii) do not violate any provisions of (A) applicable law, statute, rule, regulation, ordinance or tariff, (B) any order of any Governmental Authority binding on any such Person or any of their respective properties, or (C) the certificate of incorporation or bylaws (or any other equivalent governing agreement or document) of any such Person, or any agreement between any such Person and its respective stockholders, members, partners or equity owners or among any such stockholders, members, partners or equity owners; (iii) are not in conflict with, and do not result in a breach or default of or constitute an event of default, or an event, fact, condition or circumstance which, with notice or passage of time, or both, would constitute or result in a conflict, breach, default or event of default under, any indenture, agreement or other instrument to which any such Person is a party, or by which the properties or assets of such Person are bound; (iv) except as set forth therein or Permitted Liens, will not result in the creation or imposition of any Lien of any nature upon any of the properties or assets of any such Person, and (v) except as set forth on Schedule 5.2 , do not require the consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority or any other Person. When executed and delivered, each of the Loan Documents to which Borrower is a party will constitute the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, subject to the effect of any applicable bankruptcy, moratorium, insolvency, reorganization or other similar law affecting the enforceability of creditors’ rights generally and to the effect of general principles of equity which may limit the availability of equitable remedies (whether in a proceeding at law or in equity).

      5.3 Subsidiaries, Capitalization and Ownership Interests

     Except as listed on Schedule 5.3 , Borrower has no Subsidiaries. NationsHealth Supply, L.L.C. is presently inactive but has not been dissolved. Schedule 5.3 states the authorized and issued capitalization of Borrower, the number and class of equity securities and/or ownership, voting or partnership interests issued and outstanding of Borrower and the record and beneficial owners thereof (including options, warrants and other rights to acquire any of the foregoing) (provided however, beneficial ownership information for NationsHealth is not required to be included in Schedule 5.3). The ownership or partnership interests of each Borrower that is a limited partnership or a limited liability company are not certificated, the documents relating to such interests do not expressly state that the interests are governed by Article 8 of the Uniform Commercial Code, and the interests are not held in a securities account. The outstanding equity securities and/or ownership, voting or partnership interests of Borrower have been duly authorized and validly issued and are fully paid and nonassessable, and each Person listed on Schedule 5.3 owns beneficially and of record all the equity securities and/or ownership, voting or partnership interests it is listed as owning free and clear of any Liens other than Liens created by the Security Documents. Schedule 5.3 also lists the directors, members, managers and/or partners of Borrower. Except as listed on Schedule 5.3 , Borrower does not own an interest in, participate in or engage in any joint venture, partnership or similar arrangements with any Person.

      5.4 Properties

     Borrower (i) is the sole owner and has good, valid and marketable title to, or a valid leasehold interest in, all of its properties and assets, including the Collateral, whether personal or real, subject to no transfer restrictions or Liens of any kind except for Permitted Liens, and (ii) is in compliance in all material respects with each lease to which it is a party or otherwise bound. Schedule 5.4 lists all real properties (and their locations) owned or leased by or to, and all other assets or property (with a value in excess of $25,000) that are leased or licensed by, Borrower and all leases (including leases of leased real property) covering or with respect to such properties and assets and all warehouses, fulfillment houses or other locations at which any of Borrower’s Inventory is located. Borrower enjoys peaceful and undisturbed possession under all such leases and such leases are all the leases necessary for the operation of such properties and assets, are valid and subsisting and are in full force and effect. All warehouse, fulfillment and other agreements relating to Borrower’s Inventory are in full force and effect.

      5.5 Other Agreements

     Borrower is not (i) a party to any judgment, order or decree or any agreement, document or instrument, or subject to any restriction, which would affect its ability to execute and deliver, or perform under, any Loan Document or to pay the Obligations, (ii) in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in any agreement, document or instrument to which it is a party or to which any of its properties or assets are subject, which default, if not remedied within any applicable grace or cure period would reasonably be expected to have a Material Adverse Effect, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default under, any of the foregoing which, if not remedied within any applicable grace or cure period would reasonably be expected to have a Material Adverse Effect; or (iii) a party or subject to any agreement, document or instrument with respect to, or obligation to pay any, Management or Service Fee with respect to, the ownership, operation, leasing or performance of any of its business or any facility, nor is there any manager with respect to any such facility.

      5.6 Litigation

     There is no action, suit, proceeding or investigation pending or, to their knowledge, threatened against Borrower that (i) questions or could prevent the validity of any of the Loan Documents or the right of Borrower to enter into any Loan Document or to consummate the transactions contemplated thereby, (ii) would reasonably be expected to be or have, either individually or in the aggregate, any Material Adverse Change or Material Adverse Effect, or (iii) would reasonably be expected to result in any Change of Control or other change in the current ownership, control or management of Borrower. Borrower is not aware that there is any basis for the foregoing. Borrower is not a party or subject to any order, writ, injunction, judgment or decree of any Governmental Authority. There is no action, suit, proceeding or investigation initiated by Borrower currently pending. Borrower has no existing accrued and/or unpaid Indebtedness to any Governmental Authority or any other governmental payor.

      5.7 Hazardous Materials

     Borrower is in compliance with all applicable Environmental Laws. Borrower has not been notified of any action, suit, proceeding or investigation (i) relating in any way to compliance by or liability of Borrower under any Environmental Laws, (ii) which otherwise deals with any Hazardous Substance or any Environmental Law, or (iii) which seeks to suspend, revoke or terminate any license, permit or approval necessary for the generation, handling, storage, treatment or disposal of any Hazardous Substance, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect.

      5.8 Potential Tax Liability; Tax Returns; Governmental Reports

     (a) Except as disclosed in Schedule 5.8 , Borrower (i) has not received any oral or written communication from the Internal Revenue Service with respect to any investigation or assessment relating to the Borrower directly, or relating to any consolidated tax return which was filed on behalf of Borrower, (ii) is not aware of any year which remains open pending tax examination or audit by the IRS, and (iii) is not aware of any information that could give rise to an IRS tax liability or assessment.

     (b) Borrower (i) has filed all federal, state, foreign (if applicable) and local tax returns and other reports which are required by law to be filed by Borrower (after giving effect to any permitted extension thereof), and (ii) has paid all taxes, assessments, fees and other governmental charges, including, without limitation, payroll and other employment related taxes, in each case that are due and payable, except only for items that Borrower is currently contesting in good faith with adequate reserves under GAAP, which contested items are described on Schedule 5.8 .

      5.9 Financial Statements and Reports

     All financial statements and financial information relating to Borrower that have been or may hereafter be delivered to Lender by Borrower are accurate and complete in all material respects and have been prepared in accordance with GAAP consistently applied with prior periods. Borrower has no material obligations or liabilities of any kind not disclosed in such financial information or statements, and since the date of the most recent financial statements submitted to Lender, there has not occurred any Material Adverse Change, Material Adverse Effect or Liability Event or, to Borrower’s knowledge, any other event or condition that would reasonably be expected to have a Material Adverse Effect or cause or constitute a Liability Event.

      5.10 Compliance with Law

     (a) Borrower (i) is in compliance with all laws, statutes, rules, regulations, ordinances and tariffs of any Governmental Authority applicable to Borrower and/or Borrower’s business, assets or operations, including, without limitation, applicable requirements of the Standards for Privacy of Individually Identifiable Health Information which were promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (as amended, and collectively with the regulations promulgated thereunder, “HIPAA” ), ERISA and Healthcare Laws, and (ii) is not in violation of any order of any Governmental Authority or other board or tribunal, except in the case of (i) and (ii) above where noncompliance or violation could not reasonably be expected to have a Material Adverse Effect. There is no event, fact, condition or circumstance which, with notice or passage of time, or both, would constitute or result in any noncompliance with, or any violation of, any of the foregoing, in each case except where noncompliance or violation could not reasonably be expected to have a Material Adverse Effect. Borrower has not received any notice that Borrower is not in compliance in any respect with any of the requirements of any of the foregoing. Borrower has (a) not engaged in any Prohibited Transactions as defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, (b) not failed to meet any applicable minimum funding requirements under Section 302 of ERISA in respect of its plans and no funding requirements have been postponed or delayed, (c) no knowledge of any amounts due but unpaid to the Pension Benefit Guaranty Corporation, or of any event or occurrence which would cause the Pension Benefit Guaranty Corporation to institute proceedings under Title IV of ERISA to terminate any of the employee benefit plans, (d) no fiduciary responsibility under ERISA for investments with respect to any plan existing for the benefit of Persons other than its employees or former employees, or (e) not withdrawn, completely or partially, from any multi-employer pension plans so as to incur liability under the MultiEmployer Pension Plan Amendments of 1980. With respect to Borrower, there exists no event described in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and 4043(b)(3) thereof, for which the thirty (30) day notice period contained in 12 C.F.R. § 2615.3 has not been waived. Borrower has maintained in all material respects all records required to be maintained by the Joint Commission on Accreditation of Healthcare Organizations, the Food and Drug Administration, Drug Enforcement Agency and State Boards of Pharmacy and the federal and state Medicare and Medicaid programs as required by the Healthcare Laws and, to the best knowledge of Borrower, there are no presently existing circumstances which would reasonably be expected to result in material violations of the Healthcare Laws. There is no Liability Event.

     (b) No Credit Party (i) is a Person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise associated with any such Person in any manner violative of such Section 2, or (iii) is a Person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order (“ OFAC ”).

     (c) No Credit Party engages in any dealings or transactions in violation of the Trade Sanctions Reform and Export Enhancement Act of 2000, OFAC’s Iranian Transactions Regulations, 31 C.F.R. Part 560, and Sudanese Sanctions Regulations, 31 C.F.R. Part 538 or any other any other applicable OFAC regulation or executive order.

     (d) Each Credit Party is in compliance, in all material respects, with the Patriot Act.

      5.11 Intellectual Property

     Except as set forth on Schedule 5.11 , Borrower does not own, license or utilize, and is not a party to, any material patents, patent applications, trademarks, trademark applications, service marks, registered copyrights, copyright applications, copyrights, trade names, trade secrets, software or licenses (collectively, the “Intellectual Property” ).

      5.12 Licenses and Permits; Labor

     Borrower is in compliance with and has all Permits and Intellectual Property necessary or required by applicable law or Governmental Authority for the operation of its businesses except any of the foregoing which would not reasonably be expected to have a Material Adverse Effect. All of the foregoing are in full force and effect and not in known conflict with the rights of others. Borrower is not (i) in breach of or default under the provisions of any of the foregoing, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default under, any of the foregoing which, if not remedied within any applicable grace or cure period would reasonably be expected to have a Material Adverse Effect, (ii) a party to or subject to any agreement, instrument or restriction that is so unusual or burdensome that it might have a Material Adverse Effect, and/or (iii) and has not been, involved in any labor dispute, strike, walkout or union organization which would reasonably be expected to have a Material Adverse Effect.

      5.13 No Default

     There does not exist any Default or Event of Default or any event, fact, condition or circumstance which, with the giving of notice or passage of time or both, would constitute or result in a Default or Event of Default.

      5.14 Disclosure

     No Loan Document nor any other agreement, document, certificate, or statement furnished to Lender by or on behalf of Borrower in connection with the transactions contemplated by the Loan Documents, nor any representation or warranty made by Borrower in any Loan Document, contains any untrue statement of material fact or omits to state any fact necessary to make the statements therein not materially misleading. There is no fact known to Borrower which has not been disclosed to Lender in writing which would reasonably be expected to have a Material Adverse Effect.

      5.15 Existing Indebtedness; Investments, Guarantees and Certain Contracts

     Except for Permitted Indebtedness, Borrower (i) has no outstanding Indebtedness, (ii) is not subject or party to any mortgage, note, indenture, indemnity or guarantee of, with respect to or evidencing any Indebtedness of any other Person, or (iii) does not own or hold any equity or long-term debt investments in, and does not have any outstanding advances to, or any outstanding guarantees for the obligations of, or any outstanding borrowings from, any Person. Borrower has performed all material obligations required to be performed by Borrower pursuant to or in connection with all Permitted Indebtedness and there has occurred no breach, default or event of default under any document evidencing any such items, including without limitation the MHR Subordinated Debt, or any fact, circumstance, condition or event which, with the giving of notice or passage of time or both, would constitute or result in a breach, default or event of default thereunder. Schedule 5.15 sets forth all Indebtedness with a maturity date during the Term, and identifies such maturity date.

      5.16 Other Agreements

     Except as set forth on Schedule 5.16 and Schedule 5.22 , (i) there are no existing or proposed agreements, arrangements, understandings or transactions between Borrower and any of Borrower’s officers, members, managers, directors, stockholders, partners, other interest holders, employees or Affiliates or any members of their respective immediate families, and (ii) none of the foregoing Persons are directly or indirectly, indebted to or have any direct or indirect ownership, partnership or voting interest in, to Borrower’s knowledge, any Affiliate of Borrower or any Person that competes with Borrower (except that any such Persons may own stock in (but not exceeding two (2%) percent of the outstanding capital stock of) any publicly traded company that may compete with Borrower.

      5.17 Insurance

     Borrower has in full force and effect such insurance policies as are customary in its industry and as may be required pursuant to Section 6.5 hereof. All such insurance policies are listed and described on Schedule 5.17 .

      5.18 Names; Location of Offices, Records and Collateral

     During the preceding five years, Borrower has not conducted business under or used any name (whether corporate, partnership or assumed) other than as shown on Schedule 5.18A . Borrower is the sole owner of all of its names listed on Schedule 5.18A , and any and all business done and invoices issued in such names are Borrower’s sales, business and invoices. Each trade name of Borrower represents a division or trading style of Borrower. Borrower maintains its places of business and chief executive offices only at the locations set forth on Schedule 5.18B , and all Accounts of Borrower arise, originate and are located, and all of the Collateral, including Inventory, and all books and records in connection therewith or in any way relating thereto or evidencing the Collateral are located and shall only be located, in and at such locations. All of the Collateral is located only in the continental United States.

      5.19 Non-Subordination

     The Obligations are not subordinated in any way to any other obligations of Borrower or to the rights of any other Person.

      5.20 Accounts and Inventory

     (a) In determining which Accounts are Eligible Receivables, Lender may rely on all statements and representations made by Borrower with respect to any Account. Unless otherwise indicated in writing to Lender (including, without limitation, any Borrowing Certificate), (i) each Account of Borrower is genuine and in all respects what it purports to be and is not evidenced by a judgment, (ii) each Account of Borrower arises out of a completed, bona fide sale and delivery of goods or rendering of Services by Borrower in the ordinary course of business and in accordance with the terms and conditions of all purchase orders, contracts, certifications, participations, certificates of need and other documents relating thereto or forming a part of the contract between Borrower and the Account Debtor, (iii) each Account of Borrower is for a liquidated amount maturing as stated in a claim or invoice covering such sale of goods or rendering of Services, a copy of which has been furnished or is available to Lender, (iv) each Account of Borrower together with Lender’s security interest therein, is not and will not be in the future (by voluntary act or omission by Borrower), subject to any offset, lien, deduction, defense, dispute, counterclaim or other adverse condition, is absolutely owing to Borrower and is not contingent in any respect or for any reason (except Accounts owed or owing by Medicaid/Medicare Account Debtors that may be subject to offset or deduction under applicable law), (v) there are no facts, events or occurrences which in any way impair the validity or enforceability of any Account of Borrower or tend to reduce the amount payable thereunder from the face amount of the claim or invoice and statements delivered to Lender with respect thereto, (vi) (A) to the knowledge of Borrower, the Account Debtor under each Account of Borrower had the capacity to contract at the time any contract or other document giving rise thereto was executed and (B) to the knowledge of Borrower, each such Account Debtor is solvent, (vii) to the knowledge of Borrower, there are no proceedings or actions which are threatened or pending against any Account Debtor under any Account of Borrower which might result in any Material Adverse Change in such Account Debtor’s financial condition or the collectability thereof, (viii) each Account of Borrower has been billed and forwarded to the Account Debtor for payment in accordance with applicable laws and is in compliance and conformance with any requisite procedures, requirements and regulations governing payment by such Account Debtor with respect to such Account, and, if due from a Medicaid/Medicare Account Debtor, is properly payable directly to Borrower, (ix) Borrower has obtained and currently has all material Permits necessary in the generation of each Account of Borrower, and (x) Borrower has disclosed to Lender on each Borrowing Certificate the amount of all Accounts of Borrower for which Medicare is the Account Debtor and for which payment has been denied and subsequently appealed pursuant to the procedure described in the definition of Eligible Receivables hereof. Borrower is pursuing all available appeals in respect of such Accounts which Borrower usually and customarily appeals in the ordinary course of its business.

     (b) In determining which Inventory is Eligible Inventory, Lender may rely on all statements and representations made by Borrower with respect to any Inventory. Unless otherwise indicated in writing to Lender (including, without limitation, any Borrowing Certificate), (i) Borrower has at all times maintained correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory in all material respects, Borrower’s cost therefore and daily withdrawals therefrom and additions thereto; (b) has not removed any Inventory from the locations set forth or permitted herein, except for sales of Inventory in the ordinary course of Borrower’s business and except to move Inventory directly from one location set forth or permitted herein to another such location; (c) has produced, used, stored, shipped and maintained Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (d) except as set forth on Schedule 5.20 , has not sold Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate Borrower to repurchase such Inventory; (e) has kept Inventory in good and marketable condition; and (f) has not acquired or accepted any Inventory on consignment or approval except as set forth on Schedule 5.20 and (g) has not permitted Inventory to be subject to any Lien except Liens in favor of Lender and other Permitted Liens.

      5.21 Healthcare

     Without limiting or being limited by any other provision of any Loan Document, Borrower has timely filed or caused to be filed all cost and other reports of every kind required under any Healthcare Laws or any provider or other agreement relating to Borrower’s participation in Medicare or Medicaid programs. Subject to subsection (a)(x) of Section 5.20 , there are no claims, actions or appeals pending (and Borrower has not filed any claims or reports which could reasonably result in any such claims, actions or appeals) before any commission, board or agency or other Governmental Authority, including, without limitation, any intermediary or carrier, the Provider Reimbursement Review Board or the Administrator of the Centers for Medicare and Medicaid Services, with respect to any state or federal Medicare or Medicaid cost reports or claims filed by Borrower, or any disallowance by any commission, board or agency or other Governmental Authority in connection with any audit of such cost reports. No validation review or program integrity review related to Borrower or the consummation of the transactions contemplated herein or to the Collateral have been conducted by any commission, board or agency or other Governmental Authority in connection with the Medicare or Medicaid programs, and to the knowledge of Borrower, no such reviews are scheduled, pending or threatened against or affecting any of the providers, any of the Collateral or the consummation of the transactions contemplated hereby.

      5.22 Certain Agreements

     (a) No Borrower is in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in the MHR Subordinated Note or any of the documents, agreements and instruments executed and delivered in connection therewith, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default under any of the foregoing which, if not remedied within any applicable grace or cure period could reasonably be expected to have a Material Adverse Effect. There does not exist any default or event of default or any event, fact, condition or circumstance, which, with the giving of notice or passage of time or both, would constitute or result in a default or event of default on the part of any Borrower in connection with the MHR Subordinated Note. Except as permitted by the MHR Subordination Agreement, no amendment or modification has been made to the MHR Subordinated Note or any of the documents, agreements and instruments executed and delivered in connection therewith.

     (b) Reserved.

     (c) No Borrower is in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in the Hills Settlement Agreement, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default under any of the foregoing which, if not remedied within any applicable grace or cure period could reasonably be expected to have a Material Adverse Effect. As of the Closing Date, no amendment or modification has been made to the Hills Settlement Agreement.

     (d) No Borrower is in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in the Merger Documents, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a

     conflict, breach, default or event of default under any of the foregoing which, if not remedied within any applicable grace or cure period could reasonably be expected to have a Material Adverse Effect. As of the Closing Date, no amendment or modification has been made to the Merger Documents (except for amendments and supplements to the Company Disclosure Schedule or the Parent Disclosure Schedule, amendments pursuant to Section 5.3(c) of the Merger Agreement, and waivers of conditions precedent pursuant to Article VI of the Merger Agreement).

     (e) No Borrower is in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in the Bridge Loan Documents, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default under any of the foregoing which, if not remedied within any applicable grace or cure period could reasonably be expected to have a Material Adverse Effect. As of the Closing Date, no amendment or modification has been made to the Bridge Loan Documents.

     (f) No Borrower is in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in the Preferred Stock Purchase Documents, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default under any of the foregoing which, if not remedied within any applicable grace or cure period could reasonably be expected to have a Material Adverse Effect. As of the Closing Date, no amendment or modification has been made to the Preferred Stock Purchase Documents.

      5.23 Survival

     Borrower makes the representations and warranties contained herein with the knowledge and intention that Lender is relying and will rely thereon. All such representations and warranties will survive the execution and delivery of this Agreement