Exhibit 10.1
CREDIT AGREEMENT
by and between
SURMODICS., INC.
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Sole Lead Arranger and Administrative Agent
and the Lenders party hereto
Dated as of February 27, 2009

 

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TABLE OF CONTENTS

              Page  
 
       
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS
    1  
Section 1.1 Defined Terms
    1  
Section 1.2 Accounting Terms and Calculations
    12  
Section 1.3 Computation of Time Periods
    12  
Section 1.4 Other Definitional Terms
    12  
 
       
ARTICLE 2. AMOUNT AND TERMS OF CREDIT FACILITIES
    12  
Section 2.1 Revolving Loan and Letter of Credit Facilities
    12  
Section 2.2 Procedure for Advances
    17  
Section 2.3 Payments and Prepayments
    18  
Section 2.4 Notes
    19  
Section 2.5 Interest
    19  
Section 2.6 Fees and Expenses
    21  
Section 2.7 Funding Losses
    22  
Section 2.8 Increased Costs
    22  
Section 2.9 Discretion of Lenders as to Manner of Funding
    23  
Section 2.10 Optional Prepayment/Replacement of Lenders
    23  
Section 2.11 Termination of Revolving Loan Commitment
    24  
Section 2.12 Use of Revolving Loan Proceeds
    24  
Section 2.13 Maturity
    24  
Section 2.14 USA Patriot Act Notice
    24  
 
       
ARTICLE 3. CONDITIONS PRECEDENT
    25  
Section 3.1 Conditions of Initial Advances
    25  
Section 3.2 Conditions Precedent to all Advances
    26  
 
       
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
    26  
Section 4.1 Organization, Standing, Etc.
    26  
Section 4.2 Authorization and Validity
    27  
Section 4.3 No Conflict; No Default
    27  
Section 4.4 Government Consent
    27  
Section 4.5 Financial Statements/Disclosure/Solvency
    27  
Section 4.6 Litigation and Contingent Liabilities
    28  
Section 4.7 Compliance
    28  
Section 4.8 Environmental, Health and Safety Laws
    28  
Section 4.9 ERISA
    28  
Section 4.10 Regulation U
    29  
Section 4.11 Ownership of Property; Liens
    29  
Section 4.12 Taxes
    29  
Section 4.13 Intellectual Property
    29  
Section 4.14 Investment Company Act
    30  
Section 4.15 Subsidiaries
    30  
Section 4.16 Related Entities
    30  
Section 4.17 Investment Policy
    30  
 
       
ARTICLE 5. AFFIRMATIVE COVENANTS
    30  
Section 5.1 Financial Statements and Reports
    30  

 

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              Page  
 
       
Section 5.2 Financial Covenants
    32  
Section 5.3 Corporate Existence
    32  
Section 5.4 Insurance
    32  
Section 5.5 Payment of Taxes and Claims
    32  
Section 5.6 Inspection
    33  
Section 5.7 Maintenance of Properties
    33  
Section 5.8 Books and Records
    33  
Section 5.9 Compliance
    33  
Section 5.10 ERISA
    33  
Section 5.11 Additional Subsidiaries
    33  
Section 5.12 Environmental Matters
    34  
Section 5.13 Depository Accounts
    34  
 
       
ARTICLE 6. NEGATIVE COVENANTS
    34  
Section 6.1 Consolidation and Merger; Asset Acquisitions; Investments
    34  
Section 6.2 Sale of Assets
    35  
Section 6.3 Indebtedness
    35  
Section 6.4 Liens
    36  
Section 6.5 Transactions with Affiliates
    36  
Section 6.6 No Restrictions on Subsidiary Distributions
    37  
Section 6.7 Use of Proceeds
    37  
Section 6.8 Plans
    37  
Section 6.9 Change in Nature of Business
    37  
Section 6.10 Restriction on Fundamental Changes
    37  
Section 6.11 No Negative Pledges/Other Agreements
    37  
 
       
ARTICLE 7. EVENTS OF DEFAULT AND REMEDIES
    37  
Section 7.1 Events of Default
    37  
Section 7.2 Remedies
    39  
Section 7.3 Offset
    40  
 
       
ARTICLE 8. AGENCY
    40  
Section 8.1 Appointment of Agent
    40  
Section 8.2 Nature of Duties of Agent
    40  
Section 8.3 Lack of Reliance on Agent
    41  
Section 8.4 Certain Rights of Agent
    41  
Section 8.5 Reliance by Agent
    41  
Section 8.6 Indemnification of Agent
    42  
Section 8.7 Agent in its Individual Capacity
    42  
Section 8.8 Successor Agent
    42  
Section 8.9 Amendments, Consents and Waivers
    43  
Section 8.10 Actions with Respect to Defaults
    43  
Section 8.11 Delivery of Information
    43  
Section 8.12 Demand
    44  
Section 8.13 Notice of Default
    44  
Section 8.14 Arranger
    44  
 
       
ARTICLE 9. FUNDING OF ADVANCES, RECEIPT OF PAYMENTS
    44  
Section 9.1 Funding of Advances/Settlement
    44  
Section 9.2 Availability of Lender’s Pro Rata Share
    45  

 

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              Page  
 
       
Section 9.3 Return of Payments
    45  
Section 9.4 Non-Funding Lenders
    46  
 
       
ARTICLE 10. ASSIGNMENTS AND PARTICIPATIONS
    46  
Section 10.1 Assignments
    46  
Section 10.2 Participations
    47  
Section 10.3 Security Interests in Obligations; Assignments to Affiliates
    47  
Section 10.4 Other Matters
    48  
 
       
ARTICLE 11. MISCELLANEOUS
    48  
Section 11.1 Waivers and Amendments
    48  
Section 11.2 Indemnities
    49  
Section 11.3 Notices
    49  
Section 11.4 Successors
    51  
Section 11.5 Participations and Information
    51  
Section 11.6 Treatment of Certain Information; Confidentiality
    51  
Section 11.7 Failure or Indulgence Not Waiver; Remedies Cumulative
    51  
Section 11.8 Marshaling; Payments Set Aside
    51  
Section 11.9 Lenders’ Obligations Several; Independent Nature of Lenders’ Rights
    52  
Section 11.10 Severability
    52  
Section 11.11 Subsidiary References
    52  
Section 11.12 Captions
    52  
Section 11.13 Entire Agreement
    52  
Section 11.14 Counterparts
    52  
Section 11.15 Governing Law
    52  
Section 11.16 Consent to Jurisdiction
    53  
Section 11.17 Waiver of Jury Trial
    53  
Section 11.18 Borrower Acknowledgements
    53  
Section 11.19 Arbitration
    53  
 
       
EXHIBITS
       
 
       
Exhibit A            Form of Revolving Note
       
Exhibit B            Form of Compliance Certificate
       
Exhibit C            New Lender Supplement
       
Exhibit D            Commitment Increase Supplement
       
Exhibit E            Form of Assignment Certificate
       
 
       
SCHEDULES
       
 
       
Schedule 1.1A         Commitments
       
Schedule 4.6            Litigation and Contingent Liabilities Disclosure
       
Schedule 4.8            Environmental Disclosure
       
Schedule 4.13          Intellectual Property Disclosure
       
Schedule 4.15          Subsidiaries Disclosure
       
Schedule 4.16          Related Entities Disclosure
       
Schedule 4.17          Investment Policy
       
Schedule 6.4            Permitted Liens
       
Schedule 6.5            Permitted Affiliated Transactions
       

 

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CREDIT AGREEMENT
     This Credit Agreement, together with all exhibits and schedules attached
hereto and hereby made a part hereof (“Agreement”), is made as of February 27,
2009, by and among SurModics, Inc., a Minnesota corporation (the “Borrower”),
the financial institutions from time to time party hereto (the “Lenders”) and
Wells Fargo Bank, National Association, a national banking association (in its
individual capacity, “Wells Fargo”), and Wells Fargo as sole lead arranger and
as administrative agent for the Lenders (in such administrative agent capacity,
the “Agent”).
RECITALS
     A. Borrower and Guarantors have requested that Wells Fargo and Lenders make
available to Borrower the extensions of credit and certain other financial
accommodations referenced herein.
     B. Wells Fargo and the Lenders have agreed severally to make available to
Borrower the extensions of credit and other financial accommodations referenced
herein on the terms and conditions contained herein.
     NOW THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein and for other good and valuable consideration, the
parties agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING TERMS
     Section 1.1 Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the following respective meanings
(and such meanings shall be equally applicable to both the singular and plural
form of the terms defined, as the context may require):
     “Advance” means either a LIBOR Advance or a Floating Rate Advance.
     “Acquisition” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any Person, 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) all
of the securities of a corporation or of the outstanding ownership interests of
a partnership or limited liability company or other business entity.
     “Acquisition Limit” means the lesser of (a) $30,000,000 or (b) the
aggregate EBITDA for the immediately preceding twelve month period.

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     “Advance Date” means the date of the making of any Advance hereunder.
     “Affiliate” or “Affiliates” means with respect to any Person (a) each
Person that is directly or indirectly controlling, controlled by, or under
common control with such Person; (b) each Person that, directly or indirectly
owns or holds ten percent (10%) or more of any equity interest in such Person;
or (c) ten percent (10%) or more of whose voting stock or other equity interest
is directly or indirectly owned or held by such Person. For purposes of this
definition, “control” (including with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”) means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or by contract or otherwise. Notwithstanding the foregoing,
none of Agent, any Lender nor any of their respective Affiliates shall be
considered an Affiliate of any Borrower or any of its Subsidiaries.
     “Agreement” means this Credit Agreement, as it may be amended, modified,
supplemented, restated or replaced from time to time.
     “Approved New Lender Offerees” has the meaning given in
Section 2.1(a)(iii)A.
     “Assignment Certificate” has the meaning given in Section 2.1(a).
     “Business Day” means any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota.
     “Change of Control” means any event or series of events whereby any Person
or “group” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan) is or becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that any such Person, entity or group will be
deemed to have “beneficial ownership” of all securities that such Person, entity
or group has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than
twenty-five percent (25%) of the voting power of all classes of ownership of
Borrower.
     “Code” means The Internal Revenue Code of 1986, as amended, or any
successor statute, together with regulations thereunder.
     “Commitment” means with respect to any Lender, the obligation of such
Lender, if any, to make Revolving Loans and participate in and Letter of Credit
Obligations in an aggregate principal and/or face amount not to exceed the
amount set forth under the heading “Commitment” opposite such Lender’s name on
Schedule 1.1A or in the Assignment and Assumption or New Lender Supplement
pursuant to which such Lender became a party hereto, as the same may be changed
from time to time pursuant to the terms hereof.
     “Commitment Increase Notice” has the meaning given in Section 2.1(a)(iii)A.
     “Commitment Increase Supplement” shall have the meaning given in
Section 2.1(a)(iii)C.

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     “Contingent Debt” means all contingent liabilities, including but not
limited to guaranties.
     “Current Liabilities” means all Debt of the Borrower and its Subsidiaries
due on demand or within one year from the date of determination thereof, all
borrowings under the Revolving Loan Commitment and any Letter of Credit
Obligations and all other items (including taxes accrued as estimated), which in
accordance with GAAP, may be properly classified as current liabilities.
     “Debt” of any Person means (i) all items of indebtedness or liability which
in accordance with GAAP would be included in determining total liabilities as
shown on the liabilities side of a balance sheet (except that derivative
liabilities will be excluded to the extent of corresponding derivative assets
provided that no credit shall be given to the extent that derivative assets
exceed derivative liabilities) of that Person as at the date as of which Debt is
to be determined and (ii) if not included in items (i) or (iii), indebtedness
secured by any mortgage, pledge, lien or security interest existing on property
owned by such Person, whether or not the indebtedness secured thereby shall have
been assumed, and (iii) if not included in items (i) or (ii), guaranties and
endorsements (other than for purposes of collection in the ordinary course of
business) by such Person and other contingent obligations of such Person in
respect of, or to purchase or otherwise acquire, indebtedness of others.
     “Default” means any event which, with the giving of notice to the Borrower
or lapse of time, or both, would constitute an Event of Default.
     “Defaulting Lender” a Lender that (a) has failed to fund its portion of any
Loan or any participations in Letters of Credit that it is required to fund
under this Agreement and has continued in such failure for three Business Days
after written notice from the Agent, (b) has otherwise failed to pay over to the
Agent or any other Lender any other amount required to be paid by it hereunder
within three Business Days of the date when due, unless the subject of a good
faith dispute, or (c) has been deemed insolvent or become the subject of a
receivership, bankruptcy or insolvency proceeding.
     “Default Rate” shall have the meaning given to it in Section 2.5(e).
     “Dollars” and “$” means dollars in lawful currency of the United States.
     “EBITDA” means, with reference to any period, the Net Income (or loss) of
the Borrower and its Subsidiaries for such period, plus, to the extent deducted
in determining such Net Income, (i) consolidated interest expense (net of
capitalized interest), (ii) expense for income taxes paid or accrued,
(iii) depreciation, and (iv) amortization, all calculated for the Borrower and
its Subsidiaries on a consolidated basis, in accordance with GAAP.
     “ERISA” means The Employee Retirement Income Security Act of 1974, as
amended, and any successor statute, together with regulations thereunder.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that is a member of a group of which the Borrower is a member and which is
treated as a single employer under Section 414 of the Code.

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     “Event of Default” means any event described in Section 7.1.
     “Floating Rate” means with respect to any Floating Rate Advances: (i) from
the date hereof, until Borrower receives written notice from the Agent, the
LIBOR Base Rate applicable to a 90-day Interest Period plus the applicable
Margin pursuant to Subsection 2.5(c) below, which LIBOR Base Rate shall, in each
case, change when and as the LIBOR Base Rate applicable to a 90-day Interest
Period changes; and (ii) from the date the Borrower receives written notice from
the Agent, the Prime Rate, which interest rate shall, in each case, change when
and as the Prime Rate changes.
     “Floating Rate Advance” means an Advance specified as such in a notice of
borrowing under Section 2.2 or a notice of continuation or conversion under
Section 2.1(a)(ii).
     “Funded Debt” means the sum of all Debt of the Borrower and its
Subsidiaries, determined on a consolidated basis, of any maturity, on which such
entity customarily pays interest, including, but not limited to: (i) all rental
payments under capitalized leases, (ii) all subordinated debt (whether or not
such entity pays interest thereon), and (iii) all Letter of Credit Obligations.
     “GAAP” means generally accepted accounting principles as applied in the
preparation of the audited financial statement of the Borrower referred to in
Section 4.5.
     “Guarantors” means, collectively, each Subsidiary that shall become a
Guarantor as required by Section 5.11 hereof and any other Person who becomes a
Guarantor of the Obligations.
     “Guaranties” means, collectively, each and every Guaranty executed by a
Guarantor in favor of the Agent for the benefit of the Lenders, in form and
substance acceptable to Agent, as such Guaranty may hereafter be amended,
modified, or replaced from time to time.
     “Interest Period” means, for any LIBOR Advance, the period commencing on
the borrowing date of such LIBOR Advance or the date LIBOR Advance is converted
into such LIBOR Advance, or the last day of the preceding Interest Period for
any outstanding LIBOR Advance being continued into a subsequent Interest Period,
as the case may be, and ending on the numerically corresponding day one, two,
three, six or twelve months thereafter, as selected by the Borrower pursuant to
Article 2 hereof; provided, that:
     (a) any Interest Period which would otherwise end on a day which is not a
Business Day shall end on the next succeeding LIBOR Business Day unless such
next succeeding LIBOR Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding LIBOR Business Day;
     (b) any Interest Period which begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
LIBOR Business Day of the calendar month at the end of such Interest Period; and

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     (c) no Interest Period shall extend beyond the Termination Date.
     “Lenders” has the meaning set forth in the first paragraph of page one
(1) of this Agreement.
     “Letter of Credit” means any letter of credit issued by the Agent on the
application of the Borrower.
     “Letter of Credit Application” means an application by the Borrower, in a
form and containing terms and provisions acceptable to the Agent, for the
issuance by the Agent of a Letter of Credit.
     “Letter of Credit Obligations” means, as of any date of determination, the
sum of (a) the amount available to be drawn or which may become available to be
drawn under Letters of Credit outstanding on such date, (b) the aggregate amount
of Unpaid Drawings on such date, and (c) to the extent not included in the
foregoing, all accrued and unpaid interest, fees and expenses with respect
thereto.
     “LIBOR Advance” means an Advance specified as such in a notice of borrowing
under Section 2.1(a)(i), or a notice of continuation or conversion under
Section 2.1(a)(ii).
     “LIBOR Base Rate” with respect to each Interest Period pertaining to a
LIBOR Advance, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period appearing on Page 3750 of the Telerate screen
as of 11:00 A.M., London time, two (2) Business Days prior to the beginning of
such Interest Period, such rate to remain fixed for such Interest Period. In the
event that such rate does not appear on Page 3750 of the Telerate screen (or
otherwise on such screen), the “LIBOR Base Rate” shall be determined by
reference to such other comparable publicly available service for displaying
LIBOR rates as may be selected by the Agent or, in the absence of such
availability, by reference to the rate at which the Agent is offered Dollar
deposits at or about 10:00 A.M. two Business Days prior to the beginning of such
Interest Period in the London interbank market where its foreign currency and
exchange operations are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein. Notwithstanding
the foregoing, with respect to any Interest Period less than or equal to
90 days, the “LIBOR Base Rate” shall be the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to 90 days, as such
rate is determined above.
     “LIBOR Business Day” means a day on which banks are open for business in
the State of Minnesota and on which dealings in U.S. dollar deposits are carried
on in the London interbank market.
     “LIBOR Rate” means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/8 of 1%) and determined pursuant to the following formula:

         
LIBOR Rate =
  LIBOR Base Rate    
 
       
 
  100% — LIBOR Reserve Percentage    

     “LIBOR Reserve Percentage” of any Lender for any Interest Period as applied
to a LIBOR Advance, the reserve percentage applicable during such Interest
Period (or if more than

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one such percentage shall be so applicable, the daily average of such
percentages for those days in such Interest Period during any such percentage
shall be so applicable) under any regulations of the Board or other Governmental
Authority having jurisdiction with respect to determining the maximum reserve
requirement (including basic, supplemental and emergency reserves) for such
Lender with respect to liabilities or assets consisting of or including
“Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve
Board, as amended) having a term equal to such Interest Period.
     “Lien” means any security interest, mortgage, pledge, lien, hypothecation,
judgment lien or similar legal process, charge, encumbrance, title retention
agreement or analogous instrument or device (including, without limitation, the
interest of the lessors under capital leases and the interest of a vendor under
any conditional sale or other title retention agreement).
     “Loan Documents” means this Agreement, the Note, the Negative Pledge
Agreement, and each other instrument, document, guaranty, security agreement,
mortgage, or other agreement executed and delivered by the Borrower or any party
in connection with this Agreement, the Loans or the Letters of Credit, or any
collateral for the Loans or Letter of Credit Obligations, in each case,
including any amendment, waiver, supplement or other modification to any of the
foregoing.
     “Loans” means the Revolving Loan and all Advances thereunder.
     “Marketable Securities” means any of the following:
     (a) Direct obligations of, or obligations the principal and interest on
which are unconditionally guaranteed by, the United States of America or
obligations of any agency of the United States of America to the extent such
obligations are backed by the full faith and credit of the United States of
America, in each case maturing within one year from the date of acquisition
thereof;
     (b) Certificates of deposit, time or demand deposit accounts or bankers
acceptances maturing within one year from the date of acquisition thereof issued
by a commercial bank or trust company organized under the laws of the United
States of America or a state thereof or that is a Lender, provided that (i) such
deposits or bankers acceptances are denominated in Dollars, (ii) such bank or
trust company has capital, surplus and undivided profits of not less than
$100,000,000 and (iii) such bank or trust company has certificates of deposit or
other debt obligations rated at least A-1 (or its equivalent) by S&P or P-1 (or
its equivalent) by Moody’s;
     (c) Open market commercial paper maturing within 360 days from the date of
acquisition thereof issued by a corporation organized under the laws of the
United States of America or a state thereof, provided such commercial paper is
rated at least A-1 (or its equivalent) by S&P or P-1 (or its equivalent) by
Moody’s;
     (d) Any repurchase agreement entered into with a commercial bank or trust
company organized under the laws of the United States of America or a state
thereof or that is a Lender, provided that (i) such bank or trust company has
capital, surplus and

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undivided profits of not less than $100,000,000, (ii) such bank or trust company
has certificates of deposit or other debt obligations rated at least A-1 (or its
equivalent) by S&P or P-1 (or its equivalent) by Moody’s, (iii) the repurchase
obligations of such bank or trust company under such repurchase agreement are
fully secured by a perfected security interest in a security or instrument of
the type described in clause (a), (b) or (c) above and (iv) such security or
instrument so securing the repurchase obligations has a fair market value at the
time such repurchase agreement is entered into of not less than 100% of such
repurchase obligations;
     (e) shares of any money market mutual or similar fund that has all or at
least 95% of its assets invested continuously in investments satisfying the
requirements of clauses (a) through (d) of this definition;
     (f) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A2 by Moody’s; and
     (g) to the extent not included in items (a) through (f) above, any
securities purchased in accordance with the Borrower’s Investment Policy adopted
by its board of directors on January 30, 2006 and attached hereto as
Schedule 4.17, provided that such securities maintain a rating of A or higher at
the time of purchase.
     “Margin” has the meaning given to it in Section 2.5(c).
     “Margin Adjustment Date” has the meaning given to it in Section 2.5(c).
     “Material Adverse Effect” means (a) a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of any Borrower, or (b) the impairment of the ability of any party to perform
its obligations under any Loan Document to which it is a party or of Agent or
any Lender to enforce any Loan Document or collect any of the Obligations. In
determining whether any individual event would result in a Material Adverse
Effect, notwithstanding that such event does not of itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then existing events would result in a
Material Adverse Effect.
     “Multiemployer Plan” means a multiemployer plan (as defined in
Section 4001(a)(3) of ERISA) to which the Borrower or any ERISA Affiliate
contributes or is obligated to contribute.
     “Negative Pledge Agreement” means that certain Negative Pledge Agreement of
even date herewith and executed by the Borrower and each Subsidiary in favor of
the Lender.
     “Net Income” means, with reference to any period, the net income (or loss)
of the Borrower and its Subsidiaries for such period plus, to the extent
deducted in calculating such net income, (i) Purchased In-Process Research and
Development Expense, (ii) non-recurring costs or

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expense incurred with a merger, acquisition or restructuring (financial or
operational) (acceptable to Agent) and (iii) extraordinary non-cash losses
incurred other than in the ordinary course of business, minus, to the extent
included in such net income, extraordinary gains realized other than in the
ordinary course of business, all calculated for the Borrower and its
Subsidiaries on a consolidated basis, in accordance with GAAP.
     “New Lender Supplement” as defined in Section 2.1(a)(iii)B.
     “New Revolving Credit Lender” as defined in Section 2.1(a)(iii)B.
     “Notes” means any or all of the Revolving Notes.
     “Obligations” means all of Borrower’s and each Guarantor’s liabilities,
obligations, and other Debt to Agent and Lenders of any and every kind and
nature under or with respect to the all Loan Documents, whether heretofore, now
or hereafter owing, arising, due or payable and howsoever evidenced, created,
incurred, acquired, or owing, whether individually or collectively, direct or
indirect, joint or several, absolute or contingent, primary or secondary, fixed
or otherwise (including obligations of performance) and whether arising or
existing under written agreement, oral agreement or operation of law, including,
without limitation, all of Borrower’s reimbursement obligations, whether
contingent or liquidated, with respect to any Letter of Credit and all of
Borrower’s and each Guarantor’s other Debt and obligations to Agent and Lenders
under or in respect of this Agreement, the other Loan Documents and any Rate
Contract between Borrower and Agent or an Affiliate of Agent.
     “PBGC” means the Pension Benefit Guaranty Corporation, established pursuant
to Subtitle A of Title IV of ERISA, and any successor thereto or to the
functions thereof.
     “Permitted Acquisition” means any proposed Acquisition by the Borrower of
any capital stock or other equity interests in another business entity, or of
any amount of the assets of another business entity that complies with the
following terms and conditions:
     (a) if acquiring a business entity, such business entity (together with any
of its direct and indirect Subsidiaries) must be (i) in the same general line of
business as the Borrower, and (ii) a corporation, limited liability company or
partnership organized under the laws of any one of the United States of America;
     (b) the aggregate purchase price for such Acquisition, including assumed
debt earn-outs (including any contingent milestone payments) and any non-cash
purchase price consideration, together with the aggregate consideration paid in
connection with all Acquisitions and the aggregate of all investments in Related
Entities occurring during the twelve (12) months immediately preceding such
Acquisition, for which consent was not required, does not in the aggregate
exceed the Acquisition Limit;
     (c) after giving effect to such Acquisition and the incurrence of any Debt
in connection therewith, (i) no Default or Event of Default shall exist,
(ii) the Borrower shall be in compliance on a pro-forma basis with the financial
covenants set forth in Section 5.2 hereof recomputed for the most recently ended
month for which information is available regarding the business being acquired,
and for all periods following the consummation of the proposed Acquisition for
which projections have been prepared,

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based on the projected combined operating results of the targeted business and
of the Borrower and its then-existing Subsidiaries, each on a consolidated
basis, and (iii) the Borrower shall be in compliance with all other terms and
conditions contained in this Agreement;
     (d) for any Acquisition of capital stock or other equity interests of a
Person, Borrower shall cause such Person (together with, if applicable, any
Subsidiary of Borrower used to acquire such equity interest) to become a
Guarantor hereunder by executing and delivering a Guaranty, a Negative Pledge
Agreement, and documents of the nature of those described in Section 3.1(a)(iii)
through (vii) for such Person, each in form and substance acceptable to the
Agent;
     (e) the acquired entity and or the assets acquired shall be acquired on a
non-hostile basis;
     (f) Borrower shall purchase, or purchase through a Subsidiary, the acquired
assets of a Person or with respect to the Acquisition of any equity interests,
100% of the outstanding ownership interests of such acquired entity; and
     (g) as soon as available, but in any event not less than ten (10) Business
Days prior to the consummation of such proposed Acquisition, the Borrower shall
have provided prior written notice of such Acquisition to the Agent and upon
request, shall promptly provide Agent with true, correct and complete copies of
all acquisition-related documents, historical financial statements of any
acquired entity, together with such other documents, reports, searches,
instruments and information as any Lender may request.
     “Permitted Liens” has the meaning given in Section 6.4 hereto.
     “Person” means any natural person, corporation, partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.
     “Plan” means an employee benefit plan or other plan, including a Multiple
Employer Plan, maintained for employees of the Borrower or of any ERISA
Affiliate, and subject to Title IV of ERISA or Section 412 of the Code.
     “Prime Rate” means the prime rate announced by the Agent from time to time.
     “Pro Rata Share” means as to any Lender, the fraction (expressed as a
percentage) the numerator of which is such Lender’s Commitment, each as set
forth on Schedule 1.1A hereto or an executed Assignment Certificate, and the
denominator of which is the sum of the aggregate Revolving Loan Commitment,
provided that if the Revolving Loan Commitment has been terminated, the
numerator shall be the unpaid amount of such Lender’s Loans plus the aggregate
amount of all participations purchased by such Lender in the outstanding Letter
of Credit Obligations, and the denominator shall be the aggregate amount of all
unpaid Loans, plus the aggregate amount of all Letters of Credit Obligations.

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     “Purchased In-Process Research and Development Expense” means the cost of
research and development activities, that when acquired through a merger,
acquisition or other business combination do not have an alternative future use
(as determined under GAAP) and in accordance with GAAP must therefore be
expensed at the time of the consummation of the business combination.
     “Quick Ratio” means for any period the aggregate of unrestricted cash,
unrestricted Marketable Securities (including any “available for sale”
Marketable Securities classified as long term for balance sheet purposes and the
fair market value of any Marketable Securities classified as “held to maturity”
for balance sheet purposes) and net accounts receivable divided by total current
liabilities (including any non-current portion of revolving debt and any
outstanding letters of credit), as determined in accordance with GAAP.
     “Rate Contracts” means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions.
     “Related Entity” means any Person in which the Borrower or a Subsidiary has
directly or indirectly made an investment and such Person is not a Subsidiary.
     “Reportable Event” means, as to Borrower and each ERISA Affiliate, (i) 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 by regulation has waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event,
provided that a failure to meet the minimum funding standard of Section 412 of
the Code and Section 302 of ERISA shall be a reportable event regardless of the
issuance of any such waivers in accordance with Section 412(d) of the Code,
(ii) the withdrawal of Borrower or any ERISA Affiliate from a Plan in which it
was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or was
deemed to be a “substantial employer” under Section 4062(e) of ERISA, (iii) the
termination of a Plan, the filing of notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041 of ERISA,
(iv) the institution of proceedings to terminate a Plan by the PBGC, (v) the
partial or complete withdrawal from a Plan by Borrower or any ERISA Affiliate,
(vi) the imposition of a Lien on any property of Borrower or any ERISA
Affiliate, pursuant to IRC Section 412 or Section 302 of ERISA, (vi) any event
or condition which results in the reorganization or insolvency of a Plan, and
(vii) any event or condition which results in the termination of a Plan, or the
institution by the PBGC of proceedings to terminate a Plan.
     “Required Lenders” means, (a) the Agent in its capacity as a Lender if, and
only if, it is the sole Lender under this Agreement, or (b) if there are two or
more Lenders under this Agreement, any two (2) or more unaffiliated Lenders
holding: (i) more than fifty-one percent (51%) of the Revolving Loan Commitment
or (ii) if the Revolving Loan Commitment has been terminated, more than fifty
one percent (51%) of the sum of: (x) the aggregate outstanding principal of the
Loans, plus (y) the then aggregate undrawn face amount of all the then
outstanding Letters of Credit. In each case, at any time any Lender is a
Defaulting Lender, all Defaulting Lenders shall be excluded in determining
“Required Lenders” and “Required Lenders” shall mean non-Defaulting Lenders
otherwise meeting the criteria set forth in this definition.

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     “Revolving Credit Offered Increase Amount” has the meaning given in
Section 2.1(a)(iii)A.
     “Revolving Credit Re-Allocation Date” has the meaning given in
Section 2.1(a)(iii)D.
     “Revolving Loan Commitment” has the meaning given in Section 2.1(a).
     “Revolving Loan” has the meaning given in Section 2.1(a).
     “Revolving Note” or “Revolving Notes” has the meanings given in
Section 2.4(a).
     “Stock” means any shares of capital stock (whether denominated as common
stock or preferred stock), equity interests, beneficial, partnership or
membership interests, joint venture interests, participations or other ownership
or profit interests in or equivalents (regardless of how designated) of or in a
Person, whether voting or non-voting.
     “Subsidiary” means any Person of which or in which the Borrower and its
other Subsidiaries own directly or indirectly 50% or more of: (a) the combined
voting power of all classes of Stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profit interest of such Person,
if it is a partnership, joint venture or similar entity, or (c) the beneficial
interest of such Person, if it is a trust, association or other unincorporated
organization.
     “Termination Date” means the earliest of (a) March 1, 2011, (b) the date on
which the Revolving Loan Commitment is terminated by Borrower pursuant to
Section 2.11 hereof, or (c) the date on which the Revolving Loan Commitment is
terminated by the Lender pursuant to Section 7.2 hereof.
     “Total Outstandings” means as of any date of determination, the sum of
(a) the aggregate unpaid principal balance of Advances outstanding on such date
and (b) the Letter of Credit Obligations.
     “Unpaid Drawing” means any amount by which the Borrower has failed to
reimburse the Agent for the full amount of any drawing on a Letter of Credit by
11:30 a.m. on the date on which the Agent in its notice indicated that it would
pay such drawing, until reimbursed from the proceeds of an Advance pursuant to
Section 2.1(b)(ii).
     “Unused Amount” means for any period, the Revolving Loan Commitment reduced
by the average Total Outstandings for such period.
     “Unused Commitment Fee Percentage” has the meaning given to it in
Section 2.5(c).
     “Working Capital” means the excess of the Current Assets over the Current
Liabilities of the Borrower.

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     Section 1.2 Accounting Terms and Calculations. Except as may be expressly
provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder (including, without
limitation, determination of compliance with financial ratios and restrictions
in Article 5 and Article 6 hereof) shall be made in accordance with GAAP
consistently applied. Any reference to “consolidated”, “consolidating” and/or
“combined” financial terms shall be deemed to refer to those financial terms as
applied to the Borrower and respective Subsidiaries in accordance with GAAP.
     Section 1.3 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
unless otherwise stated the word “from” means “from and including” and the word
“to” or “until” each means “to but excluding.”
     Section 1.4 Other Definitional Terms. The words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. References to Sections, Exhibits, schedules and like references are
to this Agreement unless otherwise expressly provided.
ARTICLE 2.
AMOUNT AND TERMS OF CREDIT FACILITIES
     Section 2.1 Revolving Loan and Letter of Credit Facilities.
          (a) Revolving Loan Facility. On the terms and subject to conditions
hereof, each Lender severally agrees to make revolving credit loans (“Revolving
Loans”) to the Borrower from time to time from the date hereof to the
Termination Date in an aggregate principal amount at any one time outstanding
which, when added to such Lender’s Pro Rata Share of the Letter of Credit
Obligations then outstanding, does not exceed the amount of such Lender’s
Commitment; provided, however, that no Advance will be made in any amount and no
Letter of Credit will be issued which, after giving effect thereto, would cause
the Total Outstandings to exceed an aggregate maximum for all Lenders of
Twenty-Five Million Dollars ($25,000,000) (as the same may be increased or
reduced from time to time under the terms of this Agreement, the “Revolving Loan
Commitment”). During such period, the Borrower may use the Commitments by
borrowing, prepaying the Revolving Loans in whole or in part, and reborrowing,
all in accordance with the terms and conditions hereof.
               (i) Advance Options. The Revolving Loan shall be comprised of
LIBOR Advances and Floating Rate Advances as shall be specified by the Borrower
in a borrowing request pursuant to Section 2.2 except as otherwise provided
herein. Once given, a LIBOR Advance request shall be irrevocable and Borrower
shall be bound thereby. During the continuance of a Default or Event of Default,
the Borrower shall not be permitted to obtain, continue or convert to a LIBOR
Advance unless such Default or Event of Default has first been cured. Both LIBOR
Advances and Floating Rate Advances may be outstanding under the Revolving Note
at the same time. Each LIBOR Advance and Floating Rate Advance shall be in a
minimum amount of $500,000 or in an integral multiple of $250,000 above such
amount. The Borrower shall not have more than six (6) LIBOR Advances outstanding
at any time.

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               (ii) Continuation or Conversion of Advances. The Borrower may
elect to continue any outstanding LIBOR Advance from one Interest Period into a
subsequent Interest Period to begin on the last day of the earlier Interest
Period, or convert any outstanding Advance into any other type of Advance
provided for in Section 2.1(a)(i) above (on the last day of an Interest Period
only, in the instance of a LIBOR Advance), by giving the Agent notice in
writing, or by telephone promptly confirmed in writing, given so as to be
received by the Agent not later than 1:00 P.M., Minneapolis time, on the date of
the requested continuation or conversion; provided, however, if the continuing
or converting Advance shall be a LIBOR Advance, Borrower shall give such notice
to the Agent at least three (3) Business Days prior to such continuation or
conversion. Each notice of continuation or conversion of an Advance shall
specify (A) the effective date of the continuation or conversion date (which
shall be a Business Day), (B) the amount and the type or types of Advances
following such continuation or conversion, and (C) for continuation as, or
conversion into LIBOR Advances, the Interest Periods for such Advances. Absent
timely notice of continuation or conversion, each LIBOR Advance shall
automatically convert into a Floating Rate Advance on the last day of an
applicable Interest Period for LIBOR Advances. No Advance shall be continued as,
or converted into, a LIBOR Advance if the shortest Interest Period for such
Advance may not transpire prior to the Termination Date of the Note or if a
Default or Event of Default shall exist. Once given, a LIBOR Advance request
shall be irrevocable and Borrower shall be bound thereby.
               (iii) Increase to Revolving Loan Commitment.
               A. In the event that the Borrower wishes to increase the
Revolving Loan Commitment at any time when no Default or Event of Default has
occurred and is continuing (or would result from such increase), it shall notify
the Agent in writing of the amount (the “Revolving Credit Offered Increase
Amount”) of such proposed increase (such notice, a “Commitment Increase Notice”)
in a minimum amount equal to $5,000,000 or a whole multiple of $5,000,000 in
excess thereof. The Borrower may offer the Revolving Credit Offered Increase
Amount to (i) any Lender and/or (ii) other banks, financial institutions or
other entities with the consent of the Agent, such consent not to be
unreasonably withheld (“Approved New Lender Offerees”). The Commitment Increase
Notice shall (A) specify the Lenders and/or Approved New Lender Offerees that
will be requested to provide such Revolving Credit Offered Increase Amount,
(B) specify the proposed effective date and (C) be accompanied by a certificate
executed by one or more duly authorized officers of the Borrower stating that no
Default or Event of Default has occurred and is continuing (or would result from
such increase). The Borrower or, if requested by the Borrower, the Agent will
notify such Lenders, and/or Approved New Lender Offerees of such offer.
               B. Any Approved New Lender Offerees which the Borrower selects to
offer a portion of the increased Revolving Loan Commitment and which elects to
become a party to this Agreement and obtain a Commitment in an amount so offered
and accepted by it pursuant to Section 2.1(a)(iii)A shall execute a new lender
supplement (the “New Lender Supplement”) with the Borrower and the Agent,
substantially in the form of Exhibit C, whereupon such Approved New Lender
Offerees (herein called a “New Revolving Credit Lender”) shall become a Lender
for all purposes and to the same extent as if originally a party hereto and
shall be bound by and entitled to the benefits of this Agreement, provided that
the Commitment of any such New Revolving Credit Lender shall be in an amount not
less than $5,000,000 except with the prior written consent of Agent.

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               C. Any Lender which accepts an offer to it by the Borrower to
increase its Commitment pursuant to Section 2.1(a)(iii)A shall, in each case,
execute a Commitment Increase Supplement (each a “Commitment Increase
Supplement”) with the Borrower and the Agent, substantially in the form of
Exhibit D, whereupon such Lender shall be bound by and entitled to the benefits
of this Agreement with respect to the full amount of its Commitment as so
increased. No Lender shall have any obligation, expressed or implied, to offer
to increase the amount of its Commitment. Only the consent of each Lender
increasing its Commitment shall be required for an increase in the amount of the
Commitments pursuant to this Section 2.1(a)(iii). No Lender which elects not to
increase the amount of its Commitment may be replaced in respect of its existing
Commitment as a result thereof without such Lender’s consent. Subject to the
limitations set forth above, the Borrower and the Agent shall have discretion
jointly to adjust the allocation of the increased aggregate principal amount of
the Commitments among Lenders increasing their Commitments and New Revolving
Credit Lenders.
               D. If any Approved New Lender Offeree becomes a New Revolving
Credit Lender pursuant to Section 2.1(a)(iii)B or any Lender’s Commitment is
increased pursuant to Section 2.1(a)(iii)C, additional Revolving Loans made on
or after the effectiveness thereof (the “Revolving Credit Re-Allocation Date”)
shall be made pro rata based on the Pro Rata Shares in effect on and after such
Revolving Credit Re-Allocation Date (except to the extent that any such pro rata
borrowings would result in any Lender making an aggregate principal amount of
Revolving Loans in excess of its Commitment, in which case such excess amount
will be allocated to, and made by, such New Revolving Credit Lenders and/or
Lenders with such increased Commitments to the extent of, and pro rata based on,
their respective Commitments otherwise available for Revolving Loans), and
continuations of LIBOR Advances outstanding on such Revolving Credit
Re-Allocation Date shall be effected by repayment of such LIBOR Advances on the
last day of the Interest Period applicable thereto and the making of new LIBOR
Advances pro rata based on such new Pro Rata Shares. In the event that on any
such Revolving Credit Re-Allocation Date there is an unpaid principal amount of
Floating Rate Advances, the Borrower shall make prepayments thereof and
borrowings of Floating Rate Advances so that, after giving effect thereto, the
Floating Rate Advances outstanding are held pro rata based on such new Pro Rata
Shares. In the event that on any such Revolving Credit Re-Allocation Date there
is an unpaid principal amount of LIBOR Advances, such LIBOR Advances shall
remain outstanding with the respective holders thereof until the expiration of
their respective Interest Periods (unless the Borrower elects to prepay any
thereof in accordance with the applicable provisions of this Agreement), and
interest on and repayments of such LIBOR Advances will be paid thereon to the
respective Lenders holding such LIBOR Advances pro rata based on the respective
principal amounts thereof outstanding.
               E. Notwithstanding anything to the contrary in this
Section 2.1(a)(iii), (1) no Lender shall have any obligation to increase its
Commitment unless it agrees to do so in its sole discretion and (2) in no event
shall any transaction effected pursuant to this Section 2.1(a)(iii) cause the
Revolving Loan Commitment to exceed Fifty Million Dollars ($50,000,000).

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               F. The Agent shall have received on or prior to the Revolving
Credit Re-Allocation Date, for the benefit of the Lenders, (1) certified copies
of resolutions of the board of directors of the Borrower authorizing the
Borrower to borrow the Revolving Credit Offered Increase Amount and (2) any
other documents or instruments as may be requested by the Agent.
               G. Upon the Borrower’s compliance with the foregoing, Agent shall
(1) record the information related to such increase in the Register (as defined
in Section 10.1(b) hereof) and replace Schedule 1.1A; and (2) give prompt notice
thereof to Borrower and Lenders.
          (b) Letter of Credit Facility.
               (i) Issuance Mechanics. In addition to Advances made pursuant to
Section 2.1(a), the Revolving Loan Commitment may be utilized, upon the request
of Borrower, for the issuance of Letters of Credit for the account of Borrower.
The Agent may, upon receipt of duly executed Letter of Credit Applications and
such other documents, instruments and/or agreements as the Agent may require,
issue Letters of Credit on such terms as are satisfactory to the Agent;
provided, however, that no Letter of Credit will be issued if, before or after
taking such Letter of Credit into account, the Letter of Credit Obligations
exceed the lesser of: (A) the Revolving Loan Commitment minus the total Advances
outstanding; or (B) Ten Million Dollars ($10,000,000) (the “Letter of Credit
Facility”). The Letter of Credit Facility is a sublimit of the Revolving Loan
Commitment. Immediately upon the issuance by Agent of a Letter of Credit, and
without further action on the part of Agent or any of the Lenders, each Lender
shall be deemed to have purchased from Agent a participation in such Letter of
Credit (or in its obligation under a risk participation agreement with respect
thereto) equal to such Lender’s Pro Rata Share of the aggregate amount available
to be drawn under such Letter of Credit. Each request for a Letter of Credit
shall be made by the Borrower in writing, by telefacsimile transmission or
electronic conveyance received by the Agent by 1:00 P.M., Minneapolis time, on.
a Business Day which is not less than one Business Day preceding the requested
date of issuance (which shall also be a Business Day). Each request for a Letter
of Credit shall be deemed a representation by the Borrower that on the date of
issuance of such Letter of Credit and after giving effect thereto the applicable
conditions specified in Article 3 have been and will be satisfied. The Agent may
require that such request be made on such letter of credit application and
reimbursement agreement form as the Agent may from time to time specify, along
with satisfactory evidence of the authority and incumbency of the officers of
the Borrower making such request.
               (ii) Expiration Dates of Letters of Credit. Each Letter of Credit
shall expire no later than the earlier of (x) the first anniversary of its date
of issuance and (y) the date (the “Collateralization Date”) which is fifteen
(15) Business Days prior to the Termination Date; provided that any Letter of
Credit with a one-year term may provide for the renewal thereof for additional
one-year periods and may extend beyond the Collateralization Date provided
further that upon the occurrence of the Collateralization Date, the Borrower
shall have deposited cash with the Agent in the face amount of such Letter of
Credit as additional security therefor. The Agent may elect not to renew any
such Letter of Credit and, upon direction by the Required Lenders, shall not
renew any such Letter of Credit, at any time during the continuance

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of an Event of Default, provided that, in the case of a direction by the
Required Lenders, the Agent receives such directions prior to the date notice of
non-renewal is required to be given by the Agent and the Agent has had a
reasonable period of time to act on such notice.
               (iii) Reimbursement Obligation. The Borrower agrees to reimburse
the Lenders on demand by Agent for each Unpaid Drawing. Whenever any Unpaid
Drawing exists, each Lender is authorized (and the Borrower does so authorize
the Lenders) to, and may in their sole discretion (but shall not be obligated
to), make an Advance to the Borrower in the amount equal to the amount of the
Unpaid Drawing, even if the applicable conditions precedent specified in
Article 3 shall not have been satisfied. The Borrower further agrees to pay
interest on any Unpaid Drawing or any Advance made to pay an Unpaid Drawing at
the same rate as is applicable to Floating Rate Advances. If at such time as the
Agent makes an Advance pursuant to the provisions of this Section, the
applicable conditions precedent specified in Article 3 shall not have been
satisfied, or if an Unpaid Drawing remains outstanding at a time when a Default
or Event of Default exists, the Borrower shall pay the Agent interest on the
funds so advanced or outstanding at the Default Rate applicable to Floating Rate
Advances.
               (iv) Collateral. Notwithstanding anything to the contrary herein
or in any Letter of Credit Application of the Borrower, upon the occurrence of
an Event of Default or upon the Termination Date, an amount equal to the
aggregate amount of Letter of Credit Obligations shall, upon the Agent’s demand,
be delivered to the Agent in cash or other collateral of a type satisfactory to
the Agent having a value, as determined by the Agent, equal to the aggregate
amount of the Letter of Credit Obligations. Any such collateral and/or cash
received by the Agent pursuant to this paragraph (d) shall be held by the Agent
in a separate account appropriately designated as a collateral account in
relation to this Agreement and the Letters of Credit and retained by the Agent
as collateral security for the Letter of Credit Obligations. Such amounts shall
not be used by the Agent to pay any amounts drawn or paid under or pursuant to
any Letter of Credit but may be applied to reimburse the Agent or the Lenders,
as applicable, for drawings or payments under or pursuant to Letters of Credit
which the Agent or Lenders have paid or, if no such reimbursement is required,
to payment of such other obligations as the Agent shall determine. Following
payment in full of all Obligations, any amounts remaining in any cash collateral
account established pursuant to this paragraph (d) which are not (as determined
by the Agent) to be applied to reimburse the Agent and/or the Lenders for
amounts actually paid by Agent in respect of a Letter of Credit shall be
returned to the Borrower (after deduction of the Agent’s expenses).
               (v) Obligations Absolute. The obligation of the Borrower to repay
the Agent for any amount drawn on any Letter of Credit and to repay the Agent
and Lenders for any Advances made to cover Unpaid Drawings shall be absolute,
unconditional and irrevocable, shall continue for so long as any Letter of
Credit is outstanding notwithstanding any termination of this Agreement, and
shall be paid strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following
circumstances:
                    A. Any lack of validity or enforceability of any Letter of
Credit;

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                    B. The existence of any claim, setoff, defense or other
right which the Borrower may have or claim at any time against any beneficiary,
transferee or holder of any Letter of Credit (or any Person for whom any such
beneficiary, transferee or holder may be acting), the Agent or any other Person,
whether in connection with a Letter of Credit, this Agreement, the transactions
contemplated hereby, or any unrelated transaction; or
                    C. Any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect
whatsoever.
Neither the Agent nor its officers, directors or employees shall be liable or
responsible for, and the obligations of the Borrower to the Agent and Lenders
shall not be impaired by:

  (1)   The use which may be made of any Letter of Credit or for any acts or
omissions of any beneficiary, transferee or holder thereof in connection
therewith;     (2)   The validity, sufficiency or genuineness of documents, or
of any endorsements thereon, even if such documents or endorsements should, in
fact, prove to be in any or all respects invalid, insufficient, fraudulent or
forged;     (3)   The acceptance by the Agent of documents that appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; or     (4)   Any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit.

     Section 2.2 Procedure for Advances. Any request by the Borrower for an
Advance hereunder shall be in writing, or by telephone promptly confirmed in
writing, and must be given so as to be received by the Agent not later than 1:00
P.M. (Minneapolis time) on the requested Advance Date provided, however, if the
requested Advance shall be a LIBOR Advance, Borrower shall give such notice to
the Agent at least three (3) Business Days prior to such continuation or
conversion. Each request for an Advance hereunder shall be irrevocable and shall
be deemed a representation by the Borrower that on the requested Advance Date
and after giving effect to the requested Advance the applicable conditions
specified in Article 3 have been and will be satisfied. Each request for an
Advance hereunder shall specify (a) the requested Advance Date, and (b) the
amount and type of the Advance. Without in any way limiting the Borrower’s
obligation to confirm in writing any telephone request for an Advance hereunder,
the Agent and each Lender may rely on any such request which it believes in good
faith to be genuine; and the Borrower hereby waives the right to dispute the
Agent’s record of the terms of such telephone request. Unless the Agent or any
Lender determines that any applicable condition specified in Article 3 has not
been satisfied, the Agent and each Lender will make available to the Borrower at
the Agent’s principal office in Minneapolis, Minnesota in immediately available
funds not later than 3:00 P.M. (Minneapolis time) on the requested Advance Date
its Pro Rata Share of the amount of the requested Advance.

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     Section 2.3 Payments and Prepayments.
          (a) Payments. Payments and prepayments of principal of, and interest
on, the Loans and all fees, expenses and other Obligations under Loan Documents
shall be made without setoff or counterclaim in immediately available funds and
shall be made in same day funds and delivered to Agent at its main office in
Minneapolis, Minnesota, for the benefit of Agent and Lenders, as applicable, not
later than 1:00 P.M. (Minneapolis time) on the dates called for under this
Agreement and the Loan Documents. Funds received after such time shall be deemed
to have been received on the next Business Day. Whenever any payment to be made
hereunder or on the Notes shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of time, in the case of a payment of principal, shall be included
in the computation of any interest on such principal payment. Borrower hereby
authorizes Lenders to make Revolving Loans, on the basis of their Pro Rata
Shares, for the payment of interest, costs, facility fees, Letter of Credit
fees, funding losses or indemnification obligations under Section 2.7 and
Section 2.8 hereof, and Letter of Credit reimbursement obligations. Prior to an
Event of Default, other fees, costs and expenses (including those of attorneys)
reimbursable to Agent pursuant to Section 11.2 or elsewhere in any Loan Document
may be debited to the Revolving Loan after fifteen (15) days notice to Borrower.
After the occurrence of an Event of Default, no notice will be required.
               (i) Revolving Loan. The unpaid principal of the Revolving Notes,
together with all accrued and unpaid interest thereon and all other Obligations
shall be due and payable on the Termination Date.
               (ii) Mandatory Prepayments. The Borrower agrees that the
Obligations shall be subject to mandatory prepayment if (A) on any day the Total
Outstandings exceeds the Revolving Loan Commitment, and (B) on any day a
Lender’s Pro Rata Share of the Total Outstandings exceeds its Commitment.
Borrower agrees that on any such day, the Borrower shall make a prepayment to
the extent of such excess.
               (iii) Optional Prepayments. The Borrower may prepay Advances, in
whole or in part, at any time, without premium or penalty, but subject to the
payment of any funding losses payable by Borrower under Section 2.7 hereof and
provided further that with respect to the prepayment of any LIBOR Advance during
an Interest Period on two (2) Business Days’ advance written notice. Any such
prepayment must be accompanied by accrued and unpaid interest on the amount
prepaid. Each partial prepayment shall be in a minimum amount of $500,000 or in
an integral multiple of $250,000 above such amount. Amounts paid (unless
following an acceleration or upon termination of the Revolving Loan Commitment
in whole) or prepaid on Advances under this Section 2.3 may be re-borrowed upon
the terms and subject to the conditions and limitations of this Agreement.
               (iv) Application of Payments. With respect to the prepayments
described in Section 2.3(a)(ii) and (iii), such prepayments shall first be
applied to the payment of all outstanding fees, costs and expenses payable by
Borrower, then such prepayments shall be applied, pro rata, to reduce the
outstanding principal balance of the Revolving Loans. Considering each type of
Loan being prepaid separately, any such prepayment shall be applied first to
Floating Rate Advances of the type required to be prepaid before application to
LIBOR

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Advances, in each case in a manner which minimizes any resulting funding losses
under Section 2.7. During the continuance of an Event of Default, Borrower
irrevocably waives the right to direct the application of any and all payments
and Borrower hereby irrevocably agrees that each Lender shall have the
continuing exclusive right to thereafter apply payments in any manner it deems
appropriate.
               (v) No Deductions. Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto of any nature whatsoever
imposed by any taxing authority, excluding such taxes to the extent imposed on
Agent’s or a Lender’s net income by the jurisdiction in which Agent or such
Lender is organized. If Borrower shall be required by law to deduct any such
amounts from or in respect of any sum payable hereunder to any Lender or Agent,
then the sum payable hereunder shall be increased as may be necessary so that,
after making all required deductions, such Lender or Agent receives an amount
equal to the sum it would have received had no such deductions been made.
     Section 2.4 Notes.
          (a) Revolving Notes. The Borrower agrees that, upon the request to the
Agent by any Lender, the Borrower will promptly execute and deliver to such
Lender a revolving promissory note (as such promissory note may be amended,
modified or supplemented from time to time, and including any substitutions for,
or renewals of, such promissory note, individually, a “Revolving Note” and
collectively for all Lenders, the “Revolving Notes”) of the Borrower evidencing
any Revolving Loans of such Lender, substantially in the form of Exhibit A, with
appropriate insertions as to date and principal amount. Each Note shall bear
interest at an annual rate determined pursuant to Section 2.5.
     Section 2.5 Interest. Borrower shall pay to Agent interest on the
outstanding principal balance of each Note at one or more of the rates specified
below. Unless the Borrower specifies otherwise, the principal balance of each
Advance outstanding under the Revolving Notes shall bear interest at the
Floating Rate.
          (a) LIBOR Advances. The unpaid principal amount of each LIBOR Advance
shall bear interest prior to maturity at a rate per annum equal to the LIBOR
Rate in effect for each Interest Period for such LIBOR Advances plus the
applicable Margin pursuant to Section 2.5(c) below.
          (b) Floating Rate Advances. The unpaid principal amount of each
Floating Rate Advance shall bear interest prior to maturity at a rate per annum
equal to the Floating Rate.
          (c) Margins/Letter of Credit Fee/Unused Commitment Fee Percentage. The
“Margins,” “Letter of Credit Fee” and "Unused Commitment Fee Percentage” through
and including the first adjustment occurring as specified below shall be 1.50%
for Floating Rate Advances, LIBOR Advances, and Letters of Credit and 0.250% for
the Unused Commitment Fee Percentage. Commencing on the third Business Day after
the Borrower delivers financial statements pursuant to Section 5.1, for each
fiscal quarter (each a “Margin/Fee Adjustment

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Date”), the Margins, the Letter of Credit Fee and Unused Commitment Fee
Percentage shall be adjusted, on the basis of the ratio of Borrower’s Funded
Debt to EBITDA (as calculated at the end of the previous calendar quarter in
accordance with Section 5.2(a)), in accordance with the following table,
provided however that the Margin accruing on then existing LIBOR Advances shall
not be adjusted.

                              LIBOR Advances and         Funded Debt to  
Floating Rate   Letter of Credit   Unused Commitment EBITDA   Advances   Fees  
Fee Percentage
< 0.75
    1.50 %     1.50 %     0.250 %
> 0.75 < 1.25
    1.75 %     1.75 %     0.375 %
> 1.25
    2.00 %     2.00 %     0.500 %

Notwithstanding the foregoing, no reduction in the Margins will be made if a
Default or an Event of Default exists at the time that such reduction would
otherwise be made. If Borrower fails to deliver its financial statements in
accordance with Section 5.1, the Margins and fees due under this Section 2.5(c)
shall adjust to the highest ratio set forth in the table above beginning on the
date that delivery of such financial statement was due under Section 5.1 below.
          (d) Computation and Payment of Interest. All interest provided for
under this Agreement shall be computed on the basis of actual days elapsed and a
year of 360 days. The date of funding a Floating Rate Advance and the first day
of an Interest Period with respect to a LIBOR Advance shall be included in the
calculation of interest. The date of payment of a Floating Rate Advance and the
last day of an Interest Period with respect to a LIBOR Advance shall be excluded
from the calculation of interest. If a Loan is repaid on the same day that it is
made, one (1) days’ interest shall be charged. Interest on all Floating Rate
Advances is payable in arrears on the first day of each month and on the
maturity of such Loans, whether by acceleration or otherwise. Interest on LIBOR
Advances shall be payable on the last day of the applicable Interest Period,
unless the Interest Period is greater than three (3) months, in which case
interest will be payable on the last day of each three (3) month interval. In
addition, interest on LIBOR Advances is due on the maturity of such Loans,
whether by acceleration or otherwise.
          (e) Default Rate. Upon the occurrence of any Event of Default, each
Advance shall, at the option of the Agent (or, in the case of an Event of
Default under Section 7.1(f), (g) or (h), automatically upon the occurrence of
such Event of Default), bear interest until paid in full at the rate otherwise
applicable thereto plus 2.0% (the “Default Rate”).
          (f) Inability to Determine LIBOR. In the event, prior to commencement
of any Interest Period relating to a LIBOR Advance or outstanding Floating Rate
Advances are based on a LIBOR Base Rate, Agent shall determine or be notified in
writing by Required Lenders that adequate and reasonable methods do not exist
for ascertaining LIBOR Base Rate, Agent shall promptly provide notice of such
determination to Borrower and Lenders (which shall be conclusive and binding on
Borrower and Lenders). In such event, (1) any request for a LIBOR Advance or for
a conversion to or continuation of a LIBOR Advance shall be automatically
withdrawn and shall be deemed a request for a Floating Rate Advance, (2) each
LIBOR Advance will automatically, on the last day of the then current Interest
Period relating

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thereto, become a Floating Rate Advance, (3) all outstanding Floating Rate
Advances (including Advances converted under (1) and (2) above, shall
automatically become Floating Rate Advances based upon the Prime Rate, and
(4) the obligations of Lenders to make LIBOR Advances (or Floating Rate Advances
based upon a LIBOR Base Rate) shall be suspended until Agent or Required Lenders
determine that the circumstances giving rise to such suspension no longer exist,
in which event Agent upon the instructions of Required Lenders, shall so notify
Borrower and Lenders.
          (g) Illegality. Notwithstanding any other provisions hereof, if any
law, rule, regulation, treaty or directive or interpretation or application
thereof shall make it unlawful for any Lender to make, fund or maintain LIBOR
Advances, or make Floating Rate Advances based upon the LIBOR Base Rate such
Lender shall promptly give notice of such circumstances to Agent, Borrower and
the other Lenders. In such an event, (1) the commitment of such Lender to make
LIBOR Advances, make Floating Rate Advances based upon the LIBOR Base Rate, or
convert Floating Rate Advances to LIBOR Advances shall be immediately suspended
and (2) such Lender’s outstanding LIBOR Advances and Floating Rate Advances
based upon the LIBOR Base Rate shall be converted automatically to Floating Rate
Advances based upon the Prime Rate on the last day of the Interest Period
thereof or at such earlier time as may be required by law.
     Section 2.6 Fees and Expenses.
          (a) Unused Commitment Fee. The Borrower agrees to pay to the Lender a
Unused Commitment Fee equal to the Unused Amount multiplied by the applicable
Unused Commitment Fee Percentage set forth in Section 2.5(c) above, from the
date of this Agreement to and including the Termination Date, due and payable
quarterly in arrears on the last day of each quarter, commencing March 31, 2009
and on the Termination Date; such fee shall be prorated for any partial period.
          (b) Agent Fees. Borrower shall pay to Agent, for Agent’s own account,
such Agent’s fee as may be required in any Agent’s Fee Letter as may be agreed
to by Borrower and Agent from time to time.
          (c) Letter of Credit Fee. For each Letter of Credit issued, the
Borrower shall pay to the Agent an issuance fee equal to the Agent’s then
current rate, payable on the date of issuance of the Letter of Credit. The
Borrower shall further pay to the Agent, for the account of the Lenders, a fee
in an amount determined by applying a per annum rate equal to the Letter of
Credit Fee Percentage set forth in Section 2.5(c) to the original face amount of
the Letter of Credit for each month that such Letter of Credit is outstanding,
which fee shall be due and payable monthly in arrears on the last day of each
month, and on the Termination Date. In addition to the foregoing fees, the
Borrower shall pay to the Agent, on demand, all issuance, amendment, drawing and
other fees regularly charged by the Agent to its letter of credit customers and
all out-of-pocket expenses incurred by the Agent in connection with the
issuance, amendment, administration or payment of any Letter of Credit.

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          (d) Expenses and Attorneys Fees. Borrower agrees to promptly pay all
fees, costs and expenses (including reasonable fees, charges and disbursements
of legal counsel for Agent) incurred by Agent in connection with any matters
contemplated by or arising out of the Loan Documents, in connection with the
examination, review, due diligence investigation, documentation, negotiation,
closing and syndication of the transactions contemplated herein and in
connection with the continued administration of the Loan Documents including any
amendments, modifications, consents and waivers. Borrower agrees to promptly pay
all fees, costs and expenses (including reasonable fees, charges and
disbursements of legal counsel for Agent and Lenders) incurred by Agent and
Lenders in connection with any action to enforce any Loan Document or to collect
any payments due from Borrower or any other Loan Party. All fees, costs and
expenses for which Borrower is responsible under this Section 2.6(d) shall be
deemed part of the Obligations when incurred. Agent agrees to limit the fees of
legal counsel to be paid by Borrower in conjunction with the initial preparation
of this Agreement and the other Loan Documents at an amount not to exceed
$25,000, plus out-of-pocket expenses if, and only if, the transactions
contemplated herein close by February 27, 2009. Borrower understands that all
costs incurred on or after March 1, 2009 shall not be subject to the foregoing
limitation.
     Section 2.7 Funding Losses. The Borrower will indemnify Agent and each
Lender upon written request of such party (which request shall set forth the
basis for requesting such amounts) against any loss or expense which the Agent
or Lender may sustain or incur (including, without limitation, any loss or
expense sustained or incurred in obtaining, liquidating or employing deposits or
other funds acquired to effect, fund, or maintain any Advance) as a consequence
of (i) any failure of the Borrower to make any payment when due of any amount
due hereunder or under the Note, (ii) any failure of the Borrower to borrow,
continue or convert an Advance on a date specified therefor in a notice thereof,
or (iii) any payment, prepayment or conversion of any LIBOR Advance on a date
other than the last day of the Interest Period for such Advance. Determinations
by the Agent for purposes of this Section 2.7 of the amount required to
indemnify the Lenders shall be conclusive in the absence of manifest error. A
certificate as to any such loss or expense (including calculations, in
reasonable detail, showing how such Lender computed such loss or expense and
showing any other compensation which such Lender may have received or be
entitled to receive for such loss or expense, if any, and showing any mitigation
of such loss or expense by such Lender, if any) shall be promptly submitted by
such Lender to the Borrower and shall, in the absence of manifest error, be
conclusive and binding as to the amount thereof. Such loss or expense may be
computed as though such Lender acquired deposits in the London interbank market
to fund the LIBOR Advances, whether or not the Lender in fact did so.
     Section 2.8 Increased Costs. If at any time, as a result of any change in
or the adoption of any law, rule, regulation, treaty or directive, or any change
in the interpretation or administration thereof, or compliance by Agent or any
Lender with any request or directive (whether or not having the force of law)
from any court, central bank, governmental authority, agency or instrumentality,
or comparable agency:
          (a) any tax, duty or other charge with respect to any Loan, the Notes
or the Revolving Loan Commitment is imposed, modified or deemed applicable, or
the basis of taxation of payments to any Lender of interest or principal of the
Loans or of any fees payable to the Agent or a Lender hereunder (other than
taxes imposed on the overall net income of a Lender) is changed;

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          (b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, a Lender is imposed, modified or deemed applicable;
          (c) any increase in the amount of capital required or expected to be
maintained by a Lender or any Person controlling a Lender is imposed, modified
or deemed applicable; or
          (d) any other condition affecting this Agreement or the Revolving Loan
Commitment is imposed on a Lender or the relevant funding markets;
and the Lender determines that, by reason thereof, the cost to the Lender of
making or maintaining the Loans, issuing the Letters of Credit or maintaining
the Revolving Loan Commitment is increased, or the amount of any sum receivable
by the Lender hereunder or under the Notes in respect of any Loan is reduced;
then, the Borrower shall pay to the Agent for the account of the Lender upon
demand such additional amount or amounts as will compensate the Lender (or the
controlling Person in the instance of (c) above) for such additional costs or
reduction (provided that the Lender has not been compensated for such additional
cost or reduction in the calculation of the LIBOR Rate). A certificate as to any
additional amounts payable pursuant to this Section 2.8 submitted by any Lender
to Borrower (with a copy to Agent) of the additional amounts required to
compensate the Lender shall be conclusive in the absence of manifest error. In
determining such amounts, the Lender may use any reasonable averaging,
attribution and allocation methods.
     Section 2.9 Discretion of Lenders as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary, each Lender shall be entitled
to fund and maintain its funding of all or any part of the Loans in any manner
it elects; it being understood, however, that for purposes of this Agreement,
all determinations hereunder shall be made as if the Lender had actually funded
and maintained each LIBOR Advance during the Interest Period for such Advance
through the purchase of deposits having a term corresponding to such Interest
Period and bearing an interest rate equal to the LIBOR Rate for such Interest
Period (whether or not the Lender shall have granted any participations in such
Advances).
     Section 2.10 Optional Prepayment/Replacement of Lenders. Within fifteen
(15) days after receipt by Borrower of written notice and demand from any Lender
for payment pursuant to Section 2.8 or, as provided in Section 8.9(c), in the
case of certain refusals by any Lender to consent to certain proposed
amendments, modifications, terminations or waivers with respect to this
Agreement that have been approved by Required Lenders (any such Lender demanding
such payment or refusing to so consent being referred to herein as an “Affected
Lender”), Borrower may, at its option, notify Agent and such Affected Lender of
its intention to do one of the following:
     (a) Borrower may obtain, at Borrower’s expense, a replacement Lender
(“Replacement Lender”) for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to Agent. In the event Borrower obtains a Replacement
Lender that will purchase all outstanding Obligations owed to such Affected
Lender and assume its commitments hereunder (and under any participations sold
by such Affected Lender pursuant to Section 10.2

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hereof) within ninety (90) days following notice of Borrower’s intention to do
so, the Affected Lender shall sell and assign all of its rights and delegate all
of its obligations under this Agreement to such Replacement Lender in accordance
with the provisions of Section 10.1, provided that Borrower has reimbursed such
Affected Lender for any administrative fee payable pursuant to Section 10.1 and,
in any case where such replacement occurs as the result of a demand for payment
pursuant to Section 2.8, paid all amounts required to be paid to such Affected
Lender pursuant to Section 2.8 through the date of such sale and assignment; or
     (b) Borrower may prepay in full all outstanding Obligations owed to such
Affected Lender and terminate such Affected Lender’s Commitment, in which case
the Revolving Loan Commitment will be reduced by the amount thereof. Borrower
shall, within ninety (90) days following notice of its intention to do so,
prepay in full all outstanding Obligations owed to such Affected Lender
(including, in any case where such prepayment occurs as the result of a demand
for payment for increased costs, such Affected Lender’s increased costs for
which it is entitled to reimbursement under this Agreement through the date of
such prepayment), and terminate such Affected Lender’s obligations under the
Revolving Loan Commitment.
     Section 2.11 Termination of Revolving Loan Commitment. The Borrower may, at
any time, upon not less than three (3) Business Days prior written notice to the
Agent, reduce the Revolving Loan Commitment, with any such reduction in a
minimum amount of $5,000,000, or, if more, in an integral multiple of thereof;
provided, however, that the Borrower may not at any time reduce the Revolving
Loan Commitment below the Total Outstandings. The Borrower may, at any time,
upon not less than three (3) Business Days prior written notice to the Agent,
terminate the Revolving Loan Commitment (including, without limitation, each
Lender’s Commitment thereunder) in its entirety. Upon termination of the
Revolving Loan Commitment pursuant to this Section, the Borrower shall pay to
the Agent the full amount of all outstanding Advances under the Loans, all
accrued and unpaid interest thereon, all unpaid fees, if any, accrued to the
date of such termination, and all other unpaid Obligations to the Agent and
Lenders under the Loan Documents.
     Section 2.12 Use of Revolving Loan Proceeds. The proceeds of the Advances
shall be used for the Borrower’s general business purposes in a manner not in
conflict with any of the Borrower’s covenants in this Agreement.
     Section 2.13 Maturity. All of the Obligations shall become due and payable
as set forth herein, but in any event all of the remaining Obligations shall
become due and payable upon termination of this Agreement. Until all Obligations
have been fully paid and satisfied (other than contingent indemnification
obligations to the extent no unsatisfied claim has been asserted), the Revolving
Loan Commitment (including, without limitation, each Lender’s Commitment
thereunder) has been terminated and all Letters of Credit have been terminated
or otherwise secured to the satisfaction of Agent, Agent shall be entitled to
retain the security interests or liens in the collateral, if any, granted under
the Loan Documents and the ability to exercise all rights and remedies available
to them under the Loan Documents and applicable laws.

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     Section 2.14 USA Patriot Act Notice. The Agent and each Lender hereby
notify the Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001; the “Act”), they
are required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow the Agent and such Lender to identify the
Borrower in accordance with the Act.
ARTICLE 3.
CONDITIONS PRECEDENT
     Section 3.1 Conditions of Initial Advances. The making of the initial
Advance on any of the Loans, or issuance of any initial Letter of Credit
hereunder, shall be subject to the prior or simultaneous fulfillment of the
following conditions, each in form and substance acceptable to Agent:.
          (a) Documents. The Agent shall have received an executed copy of this
Agreement, together with each of the following:
          (i) A Revolving Note payable to each Lender requesting such a note in
the principal amount of its Commitment and duly executed by the Borrower.
          (ii) A Guaranty executed by each Guarantor.
          (iii) Certificates of good standing or existence with respect to the
Borrower and each Subsidiary, issued as of a recent date by the Secretary of
State of the Borrower’s or respective Subsidiary’s state of organization.
          (iv) A copy of the Articles of Incorporation of the Borrower and each
Subsidiary with all amendments thereto, certified by the appropriate
governmental official of the jurisdiction of its incorporation as of a date not
more than 15 days prior to the date hereof.
          (v) A copy of the bylaws of the Borrower and each Subsidiary,
certified as of the date hereof by the Secretary or an Assistant Secretary of
the Borrower, as applicable.
          (vi) A copy of the corporate resolution of the Borrower and each
Subsidiary duly authorizing the execution, delivery and performance of the Loan
Documents, certified by the Secretary or an Assistant Secretary of the Borrower
or such Subsidiary, as applicable.
          (vii) An incumbency certificate of the Borrower and each Subsidiary
showing the names and titles, and bearing the signatures of, the officers of the
Borrower or such Subsidiary authorized, in the case of the Borrower, to execute
the Loan Documents and in the case of each Subsidiary, to execute its respective
Guaranty, certified by the Secretary or an Assistant Secretary of the Borrower
or such Subsidiary, as applicable.
          (viii) The Negative Pledge Agreement executed by Borrower and each
Subsidiary.

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          (ix) UCC/Tax Lien Searches confirming no liens other than Permitted
Liens.
          (b) Compliance. The Borrower shall have performed and complied with
all agreements, terms and conditions contained in this Agreement required to be
performed or complied with by the Borrower prior to or simultaneously with the
date hereof.
          (c) Other Matters. All corporate and legal proceedings relating to the
Borrower and all instruments and agreements in connection with the transactions
contemplated by this Agreement shall be satisfactory in scope, form and
substance to the Agent and its counsel, and the Agent shall have received all
information and copies of all documents, including records of corporate
proceedings, as the Agent or its counsel may reasonably have requested in
connection therewith, such documents where appropriate to be certified by proper
corporate or governmental authorities.
          (d) Fees and Expenses. The Agent shall have received all fees and
other amounts due and payable by the Borrower on or prior to date hereof.
     Section 3.2 Conditions Precedent to all Advances. The obligation of the
Agent to make any Advances hereunder (including the initial advances on the
Loans) or to issue any Letter of Credit hereunder shall be subject to the
fulfillment of the following conditions:
          (a) Representations and Warranties. The representations and warranties
contained in Article 4 shall be true and correct on and as of the date hereof
and on the date of each Advance, with the same force and effect as if made on
such date.
          (b) No Default. No Default or Event of Default shall have occurred and
be continuing as of the date hereof and on the date of each Advance or will
exist after giving effect to the Advance.
          (c) Notices and Requests. The Agent shall have received the Borrower’s
request for such advance as required under Section 2.2.
          (d) Additional Documents. The execution and delivery to Agent and/or
the Lenders of all other documents and instruments as may be required under the
terms of this Agreement as a condition to such Advance or Letter of Credit,
including, if applicable, all documents required by Section 5.11 hereof, or
under any other Loan Documents.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
     To induce the Agent to enter into this Agreement and to make Loans and
issue Letters of Credit hereunder, the Borrower represents and warrants to the
Agent:
     Section 4.1 Organization, Standing, Etc. The Borrower and each of its
Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction of their respective organization and
have all requisite corporate power and authority to carry on their respective
businesses as now conducted, and to enter into the Loan Documents

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and to issue the Notes and to perform its respective obligations under the Loan
Documents. The Borrower and each of its Subsidiaries are duly qualified and in
good standing as a foreign corporation or other entity, as applicable, in each
jurisdiction in which the character of the properties owned, leased or operated
by it or the business conducted by it makes such qualification necessary.
     Section 4.2 Authorization and Validity. The execution, delivery and
performance by the Borrower and each of its Subsidiaries of the Loan Documents
to which it is a party has been duly authorized by all necessary corporate,
company or other legal action of such entity and constitute the legal, valid and
binding obligations of the Borrower and/or its Subsidiaries to the extent a
party thereto, enforceable in accordance with their respective terms, subject to
limitations as to enforceability which might result from bankruptcy, insolvency,
moratorium and other similar laws affecting creditors’ rights generally and
subject to limitations on the availability of equitable remedies.
     Section 4.3 No Conflict; No Default. The execution, delivery and
performance by the Borrower and its Subsidiaries of the Loan Documents to which
it is a party will not (a) violate any provision of any law, statute, rule or
regulation or any order, writ, judgment, injunction, decree, determination or
award of any court, governmental agency or arbitrator presently in effect having
applicability to the Borrower and/or its Subsidiares, (b) violate or contravene
any provisions of the Articles (or Certificate) of Incorporation, by-laws or
other organizational of the Borrower and/or its Subsidiaries, or (c) result in a
breach of or constitute a default under any indenture, loan or credit agreement
or any other agreement, lease or instrument to which the Borrower and/or its
Subsidiaries is a party or by which it or any of its properties may be bound or
result in the creation of any Lien on any asset of the Borrower or any
Subsidiary. Neither the Borrower nor any Subsidiary is in default under or in
violation of any such law, statute, rule or regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, loan or credit
agreement or other agreement, lease or instrument in any case in which the
consequences of such default or violation could constitute a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
     Section 4.4 Government Consent. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority is required on the
part of the Borrower or any Subsidiary to authorize, or is required in
connection with the execution, delivery and performance of, or the legality,
validity, binding effect or enforceability of, the Loan Documents.
     Section 4.5 Financial Statements/Disclosure/Solvency.
     (a) The Borrower’s audited, consolidated financial statements as of
September 30, 2008, and its company prepared consolidated financial statements
as of December 31, 2008, as heretofore furnished to the Agent, have been
prepared on a consistent basis and (in the case of the audited financial
statements) in accordance with GAAP and fairly present the financial condition
of the Borrower, and its respective Subsidiaries as at such dates and the
results of their operations and changes in financial position for the respective
periods then ended. As of the dates of such financial statements, neither the
Borrower nor any Subsidiary had any material obligation, contingent liability,
liability for taxes or long-term lease obligation which is not reflected in such
financial statements or in the notes thereto. Since September 30, 2008, no
Material Adverse Effect has occurred.

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     (b) No representation or warranty of Borrower or any Subsidiary contained
in the Loan Documents, the financial statements referred to above or any other
document, certificate or written statement furnished to Agent or any Lender by
or on behalf of any such Person for use in connection with the Loan Documents
contains any untrue statement of a material fact or omitted, omits or will omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances in which the same
were made.
     (c) Borrower and each of its Subsidiaries: (a) owns and will own assets the
fair saleable value of which are (i) greater than the total amount of its
liabilities (including contingent liabilities) and (ii) greater than the amount
that will be required to pay the probable liabilities of its then existing debts
as they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to it; (b) has capital that is not
unreasonably small in relation to its business as presently conducted or after
giving effect to any contemplated transaction; and (c) does not intend to incur
and does not believe that it will incur debts beyond its ability to pay such
debts as they become due.
     Section 4.6 Litigation and Contingent Liabilities. Except as described in
Schedule 4.6, there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary or any of their properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality which, if
determined adversely to the Borrower or such Subsidiary, could constitute a
Material Adverse Effect. Except as described in Schedule 4.6, neither the
Borrower nor any Subsidiary has any Contingent Debt that is material to the
Borrower or its Subsidiaries as a consolidated enterprise.
     Section 4.7 Compliance. The Borrower and its Subsidiaries are in material
compliance with all statutes and governmental rules and regulations applicable
to them.
     Section 4.8 Environmental, Health and Safety Laws. Except as described in
Schedule 4.8, there does not exist any violation by the Borrower or any
Subsidiary of any applicable federal, state or local law, rule or regulation or
order of any government, governmental department, board, agency or other
instrumentality relating to environmental, pollution, health or safety matters
which will or threatens to impose a material liability on the Borrower or a
Subsidiary or which would require a material expenditure by the Borrower or such
Subsidiary to cure. Except as described in Schedule 4.8, neither the Borrower
nor any Subsidiary has received any notice to the effect that any part of its
operations or properties is not in material compliance with any such law, rule,
regulation or order or notice that it, or its property is the subject of any
governmental investigation evaluating whether any remedial action is needed to
respond to any release of any toxic or hazardous waste or substance into the
environment, the consequences of which non-compliance or remedial action could
constitute a Material Adverse Effect.

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     Section 4.9 ERISA. Each Plan complies with all material applicable
requirements of ERISA and the Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Code setting forth
those requirements. No Reportable Event, other than a Reportable Event for which
the reporting requirements have been waived by regulations of the PBGC, has
occurred and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no event
or condition which would permit the institution of proceedings to terminate any
Plan under Section 4042 of ERISA. The current value of the Plans’ benefits
guaranteed under Title IV or ERISA does not exceed the current value of the
Plans’ assets allocable to such benefits.
     Section 4.10 Regulation U. Neither the Borrower, nor any of its
Subsidiaries, is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) and no part of the proceeds of any Loan
will be used to purchase or carry margin stock or for any other purpose which
would violate any of the margin requirements of the Board of Governors of the
Federal Reserve System.
     Section 4.11 Ownership of Property; Liens. Each of the Borrower and its
Subsidiaries, if any, has good and marketable title to its real properties and
good and sufficient title to its other properties, including all properties and
assets referred to as owned by the Borrower and its Subsidiaries in the
financial statements of the Borrower referred to in Section 4.5 (other than
property disposed of since the date of such financial statement in the ordinary
course of business). None of the properties, revenues or assets of the Borrower
or any of the Subsidiaries is subject to a Lien, except for (a) Liens disclosed
in the financial statements referred to in Section 4.5, or (b) Liens allowed
under Section 6.3.
     Section 4.12 Taxes. Each of the Borrower and its Subsidiaries has filed all
federal, state and local tax returns required to be filed and has paid or made
provision for the payment of all taxes due and payable pursuant to such returns
and pursuant to any assessments made against it or any of its property and all
other taxes, fees and other charges imposed on it or any of its property by any
governmental authority (other than taxes, fees or charges the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in accordance with GAAP have been provided on
the books of the Borrower and its Subsidiaries). No tax Liens have been filed
and no material claims are being asserted with respect to any such taxes, fees
or charges. The charges, accruals and reserves on the books of the Borrower in
respect of taxes and other governmental charges are adequate.
     Section 4.13 Intellectual Property. Borrower and each Subsidiary thereof
own or are licensed or otherwise have the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are, to Borrower’s knowledge (after due
inquiry and investigation) reasonably necessary for the operation of their
respective businesses, except as set forth on Schedule 4.13. To Borrower’s
knowledge (after due inquiry and investigation), (i) the use of such
intellectual property by Borrower and its Subsidiaries and the operation of
their respective businesses do not infringe any valid and enforceable
intellectual property rights of any other Person, and (ii) no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by Borrower or any Subsidiary
thereof infringes upon any rights held by any other Person. Except as
specifically disclosed on Schedule 4.6, no claim or litigation regarding any of
the foregoing is pending or threatened, and no patent, invention,

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device, application, principle or any statute, law, rule, regulation, standard
or code is pending or, to the knowledge of Borrower, proposed, which, could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
     Section 4.14 Investment Company Act. Neither the Borrower 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.
     Section 4.15 Subsidiaries. Schedule 4.15 sets forth as of the date of this
Agreement a list of each direct and indirect Subsidiaries of the Borrower and
the number and percentage of the shares of each class of Stock owned
beneficially or of record by the Borrower or any other Subsidiary therein, and
the jurisdiction of incorporation or organization of each Subsidiary. DRB #10,
LLC is a non-operating subsidiary of Borrower and DRB #11, LLC is a
non-operating Subsidiary of DRB #10, LLC. Neither DRB #10, LLC and DRB #11, LLC
have any assets or revenues.
     Section 4.16 Related Entities. Schedule 4.16 sets forth as of the date of
this Agreement a list of all Related Entities in which the Borrower or any
Subsidiary holds an investment.
     Section 4.17 Investment Policy. Attached hereto as Schedule 4.17 is the
Investment Policy adopted by the Borrower’s board of directors on or about
January 30, 2006, which policy governs the Borrower’s investment strategy and
remains in full force and effect and has not been modified, revised or replaced
since its adoption.
ARTICLE 5.
AFFIRMATIVE COVENANTS
     From the date of this Agreement and thereafter until any obligation of the
Lenders to make Advances shall have expired or been terminated, the Notes, the
Letter of Credit Obligations and all of the Borrower’s and any Guarantor’s other
Obligations have been paid in full and all outstanding Letters of Credit shall
have expired or been terminated, unless the Required Lenders shall otherwise
expressly consent in writing, the Borrower will do, and will cause each
Subsidiary to do, all of the following:
     Section 5.1 Financial Statements and Reports. Furnish to the Agent:
          (a) As soon as available and in any event the earlier of: (i) within
five days of filing with the Securities and Exchange Commission, or (ii) within
120 days after the end of each fiscal year of the Borrower, the annual audit
report of the Borrower and its Subsidiaries prepared on a consolidated basis and
in conformity with GAAP, consisting of at least statements of income, cash flow,
changes in financial position and stockholders’ equity, and a consolidated
balance sheet as at the end of such year, certified without qualification by
independent certified public accountants of recognized standing selected by the
Borrower and acceptable to the Agent, together with any management letters,
management reports or other supplementary comments or reports to the Borrower or
its board of directors furnished by such accountants and requested by the Agent.

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          (b) as soon as available, and in any event the earlier of: (i) within
five days of filing with the Securities and Exchange Commission, or (ii) within
45 days after the end of each fiscal quarter, consolidated unaudited balance
sheets of the Borrower and its Subsidiaries as of the end of each such fiscal
quarter and related consolidated statement of income, cash flow and changes in
financial position of the Borrower and its Subsidiaries for each such month and
for the year to date, in reasonable detail and stating in comparative form the
figures for the corresponding date and period in the previous year, all prepared
in accordance with GAAP applied on a basis consistent with the accounting
practices reflected in the annual financial statements referred to in Section
4.5.
          (c) Together with the financial statements furnished under (a) and
(b), a certificate of the Borrower’s chief financial officer, substantially in
the form of Exhibit B hereto, stating (i) that such financial statements have
been prepared in accordance with generally accepted accounting principles,
consistently applied, and fairly represent the Borrower’s combined, consolidated
and consolidating financial position and the results of its operations for such
period, (ii) whether or not such officer has knowledge of the occurrence of any
Default or Event of Default not theretofore reported and remedied and, if so,
stating in reasonable detail the facts with respect thereto, and (iii) all
relevant facts and reasonable detail to evidence, and the computations as to,
whether or not the Borrower is in compliance with all financial covenants set
forth in this Agreement.
          (d) As soon as available and in any event within 90 days after the
beginning of each fiscal year of the Borrower, the Borrower will deliver to the
Lender the projected financial statements of the Borrower and its Subsidiaries
for such fiscal year, each in reasonable detail, representing the Borrower’s
good faith projections and certified by the Borrower’s chief financial Officer
as being the most accurate projections available and identical to the
projections used by the Borrower for internal planning purposes, together with a
statement of underlying assumptions and such supporting schedules and
information as the Agent may in its discretion require.
          (e) Promptly upon their distribution, copies of all financial
statements, reports and proxy statements, which the Borrower shall have sent to
its shareholders.
          (f) Promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the stockholders of Borrower and copies of all annual, regular, periodic and
special reports and registration statements that Borrower may file or be
required to file with the Securities and Exchange Commission under Section 13 or
Section 15(d) of the Exchange Act, and, in each case, not otherwise required to
be delivered to Agent pursuant hereto.
          (g) Immediately upon becoming aware of any Default or Event of
Default, a notice describing the nature thereof and what action the Borrower
proposes to take with respect thereto.
          (h) Immediately upon becoming aware of the occurrence, with respect to
any Plan, of any Reportable Event (other than a Reportable Event for which the
reporting requirements have been waived by PBGC regulations) or any “prohibited
transaction” (as

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defined in Section 4975 of the Code), a notice specifying the nature thereof and
what action the Borrower proposes to take with respect thereto, and, when
received, copies of any notice from PBGC of intention to terminate or have a
trustee appointed for any Plan.
          (i) Immediately upon becoming aware of the occurrence thereof, notice
of the institution of any litigation, arbitration or governmental proceeding, or
the rendering of a judgment or decision in such litigation or proceeding, which
could constitute a Material Adverse Effect, and the steps being taken by the
Person(s) affected by such proceeding.
          (j) From time to time, such other information regarding the business,
operation and financial condition of the Borrower and the Subsidiaries as the
Agent may reasonably request.
     Section 5.2 Financial Covenants.
          (a) Maximum Funded Debt to EBITDA. The Borrower shall maintain, on a
consolidated basis, Funded Debt to EBITDA not greater than 1.50 to 1.0 as of
each fiscal quarter end, determined on a rolling 4-quarter basis.
Notwithstanding anything to the contrary contained herein, the calculation of
EBITDA shall not include any one-time recognition of deferred revenue or gain
resulting from the termination of its License Research Collaboration Agreement
and Supply Agreement, each dated as of June 26, 2007 between the Borrower and
Merck & Co., Inc.
          (b) Minimum Quick Ratio. The Borrower shall maintain, on a
consolidated basis, a Quick Ratio not less than 1.50 to 1.0 measured at each
fiscal quarter end.
          (c) Minimum Net Income. The Borrower shall achieve, on a consolidated
basis, Net Income: (i) each fiscal quarter of not less than $750,000, and
(ii) each fiscal year end of not less than $5,000,000.
     Section 5.3 Corporate Existence. Subject to Section 6.1 in the instance of
a Subsidiary, the Borrower and its Subsidiaries, as applicable, shall maintain
its corporate or other legal existence in good standing under the laws of its
jurisdiction of organization and its qualification to transact business in each
jurisdiction in which the character of the properties owned, leased or operated
by it or the business conducted by it makes such qualification necessary.
     Section 5.4 Insurance. Maintain with financially sound and reputable
insurance companies: such insurance as may be required by law and such other
insurance in such amounts and against such hazards as is customary in the case
of reputable corporations engaged in the same or similar business and similarly
situated. Borrower shall deliver to Agent (a) a copy of each policy of
insurance, and (b) from time to time upon request of Agent, evidence of payment
of all premiums therefor and certificates/endorsements naming the Agent, for the
account of the Lenders, as additional insured and lender’s loss payee, each in
form reasonably acceptable to Agent.

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     Section 5.5 Payment of Taxes and Claims. File all tax returns and reports
which are required by law to be filed by it and pay before they become
delinquent all taxes, assessments and governmental charges and levies imposed
upon it or its property and all claims or demands of any kind (including,
without limitation, those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the creation
of a Lien upon its property; provided that the foregoing items need not be paid
if they are being contested in good faith by appropriate proceedings, and as
long as the Borrower’s or such Subsidiary’s title to its property is not
materially adversely affected, its use of such property in the ordinary course
of its business is not materially interfered with and adequate reserves with
respect thereto have been set aside on the Borrower’s or such Subsidiary’s books
in accordance with GAAP.
     Section 5.6 Inspection. Permit any authorized representatives of Agent to
visit and inspect any of the properties of such Borrower or any of its
Subsidiaries, including its and their financial and accounting records, and to
make copies and take extracts therefrom, and to discuss its and their affairs,
finances and business with its and their officers and certified public
accountants, at such reasonable times during normal business hours and as often
as may be reasonably requested, provided, however, that if no Default or an
Event of Default exists, the cost of any such visit and inspection shall be
borne by Agent and/or Lenders; and provided further, that when an Event of
Default exists, Agent or any Lender (or any of their respective representatives
or independent contractors) may do any of the foregoing at the expense of
Borrower at any time during normal business hours and without advance notice,
and may do so as many times as Agent or any Lender may require.
     Section 5.7 Maintenance of Properties. Maintain its properties used or
useful in the conduct of its business in good condition, repair and working
order, and supplied with all necessary equipment, and make all necessary
repairs, renewals, replacements, betterments and improvements thereto, all as
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
     Section 5.8 Books and Records. Keep adequate and proper records and books
of account in which full and correct entries will be made of its dealings,
business and affairs.
     Section 5.9 Compliance. Comply in all material respects with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject.
     Section 5.10 ERISA. Maintain each Plan in compliance with all material
applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code.
     Section 5.11 Additional Subsidiaries. Without limiting other provisions
regarding Subsidiaries, upon formation or acquisition of any entity that would
become a Subsidiary, the Borrower shall (a) cause such Subsidiary to become a
Guarantor hereunder by executing and delivering a Guaranty, and (b) deliver to
the Agent documents of the nature of those described in Section 3.1(a)(iii)
through (vii) for such Subsidiary and as may otherwise be required by the Loan
Documents. In addition, at any point that DRB #10, LLC and DRB #11, LLC acquire
any assets or record any revenues, Borrower shall cause both such entities to
comply with (a) and (b) above.

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     Section 5.12 Environmental Matters. Observe and comply with all laws,
rules, regulations and orders of any government or government agency relating to
health, safety, pollution, hazardous materials or other environmental matters to
the extent non-compliance could result in a material liability or otherwise
constitute a Material Adverse Effect.
     Section 5.13 Depository Accounts. At all times maintain its primary deposit
accounts with the Agent.
ARTICLE 6.
NEGATIVE COVENANTS
     From the date of this Agreement and thereafter until any obligation of the
Lenders to make Advances shall have expired or been terminated, the Notes, the
Letter of Credit Obligations and all of the Borrower’s and any Guarantor’s other
Obligations have been paid in full and all outstanding Letters of Credit shall
have expired or been terminated, unless the Required Lenders shall otherwise
expressly consent in writing, the Borrower will not, and will not permit any
Subsidiary to, do any of the following:
     Section 6.1 Consolidation and Merger; Asset Acquisitions; Investments.
Consolidate with or merge into any Person, or permit any other Person to merge
into it (provided, however, any Subsidiary may be merged with or liquidated into
the Borrower (if the Borrower is the surviving corporation) or any other
Subsidiary), or consummate any Acquisition (in a transaction analogous in
purpose or effect to a consolidation or merger), including any division, of any
other Person, except in connection with a Permitted Acquisition; nor make or
permit to exist any loans or advances to, or make any investment or acquire any
interest whatsoever in, any other Person, except:
          (a) investments in Marketable Securities;
          (b) travel advances or loans to the Borrower’s officers and employees
not exceeding at any one time an aggregate of $10,000;
          (c) advances in the form of progress payments, prepaid rent not
exceeding twelve (12) months or security deposits;
          (d) investments in Subsidiaries created in connection with a Permitted
Acquisition; and
          (e) investments in Related Entities that comply with the following
terms and conditions:
     (i) the investment must be in an entity that is in the same general line of
business as the Borrower;
     (ii) the aggregate investment in such entity, together with the aggregate
consideration paid in connection with all Acquisitions and the aggregate amount
of all other investments in Related Entities and Subsidiaries occurring during
the twelve (12) months immediately preceding such investment, does not in the
aggregate exceed the Acquisition Limit;

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     (iii) after giving effect to such investment, (i) no Default or Event of
Default shall exist, and (ii) the Borrower shall be in compliance with all other
terms and conditions contained in this Agreement; and
     (iv) as soon as available, but in any event not less than five (5) Business
Days prior to the consummation of any proposed Strategic Business Investment,
the Borrower shall have provided prior written notice of such investment to the
Agent, and upon request shall promptly provide Agent with true, correct and
complete copies of all investment-related documents, together with such other
documents, reports, searches, instruments and information as any Lender may
request.
     Section 6.2 Sale of Assets. Sell, lease, assign, transfer or otherwise
dispose of (i) the Stock of any Subsidiary, or (ii) any assets except for the
sale of inventory in the ordinary course of business or the sale of worn-out or
depleted equipment; or liquidate, dissolve or suspend all or any material
portion of its consolidated business operations during any fiscal year, or
otherwise take any such action which would have a Material Adverse Effect on
Borrower or its business.
     Section 6.3 Indebtedness. Incur, create, assume or permit to exist any
Funded Debt or Contingent Debt of the Borrower or any Subsidiary, or any other
indebtedness or liability evidenced by notes, bonds, debentures or similar
obligations, except:
          (a) Funded Debt arising under the Loan Documents;
          (b) Funded Debt in existence on the date hereof and listed in its
financial statements referenced in Section 4.5;
          (c) Funded Debt relating to Permitted Liens existing as of the date
hereof and disclosed on Schedule 6.4;
          (d) additional Funded Debt incurred after the date hereof (including
in connection with a Permitted Acquisition) that in the aggregate does not
exceed more than $500,000 in principal amount outstanding at any time and
provided that (i) the incurrence of such Funded Debt does not and would not
cause the Borrower to be in default of any of the financial covenants set forth
in Section 5.2 hereof or the terms of Section 6.4 hereof, and (ii) such Funded
Debt shall be unsecured except liens securing purchase money Funded Debt that
complies with Section 6.4(c) hereof;
          (e) Contingent Debt related to: (i) the endorsement of negotiable
instruments for deposit or collection (or similar transactions) in the ordinary
course of business, and (ii) any contingent liabilities disclosed on
Schedule 4.6 attached hereto;
          (f) Any Contingent Debt (including, but not limited to milestone
payments), other than Guaranties, incurred in conjunction with a Permitted
Acquisition consummated before October 1, 2009; and

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          (g) Any Contingent Debt other than the Contingent Debt set forth in
(e) and (f) above, so long as such contingent liability incurred does not exceed
$500,000 individually or $1,000,000 in the aggregate.
     Section 6.4 Liens. Create, incur or suffer to exist any Lien upon or of any
of its assets (real or personal), now owned or hereafter acquired, to secure any
Debt; excluding, however, from the operation of the foregoing, the following
(collectively, “Permitted Liens”):
          (a) in the case of any of the Borrower’s or a Subsidiary’s property,
covenants, restrictions, rights, easements and minor irregularities in title
which do not materially interfere with its business or operations as presently
conducted;
          (b) Liens in existence on the date hereof and listed in Schedule 6.4
hereto or that are permitted under any Loan Documents;
          (c) Liens securing purchase money Debt (including capital leases)
incurred in connection with the acquisition of assets provided (i) the
incurrence of which Debt does not and would not cause the Borrower to be in
default of any of the financial covenants set forth in Section 5.2 hereof or the
terms of Section 6.3 hereof, and (ii) if requested by the Agent, the Agent shall
have received from the other secured party providing such financing an
intercreditor agreement containing standard and customary terms and otherwise in
form and substance acceptable to the Required Lenders;
          (d) Liens assumed in connection with the merger of a Subsidiary into
the Borrower or in connection with a Permitted Acquisition (including capital
leases) provided (i) the Debt securing such Lien does not and would not cause
the Borrower to be in default of any of the financial covenants set forth in
Section 5.2 hereof or the terms of Section 6.3 hereof, and (ii) if requested by
the Agent, the Agent shall have received from the other secured party providing
such financing an intercreditor agreement containing standard and customary
terms and otherwise in form and substance acceptable to the Required Lenders;
and
          (e) Security interest and Liens, if any, created by the Loan
Documents.
     Section 6.5 Transactions with Affiliates. Directly or indirectly to enter
into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any management, consulting,
investment banking, advisory or other similar services) with any Affiliate
(excluding any Affiliate that is a Guarantor) or with any director, officer or
employee of Borrower or any Affiliate, except (a) as set forth on Schedule 6.5
hereto, (b) transactions in the ordinary course of the business of such Borrower
or any of its Subsidiaries and upon fair and reasonable terms which are fully
disclosed to Agent and are no less favorable to such Borrower or such Subsidiary
than would be obtained in a comparable arm’s length transaction with a Person
that is not an Affiliate, and (c) payment of reasonable compensation to officers
and employees for services actually rendered to such Borrower or such
Subsidiary. Notwithstanding the foregoing, unless otherwise approved by Required
Lenders, no payments may be made with respect to any items set forth on
Schedule 6.5, if any, after the occurrence and during the continuation of a
Default or Event of Default or if a Default or Event of Default would result
therefrom.

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     Section 6.6 No Restrictions on Subsidiary Distributions. Except as provided
herein, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Subsidiary to: (1) pay dividends or make any other distribution on any of such
Subsidiary’s Stock owned by Borrower or any other Subsidiary; (2) pay any Debt
owed to Borrower or any other Subsidiary; (3) make loans or advances to Borrower
or any other Subsidiary; or (4) transfer any of its property or assets to any
Borrower or any other Subsidiary.
     Section 6.7 Use of Proceeds. Permit any proceeds of the Loans to be used,
either directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of “purchasing or carrying any margin stock” within the meaning of
Regulation U of the Federal Reserve Board of Governors, as amended from time to
time, and furnish to the Agent, upon its request, a statement in conformity with
the requirements of Federal Reserve Form U-1 referred to in Regulation U.
     Section 6.8 Plans. Permit any condition to exist in connection with any
Plan which might constitute grounds for the PBGC to institute proceedings to
have such Plan terminated or a trustee appointed to administer such Plan, permit
any Plan to terminate under any circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to any property, revenue or
asset of the Borrower or any Subsidiary or permit the underfunded amount of Plan
benefits guaranteed under Title IV of ERISA to exceed $250,000.
     Section 6.9 Change in Nature of Business. Make any material change in the
nature of the business of the Borrower or any Subsidiary, as carried on at the
date hereof.
     Section 6.10 Restriction on Fundamental Changes. Directly or indirectly to:
(a) change its name or jurisdiction of organization except with the consent of
Agent and Required Lenders which will not be unreasonably withheld; (b) merge
any Subsidiary of a Borrower with or into Borrower or any Subsidiary of a
Borrower except upon not less than five (5) Business Days prior written notice
to Agent; or (c) liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution).
     Section 6.11 No Negative Pledges/Other Agreements. Enter into any
agreement, bond, note or other instrument with or for the benefit of any Person
other than the Agent which would: (a) limit the ability of any Subsidiary to
guarantee the Obligations of Borrower (b) prohibit the Borrower or such
Subsidiary from granting, or otherwise limit the ability of the Borrower or such
Subsidiary to grant, to the Agent any Lien on any assets or properties (real or
personal) of the Borrower or such Subsidiary, provided, however, that this
subclause (b) shall not prohibit any negative pledge incurred or provided in
favor of any holder of Debt permitted under Sections 6.3(b) or Section 6.3(d);
or (c) be violated or breached by the Borrower’s performance of its obligations
under the Loan Documents.
ARTICLE 7.
EVENTS OF DEFAULT AND REMEDIES
     Section 7.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default:

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          (a) The Borrower or any Guarantor shall fail to make when due, whether
by acceleration or otherwise, any payment of principal of or interest on any of
the Loans, or any fee or other amount required to be paid to the Agent or the
Lenders pursuant to the Loan Documents;
          (b) A Change of Control shall occur;
          (c) Any representation or warranty made or deemed to have been made by
or on behalf of the Borrower or any Subsidiary in the Loan Documents or by or on
behalf of the Borrower or any Subsidiary in any certificate, statement, report
or other writing furnished by or on behalf of the Borrower or any Subsidiary to
the Agent pursuant to the Loan Documents shall prove to have been false or
misleading in any material respect on the date as of which the facts set forth
are stated or certified or deemed to have been stated or certified;
          (d) The Borrower shall fail to comply with Section 5.2, Section 5.3 or
Section 5.4 hereof or any Section of Article 6 hereof;
          (e) The Borrower or any Subsidiary shall fail to comply with any
agreement, covenant, condition, provision or term contained in the Loan
Documents (and such failure shall not constitute an Event of Default under any
of the other provisions of this Section 7.1) and such failure to comply shall
continue for 30 calendar days after notice thereof to the Borrower by the Agent;
          (f) The Borrower or any Subsidiary shall become insolvent or shall
generally not pay its debts as they mature or shall apply for, shall consent to,
or shall acquiesce in the appointment of a custodian, trustee or receiver of the
Borrower or such Subsidiary or for a substantial part of the property thereof
or, in the absence of such application, consent or acquiescence, a custodian,
trustee or receiver shall be appointed for the Borrower or any Subsidiary or for
a substantial part of the property thereof and shall not be discharged within
30 days;
          (g) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by or
against the Borrower or any Subsidiary, and, if instituted against the Borrower
or any Subsidiary, shall have a been consented to or acquiesced to by the
Borrower or any such Subsidiary, or shall remain undismissed for 30 days, or an
order for relief shall have been entered against the Borrower or any such
Subsidiary, or the Borrower or any Subsidiary shall take any corporate action to
approve institution of, or acquiescence in, such a proceeding;
          (h) Any dissolution or liquidation proceeding shall be instituted by
or against the Borrower or any Subsidiary and, if instituted against the
Borrower or any such Subsidiary, shall be consented to or acquiesced in by the
Borrower or such Subsidiary or shall remain for 30 days undismissed, or the
Borrower or any Subsidiary shall take any corporate action to approve
institution of, or acquiescence in, such a proceeding;
          (i) A judgment, writ, warrant for attachment, executions or similar
process for the payment of money in excess of the sum of (1) an amount in any
individual case in excess of $500,000 or (2) an amount in the aggregate at any
time in excess of $1,000,000 (in either case to the extent not adequately
covered by insurance as to which the insurance company has

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acknowledged coverage) shall be rendered against the Borrower or any Subsidiary
and the Borrower or such Subsidiary shall not discharge the same or provide for
its discharge in accordance with its terms, or procure a stay of execution
thereof, prior to any execution on such judgments by such judgment creditor,
within 30 days from the date of entry thereof, and within said period of
30 days, or such longer period during which execution of such judgment shall be
stayed, appeal therefrom and cause the execution thereof to be stayed during
such appeal;
          (j) The institution by the Borrower or any ERISA Affiliate of steps to
terminate any Plan if in order to effectuate such termination, the Borrower or
any ERISA Affiliate would be required to make a contribution to such Plan, or
would incur a liability or obligation to such Plan, in excess of $250,000, or
the institution by the PBGC of steps to terminate any Plan;
          (k) The maturity of any Debt (excluding accounts payable) of the
Borrower or any Subsidiary (other than Obligations under the Loan Documents) in
excess of $500,000 shall be accelerated, or the Borrower or any Subsidiary shall
fail to pay any such Debt when due or, in the case of such Debt payable on
demand, when demanded, or any event shall occur or condition shall exist and
shall continue for more than the period of grace, if any, applicable thereto and
shall have the effect of causing, or permitting (any required notice having been
given and grace period having expired) the holder of any such Debt or any
trustee or other Person acting on behalf of such holder to cause, such Debt to
become due prior to its stated maturity or to realize upon any collateral given
as security therefor; or
          (l) A Material Adverse Effect has occurred.
     Section 7.2 Remedies. If (a) any Event of Default described in
Sections 7.1(f), (g) or (h) shall occur with respect to the Borrower or any
Subsidiary, the Revolving Loan Commitment (including, without limitation, each
Lender’s Commitment thereunder) shall automatically terminate and the
outstanding unpaid principal balance of the Loans, the accrued interest thereon
and all other obligations of the Borrower or any Subsidiary to the Agent under
the Loan Documents shall automatically become immediately due and payable
without presentment, demand, protest or notice of any kind; or (b) any other
Event of Default shall occur and be continuing, then the Agent may, and at the
request of Required Lenders Agent shall (i) declare the Revolving Loan
Commitment (including, without limitation, each Lender’s Commitment thereunder)
terminated, whereupon the Revolving Loan Commitment shall terminate, and/or
(ii) declare that the outstanding unpaid principal balance of the Loans, the
accrued and unpaid interest thereon and all other Obligations of the Borrower or
any Subsidiary to the Agent and the Lenders under the Loan Documents to be
forthwith due and payable, whereupon the Loans, all accrued and unpaid interest
thereon and all such Obligations shall immediately become due and payable, in
each case without demand or notice of any kind, all of which are hereby
expressly waived, anything in this Agreement or in the Notes to the contrary
notwithstanding. In addition, without limiting the foregoing (y) upon the
occurrence of any Default, Agent may, and at the request of Required Lenders
Agent shall, without notice or demand, immediately suspend all or any portion of
Lenders’ obligations to make additional Loans or issue or cause to be issued
Letters of Credit under the Revolving Loan Commitment; provided that if the
subject condition or event is waived by Required Lenders or cured within any
applicable grace or cure period, the Revolving Loan Commitment shall be
reinstated; and (z) upon the occurrence of any Event of Default or at any time
thereafter until such Event of

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Default is cured to the written satisfaction of the Agent, the Agent may take
any or all of the following actions: (i) exercise all rights and remedies
available under any instrument, document or agreement between the Borrower or
any Subsidiary and the Agent; and (ii) enforce all rights and remedies under any
applicable law.
     Section 7.3 Offset. In addition to the remedies set forth in Section 7.2,
upon the occurrence of any Event of Default or at any time thereafter while such
Event of Default continues, each Lender is hereby authorized by Borrower at any
time or from time to time, with reasonably prompt subsequent notice to Borrower
(any prior or contemporaneous notice being hereby expressly waived) to set off
and to appropriate and to apply any and all (A) balances held by such Lender at
any of its offices for the account of Borrower or any of its Subsidiaries
(regardless of whether such balances are then due to Borrower or its
Subsidiaries), and (B) other property at any time held or owing by such Lender
to or for the credit or for the account of Borrower or any of its Subsidiaries,
against and on account of any of the Obligations; except that no Lender shall
exercise any such right without the prior written consent of Agent. Any Lender
exercising a right to set off shall purchase for cash (and the other Lenders
shall sell) interests in each of such other Lender’s Pro Rata Share of the
Obligations as would be necessary to cause all Lenders to share the amount so
set off with each other Lender in accordance with their respective Pro Rata
Shares. Borrower agrees, to the fullest extent permitted by law, that any Lender
may exercise its right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and upon doing so shall deliver such amount so set
off to the Agent for the benefit of all Lenders in accordance with their Pro
Rata Shares.
ARTICLE 8.
AGENCY
     Section 8.1 Appointment of Agent.
          (a) Each Lender hereby designates Wells Fargo as Agent to act as
herein specified. Each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and the Notes and
any other instruments and agreements referred to herein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. Except as otherwise provided
herein, Agent shall hold any collateral and all payments of principal, interest,
fees, charges and expenses received pursuant to this Agreement or any of the
Loan Documents for the benefit of Lenders. Agent may perform any of its duties
hereunder by or through its agents or employees.
          (b) The provisions of this Article 8 are solely for the benefit of
Agent and Lenders, and Borrower shall not have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, Agent shall act solely as agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Borrower or any Subsidiaries.
     Section 8.2 Nature of Duties of Agent. Agent shall not have duties,
obligations or responsibilities except those expressly set forth in this
Agreement and the Loan Documents. Neither Agent nor any of its officers,
directors, employees or agents shall be liable for any action

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taken or omitted by it as such hereunder or in connection herewith, unless
caused by its or their gross negligence or willful misconduct. The duties of
Agent shall be mechanical and administrative in nature; Agent shall not have by
reason of this Agreement or the Loan Documents a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or the Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Agreement or the Loan Documents except
as expressly set forth herein.
     Section 8.3 Lack of Reliance on Agent.
          (a) Independently and without reliance upon Agent, each Lender, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial or other condition and affairs of
Agent and any other Lender in connection with the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the creditworthiness
of Agent and any other Lender, and, except as expressly provided in this
Agreement, Agent shall not have any duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the initial Revolving Loans, Draw Loans and the Term Loans or at any
time or times thereafter.
          (b) Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement or the Loan Documents
or any notes or the financial or other condition of Borrower or any of its
Subsidiaries. Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or the Loan Documents, or the financial condition of Borrower or
any Subsidiary, or the existence or possible existence of any Event of Default.
     Section 8.4 Certain Rights of Agent. Agent shall have the right to request
instructions from Required Lenders or all Lenders, as applicable, pursuant to
this Agreement, by notice to each Lender. If Agent shall request instructions
from Required Lenders or all Lenders, as applicable, with respect to any act or
action (including the failure to act) in connection with this Agreement, Agent
shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from Required Lenders or all
Lenders, as applicable, and Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting hereunder in accordance with the instructions of Required
Lenders or all Lenders, as applicable.
     Section 8.5 Reliance by Agent. Agent shall be under no duty to examine,
inquire into, or pass upon the validity, effectiveness or genuineness of this
Agreement, any of the Loan Documents or any instrument, document or
communication furnished pursuant hereto or thereto or in connection herewith or
therewith. Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, radiogram, order, electronic
mail or other

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documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person. Agent
may consult with legal counsel (including counsel for Borrower with respect to
matters concerning Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
     Section 8.6 Indemnification of Agent. To the extent Agent is not promptly
reimbursed and indemnified by Borrower, each Lender will reimburse and indemnify
Agent, in proportion to its Pro Rata Share, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against Agent in performing its duties hereunder, in any way relating to or
arising out of this Agreement; provided, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent’s gross
negligence or willful misconduct. If any indemnity furnished to Agent for any
purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnities and cease to do, or not commence, the
acts to be indemnified against, even if so directed by Required Lenders or all
Lenders, as applicable, until such additional indemnification is provided. The
obligations of Lenders under this Section 8.6 shall survive the payment in full
of the Obligations, any resignation by Agent and the termination of this
Agreement.
     Section 8.7 Agent in its Individual Capacity. With respect to the Loans
made by it pursuant hereto, Agent shall have the same rights and powers
hereunder as any other Lender or holder of a note or participation interest and
may exercise the same as though it was not performing the duties specified
herein; and the terms “Lenders,” “Required Lenders” or any similar terms shall,
unless the context clearly otherwise indicates, include Agent in its individual
capacity. Agent may accept deposits from, lend money to, acquire equity
interests in, and generally engage in any kind of banking, trust, financial
advisor or other business with Borrower or any Subsidiaries or any Affiliate of
Borrower or any of the Subsidiaries as if it were not performing the duties
specified herein, and may accept fees and other consideration from Borrower or
any Subsidiaries for services in connection with this Agreement and otherwise
without having to account for the same to Lenders, to the extent such activities
are not in contravention of the terms of this Agreement.
     Section 8.8 Successor Agent.
          (a) Agent may, upon thirty (30) days’ notice to Lenders and Borrower,
resign at any time (effective upon the appointment of a successor Agent pursuant
to the provisions of this Section 8.8 by giving written notice thereof to
Lenders and Borrower. Upon any such resignation, Required Lenders shall have the
right, upon five (5) days’ notice, to appoint a successor Agent which, if no
Default is continuing, is acceptable to Borrower (such approval not to be
unreasonably withheld). If no successor Agent shall have been so appointed by
Required Lenders and approved by Borrower, if applicable, and accepted such
appointment, within thirty (30) days after the retiring Agent’s giving of notice
of resignation, then, upon five (5) days’ notice, the retiring Agent may, on
behalf of Lenders, appoint a successor Agent, which shall be a

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bank or a trust company or other financial institution which maintains an office
in the United States, or a commercial bank organized under the laws of the
United States of America or of any State thereof.
          (b) Upon the acceptance of any appointment as an Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Article 8 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was an Agent under this Agreement.
     Section 8.9 Amendments, Consents and Waivers.
          (a) Except as otherwise provided in this Section 8.9 or in
Section 11.1 and except as to matters set forth in other subsections hereof or
in any other Loan Document as requiring only Agent’s consent, the consent of
Required Lenders and Borrower will be required to amend, modify, terminate, or
waive any provision of this Agreement or any of the other Loan Documents. The
consent of Borrower shall constitute consent of Borrower and each of its
Subsidiaries.
          (b) In the event Agent requests the consent of a Lender and does not
receive a written consent or denial thereof within ten (10) Business Days after
such Lender’s receipt of such request, then such Lender will be deemed to have
denied the giving of such consent.
          (c) If, in connection with any proposed amendment, modification,
termination or waiver of any of the provisions of this Agreement requiring the
consent or approval of all Lenders under Section 11.1, the consent of Required
Lenders is obtained but the consent of one or more other Lenders whose consent
is required is not obtained, then Borrower shall have the right, so long as all
such non-consenting Lenders are either replaced or prepaid as described in
clauses (A) or (B) below, to either (A) replace the non-consenting Lenders with
one or more Replacement Lenders pursuant to Section 2.10(a) so long as each such
Replacement Lender consents to the proposed amendment, modification, termination
or waiver or (B) prepay in full the Obligations of the non-consenting Lenders
and terminate the non-consenting Lenders’ Commitment in accordance with
Section 2.10(b).
     Section 8.10 Actions with Respect to Defaults. In addition to Agent’s right
(where applicable) to take actions on its own accord as permitted under this
Agreement, Agent shall take such action with respect to an Event of Default as
shall be directed by Required Lenders or all Lenders, as applicable, under this
Agreement; provided, that until Agent shall have received such directions, Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Event of Default as it shall deem advisable
and in the best interests of Lenders. No Lender shall have any right
individually to enforce or seek to enforce this Agreement or any Loan Document
or to realize upon any collateral, unless instructed to do so by Agent.

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     Section 8.11 Delivery of Information. Agent shall not be required to
deliver to any Lender originals or copies of any documents, instruments,
notices, communications or other information received by Agent from Borrower or
any of the Subsidiaries, Required Lenders, any Lender or any other Person under
or in connection with this Agreement or any Loan Document except: (i) as
specifically provided in this Agreement or any Loan Document and (ii) as
specifically requested from time to time in writing by any Lender with respect
to a specific document, instrument, notice or other written communication
received by and in the possession of Agent at the time of receipt of such
request and then only in accordance with such specific request.
     Section 8.12 Demand. Subject to the terms of this Agreement, Agent shall
make demand for repayment by Borrower of all amounts owing by Borrower
hereunder, after the occurrence of an Event of Default, upon the written request
of Required Lenders. Agent shall make such demand in such manner as it deems
appropriate, in its sole discretion, to effectuate the request of the Required
Lenders. Nothing contained herein shall limit the discretion of Agent to take
reserves, or to exercise any other discretion granted to Agent in this
Agreement.
     Section 8.13 Notice of Default. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default or any Default, except with
respect to Events of Default arising as a result of Borrower’s failure to pay
principal, interest or fees required to be paid to Agent for the benefit of
Lenders, unless Agent shall have received written notice from a Lender or
Borrower describing such Event of Default or Default, and which identifies such
event as a “notice of default”. Upon receipt of any such notice or Agent
becoming aware of Borrower’s failure to pay principal, interest or fees required
to be paid to Agent for the benefit of Lenders, Agent will notify each Lender of
such receipt or event.
     Section 8.14 Arranger. Wells Fargo as the sole Lead Arranger shall not have
any duties or responsibilities hereunder in its capacity as such.
ARTICLE 9.
FUNDING OF ADVANCES, RECEIPT OF PAYMENTS.
     Section 9.1 Funding of Advances/Settlement. The following procedures shall
be followed by the Agent and the Lenders upon receipt by Agent of a request for
an Advance from Borrower:
          (a) Upon receipt of a request for an Advance from the Borrower, the
Agent shall promptly provide each Lender notice of such request and the amount
of each Lender’s Pro Rata Share thereof.
          (b) Agent may, on behalf of Lenders, disburse funds to the Borrower
for Loans requested. Each Lender shall reimburse Agent on demand for all funds
disbursed on its behalf by Agent, or if Agent so requests, each Lender will
remit to Agent its Pro Rata Share of any Loan before Agent disburses same to any
Borrower. If Agent elects to require that each Lender make funds available to
Agent prior to disbursement by Agent to such Borrower, Agent shall advise each
Lender by telephone or fax of the amount of such Lender’s Pro Rata Share of the
Loan requested by any Borrower no later than 3:00 p.m. (Minneapolis time) on the
scheduled funding date applicable thereto, and each such Lender shall pay Agent
such Lender’s Pro Rata Share of such requested Loan, in same day funds, by wire
transfer to Agent’s account on such

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scheduled funding date. If any Lender fails to pay its Pro Rata Share within one
(1) Business Day after Agent’s demand, Agent shall promptly notify the Borrower,
and the Borrower shall immediately repay such amount to Agent. Any repayment
required pursuant to this Section 9.1(b) shall be without premium or penalty.
Nothing in this Section 9.1(b) or elsewhere in this Agreement or the other Loan
Documents, including the remaining provisions of Article 9, shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its Commitment hereunder or to prejudice any
rights that Agent or any Borrower may have against any Lender as a result of any
default by such Lender hereunder.
          (c) At least once each calendar week or more frequently at Agent’s
election (each, a “Settlement Date”), Agent shall advise each Lender by
telephone or fax of the amount of such Lender’s Pro Rata Share of principal,
interest and fees paid for the benefit of Lenders with respect to each
applicable Loan. Provided that each Lender has funded all payments required to
be made by it and funded all purchases of participations required to be funded
by it under this Agreement and the other Loan Documents as of such Settlement
Date, Agent shall pay to each Lender such Lender’s Pro Rata Share of principal,
interest and fees paid by the Borrower since the previous Settlement Date for
the benefit of such Lender on the Loans held by it. Such payments shall be made
by wire transfer to such Lender not later than 3:00 p.m. (Minneapolis time) on
the next Business Day following each Settlement Date. To the extent that any
Lender (a “Non-Funding Lender”) has failed to fund all such payments or failed
to fund the purchase of all such participations required to be funded by such
Lender pursuant to this Agreement, Agent shall be entitled to set off the
funding shortfall against that Non-Funding Lender’s Pro Rata Share of all
payments received from Borrower.
     Section 9.2 Availability of Lender’s Pro Rata Share. Agent may assume that
each Lender will make its Pro Rata Share of each Loan available to Agent on each
funding date. If such Pro Rata Share is not, in fact, paid to Agent by such
Lender when due, Agent will be entitled to recover such amount on demand from
such Lender without setoff, counterclaim or deduction of any kind. If any Lender
fails to pay the amount of its Pro Rata Share forthwith upon Agent’s demand,
Agent shall promptly notify the Borrower and the Borrower shall immediately
repay such amount to Agent. Nothing in this Section 9.2 or elsewhere in this
Agreement or the other Loan Documents shall be deemed to require Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights that
any Borrower may have against any Lender as a result of any default by such
Lender hereunder. To the extent that Agent advances funds to any Borrower on
behalf of any Lender and is not reimbursed therefor on the same Business Day as
such advance is made, Agent shall be entitled to retain for its account all
interest accrued on such advance until reimbursed by the applicable Lender.
     Section 9.3 Return of Payments.
          (a) If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Agent from any Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.

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          (b) If Agent determines at any time that any amount received by Agent
under this Agreement must be returned to Borrower or any Subsidiary or paid to
any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to any Borrower or such other
Person, without setoff, counterclaim or deduction of any kind.
     Section 9.4 Non-Funding Lenders. The failure of any Non-Funding Lender to
make any Loan or any payment required by it hereunder, or to fund any purchase
of any participation to be made or funded by it on the date specified therefor
shall not relieve any other Lender (each such other Lender, an “Other Lender”)
of its obligations to make such loan or fund the purchase of any such
participation on such date, but neither any Other Lender nor Agent shall be
responsible for the failure of any Non-Funding Lender to make a loan, fund the
purchase of a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a “Lender” or a “Lender” (or be included in the
calculation of “Required Lenders” hereunder) for any voting or consent rights
under or with respect to any Loan Document.
ARTICLE 10.
ASSIGNMENTS AND PARTICIPATIONS.
     Section 10.1 Assignments.
          (a) Assignments. Each Lender may from time to time assign, subject to
the terms of an Assignment Certificate in substantially the form attached hereto
as Exhibit E (each an “Assignment Certificate”), its rights and delegate its
obligations under this Agreement to another Person, provided that (1) such
Lender (excluding Wells Fargo) shall first obtain the written consent of Agent
and prior to occurrence of an Event of Default, the Borrower, which consent
shall not be unreasonably withheld; (2) the Commitment of such Lender being
assigned shall in no event be less than the lesser of (a) $5,000,000 or (b) the
entire amount of the Commitment of the assigning Lender; and (3) upon the
consummation of each such assignment the assigning Lender shall pay Agent an
administrative fee of not less than $3,500. The administrative fee referred to
in clause (3) of the preceding sentence shall not apply to an assignment of
security interest in the Obligations as described in Section 10.3 below. In the
case of an assignment authorized under this Section 10.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were an initial Lender hereunder. The assigning
Lender shall be relieved of its obligations hereunder with respect to its
Commitment or assigned portions thereof. Borrower hereby acknowledges and agrees
that any assignment will give rise to a direct obligation of Borrower to the
assignee and that the assignee shall be considered to be a Lender hereunder.
          (b) Recording of Assignments. Agent shall maintain at its office in
Minneapolis, Minnesota a copy of each Assignment Certificate delivered to it and
a register for the recordation of the names and addresses of Lenders, and the
commitments of, and principal

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amount of the Loans owing to each Lender pursuant to the terms hereof from time
to time (the “Register”). The entries in the Register shall be presumptive
evidence of the amounts due and owing to Lender in the absence of manifest
error. Borrower, Agent and each Lender may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by Borrower and any Lender, at any reasonable time upon reasonable prior notice.
     (c) Acceptance of Assignment by Agent. Upon its receipt of a duly completed
Assignment Certificate executed by an assigning Lender and its assignee
(together with the Notes subject to such assignment) and the administrative fee
referred to above, Agent shall (subject to the consent of Agent to such
assignment, if required) (1) accept such Assignment Certificate; (2) record the
information contained therein in the Register and replace Schedule 1.1A; and
(3) give prompt notice thereof to Borrower and Lenders. Upon request by Agent,
Borrower shall promptly execute and deliver to Agent Note(s) evidencing the
Obligations owed by Borrower to the assignee and, if applicable, the assigning
Lender, after giving effect to the assignment. Agent shall cancel the Note(s)
delivered to it by the assigning Lender and deliver the new Note(s) to the
assignee and, unless the assigning Lender has assigned all of its interests
under this Agreement, the assigning Lender.
     Section 10.2 Participations. Any Lender may sell participations in all or
any part of its Commitment to another Person provided that such Lender
(excluding Wells Fargo) shall first obtain the prior written consent of Agent
and prior to occurrence of an Event of Default, the Borrower, which consent
shall not be unreasonably withheld. All amounts payable by Borrower hereunder
shall be determined as if that Lender had not sold such participation and the
holder of any such participation shall not be entitled to require such Lender to
take or omit to take any action hereunder except action directly effecting
(i) any reduction in the principal amount or interest rate payable with respect
to any Loan in which such holder participates; or (ii) any extension of the
Termination Date, the date on which any principal payment is due under any of
the Loans or the date fixed for any payment of interest payable with respect to
any Loan in which such holder participates. Borrower hereby acknowledge and
agree that any participation will give rise to a direct obligation of Borrower
to the participant, and the participant shall for purposes of Section 2.7,
Section 7.3 and Section 11.2 be considered to be a Lender hereunder.
     Section 10.3 Security Interests in Obligations; Assignments to Affiliates.
Notwithstanding any other provision of this Agreement, any Lender may at any
time, following written notice to Agent, (1) pledge the Obligations held by it
or create a security interest in all or any portion of its rights under this
Agreement or the other Loan Documents in favor of any Person; provided, however,
that (a) no such pledge or grant of security interest to any Person shall
release such Lender from its obligations hereunder or under any other Loan
Document and (b) the acquisition of title to such Lender’s Obligations pursuant
to any foreclosure or other exercise of remedies by such Person shall be subject
to the provisions of this Agreement and the other Loan Documents in all respects
including, without limitation, any consent required by Section 10.1(a); and
(2) assign all or any portion of its funded loans to an Affiliate of such Lender
which is at least 50% owned by such Lender or its parent company, to one or more
other Lenders or to a Related Fund. For purposes of this paragraph, a “Related
Fund” shall mean, with respect to any Lender, a fund or other investment vehicle
that invests in commercial loans and is managed by such Lender or by the same
investment advisor that manages such Lender or by an Affiliate of such
investment advisor.

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     Section 10.4 Other Matters. Except as otherwise provided in this
Article 10, no Lender shall, as between Borrower and that Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer
or negotiation of, or granting of a participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender. Each Lender may
furnish any information concerning any Borrower and its Subsidiaries in the
possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants). Borrower agrees that it will
use commercially reasonable efforts to assist and cooperate with Agent and any
Lender in any manner reasonably requested by Agent or such Lender (provided that
such request does not violate any duty of Borrower under its existing licensing
agreements or under existing law) to effect the sale of a participation or an
assignment described above, including without limitation assistance in the
preparation of appropriate disclosure documents or placement memoranda.
Notwithstanding anything contained in this Agreement to the contrary, so long as
the Required Lenders shall remain capable of making LIBOR Advances, no Person
shall become a Lender hereunder unless such Person shall also be capable of
making LIBOR Advances.
ARTICLE 11.
MISCELLANEOUS
     Section 11.1 Waivers and Amendments. No failure on the part of the Agent or
the holder(s) of the Notes to exercise and no delay in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any power or right preclude
any other or further exercise thereof or the exercise of any other power or
right. The remedies herein and in any other instrument, document or agreement
delivered or to be delivered to the Agent hereunder or in connection herewith
are cumulative and not exclusive of any remedies provided by law. No notice to
or demand on the Borrower not required hereunder or under the Notes shall in any
event entitle the Borrower to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the right of the Agent or the
holder(s) of the Notes to any other or further action in any circumstances
without notice or demand. No amendment, modification or waiver of any provision
of the Loan Documents or consent to any departure by the Borrower therefrom
shall be effective unless the same shall be in writing and signed by the Agent,
and then such amendment, modifications, waiver or consent shall be effective
only in the specific instances and for the specific purpose for which given.
     Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement, the Notes or any of
the other Loan Documents, or consent to any departure by Borrower or any
Subsidiary therefrom (each a “Loan Party”), shall in any event be effective
unless the same shall be in writing and signed by Required Lenders (or Agent, if
expressly set forth herein, in any Note or in any other Loan Document) and the
applicable Loan Party; provided, that no amendment, modification, termination or
waiver shall, (1) increase the amount of any Lender’s Commitment unless in
writing and signed by the such Lender, and (2) unless in writing and signed by
all Lenders, do any of the following: (a) increase the Revolving Loan Commitment
(except as expressly permitted by Section 2.1(a)(iii)); (b) reduce

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the principal of or the rate of interest on any Loan or the fees payable with
respect to any Loan or Letter of Credit; (c) extend the Termination Date or any
date fixed for any payment of interest or fees; (d) change the definition of the
term Required Lenders or the percentage of Lenders which shall be required for
Lenders to take any action hereunder; (e) amend or waive this Section 11.1 or
the definitions of the terms used in this Section 11.1 insofar as the
definitions affect the substance of this Section 11.1; and provided, further,
that no amendment, modification, termination or waiver affecting the rights or
duties of Agent under any Loan Document shall in any event be effective, unless
in writing and signed by Agent, in addition to all Lenders required to take such
action. Notwithstanding anything to the contrary in this Section 11.1, Agent and
Borrower may execute amendments to this Agreement and the other Loan Documents
for the purpose of correcting typographical errors without the consent of
Lenders. Each amendment, modification, termination or waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Borrower or any other Loan Party in any case
shall entitle Borrower or any other Loan Party to any other or further notice or
demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 11.1
shall be binding upon each holder of the Notes at the time outstanding, each
future holder of the Notes and, if signed by a Loan Party, on such Loan Party
     Section 11.2 Indemnities. Borrower agrees to indemnify, pay, and hold
Agent, each Lender (individually and in their capacity as Issuing Lenders) and
their respective officers, directors, employees, agents, and attorneys (the
“Indemnitees”) harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs and
expenses (including all reasonable fees and expenses of counsel to such
Indemnitees) of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against the Indemnitee as a result of such Indemnitees being a
party to this Agreement or the transactions consummated pursuant to this
Agreement or otherwise relating to any of the Related Transactions; provided
that Borrower shall have no obligation to an Indemnitee hereunder with respect
to liabilities to the extent resulting from the gross negligence or willful
misconduct of that Indemnitee as determined by a court of competent
jurisdiction. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower agrees to make the maximum contribution
to the payment and satisfaction thereof which is permissible under applicable
law. This subsection and other indemnification provisions contained within the
Loan Documents shall survive the termination of this Agreement.
     Section 11.3 Notices.
          (a) Except as otherwise provided herein, including without limitation
1.1(b), all notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered, or three Business Days after being deposited in the mail,
postage prepaid, or, in the case of telecopy notice, when received, addressed to
such party at the address specified on the signature page hereof, or at such
other address as such party shall have specified to the other party hereto in
writing; provided, however, that any notice, demand or request to the Agent
shall be deemed to have been given only when received by the Agent.

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          (b) Notices and other communications to the Agent or the Lenders
hereunder may be delivered or furnished by electronic communications pursuant to
procedures approved by the Agent; provided that the foregoing shall not apply to
notices pursuant to Article 2 unless otherwise agreed by the Agent and each
Lender. The Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications. Additionally, if the
Agent agrees to accept a notice pursuant to Article 2, including any notice of
borrowing, notice of interest period selection or notice of loan type
conversion, made by e-mail transmission, such e-mail transmission shall be
binding on the Borrower whether or not written confirmation is sent by the
Borrower or requested by the Agent, and the Agent may act prior to the receipt
of any requested written confirmation, without any liability whatsoever, based
upon e-mail notice believed by the Agent in good faith to be from the Borrower
or its agents. The Agent’s records of the terms of any e-mail notice pursuant to
Article 2 shall be conclusive on the Borrower in the absence of gross negligence
or willful misconduct on the part of the Agent in connection therewith.
          (c) The Borrower agrees that the Agent may make any material delivered
by the Borrower to the Agent, as well as any amendments, waivers, consents, and
other written information, documents, instruments and other materials relating
to the Borrower or any of its Affiliates, or any other materials or matters
relating to this Agreement, the other Loan Documents or any of the transactions
contemplated hereby or thereby (collectively, the “Communications”) available to
the Lenders by posting such notices on an electronic delivery system (which may
be provided by the Agent, an Affiliate, or any Person that is not an Affiliate
of the Agent), such as IntraLinks, or a substantially similar electronic system
that requires passwords for access and takes other customary measures with
respect to confidentiality and security (the “Platform”). The Borrower
acknowledges that (i) the distribution of material through an electronic medium
is not necessarily secure and that there are confidentiality and other risks
associated with such distribution, (ii) the Platform is provided “as is” and “as
available” and (iii) neither the Agent nor any of its Affiliates represents or
warrants the accuracy, completeness, timeliness, sufficiency or sequencing of
the Communications posted on the Platform. The Agent and its Affiliates
expressly disclaim with respect to the Platform any liability for errors in
transmission, incorrect or incomplete downloading, delays in posting or
delivery, or problems accessing the Communications posted on the Platform and
any liability for any losses, costs, expenses or liabilities that may be
suffered or incurred in connection with the Platform, except to the extent any
of the foregoing liabilities are caused by the gross negligence or willful
misconduct of the Agent or any of its Affiliates. No warranty of any kind,
express, implied or statutory, including, without limitation, any warranty of
merchantability, fitness for a particular purpose, non-infringement of third
party rights or freedom from viruses or other code defects, is made by the Agent
or any of its Affiliates in connection with the Platform.
          (d) Each Lender agrees that notice to it (as provided in the next
sentence) (a “Notification”) specifying that any Communication has been posted
to the Platform shall for purposes of this Agreement constitute effective
delivery to such Lender of such information, documents or other materials
comprising such Communication. Each Lender agrees (i) to notify, on or before
the date such Lender becomes a party to this Agreement, the Agent in writing of
such Lender’s e-mail address to which a Notification may be sent (and from time
to time thereafter to ensure that the Agent has on record an effective e-mail
address for such Lender) and (ii) that any Notification may be sent to such
e-mail address.

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     Section 11.4 Successors. This Agreement shall be binding upon the Borrower
and the Agent and their respective successors and assigns, and shall inure to
the benefit of the Borrower and the Agent and the successors and assigns of the
Agent. The Borrower shall not assign its rights or duties hereunder without the
written consent of the Agent.
     Section 11.5 Participations and Information. The Agent may sell
participation interests in any or all of the Loans to any Person. The Agent may
furnish any information concerning the Borrower in the possession of the Agent
from time to time to participants and prospective participants and may furnish
information in response to credit inquiries consistent with general banking
practice.
     Section 11.6 Treatment of Certain Information; Confidentiality. Agent and
each Lender agrees to maintain the confidentiality of the Information, except
that Information may be disclosed: (a) to its Affiliates and to its Affiliates’
respective partners, directors, officers, employees, agents, advisors and
representatives; (b) to the extent requested by any regulatory authority,
purporting to have jurisdiction over it; (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process;
(d) to any other party hereto; (e) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder; (f) subject to an agreement containing
provisions substantially the same as those contained in this Section 11.6 to any
assignee of or Participant in, or any prospective Lender, assignee of, or
Participant in, any of its rights or obligations under this Agreement; (g) with
the consent of Borrower; or (h) to the extent such Information becomes publicly
available other than as a result of a breach of this Section 11.6 or becomes
available to Agent, any Lender or any of their respective Affiliates on a
non-confidential basis from a source other than the Borrower. As used herein,
“Information” means all information (including financial information) received
from Borrower or any Subsidiaries relating to Borrower or any Subsidiary or any
of their respective businesses, other than any such information that is
available to Agent or any Lender on a non-confidential basis, and not in
contravention of this Section 11.6, prior to disclosure by Borrower or any
Subsidiary thereof. Any Person required to maintain the confidentiality of
Information as provided in this Section 11.6 shall be considered to have
complied with its obligation to do so if such person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
     Section 11.7 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Agent or any Lender to exercise, nor any partial
exercise of, any power, right or privilege hereunder or under any other Loan
Documents shall impair such power, right, or privilege or be construed to be a
waiver of any Default or Event of Default. All rights and remedies existing
hereunder or under any other Loan Document are cumulative to and not exclusive
of any rights or remedies otherwise available.

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     Section 11.8 Marshaling; Payments Set Aside. Neither Agent nor any Lender
shall be under any obligation to marshal any assets in payment of any or all of
the Obligations. To the extent that Borrower makes payment(s) or Agent enforces
its Liens or Agent or any Lender exercises its right of set-off, and such
payment(s) or the proceeds of such enforcement or set-off is subsequently
invalidated, declared to be fraudulent or preferential, set aside, or required
to be repaid by anyone, then to the extent of such recovery, the Obligations or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or set-off had not occurred.
     Section 11.9 Lenders’ Obligations Several; Independent Nature of Lenders’
Rights. The obligation of each Lender hereunder is several and not joint and no
Lender shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
     Section 11.10 Severability. Any provision of the Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
     Section 11.11 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the Borrower has
one or more Subsidiaries.
     Section 11.12 Captions. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
     Section 11.13 Entire Agreement. This Agreement, and the Notes embody the
entire agreement and understanding between the Borrower and the Agent with
respect to the subject matter hereof and thereof. This Agreement supersedes all
prior agreements (including the Existing Credit Agreement) and understandings
relating to the subject matter hereof.
     Section 11.14 Counterparts. This Agreement may be executed in any number of
counterparts and by facsimile or e-mail transmission, all of which taken
together shall constitute one and the same instrument, and either of the parties
hereto may execute this Agreement by signing any such counterpart.
     Section 11.15 Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
OF THIS AGREEMENT, THE NOTES AND EACH OF THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS.

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     Section 11.16 Consent to Jurisdiction. AT THE OPTION OF THE AGENT, THIS
AGREEMENT AND THE NOTES MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT IN THE EVENT THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE
OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
     Section 11.17 Waiver of Jury Trial. THE BORROWER WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
(a) UNDER THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
     Section 11.18 Borrower Acknowledgements. The Borrower hereby acknowledges
that (a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents, (b) the Agent has no
fiduciary relationship to the Borrower, the relationship being solely that of
debtor and creditor, (c) no joint venture exists between the Borrower and the
Agent, and (d) the Agent undertakes no responsibility to the Borrower to review
or inform the Borrower of any matter in connection with any phase of the
business or operations of the Borrower and the Borrower shall rely entirely upon
its own judgment with respect to its business, and any review, inspection or
supervision of, or information supplied to, the Borrower by the Agent is for the
protection of the Agent and neither the Borrower nor any third party is entitled
to rely thereon.
     Section 11.19 Arbitration
          (a) Arbitration. The parties hereto agree, upon demand by any party,
to submit to binding arbitration all claims, disputes and controversies between
or among them (and their respective employees, officers, directors, attorneys,
and other agents), whether in tort, contract or otherwise in any way arising out
of or relating to (i) any credit subject hereto, or any of the Loan Documents,
and their negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit.
          (b) Governing Rules. Any arbitration proceeding will (i) proceed in a
location in Minnesota selected by the American Arbitration Association (“AAA”);
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any

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conflicting choice of law provision in any of the documents between the parties;
and (iii) be conducted by the AAA, or such other administrator as the parties
shall mutually agree upon, in accordance with the AAA’s commercial dispute
resolution procedures, unless the claim or counterclaim is at least
$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which
case the arbitration shall be conducted in accordance with the AAA’s optional
procedures for large, complex commercial disputes (the commercial dispute
resolution procedures or the optional procedures for large, complex commercial
disputes to be referred to herein, as applicable, as the “Rules”). If there is
any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law.
          (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.
          (d) Arbitrator Qualifications and Powers. Any arbitration proceeding
in which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Minnesota or a neutral retired judge of the
state or federal judiciary of Minnesota, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator’s discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Minnesota and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Minnesota Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

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          (e) Discovery. In any arbitration proceeding, discovery will be
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date. Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject
to final determination by the arbitrator upon a showing that the request for
discovery is essential for the party’s presentation and that no alternative
means for obtaining information is available.
          (f) Class Proceedings and Consolidations. No party hereto shall be
entitled to join or consolidate disputes by or against others in any
arbitration, except parties who have executed any Loan Document, or to include
in any arbitration any dispute as a representative or member of a class, or to
act in any arbitration in the interest of the general public or in a private
attorney general capacity.
          (g) Payment Of Arbitration Costs And Fees. The arbitrator shall award
all costs and expenses of the arbitration proceeding.
          (h) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.
[Signature page follows.]

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     In Witness Whereof, the parties hereto have caused this Credit Agreement to
be executed as of the date first above.

            BORROWER:

SurModics, Inc.
      By:   /s/ Philip D. Ankeny         Name:   Philip D. Ankeny       
Title:   Senior Vice President and Chief Financial Officer         Address: 
9924 West 74th Street
Eden Prairie, MN 55344-3523         E-mail:   pankeny@surmodics.com      
Facsimile:  952/345-3560       

            WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent and a Lender
      By:   /s/ Joshua D. Lucas         Name:   Joshua D. Lucas        Title:  
Relationship Manager         Address:  Regional Commercial Banking
MAC N9307-013
7900 Xerxes Avenue South
Bloomington, MN 55431         E-mail:   joshua.d.lucas@wellsfargo.com        
Facsimile:  612-316-1621    

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