Exhibit 10.1

 

EXECUTION VERSION

 

 

 

CREDIT AND SECURITY AGREEMENT

 

dated as of August 29, 2012

 

by and among

 

CARDIONET, INC.,

 

AGILITY CENTRALIZED RESEARCH SERVICES, INC.,

 

BIOTEL INC.,

 

BRAEMAR, INC.,

 

ECG SCANNING & MEDICAL SERVICES LLC, AND

 

CARDIOCORE LAB, INC.

 

each as Borrower, and collectively as Borrowers,

 

and

 

MIDCAP FINANCIAL, LLC,

 

as Administrative Agent and as a Lender,

 

and

 

THE ADDITIONAL LENDERS

 

FROM TIME TO TIME PARTY HERETO

 

GRAPHIC [g194811kg01i001.jpg]

 

 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

ARTICLE 1 -DEFINITIONS

1

 

 

 

 

Section 1.1

 

Certain Defined Terms

1

 

 

 

 

Section 1.2

 

Accounting Terms and Determinations

25

 

 

 

 

Section 1.3

 

Other Definitional and Interpretive Provisions

25

 

 

 

 

Section 1.4

 

Time is of the Essence

26

 

 

 

 

ARTICLE 2 - LOANS

26

 

 

 

 

Section 2.1

 

Loans

26

 

 

 

 

Section 2.2

 

Interest, Interest Calculations and Certain Fees

28

 

 

 

 

Section 2.3

 

Notes

30

 

 

 

 

Section 2.4

 

[RESERVED]

30

 

 

 

 

Section 2.5

 

[RESERVED]

30

 

 

 

 

Section 2.6

 

General Provisions Regarding Payment; Loan Account

30

 

 

 

 

Section 2.7

 

Maximum Interest

31

 

 

 

 

Section 2.8

 

Taxes; Capital Adequacy

31

 

 

 

 

Section 2.9

 

Appointment of Borrower Representative

33

 

 

 

 

Section 2.10

 

Joint and Several Liability; Rights of Contribution; Subordination and
Subrogation

33

 

 

 

 

Section 2.11

 

Collections and Lockbox Account

35

 

 

 

 

Section 2.12

 

Termination; Restriction on Termination

37

 

 

 

 

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

38

 

 

 

 

Section 3.1

 

Existence and Power

38

 

 

 

 

Section 3.2

 

Organization and Governmental Authorization; No Contravention

38

 

 

 

 

Section 3.3

 

Binding Effect

39

 

 

 

 

Section 3.4

 

Capitalization

39

 

 

 

 

Section 3.5

 

Financial Information

39

 

 

 

 

Section 3.6

 

Litigation

39

 

 

 

 

Section 3.7

 

Ownership of Property

39

 

 

 

 

Section 3.8

 

No Default

39

 

 

 

 

Section 3.9

 

Labor Matters

39

 

i

--------------------------------------------------------------------------------

 

Table of Contents
(continued)

 

 

 

 

Page

 

 

 

 

Section 3.10

 

Regulated Entities

40

 

 

 

 

Section 3.11

 

Margin Regulations

40

 

 

 

 

Section 3.12

 

Compliance With Laws; Anti-Terrorism Laws

40

 

 

 

 

Section 3.13

 

Taxes

40

 

 

 

 

Section 3.14

 

Compliance with ERISA

41

 

 

 

 

Section 3.15

 

Consummation of Operative Documents; Brokers

41

 

 

 

 

Section 3.16

 

Related Transactions

41

 

 

 

 

Section 3.17

 

Material Contracts

41

 

 

 

 

Section 3.18

 

Compliance with Environmental Requirements; No Hazardous Materials

42

 

 

 

 

Section 3.19

 

Intellectual Property

43

 

 

 

 

Section 3.20

 

Solvency

43

 

 

 

 

Section 3.21

 

Full Disclosure

43

 

 

 

 

Section 3.22

 

Subsidiaries

43

 

 

 

 

ARTICLE 4 - AFFIRMATIVE COVENANTS

43

 

 

 

 

Section 4.1

 

Financial Statements and Other Reports

43

 

 

 

 

Section 4.2

 

Payment and Performance of Obligations

44

 

 

 

 

Section 4.3

 

Maintenance of Existence

45

 

 

 

 

Section 4.4

 

Maintenance of Property; Insurance

45

 

 

 

 

Section 4.5

 

Compliance with Laws and Material Contracts

46

 

 

 

 

Section 4.6

 

Inspection of Property, Books and Records

46

 

 

 

 

Section 4.7

 

Use of Proceeds

46

 

 

 

 

Section 4.8

 

Estoppel Certificates

47

 

 

 

 

Section 4.9

 

Notices of Litigation and Defaults

47

 

 

 

 

Section 4.10

 

Hazardous Materials; Remediation

47

 

 

 

 

Section 4.11

 

Further Assurances

48

 

 

 

 

Section 4.12

 

Right of First Refusal

49

 

 

 

 

Section 4.13

 

Power of Attorney

49

 

 

 

 

Section 4.14

 

Borrowing Base Collateral Administration

50

 

 

 

 

ARTICLE 5 - NEGATIVE COVENANTS

50

 

ii

--------------------------------------------------------------------------------

 

Table of Contents
(continued)

 

 

 

 

Page

 

 

 

 

Section 5.1

 

Debt; Contingent Obligations

50

 

 

 

 

Section 5.2

 

Liens

50

 

 

 

 

Section 5.3

 

Restricted Distributions

50

 

 

 

 

Section 5.4

 

Restrictive Agreements

51

 

 

 

 

Section 5.5

 

Payments and Modifications of Subordinated Debt

51

 

 

 

 

Section 5.6

 

Consolidations, Mergers and Sales of Assets; Change in Control

51

 

 

 

 

Section 5.7

 

Purchase of Assets, Investments

51

 

 

 

 

Section 5.8

 

Transactions with Affiliates

52

 

 

 

 

Section 5.9

 

Modification of Organizational Documents

52

 

 

 

 

Section 5.10

 

Modification of Certain Agreements

52

 

 

 

 

Section 5.11

 

Conduct of Business

52

 

 

 

 

Section 5.12

 

Lease Payments

52

 

 

 

 

Section 5.13

 

Limitation on Sale and Leaseback Transactions

52

 

 

 

 

Section 5.14

 

Deposit Accounts and Securities Accounts; Payroll and Benefits Accounts

53

 

 

 

 

Section 5.15

 

Compliance with Anti-Terrorism Laws

53

 

 

 

 

ARTICLE 6 —[RESERVED]

53

 

 

 

 

ARTICLE 7 - CONDITIONS

53

 

 

 

 

Section 7.1

 

Conditions to Closing

53

 

 

 

 

Section 7.2

 

Conditions to Each Loan

54

 

 

 

 

Section 7.3

 

Searches

55

 

 

 

 

Section 7.4

 

Post Closing Requirements

55

 

 

 

 

ARTICLE 8 —REGULATORY MATTERS

55

 

 

 

 

Section 8.1

 

Additional Defined Terms

55

 

 

 

 

Section 8.2

 

Representations and Warranties

56

 

 

 

 

Section 8.3

 

[RESERVED]

59

 

 

 

 

Section 8.4

 

Healthcare Operations

59

 

 

 

 

Section 8.5

 

Third Party Payor Programs

60

 

 

 

 

Section 8.6

 

Cures

60

 

iii

--------------------------------------------------------------------------------

 

Table of Contents
(continued)

 

 

 

 

Page

 

 

ARTICLE 9 - SECURITY AGREEMENT

60

 

 

 

 

Section 9.1

 

Generally

60

 

 

 

 

Section 9.2

 

Representations and Warranties and Covenants Relating to Collateral

60

 

 

 

 

ARTICLE 10 - EVENTS OF DEFAULT

64

 

 

 

 

Section 10.1

 

Events of Default

64

 

 

 

 

Section 10.2

 

Acceleration and Suspension or Termination of Revolving Loan Commitment

66

 

 

 

 

Section 10.3

 

UCC Remedies

66

 

 

 

 

Section 10.4

 

[RESERVED]

68

 

 

 

 

Section 10.5

 

Default Rate of Interest

68

 

 

 

 

Section 10.6

 

Setoff Rights

68

 

 

 

 

Section 10.7

 

Application of Proceeds

69

 

 

 

 

Section 10.8

 

Waivers

69

 

 

 

 

Section 10.9

 

Injunctive Relief

71

 

 

 

 

Section 10.10

 

Marshalling; Payments Set Aside

71

 

 

 

 

ARTICLE 11 - AGENT

71

 

 

 

 

Section 11.1

 

Appointment and Authorization

71

 

 

 

 

Section 11.2

 

Agent and Affiliates

72

 

 

 

 

Section 11.3

 

Action by Agent

72

 

 

 

 

Section 11.4

 

Consultation with Experts

72

 

 

 

 

Section 11.5

 

Liability of Agent

72

 

 

 

 

Section 11.6

 

Indemnification

72

 

 

 

 

Section 11.7

 

Right to Request and Act on Instructions

73

 

 

 

 

Section 11.8

 

Credit Decision

73

 

 

 

 

Section 11.9

 

Collateral Matters

73

 

 

 

 

Section 11.10

 

Agency for Perfection

73

 

 

 

 

Section 11.11

 

Notice of Default

74

 

 

 

 

Section 11.12

 

Assignment by Agent; Resignation of Agent; Successor Agent

74

 

 

 

 

Section 11.13

 

Payment and Sharing of Payment

75

 

iv

--------------------------------------------------------------------------------

 

Table of Contents
(continued)

 

 

 

 

Page

 

 

 

 

Section 11.14

 

Right to Perform, Preserve and Protect

77

 

 

 

 

Section 11.15

 

Additional Titled Agents

77

 

 

 

 

Section 11.16

 

Amendments and Waivers

78

 

 

 

 

Section 11.17

 

Assignments and Participations

78

 

 

 

 

Section 11.18

 

Funding and Settlement Provisions Applicable When Non-Funding Lenders Exist

81

 

 

 

 

Section 11.19

 

Buy-Out Upon Refinancing

82

 

 

 

 

Section 11.20

 

Definitions

82

 

 

 

 

ARTICLE 12 - MISCELLANEOUS

82

 

 

 

 

Section 12.1

 

Survival

82

 

 

 

 

Section 12.2

 

No Waivers

83

 

 

 

 

Section 12.3

 

Notices

83

 

 

 

 

Section 12.4

 

Severability

84

 

 

 

 

Section 12.5

 

Headings

84

 

 

 

 

Section 12.6

 

Confidentiality

84

 

 

 

 

Section 12.7

 

Waiver of Consequential and Other Damages

84

 

 

 

 

Section 12.8

 

GOVERNING LAW; SUBMISSION TO JURISDICTION

85

 

 

 

 

Section 12.9

 

WAIVER OF JURY TRIAL

85

 

 

 

 

Section 12.10

 

Publication; Advertisement

86

 

 

 

 

Section 12.11

 

Counterparts; Integration

86

 

 

 

 

Section 12.12

 

No Strict Construction

86

 

 

 

 

Section 12.13

 

Lender Approvals

86

 

 

 

 

Section 12.14

 

Expenses; Indemnity

87

 

 

 

 

Section 12.15

 

[RESERVED]

88

 

 

 

 

Section 12.16

 

Reinstatement

88

 

 

 

 

Section 12.17

 

Successors and Assigns

89

 

 

 

 

Section 12.18

 

USA PATRIOT Act Notification

89

 

v

--------------------------------------------------------------------------------

 

CREDIT AND SECURITY AGREEMENT

 

THIS CREDIT AND SECURITY AGREEMENT (as the same may be amended, supplemented,
restated or otherwise modified from time to time, the “Agreement”) is dated as
of August 29, 2012 by and among CARDIONET, INC., a Delaware corporation, AGILITY
CENTRALIZED RESEARCH SERVICES, INC., a Minnesota corporation, BIOTEL INC., a
Minnesota corporation, BRAEMAR, INC., a North Carolina corporation, ECG
SCANNING & MEDICAL SERVICES LLC, a Delaware limited liability company,
CARDIOCORE LAB, INC., a Delaware corporation and successor by merger to Cardinal
Merger Sub, Inc. (a Delaware corporation) and any additional borrower that may
hereafter be added to this Agreement (each individually as a “Borrower”, and
collectively as “Borrowers”), MIDCAP FINANCIAL, LLC, a Delaware limited
liability company, individually as a Lender, and as Agent, and the financial
institutions or other entities from time to time parties hereto, each as a
Lender.

 

RECITALS

 

Borrowers have requested that Lenders make available to Borrowers the financing
facilities as described herein.  Lenders are willing to extend such credit to
Borrowers under the terms and conditions herein set forth.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, Borrowers, Lenders and Agent agree as follows:

 

ARTICLE 1- DEFINITIONS

 

Section 1.1                                   Certain Defined Terms.  The
following terms have the following meanings:

 

“Acceleration Event” means the occurrence of an Event of Default (a) in respect
of which Agent has declared all or any portion of the Obligations to be
immediately due and payable pursuant to Section 10.2, (b) pursuant to
Section 10.1(a), and in respect of which Agent has suspended or terminated the
Revolving Loan Commitment pursuant to Section 10.2, and/or (c) pursuant to
either Section 10.1(e) and/or Section 10.1(f).

 

“Account Debtor” means “account debtor”, as defined in Article 9 of the UCC, and
any other obligor in respect of an Account.

 

“Accounts” means, collectively, (a) any right to payment of a monetary
obligation, whether or not earned by performance, (b) without duplication, any
“account” (as defined in the UCC), any accounts receivable (whether in the form
of payments for services rendered or goods sold, rents, license fees or
otherwise), any “health-care-insurance receivables” (as defined in the UCC), any
“payment intangibles” (as defined in the UCC) and all other rights to payment
and/or reimbursement of every kind and description, whether or not earned by
performance, (c) all accounts, “general intangibles” (as defined in the UCC),
rights, remedies, Guarantees, “supporting obligations” (as defined in the UCC),
“letter-of-credit rights” (as defined in the UCC) and security interests in
respect of the foregoing, all rights of enforcement and collection, all books
and records evidencing or related to the foregoing, and all rights under the
Financing Documents in respect of the foregoing, (d) all information and data
compiled or derived by any Borrower or to which any Borrower is entitled in
respect of or related to the foregoing, and (e) all proceeds of any of the
foregoing.

 

--------------------------------------------------------------------------------

 

“Additional Tranche” means an additional amount of Revolving Loan Commitment
equal to $15,000,000 (it being acknowledged that multiple Additional Tranches
are permitted pursuant to Section 2.1(c) in minimum amounts for each such
Additional Tranche of $5,000,000 (and integral multiples above such minimum
amount of $1,000,000) for a total of up to $15,000,000).

 

“Agent” means MCF, in its capacity as administrative agent for itself and for
Lenders hereunder, as such capacity is established in, and subject to the
provisions of, Article 11, and the successors and assigns of MCF in such
capacity.

 

“Affiliate” means, with respect to any Person, (a) any Person that directly or
indirectly controls such Person, (b) any Person which is controlled by or is
under common control with such controlling Person, and (c) each of such Person’s
(other than, with respect to any Lender, any Lender’s) officers or directors (or
Persons functioning in substantially similar roles).  As used in this
definition, the term “control” of a Person means the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of any class of
voting securities of such Person or to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

 

“Anti-Terrorism Laws” means any Laws relating to terrorism or money laundering,
including, without limitation, Executive Order No. 13224 (effective
September 24, 2001), the USA PATRIOT Act, the Laws comprising or implementing
the Bank Secrecy Act, and the Laws administered by OFAC.

 

“Applicable Margin” means, with respect to Revolving Loans and all other
Obligations four and three-quarters percent (4.75%).

 

“Asset Disposition” means any sale, lease, license, transfer, assignment or
other consensual disposition by any Credit Party of any asset.

 

“Availability Cushion” means an amount equal to $1,500,000.

 

“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as the same may be amended, modified or supplemented from time to
time, and any successor statute thereto.

 

“Base LIBOR Rate” means, for each Interest Period, the rate per annum which
appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg
page that displays rates at which US dollar deposits are offered by leading
banks in the London interbank deposit market), or the rate which is quoted by
another source selected by Agent which has been approved by the British Bankers’
Association as an authorized information vendor for the purpose of displaying
rates at which U.S. dollar deposits are offered by leading banks in the London
interbank deposit market (an “Alternate Source”) (rounded upwards, if necessary,
to the next 1/100%), at approximately 11:00 a.m., Eastern time, two (2) Business
Days prior to the commencement of such Interest Period as the London interbank
offered rate for U.S. Dollars for deposits in the amount of $1,000,000 and
having a maturity period comparable to such Interest Period (or if there shall
at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any
substitute page) or any Alternate Source, a comparable replacement rate
determined by Agent at such time (which determination shall be conclusive absent
manifest error).

 

“Base Rate” means the per annum rate of interest announced, from time to time,
within Wells Fargo Bank, N.A. (“Wells Fargo”) at its principal office in San
Francisco as its “prime rate,” with the understanding that the “prime rate” is
one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and
serves as the basis upon which effective rates of interest are calculated for
those loans making

 

2

--------------------------------------------------------------------------------

 

reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Wells Fargo may designate;
provided, however, that Agent may, upon prior written notice to Borrower, choose
a reasonably comparable index or source to use as the basis for the Base Rate.

 

“Blocked Person” means any Person:  (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) owned or controlled
by, or acting for or on behalf of, any Person that is listed in the annex to, or
is otherwise subject to the provisions of, Executive Order No. 13224, (c) with
which any Lender is prohibited from dealing or otherwise engaging in any
transaction by any Anti-Terrorism Law, (d) that commits, threatens or conspires
to commit or supports “terrorism” as defined in Executive Order No. 13224, or
(e) that is named a “specially designated national” or “blocked person” on the
most current list published by OFAC or other similar list or is named as a
“listed person” or “listed entity” on other lists made under any Anti-Terrorism
Law.

 

“Borrower” and “Borrowers” mean the entity(ies) described in the first paragraph
of this Agreement and each of their successors and permitted assigns.

 

“Borrower Representative” means CardioNet, in its capacity as Borrower
Representative pursuant to the provisions of Section 2.9, or any successor
Borrower Representative selected by Borrowers and approved by Agent, which
consent shall not be unreasonably withheld.

 

“Borrowing Base” means:

 

(a)                                  the product of (i) eighty-five percent
(85%) multiplied by (ii) the aggregate net amount at such time of the Eligible
Accounts; minus

 

(b)                                 the amount of any Reserves established by
Agent from time to time in its Permitted Discretion; minus

 

(c)                                  an amount equal to the Availability
Cushion.

 

“Borrowing Base Certificate” means a certificate, duly executed by a Responsible
Officer of Borrower Representative, appropriately completed and substantially in
the form of Exhibit C hereto.

 

“Business Day” means any day except a Saturday, Sunday or other day on which
either the New York Stock Exchange is closed, or on which commercial banks in
Washington, DC and New York City are authorized by law to close.

 

“cardioCORE” means cardioCORE Lab, Inc., a Delaware corporation.

 

“cardioCORE Acquisition” means the acquisition by CardioNet of cardioCORE
occurring on and as of the Closing Date by means of the merger of Cardinal
Merger Sub, Inc., a Delaware corporation and a wholly-owned Subsidiary of
CardioNet, with and into cardioCORE with cardioCore as the survivor of such
merger as provided for therein, all pursuant to and on the terms and conditions
described in cardioCORE Acquisition Agreement.

 

“cardioCORE Acquisition Agreement” means that certain Agreement and Plan of
Merger dated as of August 5, 2012 by and among CardioNet, as “Purchaser”,
cardioCORE as “Comnpany”, Cardinal Merger Sub, Inc., a Delaware corporation and
a wholly-owned Subsidiary of CardioNet, as “”Merger Sub”, and the Stockholder
Representative identified therein, together with all exhibits and schedules
thereto, as amended or modified.

 

3

--------------------------------------------------------------------------------

 

“CardioNet” means CardioNet, Inc., a Delaware corporation.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C.A. § 9601 et seq., as the same may be amended
from time to time.

 

“Change in Control” means any of the following events:  (a) any Person or two or
more Persons acting in concert shall have acquired beneficial ownership,
directly or indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of or control over, voting stock of any
Borrower (or other securities convertible into such voting stock) representing
more than 50% of the combined voting power of all voting stock of any Borrower
or (b) CardioNet ceases to own, directly or indirectly, 100% of the capital
stock of any of its Subsidiaries; or (c) the occurrence of a “Change of
Control”, “Change in Control”, or terms of similar import under any document or
instrument governing or relating to Debt of or equity in any Borrower.  As used
herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934.

 

“Closing Date” means the date of this Agreement.

 

“CMS” means the federal Centers for Medicare and Medicaid Services (formerly the
federal Health Care Financing Administration), and any successor Governmental
Authority.

 

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

 

“Collateral” means all property, now existing or hereafter acquired, mortgaged
or pledged to, or purported to be subjected to a Lien in favor of, Agent, for
the benefit of Agent and Lenders, pursuant to this Agreement and the Security
Documents, including, without limitation, all of the property described in
Schedule 9.1 hereto, and for the avoidance of doubt, specifically excluding any
Excluded Property.

 

“Commitment Annex” means Annex A to this Agreement.

 

“Commitment Expiry Date” means the date that is four (4) years following the
Closing Date.

 

“Compliance Certificate” means a certificate, duly executed by a Responsible
Officer of Borrower Representative, appropriately completed and substantially in
the form of Exhibit B hereto.

 

“Consolidated Subsidiary” means, at any date, any Subsidiary the accounts of
which would be consolidated with those of “parent” Borrower (or any other
Person, as the context may require hereunder) in its consolidated financial
statements if such statements were prepared as of such date.

 

“Contingent Obligation” means, with respect to any Person, any direct or
indirect liability of such Person:  (a) with respect to any Debt of another
Person (a “Third Party Obligation”) if the purpose or intent of such Person
incurring such liability, or the effect thereof, is to provide assurance to the
obligee of such Third Party Obligation that such Third Party Obligation will be
paid or discharged, or that any agreement relating thereto will be complied
with, or that any holder of such Third Party Obligation will be protected, in
whole or in part, against loss with respect thereto; (b) with respect to any
undrawn portion of any letter of credit issued for the account of such Person or
as to which such Person is otherwise liable for the reimbursement of any
drawing; (c) [RESERVED]; (d) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement; or
(e) for any obligations of another Person pursuant to any Guarantee or pursuant
to any agreement to purchase, repurchase or otherwise acquire any obligation or
any property constituting security therefor, to

 

4

--------------------------------------------------------------------------------

 

provide funds for the payment or discharge of such obligation or to preserve the
solvency, financial condition or level of income of another Person.  The amount
of any Contingent Obligation shall be equal to the amount of the obligation so
Guaranteed or otherwise supported or, if not a fixed and determinable amount,
the maximum amount so Guaranteed or otherwise supported.

 

“Controlled Group” means all members of any group of corporations and all
members of a group of trades or businesses (whether or not incorporated) under
common control which, together with any Borrower, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.

 

“Credit Exposure” means, at any time, any portion of the Revolving Loan
Commitment that remains outstanding; provided, however, that no Credit Exposure
shall be deemed to exist solely due to the existence of contingent
indemnification liability, absent the assertion of a claim, or the known
existence of a claim reasonably likely to be asserted, with respect thereto.

 

“Credit Party” means any Guarantor under a Guarantee of the Obligations or any
part thereof, any Borrower and any other Person (other than Agent, a Lender or a
participant of a Lender), whether now existing or hereafter acquired or formed,
that becomes obligated as a borrower, guarantor, surety, indemnitor, pledgor,
assignor or other obligor under any Financing Document; and “Credit Parties”
means all such Persons, collectively.

 

“Debt” of a Person means at any date, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of property or services, except
trade accounts payable arising and paid on a timely basis and in the ordinary
course of business for a company operating in Borrowers’ industry, (d) all
capital leases of such Person, (e) all non-contingent obligations of such Person
to reimburse any bank or other Person in respect of amounts paid under a letter
of credit, banker’s acceptance or similar instrument, (f) all equity securities
of such Person subject to repurchase or redemption other than at the sole option
of such Person, (g) all obligations secured by a Lien on any asset of such
Person, whether or not such obligation is otherwise an obligation of such
Person, (h) “earnouts”, purchase price adjustments, profit sharing arrangements,
deferred purchase money amounts and similar payment obligations or continuing
obligations of any nature of such Person arising out of purchase and sale
contracts, (i) all Debt of others Guaranteed by such Person, (j) off-balance
sheet liabilities of such Person, (k) obligations arising under non-compete
agreements, and (l) obligations arising under bonus, deferred compensation,
incentive compensation or similar arrangements, other than those arising in the
ordinary course of business.  Without duplication of any of the foregoing, Debt
of Borrowers shall include any and all Loans.

 

“Default” means any condition or event which with the giving of notice or lapse
of time or both would, unless cured or waived, become an Event of Default.

 

“Deposit Account” means a “deposit account” (as defined in Article 9 of the
UCC), an investment account, or other account in which funds are held or
invested for credit to or for the benefit of any Borrower.

 

“Deposit Account Control Agreement” means an agreement, in form and substance
reasonably satisfactory to Agent, among Agent, any Borrower and each financial
institution in which such Borrower maintains a Deposit Account, which agreement
provides that (a) such financial institution shall comply with instructions
originated by Agent directing disposition of the funds in such Deposit Account
without further consent by the applicable Borrower, and (b) such financial
institution shall agree that it shall have

 

5

--------------------------------------------------------------------------------

 

no Lien on, or right of setoff or recoupment against, such Deposit Account or
the contents thereof, other than in respect of usual and customary service fees
and returned items for which Agent has been given value, in each such case
expressly consented to by Agent, and containing such other terms and conditions
as Agent may require, including providing that such financial institution shall
wire, or otherwise transfer, in immediately available funds, on a daily basis to
the Payment Account all funds received or deposited into such Lockbox or Lockbox
Account.

 

“Deposit Account Restriction Agreement” means an agreement, in form and
substance satisfactory to Agent, among Agent, a Borrower and each bank in which
such Borrower maintains a Deposit Account and into which Deposit Account
proceeds of Accounts from Governmental Account Debtors are paid directly by the
Governmental Account Debtor, and which agreement provides that (a) such bank
shall not enter into an agreement with respect to such Deposit Account pursuant
to which the bank agrees to comply with instructions originated by any Person,
other than the Borrower that owns the Deposit Account, directing disposition of
the funds in such Deposit Account, and (b) such bank shall agree that it shall
have no Lien on, or right of setoff or recoupment against, such Deposit Account
or the contents thereof, other than in respect of usual and customary service
fees and returned items for which Agent has been given value, in each such case
expressly consented to by Agent, and containing such other terms and conditions
as Agent may require, including as to any such agreement pertaining to any
Lockbox Account, providing that such bank shall wire, or otherwise transfer, in
immediately available funds, on a daily basis to the Payment Account and/or a
Lockbox Account subject to a Deposit Account Control Agreement (as Agent shall
elect and direct at the time such agreement is signed) all funds received or
deposited into such Lockbox Account and associated Lockbox unless the applicable
Borrower shall otherwise instruct the bank in writing, subject to the
limitations set forth in the Deposit Account Restriction Agreement and the other
Financing Documents.

 

“Dollars” or “$” means the lawful currency of the United States of America.

 

“EBITDA” means, of any Person (the “Applicable Person”)  for any applicable
fiscal measurement period, (i) net income (or loss) for such fiscal measurement
period, but excluding:  (a) the income (or loss) of any Person in which the
Applicable Person or any of its Subsidiaries has an ownership interest unless
received by Applicable Person in a cash distribution; and (b) the income (or
loss) of any Person accrued prior to the date it became a Subsidiary of the
Applicable Person or is merged into or consolidated with the Applicable Person,
plus (ii) any provision for (or minus any benefit from) income and franchise
taxes deducted in the determination of net income for such fiscal measurement
period, plus (iii) interest expense, net of interest income, deducted in the
determination of net income for such fiscal measurement period, (iv) expenses
related to non-cash incentive compensation plans, and (v)  amortization and
depreciation deducted in the determination of net income for such fiscal
measurement period, in each case under clauses (i) through (v) calculated in
accordance with GAAP for such Applicable Person and its Subsidiaries (if any) on
a consolidated basis.

 

“Eligible Account” means, subject to the criteria below, an account receivable
of a Borrower, which was generated in the ordinary course of business, which was
generated originally in the name of a Borrower and not acquired via assignment
or otherwise, and which Agent, in its Permitted Discretion, deems to be an
Eligible Account.  The net amount of an Eligible Account at any time shall be
(a) the face amount of such Eligible Account as originally billed minus all cash
collections and other proceeds of such Account received from or on behalf of the
Account Debtor thereunder as of such date and any and all returns, rebates,
discounts (which may, at Agent’s option, be calculated on shortest terms),
credits, allowances or excise taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in connection with
such Accounts at such time, and (b) adjusted by applying percentages (known as
“liquidity factors”) by payor and/or payor class based upon the applicable

 

6

--------------------------------------------------------------------------------

 

Borrower’s actual recent collection history for each such payor and/or payor
class in a manner consistent with Agent’s underwriting practices and
procedures.  Such liquidity factors may be adjusted by Agent from time to time
as warranted by Agent’s underwriting practices and procedures and using Agent’s
good faith credit judgment.  Without limiting the generality of the foregoing,
no Account shall be an Eligible Account if:

 

(a)                                  the Account remains unpaid more than two
hundred ten (210) days after the applicable goods or services have been rendered
or delivered);

 

(b)                                  the Account is subject to any defense,
set-off, recoupment, counterclaim, deduction, discount, credit, chargeback,
freight claim, allowance, or adjustment of any kind (but only to the extent of
such defense, set-off, recoupment, counterclaim, deduction, discount, credit,
chargeback, freight claim, allowance, or adjustment), or the applicable Borrower
is not able to bring suit or otherwise enforce its remedies against the Account
Debtor through judicial process;

 

(c)                                  if the Account arises from the sale of
goods, any part of any goods the sale of which has given rise to the Account has
been returned, rejected, lost, or damaged (but only to the extent that such
goods have been so returned, rejected, lost or damaged);

 

(d)                                 if the Account arises from the sale of
goods, the sale was not an absolute, bona fide sale, or the sale was made on
consignment or on approval or on a sale-or-return or bill-and-hold or progress
billing basis, or the sale was made subject to any other repurchase or return
agreement, or the goods have not been shipped to the Account Debtor or its
designee or the sale was not made in compliance with applicable Laws;

 

(e)                                  if the Account arises from the performance
of services, the services have not actually been performed or the services were
undertaken in violation of any law or the Account represents a progress billing
for which services have not been fully and completely rendered;

 

(f)                                    the Account is subject to a Lien other
than a Permitted Lien, or Agent does not have a first priority, perfected Lien
on such Account;

 

(g)                                 the Account is evidenced by Chattel Paper or
an Instrument of any kind, or has been reduced to judgment, unless such Chattel
Paper or Instrument has been delivered to Agent;

 

(h)                                 the Account Debtor is an Affiliate or
Subsidiary of a Credit Party, or if the Account Debtor holds any Debt of a
Credit Party;

 

(i)                                     except for Accounts owed by Medicare or
Medicaid programs, more than fifty percent (50%) of the aggregate balance of all
Accounts owing from the Account Debtor obligated on the Account are ineligible
under subclause (a) above (in which case all Accounts from such Account Debtor
shall be ineligible); provided, however, that if Agent, in its good faith
business judgment, determines that any such Account will be collected in the
ordinary course of Borrower’s business, then such Account shall not be deemed to
be ineligible pursuant to this clause (i);

 

(j)                                     without limiting the provisions of
clause (i) above, except for Accounts owed by Medicare or Medicaid programs,
fifty percent (50%) or more of the aggregate unpaid Accounts from the Account
Debtor obligated on the Account are not deemed Eligible Accounts under this
Agreement for any reason;

 

7

--------------------------------------------------------------------------------

 

(k)                                  except for Accounts owed by Medicare or
Medicaid programs, the total unpaid Accounts of the Account Debtor obligated on
the Account exceed twenty-five percent (25%) of the net amount of all Eligible
Accounts owing from all Account Debtors (but only the amount of the Accounts of
such Account Debtor exceeding such twenty-five percent (25%) limitation shall be
considered ineligible);

 

(l)                                     any covenant, representation or warranty
contained in the Financing Documents with respect to such Account has been
breached in any respect and any applicable cure period expressly provided for
herein with respect to such breach (if any) has expired;

 

(m)                               the Account is unbilled or has not been
invoiced to the Account Debtor in accordance with the procedures and
requirements of the applicable Account Debtor;

 

(n)                                 except for Accounts owed by Medicare or
Medicaid or TRICARE programs, the Account is an obligation of an Account Debtor
that is the federal, state or local government or any political subdivision
thereof, unless Agent has agreed to the contrary in writing and Agent has
received from the Account Debtor the acknowledgement of Agent’s notice of
assignment of such obligation pursuant to this Agreement in compliance with any
applicable statute including the federal Assignment of Claims Act;

 

(o)                                 the Account is an obligation of an Account
Debtor that has suspended business, made a general assignment for the benefit of
creditors, is unable to pay its debts as they become due or as to which a
petition has been filed (voluntary or involuntary) under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or the Account is
an Account as to which any facts, events or occurrences exist which could
reasonably be expected to materially impair the validity, enforceability or
collectibility of such Account or reduce the amount payable or delay payment
thereunder;

 

(p)                                 the Account Debtor has its principal place
of business or executive office, or is organized under the laws of a
jurisdiction, outside the United States;

 

(q)                                 the Account is payable in a currency other
than United States dollars;

 

(r)                                    the Account Debtor is an individual;

 

(s)                                  the Borrower owning such Account has not
signed and delivered to Agent notices, in the form reasonably requested by
Agent, directing the Account Debtors to make payment to the applicable Lockbox
Account;

 

(t)                                    the Account includes late charges or
finance charges (but only such portion of the Account shall be ineligible);

 

(u)                                 the Account arises out of the sale of any
Inventory upon which any other Person holds, claims or asserts a Lien;

 

(v)                                 the Account represents any proceeds of any
Intellectual Property or other Excluded Collateral and/or consists of any
royalty payments or other right to payment arising out of any license by any
Borrower as licensor of any Intellectual Property, or

 

8

--------------------------------------------------------------------------------

 

(w)                               the Account or Account Debtor fails to meet
such other specifications and requirements which may from time to time be
established by Agent in its Permitted Discretion.

 

“Environmental Laws” means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations, standards, policies and other
governmental directives or requirements, as well as common law, pertaining to
the environment, natural resources, pollution, health (including any
environmental clean-up statutes and all regulations adopted by any local, state,
federal or other Governmental Authority, and any statute, ordinance, code,
order, decree, law rule or regulation all of which pertain to or impose
liability or standards of conduct concerning medical waste or medical products,
equipment or supplies), safety or clean-up that apply to any Borrower and relate
to Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601
et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901
et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.), the Clean
Air Act (42 U.S.C. § 7401 et seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. § 136 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Occupational Safety and
Health Act (29 U.S.C. § 651 et seq.), the Residential Lead-Based Paint Hazard
Reduction Act (42 U.S.C. § 4851 et seq.), any analogous state or local laws, any
amendments thereto, and the regulations promulgated pursuant to said laws,
together with all amendments from time to time to any of the foregoing and
judicial interpretations thereof.

 

“Environmental Liens” means all Liens and other encumbrances imposed pursuant to
any Environmental Law, whether due to any act or omission of any Borrower or any
other Person.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as the same
may be amended, modified or supplemented from time to time, and any successor
statute thereto, and any and all rules or regulations promulgated from time to
time thereunder.

 

“ERISA Plan” means any “employee benefit plan”, as such term is defined in
Section 3(3) of ERISA (other than a Multiemployer Plan), which any Borrower
maintains, sponsors or contributes to, or, in the case of an employee benefit
plan which is subject to Section 412 of the Code or Title IV of ERISA, to which
any Borrower or any member of the Controlled Group may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five
(5) years, or by reason of being deemed to be a contributing sponsor under
Section 4069 of ERISA.

 

“Event of Default” has the meaning set forth in Section 10.1.

 

“Excluded Property” has the meaning set forth on Schedule 9.1.

 

“Fee Letter” means that certain letter agreement between Agent and Borrower
relating to fees payable to Agent, for its own account, in connection with the
execution of this Agreement.

 

“Financing Documents” means this Agreement, any Notes, the Security Documents,
the Fee Letter, any subordination or intercreditor agreement pursuant to which
any Debt and/or any Liens securing such Debt is subordinated to all or any
portion of the Obligations and all other documents, instruments and agreements
related to the Obligations and heretofore executed, executed concurrently
herewith or executed at any time and from time to time hereafter, as any or all
of the same may be amended, supplemented, restated or otherwise modified from
time to time.

 

9

--------------------------------------------------------------------------------

 

 

“GAAP” means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the United States
accounting profession), which are applicable to the circumstances as of the date
of determination.

 

“General Intangible” means any “general intangible” as defined in Article 9 of
the UCC, and any personal property, including things in action, other than
accounts, chattel paper, commercial tort claims, deposit accounts, documents,
goods, instruments, investment property, letter-of-credit rights, letters of
credit, money, and oil, gas or other minerals before extraction, but including
payment intangibles and software (as any of the foregoing terms may be defined
in Article 9 of the UCC).

 

“Governmental Account Debtor” means any Account Debtor that is a Governmental
Authority, including, without limitation, Medicare and Medicaid.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or Person exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation or other Person owned or controlled
(through stock or capital ownership or otherwise) by any of the foregoing,
whether domestic or foreign.

 

“Guarantee” by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise), or
(b) entered into for the purpose of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided, however, that
the term Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business.  The term “Guarantee” used as a verb has a
corresponding meaning.

 

“Guarantor” means any Credit Party that has executed or delivered, or shall in
the future execute or deliver, any Guarantee of any portion of the Obligations.

 

“Hazardous Materials” means petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives, flammable
materials; radioactive materials; polychlorinated biphenyls and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials; underground or above-ground storage tanks, whether empty or
containing any substance; any substance the presence of which is prohibited by
any Environmental Laws; toxic mold, any substance that requires special
handling; and any other material or substance now or in the future defined as a
“hazardous substance,” “hazardous material,” “hazardous waste,” “toxic
substance,” “toxic pollutant,” “contaminant,” “pollutant” or other words of
similar import within the meaning of any Environmental Law, including:  (a) any
“hazardous substance” defined as such in (or for purposes of) CERCLA, or any
so-called “superfund” or “superlien” Law, including the judicial interpretation
thereof; (b) any “pollutant or contaminant” as defined in 42 U.S.C.A.
§ 9601(33); (c) any material now defined as “hazardous waste” pursuant to 40
C.F.R. Part 260; (d) any petroleum or petroleum by-products, including crude oil
or any fraction thereof; (e) natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel; (f) any “hazardous chemical” as defined
pursuant to 29 C.F.R. Part 1910; (g) any toxic or

 

10

--------------------------------------------------------------------------------

 

harmful substances, wastes, materials, pollutants or contaminants (including,
without limitation, asbestos, polychlorinated biphenyls (“PCB’s”), flammable
explosives, radioactive materials, infectious substances, materials containing
lead-based paint or raw materials which include hazardous constituents); and
(h) any other toxic substance or contaminant that is subject to any
Environmental Laws or other past or present requirement of any Governmental
Authority.

 

“Hazardous Materials Contamination” means contamination (whether now existing or
hereafter occurring) of the improvements, buildings, facilities, personalty,
soil, groundwater, air or other elements on or of the relevant property by
Hazardous Materials, or any derivatives thereof, or on or of any other property
as a result of Hazardous Materials, or any derivatives thereof, generated on,
emanating from or disposed of in connection with the relevant property.

 

“Healthcare Laws” means all applicable Laws relating to the possession, control,
warehousing, marketing, sale and distribution of pharmaceuticals, procurement,
development, manufacture, production, analysis, dispensing, importation,
exportation, use, handling, quality, or promotion of any drug, medical device,
food, dietary supplement, or other product (including, without limitation, any
ingredient or component of the foregoing products) subject to regulation under
the Federal Food, Drug, and Cosmetic Act and similar state and foreign laws,
controlled substances laws, pharmacy laws, or consumer product safety laws, and
all Laws pertaining to patient healthcare, patient healthcare information,
patient abuse, the quality and adequacy of medical care, rate setting,
equipment, personnel, operating policies, fee splitting, including, without
limitation, (a) all federal and state fraud and abuse laws, including, without
limitation, the federal Anti-Kickback Statute (42 U.S.C. §1320a-7b(6)), the
Stark Law (42 U.S.C. §1395nn), the civil False Claims Act (31 U.S.C. §3729 et
seq.), (b) TRICARE, (c) HIPAA, (d) Medicare, (e) Medicaid, (f) the Patient
Protection and Affordable Care Act (P.L. 111-1468), (g) The Health Care and
Education Reconciliation Act of 2010 (P.L. 111-152), (h) quality, safety and
accreditation standards and requirements of all applicable state laws or
regulatory bodies, (i) all laws, policies, procedures, requirements and
regulations pursuant to which Healthcare Permits are issued, and (j) any and all
other applicable health care laws, regulations, manual provisions, policies and
administrative guidance, each of (a) through (j) as may be amended from time to
time.

 

“Healthcare Permit” means a Permit (a) issued or required under Healthcare Laws
applicable to the business of any Borrower or any of its Subsidiaries or
necessary in the possession, ownership, warehousing, marketing, promoting, sale,
labeling, furnishing, distribution or delivery of goods or services under
Healthcare Laws applicable to the business of any Borrower or any of its
Subsidiaries, (b) issued by any Person from which any Borrower has, as of the
Closing Date, received an accreditation, and/or (c) issued or required under
Healthcare Laws applicable to the ownership or operation of any business
location of a Borrower.

 

“Instrument” means “instrument”, as defined in Article 9 of the UCC.

 

“Intellectual Property” means, with respect to any Person, all patents, patent
applications and like protections, including improvements divisions,
continuation, renewals, reissues, extensions and continuations in part of the
same, trademarks, trade names, trade styles, trade dress, service marks, logos
and other business identifiers and, to the extent permitted under applicable
law, any applications therefore, whether registered or not, and the goodwill of
the business of such Person connected with and symbolized thereby, copyright
rights, copyright applications, copyright registrations and like protections in
each work of authorship and derivative works, whether published or unpublished,
technology, know-how and processes, operating manuals, trade secrets, computer
hardware and software, rights to unpatented inventions and all applications and
licenses therefor, used in or necessary for the conduct of

 

11

--------------------------------------------------------------------------------

 

business by such Person and all claims for damages by way of any past, present
or future infringement of any of the foregoing.

 

“Interest Period” means any period commencing on the first day of a calendar
month and ending on the last day of such calendar month.

 

“Inventory” means “inventory” as defined in Article 9 of the UCC.

 

“Investment” means any investment in any Person, whether by means of acquiring
(whether for cash, property, services, securities or otherwise), making or
holding Debt, securities, capital contributions, loans, time deposits, advances,
Guarantees or otherwise.  The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect thereto.

 

“Laws” means any and all federal, state, provincial, territorial, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, injunctions, permits, governmental agreements
and governmental restrictions, whether now or hereafter in effect, which are
applicable to any Credit Party in any particular circumstance.  “Laws” includes,
without limitation, Healthcare Laws and Environmental Laws.

 

“Lender” means each of (a) MCF, in its capacity as a lender hereunder, (b) each
other Person party hereto in its capacity as a lender hereunder, (c) each other
Person that becomes a party hereto as Lender pursuant to Section 11.17, and
(d) the respective successors of all of the foregoing, and “Lenders” means all
of the foregoing.

 

“LIBOR Rate” means, for each Loan, a per annum rate of interest equal to the
rate determined by Agent (rounded upwards, if necessary, to the next 1/100th%)
by dividing (i) the Base LIBOR Rate for the Interest Period, by (ii) the sum of
one minus the daily average during such Interest Period of the aggregate maximum
reserve requirement (expressed as a decimal) then imposed under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor thereto)
for “Eurocurrency Liabilities” (as defined therein).

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind, in respect of such asset.  For the
purposes of this Agreement and the other Financing Documents, any Borrower or
any Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset.

 

“Litigation” means any action, suit or proceeding before any court, mediator,
arbitrator or Governmental Authority.

 

“Loan Account” has the meaning set forth in Section 2.6(b).

 

“Loan(s)” means the Revolving Loans, or any combination of the foregoing, as the
context may require.

 

“Lockbox” has the meaning set forth in Section 2.11.

 

“Lockbox Account” means an account or accounts maintained at the Lockbox Bank
into which collections of Accounts are paid.

 

12

--------------------------------------------------------------------------------

 

“Lockbox Bank” has the meaning set forth in Section 2.11.

 

“Material Adverse Effect” means with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (i) the condition
(financial or otherwise), operations, business, properties of the Credit Parties
taken as a whole, (ii) the rights and remedies of Agent or Lenders under any
Financing Document, or the ability of any Credit Party to perform any of its
obligations when due under any Financing Document to which it is a party,
(iii) the legality, validity or enforceability of any Financing Document,
(iv) the existence, perfection or priority of any security interest granted in
any Financing Document, (v) the value of any material Collateral, (vi) the use
or scope of any Healthcare Permits; or (vii) the continued participation by any
Credit Party in the Medicare programs or in the Medicaid program of any state in
which participation by such Credit Party in the Medicaid program is required as
a condition for such Credit Party to otherwise conduct its business in the
ordinary course of business in such state; or (b) any final settlement of the
Pending CID or any other settlement of a dispute shall be entered into by
Borrowers, or any determination/judgment with respect to the Pending CID shall
be entered by any court or other applicable Governmental Authority of competent
jurisdiction, which such settlement or determination/judgment shall, in any such
case, require any payment(s) by Borrowers (whether as a settlement payment,
fine, penalty, civil judgment or otherwise) or impose other non-monetary
penalties or restrictions on Borrowers, which in any such case, are determined
by Agent in its Permitted Discretion to be reasonably likely to cause any
Borrower to be unable to perform any of its obligations when due (including
without limitation any Obligations under any Financing Document) or to result in
the occurrence of any Event of Default.

 

“Material Contracts” has the meaning set forth in Section 3.17.

 

“Maximum Lawful Rate” has the meaning set forth in Section 2.7.

 

“MCF” means MidCap Financial, LLC, and its successors and assigns.

 

“Medicaid” means the medical assistance programs administered by state agencies
and approved by CMS pursuant to the terms of Title XIX of the Social Security
Act, codified at 42 U.S.C. 1396 et seq.

 

“Medicare” means the program of health benefits for the aged and disabled
administered by CMS pursuant to the terms of Title XVIII of the Social Security
Act, codified at 42 U.S.C. 1395 et seq.

 

“Multiemployer Plan” means a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA to which any Borrower or any other member of the
Controlled Group (or any Person who in the last five years was a member of the
Controlled Group) is making or accruing an obligation to make contributions or
has within the preceding five plan years (as determined on the applicable date
of determination) made contributions.

 

“Notes” has the meaning set forth in Section 2.3.

 

“Notice of Borrowing” means a notice of a Responsible Officer of Borrower
Representative, appropriately completed and substantially in the form of
Exhibit D hereto.

 

“Obligations” means all obligations, liabilities and indebtedness (monetary
(including post-petition interest, fees, obligations for costs and expense and
indemnity obligations, whether or not

 

13

--------------------------------------------------------------------------------

 

allowable or allowed) or otherwise) of each Credit Party under this Agreement or
any other Financing Document, in each case howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due.

 

“OFAC” means the U.S. Department of Treasury Office of Foreign Assets Control.

 

“OFAC Lists” means, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

 

“Operative Documents” means the Financing Documents, Subordinated Debt
Documents, and any documents effecting any purchase or sale or other transaction
that is closing contemporaneously with the closing of the financing under this
Agreement.

 

“Organizational Documents” means, with respect to any Person other than a
natural person, the documents by which such Person was organized (such as a
certificate of incorporation, certificate of limited partnership or articles of
organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to the
internal governance of such Person (such as by-laws, a partnership agreement or
an operating, limited liability company or members agreement), including any and
all shareholder agreements or voting agreements relating to the capital stock or
other equity interests of such Person.

 

“Payment Account” means the account specified on the signature pages hereof into
which all payments by or on behalf of each Borrower to Agent under the Financing
Documents shall be made, or such other account as Agent shall from time to time
specify by notice to Borrower Representative.

 

“PBGC” means the Pension Benefit Guaranty Corporation and any Person succeeding
to any or all of its functions under ERISA.

 

“Pending CID” means the Civil Investigative Demand issued by the United States
Department of Justice, Western District of Washington (“DOJ WD Washington”) on
August 25, 2011 stating that the DOJ WD Washington is in the course of an
investigation regarding Borrowers’ use of certain diagnostic codes when
submitting claims for reimbursement to Medicare for the Borrowers’ real time,
outpatient cardiac monitoring services for the period from January 1, 2007
forward, as well as such investigation described in such Civil Investigative
Demand, and any and all Litigation and governmental proceedings arising
therefrom.

 

“Pension Plan” means any ERISA Plan that is subject to Section 412 of the Code
or Title IV of ERISA.

 

“Permits” means all governmental licenses, authorizations, provider numbers,
supplier numbers, registrations, permits, drug or device authorizations and
approvals, certificates, franchises, qualifications, accreditations, consents
and approvals of a Credit Party required under all applicable Laws and required
for such Credit Party in order to carry on its business as now conducted,
including, without limitation, Healthcare Permits.

 

“Permitted Acquisition” means any acquisition or purchase by (a) any Borrower
(or any Subsidiary of a Borrower formed for the purposes of such acquisition or
purchase) of substantially all of the assets of any Person organized under the
laws of the United States or any state or commonwealth of

 

14

--------------------------------------------------------------------------------

 

the United States, or of any discrete line of business or business unit or asset
group of any such domestic Person (as to any such acquisition or purchase, the
“Target”), which assets are located in the United States or (b) any Borrower (or
any Subsidiary of a Borrower formed for the purposes of such acquisition or
purchase) of 100% of the capital stock and/or other equity interests of any kind
of any Target, so long as all Subsidiaries of Target (if any) are Persons
organized under the laws of the United States or any state or commonwealth of
the United States, in each case, to the extent that each of the following
conditions shall have been fully complied with and satisfied as to such
transaction:

 

(i)            at least ten (10) Business Days prior to the consummation of such
proposed transaction, the Borrowers shall have (A) notified Agent in writing of
such proposed transaction (setting forth in reasonable detail the terms and
conditions of such Acquisition) and, (B) delivered to Agent: (x) the following
historical and pro forma financial statements: (1) a pro forma income statement
for the Target (or of the applicable line of business or business unit or asset
group of Target) for the trailing twelve month fiscal measurement period ending
as of the most recently ended month for which financial statements of the Target
are available, which shall reflect that the EBITDA of the Target and any
Subsidiaries of Target (or of the applicable line of business or business unit
or asset group of Target) for the twelve month fiscal measurement period ending
with the most recently ended month for which financial statements of the Target
are available is greater than zero, (2) audited annual financial statements for
the Target and any Subsidiaries of Target for the most recently ended fiscal
year of the Target (unless such transaction shall take place in the first fiscal
quarter of Target’s fiscal year, in which case audited annual financial
statement for the Target for the year proceeding the most recently ended fiscal
year of the Target shall be provided); provided that, in any case where no such
audited annual financial statements have historically been prepared for such
Target and its Subsidiaries in the ordinary course of business of Target and its
Subsidiaries, Agent may in its sole discretion elect to accept annual financial
statements for such Target and its Subsidiaries as prepared by the management of
such Target as satisfying the requirements of this clause (2), (3) a balance
sheet for Target and any Subsidiaries of Target (or of the applicable line of
business or business unit or asset group of Target) as of the last day of the
most recently ended month for which financial statements of the Target are
available, (4) a pro forma projected income statement for Borrowers’ and their
Consolidated Subsidiaries (prepared on a pro forma basis giving effect to the
closing and consummation of such proposed transaction) for the twelve month
fiscal period beginning with the first full month following the proposed closing
date for the proposed transaction and (5) such other historical, pro forma
and/or projected financial information and financial statements regarding Target
and any Subsidiaries of Target (or of the applicable line of business or
business unit or asset group of Target) and/or Borrowers’ and their Consolidated
Subsidiaries (prepared on a pro forma basis giving effect to the closing and
consummation of such proposed transaction) as Agent shall request, all of which
such historical, pro forma and/or projected financial information and financial
statements described in the foregoing subclauses (1) through (5) shall be
reasonably acceptable to Agent,  and (y) copies of such other agreements,
instruments and other documents and such information as Agent reasonably shall
request;

 

(ii)           no later than the date such proposed transaction shall close and
be consummated, Borrowers shall have delivered to Agent copies, certified by the
Borrowing Representative, of the final purchase agreement, merger agreement or
other similar primary acquisition agreement complete with all schedules and
exhibits thereto, and all material related documents be executed and delivered
in connection with the execution and delivery of such acquisition agreement, all
of the foregoing executed and delivered by all parties thereto,

 

15

--------------------------------------------------------------------------------

 

(iii)          both immediately prior to and also after giving effect to the
closing and consummation on such proposed transaction, no Default or Event of
Default shall have occurred and be continuing or would occur

 

(iv)          [RESERVED];

 

(v)           both immediately prior to and also after giving effect to the
closing and consummation on such proposed transaction, (A) the representations
and warranties of each Credit Party contained in the Financing Documents that
are subject to materiality or Material Adverse Effect qualifications shall be
true, correct and complete in all respects on and as of such date, except to the
extent that any such representation or warranty relates to a specific date in
which case such representation or warranty shall be true and correct as of such
earlier date, and (B) the representations and warranties of each Credit Party
contained in the Financing Documents that are not subject to materiality or
Material Adverse Effect qualifications shall be true, correct and complete in
all material respects on and as of such date, except to the extent that any such
representation or warranty relates to a specific date in which case such
representation or warranty shall be true and correct as of such earlier date
(and for purposes of this clause (iv), if applicable the Target shall be deemed
to be one of the Borrowers and to have made the representation required to be
made by Borrowers in the Financing Documents);

 

(vi)          contemporaneously with the closing and consummation on such
proposed transaction, Borrowers (and any applicable Subsidiary), and if
applicable, Target (and any Subsidiaries of Target), shall execute and deliver
the agreements, instruments and other documents, and shall take any and all
actions, required by Section 4.11 of this Agreement and all requirements of such
Section 4.11 (and Section 5.6 of this Agreement, if applicable) shall have been
fulfilled;

 

(vii)         such proposed transaction shall not be hostile and shall have been
approved by the board of directors (or other similar body) and/or the
stockholders or other equityholders of the Target;

 

(viii)        the total consideration paid or payable (including without
limitation, all transaction costs, assumed Debt and liabilities incurred,
assumed or reflected on a consolidated balance sheet of the Credit Parties and
their Subsidiaries after giving effect to such proposed transaction and the
maximum amount of all purchase price adjustments) for (x) all Permitted
Acquisitions consummated during the term of this Agreement shall not exceed
$2,000,000, and (y) each such Permitted Acquisition shall not exceed $4,000,000;
and

 

(ix)           review of the acquisition documents described in clauses (i) and
(ii), receipt of all material required regulatory and third party approvals and,
if reasonably requested by Agent, receipt of environmental assessments, and
review of lien searches and other searches of the type described in Section 7.3
with respect to the Target as necessary to satisfy the requirements of
Section 4.11 and/or to establish Borrowers’ compliance with the provisions of
Section 5.2 of this Agreement, with all of the foregoing to be satisfactory to
Agent;

 

provided that, no Accounts of any Target or any Subsidiary of any Target added
as a Borrower hereto in any such Permitted Acquisition and/or Accounts acquired
by any Borrower in any such Permitted Acquisition shall be included as Eligible
Accounts until a field examination and audit (and if required by Agent in its
Permitted Discretion, an appraisal) with respect to such assets, as well as all
due diligence to confirm compliance by such Target or Subsidiary of such Target
with all provisions of this Agreement

 

16

--------------------------------------------------------------------------------

 

(including all provisions hereof regarding compliance with Healthcare Laws, if
applicable) required by Agent in its Permitted Discretion, have been completed
to the satisfaction of Agent.

 

Any payment by any Borrower of any portion of the purchase price for any
proposed Permitted Acquisition as provided for in the purchase agreement, merger
agreement or other similar primary acquisition agreement for such transaction
shall be deemed to be a representation and warranty by Borrowers as of the date
of such closing and consummation that all of the terms and conditions of this
definition have been satisfied and complied with respect to such transaction as
of such date and that such transaction constitutes a Permitted Acquisition
hereunder.

 

“Permitted Affiliate” means with respect to any Person (a) any Person that
directly or indirectly controls such Person, and (b) any Person which is
controlled by or is under common control with such controlling Person.  As used
in this definition, the term “control” of a Person means the possession,
directly or indirectly, of the power to vote eighty percent (80%) or more of any
class of voting securities of such Person or to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

 

“Permitted Asset Dispositions” means the following Asset Dispositions, provided,
however, that at the time of such Asset Disposition, no Default or Event of
Default exists or would result from such Asset Disposition:  (a) dispositions of
Inventory in the ordinary course of business and not pursuant to any bulk sale,
(b) dispositions of furniture, fixtures and equipment in the ordinary course of
business for fair market value, (c) dispositions of Intellectual Property of a
Credit Party or any of its Subsidiaries so long as such Intellectual Property is
not included in the Collateral and the loss of ownership of such Intellectual
Property could not reasonably be expected to have an adverse and material effect
on any business of any Credit Party, (d) Asset Dispositions by a Credit Party to
another Credit Party or from a Subsidiary to a Credit Party, (e) other Asset
Dispositions (not including any Asset Disposition with respect to any Accounts
of any Credit Party) in an aggregate amount not to exceed $500,000 per fiscal
year for all such Asset Dispositions by all Credit Parties, (f) in connection
with the repurchase of capital stock issued to employees, the cancellation of
notes issued by such employees in connection with the purchase by such employees
of such capital stock (so long as no cash was advanced to any such employee in
connection with such note and such purchase in excess of the amount of cash paid
by such employee for such purchase), (g) the termination, surrender or sublease
of any real property lease of a Credit Party in the ordinary course of business
so long as the loss of such leased location a business location of Credit
Parties could not reasonably be expected to have an adverse and material effect
on any business of any Credit Party, and (h) dispositions approved by Agent in
its sole discretion.

 

“Permitted Contest” means, with respect to any tax obligation or other
obligation allegedly or potentially owing from any Borrower or its Subsidiary to
any governmental tax authority or other third party, a contest maintained in
good faith by appropriate proceedings promptly instituted and diligently
conducted and with respect to which such reserve or other appropriate provision,
if any, as shall be required in conformity with GAAP shall have been made on the
books and records and financial statements of the applicable Credit Party(ies);
provided, however, that (a) compliance with the obligation that is the subject
of such contest is effectively stayed during such challenge; (b) Borrowers’ and
its Subsidiaries’ title to, and its right to use, the Collateral is not
adversely affected thereby and Agent’s Lien and priority on the Collateral are
not adversely affected, altered or impaired thereby; (c) Borrowers have given
prior written notice to Agent of a Borrower’s or its Subsidiary’s intent to so
contest the obligation; (d)  the Collateral or any part thereof or interest
therein shall not be in any danger of being sold, forfeited or lost by reason of
such contest by Borrowers or its Subsidiaries; (e) Borrowers have given Agent
notice of the commencement of such contest and upon the reasonable request by
Agent, from time to time, notice of the status of such contest by Borrowers
and/or confirmation of the continuing satisfaction of this

 

17

--------------------------------------------------------------------------------

 

definition; and (f) upon a final, non-appealable determination of such contest,
Borrowers and its Subsidiaries shall promptly comply with the requirements
thereof.

 

“Permitted Contingent Obligations” means (a) Contingent Obligations arising in
respect of the Debt under the Financing Documents; (b) Contingent Obligations
resulting from endorsements for collection or deposit in the ordinary course of
business; (c) Contingent Obligations outstanding on the date of this Agreement
and set forth on Schedule 5.1 (but not including any refinancings, extensions,
increases or amendments to the indebtedness underlying such Contingent
Obligations other than extensions of the maturity thereof without any other
change in terms); (d) Contingent Obligations incurred in the ordinary course of
business with respect to surety and appeal bonds, performance bonds and other
similar obligations not to exceed $200,000 in the aggregate at any time
outstanding; (f) Contingent Obligations arising under indemnity agreements with
title insurers to cause such title insurers to issue to Agent mortgagee title
insurance policies; (g) Contingent Obligations arising with respect to customary
indemnification obligations in favor of purchasers in connection with
dispositions of personal property assets permitted under Section 5.6; (h) so
long as there exists no Event of Default both immediately before and immediately
after giving effect to any such transaction, Contingent Obligations existing or
arising under any Swap Contract, provided, however, that such obligations are
(or were) entered into by Borrower or an Affiliate in the ordinary course of
business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably
anticipated by such Person and not for purposes of speculation; and (i) other
Contingent Obligations not permitted by clauses (a) through (h) above, not to
exceed $500,000 in the aggregate at any time outstanding.

 

“Permitted Debt” means:  (a) Borrowers’ and its Subsidiaries’ Debt to Agent and
each Lender under this Agreement and the other Financing Documents; (b) Debt
incurred as a result of endorsing negotiable instruments received in the
ordinary course of business; (c) purchase money Debt not to exceed $1,000,000 at
any time (whether in the form of a loan or a lease) used solely to acquire
equipment used in the ordinary course of business and secured only by such
equipment; (d) Debt existing on the date of this Agreement and described on
Schedule 5.1; (e) so long as there exists no Event of Default both immediately
before and immediately after giving effect to any such transaction, Debt
existing or arising under any Swap Contract, provided, however, that such
obligations are (or were) entered into by Borrower or an Affiliate in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person and not for purposes of speculation;
(f) Debt in the form of insurance premiums financed through the applicable
insurance company; (g) trade accounts payable arising and paid on a timely basis
and in the ordinary course of business; (h) Subordinated Debt, (i) refinancing
of Debt referred to in clauses (c) and (d) so long as:  (A) the terms and
conditions of such refinancing (taken as a whole) are not, as determined by the
Agent in its Permitted Discretion, materially more onerous to the Credit Parties
taken as a whole than the terms and conditions of the Debt being refinanced,
(B) such refinancing does not result in an increase in the principal amount of
the Debt so refinanced (other than with respect to capitalization of interest,
costs, and fees), (C) such refinancing does not result in a shortening of the
average weighted maturity of the Debt so refinanced, (D) if the Debt that is
refinanced was subordinated in right of payment to any of the Obligations, then
the terms and conditions of the refinancing must include subordination terms and
conditions that are at least as favorable to the Lenders as those that were
applicable to the refinanced Debt , and (E) the refinancing is non-recourse to
any Credit Party other than any Credit Party which was obligated with respect to
the Debt that was refinanced, (j) Debt owing from one Credit Party to another
Credit Party, (k) guarantees by a Credit Party of the obligations of any other
Credit Party arising pursuant to a lease or license by such Credit Party, as the
case may be, of real or personal property in the ordinary course of business of
such Credit Party (not including any guarantee of Debt other than any Debt
permitted under clause (c) of this definition); provided, that, the person
issuing

 

18

--------------------------------------------------------------------------------

 

such guarantee is permitted hereunder to incur directly the obligation that is
being guaranteed; (l) any Debt which is a Permitted Contingent Obligation,
(m) unsecured Debt of a Credit Party arising after the date hereof to reimburse
the issuer of a bond issued in each case in the ordinary course of business
required for: (x) the performance of tenders, bids, leases, trade contracts
(other than for the repayment of Debt), statutory obligations, and other similar
obligations and (y) an appeal, stay or discharge in the course of legal
proceedings involving such Credit Party, (n) Debt incurred by any Credit Party
constituting reimbursement obligations with respect to bankers’ acceptances and
letters of credit issued in the ordinary course of business and not supporting
Debt for borrowed money, including letters of credit in respect of workers’
compensation laws, unemployment insurance laws or similar legislation, or other
Debt with respect to reimbursement type obligations regarding workers’
compensation laws, unemployment insurance laws or similar legislation so long as
the total of the aggregate amount of the reimbursement obligations (contingent
or matured) under all such Debt and (without duplication) the aggregate maximum
undrawn amount available for drawing under all such acceptances and letters of
credit shall not exceed $1,000,000 at any one time, and (o) other unsecured Debt
in an aggregate principal amount not to exceed $1,000,000 at any one time.

 

“Permitted Discretion” means, as to any Agent or Lender, a determination made in
good faith and in the exercise of commercially reasonable (from the perspective
of a secured asset-based lender) business judgment exercised in accordance with
generally applicable practices of such Agent or Lender for transactions of the
type provided for in this Agreement (provided further that, as it relates to the
establishment or changes in the amounts of Reserves or determinations made with
respect to the Borrowing Base and Eligible Accounts, such determination may
reflect the Agent’s review of updated appraisals and valuations, inspections and
field audits or other Collateral evaluations conducted in accordance with this
Agreement).

 

“Permitted Distributions” means the following Restricted Distributions: 
(a) dividends by any Subsidiary of any Borrower to such parent Borrower;
(b) dividends payable solely in common stock; and (c) payments by CardioNet to
purchase, redeem, retire or acquire shares of its capital stock in an aggregate
amount not to exceed $500,000 in any fiscal year if, and only to the extent
that, at the time of any such payment, no Default or Event of Default has
occurred and is continuing and no Default or Event of Default would result from
the making of such payment.

 

“Permitted Investments” means:  (a) Investments shown on Schedule 5.7 and
existing on the Closing Date; (b) cash equivalents, and (ii) any similar short
term Investments permitted by Borrowers’ and its Subsidiaries’ investment
policies, as amended from time to time, provided, however, that such investment
policy (and any such amendment thereto) has been approved in writing by Agent
(such approval not to be unreasonably withheld, conditioned or delayed) (but
further provided that, Borrowers’ investment policies as provided to Agent as of
the Closing Date and attached hereto as part of Schedule 5.7 is hereby so
approved by Agent); (c) Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; (d) Investments consisting of (i) travel advances and
employee relocation loans and other employee loans and advances in the ordinary
course of business, and (ii) loans to employees, officers or directors relating
to the purchase of equity securities of Borrowers or their Subsidiaries pursuant
to employee stock purchase plans or agreements approved by Borrowers’ Board of
Directors (or other governing body), but the aggregate of all such loans
outstanding may not exceed $100,000 at any time; (e) Investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
customers or suppliers; (f) Investments consisting of notes receivable of, or
prepaid royalties and other credit extensions, to customers and suppliers who
are not Affiliates, in the ordinary course of business, provided, however, that
this subpart (f) shall not apply to Investments of Borrowers in any Subsidiary;
(g) Investments consisting of Deposit Accounts in which Agent has received a
Deposit Account Control

 

19

--------------------------------------------------------------------------------

 

Agreement; (h) Investments by any Borrower in any other Borrower made in
compliance with Section 4.11(c); (i) other Investments in an amount not
exceeding $500,000 in the aggregate, (j) guarantees constituting Permitted Debt,
(k) an Investment by any Credit Party in Swap Contracts permitted hereunder, and
(l) Investments received in connection with a bankruptcy or reorganization of
customers and suppliers.

 

“Permitted Liens” means:  (a) deposits or pledges of cash to secure obligations
under workmen’s compensation, social security or similar laws, or under
unemployment insurance (but excluding Liens arising under ERISA) pertaining to a
Borrower’s or its Subsidiary’s employees, if any; (b) deposits or pledges of
cash to secure bids, tenders, contracts (other than contracts for the payment of
money or the deferred purchase price of property or services), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of business; (c) carrier’s, warehousemen’s,
mechanic’s, workmen’s, materialmen’s or other like Liens on Collateral other
than any Collateral which is part of the Borrowing Base, arising in the ordinary
course of business with respect to obligations which are not due, or which are
being contested pursuant to a Permitted Contest; (d) Liens on Collateral, other
than Accounts (with an exception under this exclusion permitting Liens described
in this clause (d) on Accounts to the extent the obligations for taxes or other
governmental charges secured by such Liens, together with the obligations
secured by the Liens on Collateral that is part of the Borrowing Base described
in the proviso to clause (b) of Section 4.5, shall not exceed $50,000
outstanding at any one time but only if and to the extent that such Liens on
Accounts are junior in priority to the Liens of Agent on such Accounts), for
taxes or other governmental charges not at the time delinquent or thereafter
payable without penalty or the subject of a Permitted Contest; (e) attachments,
appeal bonds, judgments and other similar Liens on Collateral, arising in
connection with court proceedings that do not constitute an Event of Default;
(f) with respect to real estate, easements, rights of way, restrictions, minor
defects or irregularities of title, none of which, individually or in the
aggregate, materially interfere with the benefits of the security intended to be
provided by the Security Documents, materially affect the value or marketability
of the Collateral, materially impair the use or operation of the Collateral for
the use currently being made thereof or materially impair Borrowers’ ability to
pay the Obligations in a timely manner or materially impair the use of the
Collateral or the ordinary conduct of the business of any Borrower or any
Subsidiary and which, in the case of any real estate which is part of the
Collateral, are set forth as exceptions to or subordinate matters in the title
insurance policy accepted by Agent insuring the lien of the Security Documents;
(g) Liens and encumbrances in favor of Agent under the Financing Documents;
(h) Liens on Collateral other than Collateral that is part of the Borrowing Base
existing on the date hereof and set forth on Schedule 5.2; (i) any Lien on any
equipment securing Debt permitted under subpart (c) of the definition of
Permitted Debt, provided, however, that such Lien attaches concurrently with or
within twenty (20) days after the acquisition thereof, (j) the right to setoff
against pledges and deposits of cash of any Credit Party in the ordinary course
of business with any financial institution at which a deposit account of such
Credit Party is maintained to secure obligations of such Credit Party to such
financial institution in connection with such deposit account and the cash
management services provided by such financial institution (but no other
obligations to such financial institution including without limitation
obligations for borrowed Debt) for which such deposit account is used consistent
with the current practices of such Credit Party as of the date hereof, (k) liens
arising from (i) operating leases and the precautionary UCC financing statement
filings in respect thereof and (ii) equipment or other materials which are not
owned by any Credit Party located on the premises of such Credit Party (but not
in connection with, or as part of, the financing thereof) from time to time in
the ordinary course of business of such Credit Party and the precautionary UCC
financing statement filings in respect thereof, and (l) Liens incurred by any
Credit Party in connection with the cash collateralization of letters of credit
and bankers’ acceptances to the extent such letters of credit and bankers’
acceptances constitute Permitted Debt.

 

20

--------------------------------------------------------------------------------

 

“Permitted Modifications” means (a) such amendments or other modifications to a
Borrower’s or Subsidiary’s Organizational Documents as are required under this
Agreement or by applicable Law and fully disclosed to Agent within forty-five
(45) days after such amendments or modifications have become effective, and
(b) such amendments or modifications to a Borrower’s or Subsidiary’s
Organizational Documents (other than those involving a change in the name of a
Borrower or Subsidiary or involving a reorganization of a Borrower or Subsidiary
under the laws of a different jurisdiction or a conversion or reorganization of
a Borrower or Subsidiary as a different type of legal entity) that would not
materially and adversely affect the rights and interests of the Agent or Lenders
and fully disclosed to Agent within forty-five (45) days after such amendments
or modifications have become effective. Notwithstanding anything to the contrary
contained in the foregoing, a conversion of caridioCORE Lab, Inc. from a
Delaware corporation to a Delaware limited liability company at any time after
the Closing Date shall be a Permitted Modification if and only on the conditions
that (i) Borrowers shall provide at least ten (10) Business Days prior written
notice of its intention to make such conversion, (ii) such written notice shall
include copies of the proposed Organizational Documents for the converted
limited liability company, which such proposed Organizational Documents shall be
reasonably acceptable to Agent and shall, at a minimum, include provisions
consistent with the requirements of clause (ii) of Section 5(l) of the Pledge
Agreement executed on the Closing Date by CardioNet, Inc. in favor of Agent
(“Pledge Agreement”), (iii) Borrowers shall not consummate such conversion
unless Agent shall have confirmed that Agent shall have taken all steps deemed
necessary by Agent to continue the perfection and priority of its Liens in the
assets of the converted limited liability company and (iv) immediately upon such
conversion, (x) CardioNet, Inc,. shall deliver to Agent certificates (together
with appropriate instruments of transfer executed in blank) representing the
membership/equity interests of the converted limited liability company, together
with a Pledge Supplement and amended schedules to the Pledge Agreement, (y) the
converted limited liability company and the other Borrowers shall deliver to
Agent an executed amended and restated Note, and (z) the converted limited
liability company shall deliver to Agent an executed reaffirmation of this
Agreement and the other Financing Documents in form and substance satisfactory
to Agent together with any other documents, instruments or legal opinions
reasonably requested by Agent in connection with such conversion and
reaffirmation transactions.

 

“Person” means any natural person, corporation, limited liability company,
professional association, limited partnership, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any Governmental Authority.

 

“Pro Rata Share” means (a) with respect to a Lender’s obligation to make
Revolving Loans and such Lender’s right to receive the unused line fee described
in Section 2.2(b), the Revolving Loan Commitment Percentage of such Lender,
(b) with respect to a Lender’s right to receive payments of principal and
interest with respect to Revolving Loans, such Lender’s Revolving Loan Exposure
with respect thereto; and (c) for all other purposes (including, without
limitation, the indemnification obligations arising under Section 11.6) with
respect to any Lender, the percentage obtained by dividing (i) the sum of the
Revolving Loan Commitment Amount of such Lender (or, in the event the Revolving
Loan Commitment shall have been terminated, such Lender’s then existing
Revolving Loan Outstandings), by (ii) the sum of the Revolving Loan Commitment
(or, in the event the Revolving Loan Commitment shall have been terminated, the
then existing Revolving Loan Outstandings) of all Lenders.

 

“Required Lenders” means at any time Lenders holding (a) sixty-six and two
thirds percent (66 2/3%) or more of the Revolving Loan Commitment, or (b) if the
Revolving Loan Commitment has been terminated, sixty-six and two thirds percent
(66 2/3%) or more of the then aggregate outstanding principal balance of the
Loans.

 

21

--------------------------------------------------------------------------------

 

“Reserves” means, as of any date of determination, such amounts as the Agent may
from time to time in its Permitted Discretion establish as reserves against and
deductions from the Borrowing Base (in each case without duplication of any
other Reserve instituted in accordance with the terms hereof) (a) to reflect
events, conditions, contingencies or risks which adversely affect (i) any
Collateral or the collectability thereof, or (ii) the priority, perfection or
enforceability of any of the security interests and Liens of Agent or any Lender
in the Collateral, or (b) in respect of any state of facts which the Agent
reasonably determines to constitute a Default or an Event of Default (including
any failure by Borrowers to perform any obligation under this Agreement or the
other Financing Documents to pay or satisfy any obligations, indebtedness or
liabilities of any Borrower with respect to which Agent has the option hereunder
to perform such obligation on behalf of Borrowers).

 

“Responsible Officer” means any of the Chief Executive Officer, Chief Financial
Officer or any other officer of the applicable Borrower reasonably acceptable to
Agent.

 

“Restricted Distribution” means as to any Person (a) any dividend or other
distribution (whether in cash, securities or other property) on any equity
interest in such Person (except those payable solely in its equity interests of
the same class), (b) any payment by such Person on account of (i) the purchase,
redemption, retirement, defeasance, surrender, cancellation, termination or
acquisition of any equity interests in such Person or any claim respecting the
purchase or sale of any equity interest in such Person, or (ii) any option,
warrant or other right to acquire any equity interests in such Person, (c) any
management fees, salaries or other fees or compensation to any Person holding an
equity interest in a Borrower or a Subsidiary of a Borrower (other than
(A) payments of salaries to individuals, (B) directors fees, and (C) advances
and reimbursements to employees or directors, all in the ordinary course of
business), an Affiliate of a Borrower or an Affiliate of any Subsidiary of a
Borrower, (d) any lease or rental payments to an Affiliate or Subsidiary of a
Borrower, or (e) repayments of or debt service on loans or other indebtedness
held by any Person holding an equity interest in a Borrower or a Subsidiary of a
Borrower, an Affiliate of a Borrower or an Affiliate of any Subsidiary of a
Borrower unless permitted under and made pursuant to a Subordination Agreement
applicable to such loans or other indebtedness.

 

“Revolving Lender” means each Lender having a Revolving Loan Commitment Amount
in excess of zero (or, in the event the Revolving Loan Commitment shall have
been terminated at any time, each Lender at such time having Revolving Loan
Outstandings in excess of zero).

 

“Revolving Loan Availability” means, at any time, the Revolving Loan Limit minus
the Revolving Loan Outstandings.

 

“Revolving Loan Borrowing” means a borrowing of a Revolving Loan.

 

“Revolving Loan Commitment” means, as of any date of determination, the
aggregate Revolving Loan Commitment Amounts of all Lenders as of such date.

 

“Revolving Loan Commitment Amount” means, as to any Lender, the dollar amount
set forth opposite such Lender’s name on the Commitment Annex under the column
“Revolving Loan Commitment Amount” (if such Lender’s name is not so set forth
thereon, then the dollar amount on the Commitment Annex for the Revolving Loan
Commitment Amount for such Lender shall be deemed to be zero), as such amount
may be adjusted from time to time by (a) any amounts assigned (with respect to
such Lender’s portion of Revolving Loans outstanding and its commitment to make
Revolving Loans) pursuant to the terms of any and all effective assignment
agreements to which such Lender is a party, and (b) any Additional
Tranche(s) activated by Borrowers pursuant to the terms hereof.  For the
avoidance of doubt, the aggregate Revolving Loan Commitment Amount of all
Lenders on the Closing Date shall be

 

22

--------------------------------------------------------------------------------

 

$15,000,000 and if the Additional Tranche is fully activated by Borrowers
pursuant to the terms of the Agreement such amount shall increase to
$30,000,000.

 

“Revolving Loan Commitment Percentage” means, as to any Lender, (a) on the
Closing Date, the percentage set forth opposite such Lender’s name on the
Commitment Annex under the column “Revolving Loan Commitment Percentage” (if
such Lender’s name is not so set forth thereon, then, on the Closing Date, such
percentage for such Lender shall be deemed to be zero), and (b) on any date
following the Closing Date, the percentage equal to the Revolving Loan
Commitment Amount of such Lender on such date divided by the Revolving Loan
Commitment on such date.

 

“Revolving Loan Exposure” means, with respect to any Lender on any date of
determination, the percentage equal to the amount of such Lender’s Revolving
Loan Outstandings on such date divided by the aggregate Revolving Loan
Outstandings of all Lenders on such date.

 

“Revolving Loan Limit” means, at any time, the lesser of (a) the Revolving Loan
Commitment and (b) the Borrowing Base.

 

“Revolving Loan Outstandings” means, at any time of calculation, (a) the then
existing aggregate outstanding principal amount of Revolving Loans, and (b) when
used with reference to any single Lender, the then existing outstanding
principal amount of Revolving Loans advanced by such Lender.

 

“Revolving Loans” has the meaning set forth in Section 2.1(b).

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Account” means a “securities account” (as defined in Article 9 of
the UCC), an investment account, or other account in which investment property
or securities are held or invested for credit to or for the benefit of any
Borrower.

 

“Securities Account Control Agreement” means an agreement, in form and substance
satisfactory to Agent, among Agent, any applicable Borrower and each securities
intermediary in which such Borrower maintains a Securities Account pursuant to
which Agent shall obtain “control” (as defined in Article 9 of the UCC) over
such Securities Account.

 

“Security Document” means this Agreement and any other agreement, document or
instrument executed concurrently herewith or at any time hereafter pursuant to
which one or more Credit Parties or any other Person either (a) Guarantees
payment or performance of all or any portion of the Obligations, and/or
(b) provides, as security for all or any portion of the Obligations, a Lien on
any of its assets in favor of Agent for its own benefit and the benefit of the
Lenders, as any or all of the same may be amended, supplemented, restated or
otherwise modified from time to time.

 

“Settlement Date” has the meaning set forth in Section 11.13(a).

 

“Solvent” means, with respect to any Person, that such Person (a) owns and will
own assets the fair saleable value of which are (i) greater than the total
amount of its liabilities (including Contingent Obligations), 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

 

23

--------------------------------------------------------------------------------

 

intend to incur and does not believe that it will incur debts beyond its ability
to pay such debts as they become due.

 

“Subordinated Debt” means any Debt of Borrowers incurred pursuant to the terms
of the Subordinated Debt Documents and with the prior written consent of Agent,
all of which documents must be in form and substance acceptable to Agent in its
Permitted Discretion, and subject to a Subordination Agreement.  As of the
Closing Date, there is no Subordinated Debt.

 

“Subordinated Debt Documents” means any documents evidencing and/or securing
Debt governed by a Subordination Agreement, all of which documents must be in
form and substance acceptable to Agent in its Permitted Discretion.  As of the
Closing Date, there are no Subordinated Debt Documents.

 

“Subordination Agreement” means any agreement between Agent and another creditor
of Borrowers, as the same may be amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms thereof, pursuant to
which the Debt owing from any Borrower(s) and/or the Liens securing such Debt
granted by any Borrower(s) to such creditor are subordinated in any way to the
Obligations and the Liens created under the Security Documents, the terms and
provisions of such Subordination Agreements to have been agreed to by and be
acceptable to Agent in the exercise of its sole discretion.

 

“Subsidiary” means, with respect to any Person, (a) any corporation of which an
aggregate of more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, capital stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of more than fifty percent (50%) of such
capital stock whether by proxy, agreement, operation of law or otherwise, and
(b) any partnership or limited liability company in which such Person and/or one
or more Subsidiaries of such Person shall have an interest (whether in the form
of voting or participation in profits or capital contribution) of more than
fifty percent (50%) or of which any such Person is a general partner or may
exercise the powers of a general partner.  Unless the context otherwise
requires, each reference to a Subsidiary shall be a reference to a Subsidiary of
a Borrower.

 

“Swap Contract” means any “swap agreement”, as defined in Section 101 of the
Bankruptcy Code, that is obtained by Borrower to provide protection against
fluctuations in interest or currency exchange rates, but only if Agent provides
its prior written consent to the entry into such “swap agreement”.

 

“Taxes” has the meaning set forth in Section 2.8.

 

“Termination Date” means the earlier to occur of (a) the Commitment Expiry Date,
(b) any date on which Agent accelerates the maturity of the Loans pursuant to
Section 10.2, or (c) the termination date stated in any notice of termination of
this Agreement provided by Borrowers in accordance with Section 2.12.

 

“Third Party Payor” means Medicare, Medicaid, TRICARE, and other state or
federal health care program, Blue Cross and/or Blue Shield, private insurers,
managed care plans and any other Person or entity which presently or in the
future maintains Third Party Payor Programs.

 

24

--------------------------------------------------------------------------------

 

“Third Party Payor Programs” means all payment and reimbursement programs,
sponsored by a Third Party Payor, in which a Borrower participates.

 

“TRICARE” means the program administered pursuant to 10 U.S.C. Section 1071 et.
seq), Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code and
the regulations promulgated pursuant to such statutes.

 

“UCC” means the Uniform Commercial Code of the State of Maryland or of any other
state the laws of which are required to be applied in connection with the
perfection of security interests in any Collateral.

 

“United States” means the United States of America.

 

Section 1.2                                   Accounting Terms and
Determinations.  Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder (including,
without limitation, determinations made pursuant to the exhibits hereto) shall
be made, and all financial statements required to be delivered hereunder shall
be prepared on a consolidated basis in accordance with GAAP applied on a basis
consistent with the most recent audited consolidated financial statements of
each Borrower and its Consolidated Subsidiaries delivered to Agent and each of
the Lenders on or prior to the Closing Date.  If at any time any change in GAAP
would affect the computation of any financial ratio or financial requirement set
forth in any Financing Document, and either Borrowers or the Required Lenders
shall so request, the Agent, the Lenders and Borrowers shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of the Required
Lenders); provided, however, that until so amended, (a) such ratio or
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and (b) Borrowers shall provide to the Agent and the Lenders
financial statements and other documents required under this Agreement which
include a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.  Notwithstanding any
other provision contained herein, all terms of an accounting or financial nature
used herein shall be construed, and all computations of amounts and ratios
referred to herein shall be made, without giving effect to any election under
Statement of Financial Accounting Standards 159 (or any other Financial
Accounting Standard having a similar result or effect) to value any Debt or
other liabilities of any Credit Party or any Subsidiary of any Credit Party at
“fair value”, as defined therein.

 

Section 1.3                                   Other Definitional and
Interpretive Provisions.  References in this Agreement to “Articles”,
“Sections”, “Annexes”, “Exhibits”, or “Schedules” shall be to Articles,
Sections, Annexes, Exhibits or Schedules of or to this Agreement unless
otherwise specifically provided.  Any term defined herein may be used in the
singular or plural.  “Include”, “includes” and “including” shall be deemed to be
followed by “without limitation”.  Except as otherwise specified or limited
herein, references to any Person include the successors and assigns of such
Person.  References “from” or “through” any date mean, unless otherwise
specified, “from and including” or “through and including”, respectively. 
Unless otherwise specified herein, the settlement of all payments and fundings
hereunder between or among the parties hereto shall be made in lawful money of
the United States and in immediately available funds.  References to any statute
or act shall include all related current regulations and all amendments and any
successor statutes, acts and regulations.  All amounts used for purposes of
financial calculations required to be made herein shall be without duplication. 
References to any statute or act, without additional reference, shall be deemed
to refer to federal statutes and acts of the United States.  References to any
agreement, instrument or document shall include all schedules, exhibits, annexes
and other attachments thereto. References to capitalized terms that are not
defined herein (including on any Schedule hereto),

 

25

--------------------------------------------------------------------------------

 

but are defined in the UCC, shall have the meanings given them in the UCC.  All
references herein to times of day shall be references to daylight or standard
time, as applicable.

 

Section 1.4                                   Time is of the Essence.  Time is
of the essence in Borrower’s and each other Credit Party’s performance under
this Agreement and all other Financing Documents.

 

ARTICLE 2- LOANS

 

Section 2.1                                   Loans.

 

(a)                                  [RESERVED]

 

(b)                                 Revolving Loans and Borrowings.  On the
terms and subject to the conditions set forth herein, each Lender severally
agrees to make loans to Borrowers from time to time as set forth herein (each a
“Revolving Loan”, and collectively, “Revolving Loans”) equal to such Lender’s
Revolving Loan Commitment Percentage of Revolving Loans requested by Borrowers
hereunder, provided, however, that after giving effect thereto, the Revolving
Loan Outstandings shall not exceed the Revolving Loan Limit.  Borrowers shall
deliver to Agent a Notice of Borrowing with respect to each proposed Revolving
Loan Borrowing, such Notice of Borrowing to be delivered before 1:00 p.m.
(Eastern time) two (2) Business Days prior to the date of such proposed
borrowing.  Each Borrower and each Revolving Lender hereby authorizes Agent to
make Revolving Loans on behalf of Revolving Lenders, at any time in its sole
discretion, to pay principal owing in respect of the Loans and interest, fees,
expenses and other charges and amounts then due and payable by any Credit Party
from time to time arising under this Agreement or any other Financing Document
(regardless of whether the conditions for the making of Revolving Loans under
Section 7.2 hereof have been satisfied at such time).  The Borrowing Base shall
be determined by Agent based on the most recent Borrowing Base Certificate
delivered to Agent in accordance with this Agreement and such other information
as may be available to Agent.  Without limiting any other rights and remedies of
Agent hereunder or under the other Financing Documents, the Revolving Loans
shall be subject to Agent’s continuing right to withhold from the Borrowing Base
Reserves, and to increase and decrease such Reserves from time to time, in all
such cases in Agent’s Permitted Discretion.

 

(i)                                     Mandatory Revolving Loan Repayments and
Prepayments.

 

(A)                              The Revolving Loan Commitment shall terminate
on the Termination Date.  On such Termination Date, there shall become due, and
Borrowers shall pay, the entire outstanding principal amount of each Revolving
Loan, together with accrued and unpaid Obligations pertaining thereto.

 

(B)                                If at any time the Revolving Loan
Outstandings exceed the Revolving Loan Limit, then, on the next succeeding
Business Day, Borrowers shall repay the Revolving Loans in an aggregate amount
equal to such excess.

 

(C)                                Principal payable on account of Revolving
Loans shall be payable by Borrowers to Agent (I) immediately upon the receipt by
any Borrower or Agent of any payments on or proceeds from any of the Accounts,
to the extent of such payments or proceeds, as further described in Section 2.11
below, and (II) in full on the Termination Date.

 

26

--------------------------------------------------------------------------------

 

(ii)                                  Optional Prepayments.  Borrowers may from
time to time prepay the Revolving Loans in whole or in part; provided, however,
that any such partial prepayment shall be in an amount equal to $100,000 or a
higher integral multiple of $25,000.

 

(iii)                               LIBOR Rate.

 

(A)                              Except as provided in subsection (C) below,
Revolving Loans shall accrue interest at the LIBOR Rate plus the Applicable
Margin.

 

(B)                                The LIBOR Rate may be adjusted by Agent with
respect to any Lender on a prospective basis to take into account any additional
or increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs, in each case, due to changes in applicable Law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor), which
additional or increased costs would increase the cost of funding loans bearing
interest based upon the LIBOR Rate; provided, however, that notwithstanding
anything in this Agreement to the contrary, (i) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (ii) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “change in
applicable Law”, regardless of the date enacted, adopted or issued.  In any such
event, the affected Lender shall give Borrowers and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the notice to
each other Lender and, upon its receipt of the notice from the affected Lender,
Borrowers may, by notice to such affected Lender (I) require such Lender to
furnish to Borrowers a statement setting forth the basis for adjusting such
LIBOR Rate and the method for determining the amount of such adjustment, or
(II) repay the Loans bearing interest based upon the LIBOR Rate with respect to
which such adjustment is made.

 

(C)                                In the event that any change in market
conditions or any law, regulation, treaty, or directive, or any change therein
or in the interpretation of application thereof, shall at any time after the
date hereof, in the reasonable opinion of any Lender, make it unlawful or
impractical for such Lender to fund or maintain Loans bearing interest based
upon the LIBOR Rate or to continue such funding or maintaining, or to determine
or charge interest rates at the LIBOR Rate, such Lender shall give notice of
such changed circumstances to Agent and Borrowers and Agent promptly shall
transmit the notice to each other Lender and (I) in the case of any outstanding
Loans of such Lender bearing interest based upon the LIBOR Rate, the date
specified in such Lender’s notice shall be deemed to be the last day of the
Interest Period of such Loans, and interest upon such Lender’s Loans thereafter
shall accrue interest at Base Rate plus the Applicable Margin, and (II)  such
Loans shall continue to accrue interest at Base Rate plus the Applicable Margin
until such Lender determines that it would no longer be unlawful or impractical
to maintain such Loans at the LIBOR Rate.

 

(D)                               Anything to the contrary contained herein
notwithstanding, neither Agent nor any Lender is required actually to acquire
eurodollar deposits to fund

 

27

--------------------------------------------------------------------------------

 

or otherwise match fund any Obligation as to which interest accrues based on the
LIBOR Rate.

 

(c)                                  Additional Tranches.  After the Closing
Date, so long as no Default or Event of Default exists and subject to the terms
of this Agreement, with the prior written consent of Agent and all Lenders in
their sole discretion, the Revolving Loan Commitment may be increased upon the
written request of Borrower Representative (which such request shall state the
aggregate amount of the Additional Tranche requested and shall be made at least
forty-five (45) days prior to the proposed effective date of such Additional
Tranche) to Agent to activate an Additional Tranche; provided, however, that
Agent and Lenders shall have no obligation to consent to any requested
activation of an Additional Tranche and the written consent of Agent and all
Lenders shall be required in order to activate an Additional Tranche.  Upon
activating an Additional Tranche, each Lender’s Commitment shall increase by a
proportionate amount so as to maintain the same Pro Rata Percentage of the
Revolving Loan Commitment as such Lender held immediately prior to such
activation.  In the event Agent and all Lenders do not consent to the activation
of a requested Additional Tranche (and, in any such case where any Lender other
than MCF does not so consent, MCF does not elect to exercise its option pursuant
to the final sentence of this Section 2.1(c)) within forty-five (45) days after
receiving a written request from Borrower Representative, then the Revolving
Loan Commitment shall not be increased and, within the next ninety (90) days,
Borrowers may terminate this Agreement upon written notice to Agent and, if the
Borrowing Base on the date of such request would have supported such increased
Revolving Loan Commitment, upon repayment in full of all Obligations, no fee
shall be due pursuant to Section 2.2(d) in connection with such termination. 
Notwithstanding anything to the contrary provided for in the foregoing, in the
event that any one or more Lender(s) other than MCF shall elect not to consent
to any requested activation of an Additional Tranche to which MCF has consented
(any such Lender in any such case, a “non-consenting Lender”), MCF, in its
discretion and without any obligation to do so, may elect for MCF (or any of its
Affiliates designated by MCF) to provide the portion of the increase to the
Revolving Loan Commitment that would have been provided by such non-consenting
Lender(s) if such non-consenting Lender(s) had consented to the requested
activation, and in any such case (x) each Lender’s Commitment shall be
recalculated so as to reflect the amount of such Lender’s Commitment as a
percentage of the total Revolving Loan Commitment after giving effect to all the
increases of the Commitments of any of the Lenders in connection with such
activation (including the non-proportionate increase in the Commitment of MCF
and/or its designated Affiliate) and (y) in the event MCF shall have designated
one or more Affiliate(s) to provide any portion of the non-consenting
Lender(s) increase in the Revolving Loan Commitment, such Affiliate(s) shall
become Lenders hereunder, all of the foregoing without the need for any
amendment to this Agreement or consent of any such non-consenting Lender or
other Lender.

 

Section 2.2                                   Interest, Interest Calculations
and Certain Fees.

 

(a)                                  Interest.  From and following the Closing
Date, except as expressly set forth in this Agreement, Loans and the other
Obligations shall bear interest at the sum of the LIBOR Rate plus the Applicable
Margin.  Interest on the Loans shall be paid in arrears on the first (1st) day
of each month and on the maturity of such Loans, whether by acceleration or
otherwise.  Interest on all other Obligations shall be payable upon demand.  For
purposes of calculating interest, after the delivery of the Sweep Notice to
Borrower Representative as described in Section 2.11(c), all funds transferred
to the Payment Account for application to any Revolving Loans shall be subject
to a six (6) Business Day clearance period and all interest accruing on such
funds during such clearance period shall accrue for the benefit of Agent, and
not for the benefit of the Lenders.  Without limiting the foregoing, at all
times prior to Agent delivering the Sweep Notice to Borrower Representative as
described in Section 2.11(c), Borrower shall pay to Agent, for itself and not
for the benefit of Lenders, interest accruing on all amounts that were

 

28

--------------------------------------------------------------------------------

 

collected and received by Borrower (whether in any Lockbox Account, Operating
Account, or otherwise) during such six (6) Business Day clearance period as if
such collections were transferred to the Payment Account, and Borrower shall
provide Agent with all bank statements and other supporting documentation
necessary for Agent to make such calculations of interest owed hereunder.

 

(b)                                 Unused Line Fee.  From and following the
Closing Date, Borrowers shall pay Agent, for the benefit of all Lenders
committed to make Revolving Loans, in accordance with their respective Pro Rata
Shares, a fee in an amount equal to (i) (A) the Revolving Loan Commitment minus
(B) the average daily balance of the sum of the Revolving Loan Outstandings
during the preceding month, multiplied by (ii) one-half of one percent (0.50%)
per annum.  Such fee is to be paid monthly in arrears on the first day of each
month.

 

(c)                                  Fee Letter.  In addition to the other fees
set forth herein, the Borrowers agree to pay Agent the fees set forth in the Fee
Letter.

 

(d)                                 Deferred Revolving Loan Origination Fee.  If
Lenders’ funding obligations in respect of the Revolving Loan Commitment under
this Agreement terminate for any reason (whether by voluntary termination by
Borrowers, by reason of the occurrence of an Event of Default or otherwise)
prior to the Commitment Expiry Date (but excluding any such termination of the
Revolving Loan Commitments in connection with a refinancing of the credit
facilities provided to Borrowers hereunder pursuant to a new credit facility or
facilities provided to Borrowers by MCF or any of its Affiliates), Borrowers
shall pay to Agent, for the benefit of all Lenders, a fee as compensation for
the costs of such Lenders being prepared to make funds available to Borrowers
under this Agreement, equal to an amount determined by multiplying the Revolving
Loan Commitment as in effect immediately prior to such termination by one
percent (1.00%). All fees payable pursuant to this paragraph shall be deemed
fully earned and non-refundable as of the Closing Date.

 

(e)                                  Audit Fees.  Borrowers shall pay to Agent,
for its own account and not for the benefit of any other Lenders, all reasonable
fees and expenses in connection with audits and inspections of Borrowers’ books
and records, audits, valuations or appraisals of the Collateral, audits of
Borrowers’ compliance with applicable Laws and such other matters as Agent shall
deem appropriate, which shall be due and payable on the first Business Day of
the month following the date of issuance by Agent of a written request for
payment thereof to Borrowers; provided that, notwithstanding anything to the
contrary contained in the foregoing, Borrower shall not be obligated to pay such
reasonable fees and expenses of Agent described in this Section 2.2(e) except
that (x) in the event that, at any time, the average daily amount of the
Revolving Loan Outstandings for any period of sixty (60) consecutive days
exceeds the amount equal to fifty (50%) of the average daily amount of the
Revolving Loan Limit for the same period (an “Audit Triggering Event”), Borrower
shall be obligated to pay such reasonable fees and expenses of Agent described
in this Section 2.2(e) with respect to any such audits, inspections, valuations
and appraisals conducted by Agent at any time following the occurrence of any
such Audit Triggering Event and (y) Borrower shall be obligated to pay such
reasonable fees and expenses of Agent described in this Section 2.2(e) with
respect to any such audits, inspections, valuations and appraisals conducted by
Agent at any time when a Default or Event of Default shall have occurred and
remains outstanding; and further provided that, nothing contained in the
foregoing proviso shall limit the ability of Agent to conduct any such audits,
inspections, valuations and appraisals from time to time at its own expense for
so long as no Default or Event of Default shall then exist in an amount up to
two (2) valuations and appraisals per calendar year.

 

(f)                                    Wire Fees.   Borrowers shall pay to
Agent, for its own account and not for the account of any other Lenders, on
written demand, fees for incoming and outgoing wires made for the

 

29

--------------------------------------------------------------------------------

 

account of Borrowers, such fees to be based on Agent’s then current wire fee
schedule (available upon written request of the Borrowers).

 

(g)                                 Late Charges.  If payments of principal
(other than a final installment of principal upon the Termination Date),
interest due on the Obligations, or any other amounts due hereunder or under the
other Financing Documents are not timely made (for the avoidance of doubt, any
payment of any amount owing hereunder by means of a Revolving Loan made pursuant
to the provisions of the third sentence of Section 2.1(b)(i) on the date such
amount shall be due and payable shall be deemed to have been timely made) and
remain overdue for a period of five (5) days, Borrowers, without notice or
demand by Agent, promptly shall pay to Agent, for its own account and not for
the benefit of any other Lenders, as additional compensation to Agent in
administering the Obligations, an amount equal to five percent (5.0%) of each
delinquent payment.

 

(h)                                 Computation of Interest and Related Fees. 
All interest and fees under each Financing Document shall be calculated on the
basis of a 360-day year for the actual number of days elapsed.  The date of
funding of a Loan shall be included in the calculation of interest.  The date of
payment of a Loan shall be excluded from the calculation of interest.  If a Loan
is repaid on the same day that it is made, one (1) day’s interest shall be
charged.

 

Section 2.3                                   Notes.  The portion of the Loans
made by each Lender shall be evidenced, if so requested by such Lender, by one
or more promissory notes executed by Borrowers on a joint and several basis
(each, a “Note”) in an original principal amount equal to such Lender’s
Revolving Loan Commitment Amount.  Upon activation of an Additional Tranche in
accordance with Section 2.1(c) hereof, Borrowers shall deliver to each Lender to
whom Borrowers previously delivered a Note, a restated Note evidencing such
Lender’s increased Revolving Loan Commitment Amount.

 

Section 2.4                                   [RESERVED]

 

Section 2.5                                   [RESERVED]

 

Section 2.6                                   General Provisions Regarding
Payment; Loan Account.

 

(a)                                  All payments to be made by each Borrower
under any Financing Document, including payments of principal and interest made
hereunder and pursuant to any other Financing Document, and all reasonable fees,
out-of-pocket expenses, indemnities and reimbursements, shall be made without
set-off, recoupment or counterclaim.  If any payment hereunder becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension (it being understood and agreed that, solely for purposes of
calculating financial covenants and computations contained herein and
determining compliance therewith, if payment is made, in full, on any such
extended due date, such payment shall be deemed to have been paid on the
original due date without giving effect to any extension thereto).  Any payments
received in the Payment Account before 12:00 Noon (Eastern time) on any date
shall be deemed received by Agent on such date, and any payments received in the
Payment Account at or after 12:00 Noon (Eastern time) on any date shall be
deemed received by Agent on the next succeeding Business Day.

 

(b)                                 Agent shall maintain a loan account (the
“Loan Account”) on its books to record Loans and other extensions of credit made
by the Lenders hereunder or under any other Financing Document, and all payments
thereon made by each Borrower.  All entries in the Loan Account shall be made in
accordance with Agent’s customary accounting practices as in effect from time to
time.  The

 

30

--------------------------------------------------------------------------------

 

balance in the Loan Account, as recorded in Agent’s books and records at any
time shall be conclusive and binding evidence of the amounts due and owing to
Agent by each Borrower absent manifest error; provided, however, that any
failure to so record or any error in so recording shall not limit or otherwise
affect any Borrower’s duty to pay all amounts owing hereunder or under any other
Financing Document.  Agent shall endeavor to provide Borrowers with a monthly
statement regarding the Loan Account (but neither Agent nor any Lender shall
have any liability if Agent shall fail to provide any such statement).  Unless
any Borrower notifies Agent of any objection to any such statement (specifically
describing the basis for such objection) within ninety (90) days after the date
of receipt thereof, it shall be deemed final, binding and conclusive upon
Borrowers in all respects as to all matters reflected therein.

 

Section 2.7            Maximum Interest.  In no event shall the interest charged
with respect to the Loans or any other Obligations of any Borrower under any
Financing Document exceed the maximum amount permitted under the laws of the
State of Maryland or of any other applicable jurisdiction.  Notwithstanding
anything to the contrary herein or elsewhere, if at any time the rate of
interest payable hereunder or under any Note or other Financing Document (the
“Stated Rate”) would exceed the highest rate of interest permitted under any
applicable law to be charged (the “Maximum Lawful Rate”), then for so long as
the Maximum Lawful Rate would be so exceeded, the rate of interest payable shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the Stated Rate is less than the Maximum Lawful Rate, each Borrower
shall, to the extent permitted by law, continue to pay interest at the Maximum
Lawful Rate until such time as the total interest received is equal to the total
interest which would have been received had the Stated Rate been (but for the
operation of this provision) the interest rate payable.  Thereafter, the
interest rate payable shall be the Stated Rate unless and until the Stated Rate
again would exceed the Maximum Lawful Rate, in which event this provision shall
again apply.  In no event shall the total interest received by any Lender exceed
the amount which it could lawfully have received had the interest been
calculated for the full term hereof at the Maximum Lawful Rate. If,
notwithstanding the prior sentence, any Lender has received interest hereunder
in excess of the Maximum Lawful Rate, such excess amount shall be applied to the
reduction of the principal balance of the Loans or to other amounts (other than
interest) payable hereunder, and if no such principal or other amounts are then
outstanding, such excess or part thereof remaining shall be paid to Borrowers. 
In computing interest payable with reference to the Maximum Lawful Rate
applicable to any Lender, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made.

 

Section 2.8            Taxes; Capital Adequacy.

 

(a)           All payments of principal and interest on the Loans and all other
amounts payable hereunder shall be made free and clear of and without deduction
for any present or future income, excise, stamp, documentary, payroll,
employment, property or franchise taxes and other taxes, fees, duties, levies,
assessments, withholdings or other charges of any nature whatsoever (including
interest and penalties thereon) imposed by any taxing authority, excluding taxes
imposed on or measured by Agent’s or any Lender’s net income by the
jurisdictions under which Agent or such Lender is organized or conducts business
(other than solely as the result of entering into any of the Financing Documents
or taking any action thereunder) (all non-excluded items being called “Taxes”). 
If any withholding or deduction from any payment to be made by any Borrower
hereunder is required in respect of any Taxes pursuant to any applicable Law,
then Borrowers will: (i) pay directly to the relevant authority the full amount
required to be so withheld or deducted; (ii) promptly forward to Agent an
official receipt or other documentation satisfactory to Agent evidencing such
payment to such authority; and (iii) pay to Agent for the account of Agent and
Lenders such additional amount or amounts as is necessary to ensure that the net
amount actually received by Agent and each Lender will equal the full amount
Agent and such Lender would have received had no such withholding or deduction
been required.  If any Taxes are directly

 

31

--------------------------------------------------------------------------------

 

asserted against Agent or any Lender with respect to any payment received by
Agent or such Lender hereunder, Agent or such Lender may pay such Taxes and
Borrowers will promptly pay such additional amounts (including any penalty,
interest or expense) as is necessary in order that the net amount received by
such Person after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount such Person would have received had
such Taxes not been asserted so long as such amounts have accrued on or after
the day which is two hundred seventy (270) days prior to the date on which Agent
or such Lender first made written demand therefor.

 

(b)           If any Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to Agent, for the account of Agent and the
respective Lenders, the required receipts or other required documentary
evidence, Borrowers shall indemnify Agent and Lenders for any incremental Taxes,
interest or penalties that may become payable by Agent or any Lender as a result
of any such failure.

 

(c)           Each Lender that (i) is organized under the laws of a jurisdiction
other than the United States, and (ii)(A) is a party hereto on the Closing Date
or (B) purports to become an assignee of an interest as a Lender under this
Agreement after the Closing Date (unless such Lender was already a Lender
hereunder immediately prior to such assignment) (each such Lender a “Foreign
Lender”) shall execute and deliver to each of Borrowers and Agent one or more
(as Borrowers or Agent may reasonably request) United States Internal Revenue
Service Forms W-8ECI, W-8BEN, W-8IMY (as applicable) and other applicable forms,
certificates or documents prescribed by the United States Internal Revenue
Service or reasonably requested by Agent certifying as to such Lender’s
entitlement to a complete exemption from withholding or deduction of Taxes. 
Borrowers shall not be required to pay additional amounts to any Lender pursuant
to this Section 2.8 with respect to United States withholding and income Taxes
to the extent that the obligation to pay such additional amounts would not have
arisen but for the failure of such Lender to comply with this paragraph other
than as a result of a change in law.

 

(d)           If any Lender shall determine in its commercially reasonable
judgment that the adoption or taking effect of, or any change in, any applicable
Law regarding capital adequacy, in each instance, after the Closing Date, or any
change after the Closing Date in the interpretation, administration or
application thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation, administration or application thereof,
or the compliance by any Lender or any Person controlling such Lender with any
request, guideline or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency adopted or otherwise taking effect after the Closing Date, has
or would have the effect of reducing the rate of return on such Lender’s or such
controlling Person’s capital as a consequence of such Lender’s obligations
hereunder to a level below that which such Lender or such controlling Person
could have achieved but for such adoption, taking effect, change,
interpretation, administration, application or compliance (taking into
consideration such Lender’s or such controlling Person’s policies with respect
to capital adequacy) then from time to time, upon written demand by such Lender
(which demand shall be accompanied by a statement setting forth the basis for
such demand and a calculation of the amount thereof in reasonable detail, a copy
of which shall be furnished to Agent), Borrowers shall promptly pay to such
Lender such additional amount as will compensate such Lender or such controlling
Person for such reduction, so long as such amounts have accrued on or after the
day which is two hundred seventy (270) days prior to the date on which such
Lender first made demand therefor; provided, however, that notwithstanding
anything in this Agreement to the contrary, (i) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (ii) all requests,
rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in

 

32

--------------------------------------------------------------------------------

 

each case be deemed to be a “change in applicable Law”, regardless of the date
enacted, adopted or issued.

 

(e)           If any Lender requires compensation under Section 2.8(d), or
requires any Borrower to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.8(a),
then, upon the written request of Borrower Representative, such Lender shall use
reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
(subject to the terms of this Agreement) to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or materially reduce amounts payable pursuant to any such
subsection, as the case may be, in the future, and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender (as determined in its sole discretion). 
Borrowers hereby agree to pay all reasonable costs and out-of-pocket expenses
incurred by any Lender in connection with any such designation or assignment.

 

Section 2.9            Appointment of Borrower Representative.  Each Borrower
hereby designates Borrower Representative as its representative and agent on its
behalf for the purposes of issuing Notices of Borrowing and Borrowing Base
Certificates, and giving instructions with respect to the disbursement of the
proceeds of the Loans, giving and receiving all other notices and consents
hereunder or under any of the other Financing Documents and taking all other
actions (including in respect of compliance with covenants) on behalf of any
Borrower or Borrowers under the Financing Documents.  Borrower Representative
hereby accepts such appointment.  Notwithstanding anything to the contrary
contained in this Agreement, no Borrower other than Borrower Representative
shall be entitled to take any of the foregoing actions.  The proceeds of each
Loan made hereunder shall be advanced to or at the direction of Borrower
Representative and if not used by Borrower Representative in its business (for
the purposes provided in this Agreement) shall be deemed to be immediately
advanced by Borrower Representative to the appropriate other Borrower hereunder
as an intercompany loan (collectively, “Intercompany Loans”).  All collections
of each Borrower in respect of Accounts and other proceeds of Collateral of such
Borrower received by Agent and applied to the Obligations shall also be deemed
to be repayments of the Intercompany Loans owing by such Borrower to Borrower
Representative.  Borrowers shall maintain accurate books and records with
respect to all Intercompany Loans and all repayments thereof.  Agent and each
Lender may regard any notice or other communication pursuant to any Financing
Document from Borrower Representative as a notice or communication from all
Borrowers, and may give any notice or communication required or permitted to be
given to any Borrower or all Borrowers hereunder to Borrower Representative on
behalf of such Borrower or all Borrowers.  Each Borrower agrees that each
notice, election, representation and warranty, covenant, agreement and
undertaking made on its behalf by Borrower Representative shall be deemed for
all purposes to have been made by such Borrower and shall be binding upon and
enforceable against such Borrower to the same extent as if the same had been
made directly by such Borrower.

 

Section 2.10         Joint and Several Liability; Rights of Contribution;
Subordination and Subrogation.

 

(a)           Borrowers are defined collectively to include all Persons named as
one of the Borrowers herein; provided, however, that any references herein to
“any Borrower”, “each Borrower” or similar references, shall be construed as a
reference to each individual Person named as one of the Borrowers herein.  Each
Person so named shall be jointly and severally liable for all of the obligations
of Borrowers under this Agreement.  Each Borrower, individually, expressly
understands, agrees and acknowledges, that the credit facilities would not be
made available on the terms herein in the absence of the collective credit of
all of the Persons named as the Borrowers herein, the joint and several
liability of

 

33

--------------------------------------------------------------------------------

 

all such Persons, and the cross-collateralization of the collateral of all such
Persons.  Accordingly, each Borrower individually acknowledges that the benefit
to each of the Persons named as one of the Borrowers as a whole constitutes
reasonably equivalent value, regardless of the amount of the credit facilities
actually borrowed by, advanced to, or the amount of collateral provided by, any
individual Borrower.  In addition, each entity named as one of the Borrowers
herein hereby acknowledges and agrees that all of the representations,
warranties, covenants, obligations, conditions, agreements and other terms
contained in this Agreement shall be applicable to and shall be binding upon and
measured and enforceable individually against each Person named as one of the
Borrowers herein as well as all such Persons when taken together.  By way of
illustration, but without limiting the generality of the foregoing, the terms of
Section 10.1 of this Agreement are to be applied to each individual Person named
as one of the Borrowers herein (as well as to all such Persons taken as a
whole), such that the occurrence of any of the events described in Section 10.1
of this Agreement as to any Person named as one of the Borrowers herein shall
constitute an Event of Default even if such event has not occurred as to any
other Persons named as the Borrowers or as to all such Persons taken as a whole.

 

(b)           Notwithstanding any provisions of this Agreement to the contrary,
it is intended that the joint and several nature of the liability of each
Borrower for the Obligations and the Liens granted by Borrowers to secure the
Obligations, not constitute a Fraudulent Conveyance (as defined below). 
Consequently, Agent, Lenders and each Borrower agree that if the liability of a
Borrower for the Obligations, or any Liens granted by such Borrower securing the
Obligations would, but for the application of this sentence, constitute a
Fraudulent Conveyance, the liability of such Borrower and the Liens securing
such liability shall be valid and enforceable only to the maximum extent that
would not cause such liability or such Lien to constitute a Fraudulent
Conveyance, and the liability of such Borrower and this Agreement shall
automatically be deemed to have been amended accordingly.  For purposes hereof,
the term “Fraudulent Conveyance” means a fraudulent conveyance under Section 548
of Chapter 11 of Title II of the Bankruptcy Code or a fraudulent conveyance or
fraudulent transfer under the applicable provisions of any fraudulent conveyance
or fraudulent transfer law or similar law of any state, nation or other
governmental unit, as in effect from time to time.

 

(c)           Agent is hereby authorized, without notice or demand (except as
otherwise specifically required under this Agreement) and without affecting the
liability of any Borrower hereunder, at any time and from time to time, to
(i) renew, extend or otherwise increase the time for payment of the Obligations;
(ii) with the written agreement of any Borrower, change the terms relating to
the Obligations or otherwise modify, amend or change the terms of any Note or
other agreement, document or instrument now or hereafter executed by any
Borrower and delivered to Agent for any Lender; (iii) accept partial payments of
the Obligations; (iv) take and hold any Collateral for the payment of the
Obligations or for the payment of any guaranties of the Obligations and
exchange, enforce, waive and release any such Collateral; (v) apply any such
Collateral and direct the order or manner of sale thereof as Agent, in its sole
discretion, may determine; and (vi) settle, release, compromise, collect or
otherwise liquidate the Obligations and any Collateral therefor in any manner,
all guarantor and surety defenses being hereby waived by each Borrower.  Without
limitations of the foregoing, with respect to the Obligations, each Borrower
hereby makes and adopts each of the agreements and waivers set forth in each
Guarantee, the same being incorporated hereby by reference.  Except as
specifically provided in this Agreement or any of the other Financing Documents,
Agent shall have the exclusive right to determine the time and manner of
application of any payments or credits, whether received from any Borrower or
any other source, and such determination shall be binding on all Borrowers.  All
such payments and credits may be applied, reversed and reapplied, in whole or in
part, to any of the Obligations that Agent shall determine, in its sole
discretion, without affecting the validity or enforceability of the Obligations
of the other Borrower.

 

34

--------------------------------------------------------------------------------

 

(d)           Each Borrower hereby agrees that, except as hereinafter provided,
its obligations hereunder shall be unconditional, irrespective of (i) the
absence of any attempt to collect the Obligations from any obligor or other
action to enforce the same; (ii) the waiver or consent by Agent with respect to
any provision of any instrument evidencing the Obligations, or any part thereof,
or any other agreement heretofore, now or hereafter executed by a Borrower and
delivered to Agent; (iii) failure by Agent to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
collateral for the Obligations; (iv) the institution of any proceeding under the
Bankruptcy Code, or any similar proceeding, by or against a Borrower or Agent’s
election in any such proceeding of the application of Section 1111(b)(2) of the
Bankruptcy Code; (v) any borrowing or grant of a security interest by a Borrower
as debtor-in-possession, under Section 364 of the Bankruptcy Code; (vi) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of
Agent’s claim(s) for repayment of any of the Obligations; or (vii) any other
circumstance other than payment in full of the Obligations which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or surety.

 

(e)           The Borrowers hereby agree, as between themselves, that to the
extent that Agent, on behalf of Lenders, shall have received from any Borrower
any Recovery Amount (as defined below), then the paying Borrower shall have a
right of contribution against each other Borrower in an amount equal to such
other Borrower’s contributive share of such Recovery Amount; provided, however,
that in the event any Borrower suffers a Deficiency Amount (as defined below),
then the Borrower suffering the Deficiency Amount shall be entitled to seek and
receive contribution from and against the other Borrowers in an amount equal to
the Deficiency Amount; and provided, further, that in no event shall the
aggregate amounts so reimbursed by reason of the contribution of any Borrower
equal or exceed an amount that would, if paid, constitute or result in
Fraudulent Conveyance.  Until all Obligations have been paid and satisfied in
full, no payment made by or for the account of a Borrower including, without
limitation, (i) a payment made by such Borrower on behalf of the liabilities of
any other Borrower, or (ii) a payment made by any other Guarantor under any
Guarantee, shall entitle such Borrower, by subrogation or otherwise, to any
payment from such other Borrower or from or out of such other Borrower’s
property.  The right of each Borrower to receive any contribution under this
Section 2.10(e) or by subrogation or otherwise from any other Borrower shall be
subordinate in right of payment to the Obligations and such Borrower shall not
exercise any right or remedy against such other Borrower or any property of such
other Borrower by reason of any performance of such Borrower of its joint and
several obligations hereunder, until the Obligations have been indefeasibly paid
and satisfied in full, and no Borrower shall exercise any right or remedy with
respect to this Section 2.10(e) until the Obligations have been indefeasibly
paid and satisfied in full.  As used in this Section 2.10(e), the term “Recovery
Amount” means the amount of proceeds received by or credited to Agent from the
exercise of any remedy of the Lenders under this Agreement or the other
Financing Documents, including, without limitation, the sale of any Collateral.
 As used in this Section 2.10(e), the term “Deficiency Amount” means any amount
that is less than the entire amount a Borrower is entitled to receive by way of
contribution or subrogation from, but that has not been paid by, the other
Borrowers in respect of any Recovery Amount attributable to the Borrower
entitled to contribution, until the Deficiency Amount has been reduced to zero
through contributions and reimbursements made under the terms of this
Section 2.10(e) or otherwise.

 

Section 2.11         Collections and Lockbox Account.

 

(a)           Borrowers shall maintain one or more lockboxes (each, a “Lockbox”)
with a United States depository institution designated from time to time by the
Borrower Representative and reasonably acceptable to Agent (the “Lockbox Bank”),
subject to the provisions of this Agreement, and, subject to the provisions of
Section 7.4 hereof below, shall execute with the Lockbox Bank a Deposit

 

35

--------------------------------------------------------------------------------

 

Account Control Agreement and such other agreements related to such Lockboxes as
Agent may require.  Borrowers shall ensure that all collections of Accounts
(other than Accounts for which the Account Debtor is a Governmental Account
Debtor) are paid directly from Account Debtors (i) into the Lockbox for deposit
into the Lockbox Account, and/or (ii) directly into the Lockbox Account;
provided, however, unless Agent shall otherwise direct by written notice to
Borrowers, Borrowers shall be permitted to cause Account Debtors who are
individuals to pay Accounts directly to Borrowers, which Borrowers shall then
deposit into the applicable Lockbox Account.

 

(b)           Borrowers shall establish and maintain one or more additional
lockboxes (also herein referred to collectively in the singular as the
“Lockbox”) and related Lockbox Accounts with the Lockbox Bank for the receipt
and collection of Accounts from Governmental Account Debtors, subject to the
provisions of this Agreement, and, subject to the provisions of Section 7.4
hereof below, shall execute with the Lockbox Bank a Deposit Account Restriction
Agreement and such other agreements related to such Lockbox as Agent may
require.  A separate Lockbox shall be established for each Borrower that is a
licensed provider under the Medicaid or Medicare programs, if applicable. 
Borrowers shall ensure that all collections of Accounts due from Governmental
Account Debtors are paid directly from such Account Debtors into the Lockbox
and/or Lockbox Account established pursuant to this subsection, and all funds
deposited into such Lockbox Account, shall be transferred via an automatic
intrabank transfer prior to Noon (Eastern time) on each Business Day into such
Borrower’s Lockbox Account established pursuant to subsection (a) above.

 

(c)           Agent shall initially permit funds deposited and transferred into
the various Lockbox Accounts to be transferred to the applicable Borrower’s
operating account (as identified on Schedule 5.14 attached hereto, each, an
“Operating Account”); provided, however, that at such time that Agent, acting on
a determination made by Agent in good faith and in the exercise of commercially
reasonable (from the perspective of a secured asset-based lender) business
judgment, notifies Borrower Representative in writing that all collections of
Accounts shall be directed to the Payment Account (a “Sweep Notice”), all
amounts deposited and transferred into the various Lockbox Accounts shall
thereafter be transferred by one or more wire transfers to the Payment Account
by the close of each Business Day; and provided, further, that Borrower shall
provide any notices or instructions to Lockbox Bank requested by Agent to effect
such transfer.

 

(d)           Notwithstanding anything in any Deposit Account Restriction
Agreement or Deposit Account Control Agreement to the contrary, Borrowers agree
that they shall be liable for any fees and charges in effect from time to time
and charged by the Lockbox Bank in connection with the Lockbox, the Lockbox
Account, and that Agent shall have no liability therefor.  Borrowers hereby
indemnify and agree to hold Agent harmless from any and all liabilities, claims,
losses and demands whatsoever, including reasonable attorneys’ fees and
out-of-pocket expenses, arising from or relating to actions of Agent or the
Lockbox Bank pursuant to this Section or any Deposit Account Restriction
Agreement or Deposit Account Control Agreement or similar agreement, except to
the extent of such losses arising solely from Agent’s gross negligence or
willful misconduct.

 

(e)           Agent shall apply, on a daily basis, all funds transferred into
the Payment Account pursuant to this Section to reduce the outstanding Revolving
Loans in such order of application as Agent shall elect.  If, as the result of
collections of Accounts pursuant to the terms and conditions of this Section, a
credit balance exists with respect to the Loan Account, such credit balance
shall not accrue interest in favor of Borrowers, but Agent shall transfer such
funds into an account designated by Borrower Representative for so long as no
Event of Default exists.

 

36

--------------------------------------------------------------------------------

 

(f)            To the extent that any collections of Accounts or proceeds of
other Collateral are not sent directly to the applicable Lockbox or Lockbox
Account but are received by any Borrower, such collections shall be held in
trust for the benefit of Agent pursuant to an express trust created hereby and
immediately remitted, in the form received, to applicable Lockbox or Lockbox
Account.  No such funds received by any Borrower shall be commingled with other
funds of the Borrowers.

 

(g)           Borrowers acknowledge and agree that compliance with the terms of
this Section is essential, and that Agent and Lenders will suffer immediate and
irreparable injury and have no adequate remedy at law, if any Borrower, through
acts or omissions, causes or permits Account Debtors to send payments other than
to the Lockbox or Lockbox Accounts or if any Borrower fails to promptly deposit
collections of Accounts or proceeds of other Collateral in the Lockbox Account
as herein required.  Accordingly, in addition to all other rights and remedies
of Agent and Lenders hereunder, Agent shall have the right to seek specific
performance of the Borrowers’ obligations under this Section, and any other
equitable relief as Agent may deem necessary or appropriate, and Borrowers waive
any requirement for the posting of a bond in connection with such equitable
relief.

 

(h)           Borrowers shall not, and Borrowers shall not suffer or permit any
Credit Party to, (x) send to or deposit in any Lockbox Account any funds other
than payments made with respect to and proceeds of Accounts or other Collateral,
(y) withdraw any amounts from any Lockbox Account, or (z) change the procedures
or sweep instructions under the agreements governing any Lockbox Accounts. 
Borrowers shall, and shall cause each Credit Party to, cooperate with Agent in
the identification and reconciliation on a daily basis of all amounts received
in or required to be deposited into the Lockbox Accounts.  If more than five
percent (5%) of the collections of Accounts received by Borrowers during any
given fifteen (15) day period is not identified or reconciled to the most recent
accounts receivable aging delivered by Borrowers to Agent pursuant to
Section 4.1 hereof to the reasonable satisfaction of Agent within ten
(10) Business Days of receipt, Agent shall not be obligated to make further
advances under this Agreement until such amount is identified or is reconciled
to the reasonable satisfaction of Agent, as the case may be.  In addition, if
any such amount cannot be identified or reconciled to the reasonable
satisfaction of Agent, Agent may utilize its own staff or, if it deems
necessary, engage an outside auditor, in either case at Borrowers’ expense
(which in the case of Agent’s own staff shall be in accordance with Agent’s then
prevailing customary charges (plus expenses)), to make such examination and
report as may be necessary to identify and reconcile such amount.

 

(i)            If any Borrower breaches its obligation to direct payments of the
proceeds of the Collateral to the Lockbox Account, Agent, as the irrevocably
made, constituted and appointed true and lawful attorney for Borrowers, may, by
the signature or other act of any of Agent’s officers (without requiring any of
them to do so), direct any Account Debtor to pay proceeds of the Collateral to
Borrowers by directing payment to the Lockbox Account.

 

Section 2.12         Termination; Restriction on Termination.

 

(a)           Termination by Lenders.  In addition to the rights set forth in
Section 10.2, Agent may, and at the direction of Required Lenders shall,
terminate this Agreement without notice upon or after the occurrence and during
the continuance of an Event of Default.

 

(b)           Termination by Borrowers.  Upon at least thirty (30) days’ prior
written notice to Agent and Lenders, Borrowers may, at its option, terminate
this Agreement; provided, however, that no such termination shall be effective
until Borrowers have complied with Section 2.2(d) and the terms of any Fee
Letter.  Any notice of termination given by Borrowers shall be irrevocable
unless all Lenders otherwise agree in writing and no Lender shall have any
obligation to make any Loans on or after the

 

37

--------------------------------------------------------------------------------

 

termination date stated in such notice.  Borrowers may elect to terminate this
Agreement in its entirety only.  No section of this Agreement or type of Loan
available hereunder may be terminated singly.

 

(c)           Effectiveness of Termination.  All of the Obligations shall be
immediately due and payable upon the Termination Date.  All undertakings,
agreements, covenants, warranties and representations of Borrowers contained in
the Financing Documents shall survive any such termination and Agent shall
retain its Liens in the Collateral and Agent and each Lender shall retain all of
its rights and remedies under the Financing Documents notwithstanding such
termination until all Obligations have been discharged or paid, in full, in
immediately available funds, including, without limitation, all Obligations
under Section 2.2(d) and the terms of any Fee Letter resulting from such
termination.  Notwithstanding the foregoing or the payment in full of the
Obligations, Agent shall not be required to terminate its Liens in the
Collateral unless, with respect to any loss or damage Agent may incur as a
result of dishonored checks or other items of payment received by Agent from
Borrower or any Account Debtor and applied to the Obligations, Agent shall, at
its option, (i) have received a written agreement satisfactory to Agent,
executed by Borrowers and by any Person whose loans or other advances to
Borrowers are used in whole or in part to satisfy the Obligations, indemnifying
Agent and each Lender from any such loss or damage or (ii) have retained cash
Collateral or other Collateral for such period of time as Agent, in its
discretion, may deem necessary to protect Agent and each Lender from any such
loss or damage.

 

ARTICLE 3- REPRESENTATIONS AND WARRANTIES

 

To induce Agent and Lenders to enter into this Agreement and to make the Loans
and other credit accommodations contemplated hereby, each Borrower hereby
represents and warrants to Agent and each Lender that:

 

Section 3.1            Existence and Power.  Each Credit Party is an entity as
specified on Schedule 3.1, is duly organized, validly existing and in good
standing under the laws of the jurisdiction specified on Schedule 3.1 and no
other jurisdiction, has the same legal name as it appears in such Credit Party’s
Organizational Documents and an organizational identification number (if any),
in each case as specified on Schedule 3.1, and has all powers and all Permits
necessary or desirable in the operation of its business as presently conducted
or as proposed to be conducted, except where the failure to have such Permits
could not reasonably be expected to have a Material Adverse Effect.  Each Credit
Party is qualified to do business as a foreign entity in each jurisdiction in
which it is required to be so qualified, which jurisdictions as of the Closing
Date are specified on Schedule 3.1, except where the failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect.  Except as
set forth on Schedule 3.1, no Credit Party (a) has had, over the five (5) year
period preceding the Closing Date, any name other than its current name, or
(b) was incorporated or organized under the laws of any jurisdiction other than
its current jurisdiction of incorporation or organization.

 

Section 3.2            Organization and Governmental Authorization; No
Contravention.  The execution, delivery and performance by each Credit Party of
the Operative Documents to which it is a party are within its powers, have been
duly authorized by all necessary action pursuant to its Organizational
Documents, require no further action by or in respect of, or filing with, any
Governmental Authority (other than the filing of UCC financing statements and
other registrations of Lines in favor of the Agent pursuant to the Financing
Documents, and except as such have been obtained) and do not violate, conflict
with or cause a breach or a default under (a) any Law applicable to any Credit
Party or any of the Organizational Documents of any Credit Party, or (b) any
agreement or instrument binding upon it, except for such violations, conflicts,
breaches or defaults as could not, with respect to this clause (b), reasonably
be expected to have a Material Adverse Effect.

 

38

--------------------------------------------------------------------------------

 

Section 3.3            Binding Effect.  Each of the Operative Documents to which
any Credit Party is a party constitutes a valid and binding agreement or
instrument of such Credit Party, enforceable against such Credit Party in
accordance with its respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency or other similar laws relating to the
enforcement of creditors’ rights generally and by general equitable principles.

 

Section 3.4            Capitalization.  The authorized equity securities of each
of the Credit Parties as of the Closing Date are as set forth on Schedule 3.4. 
All issued and outstanding equity securities of each of the Credit Parties are
duly authorized and validly issued, fully paid, nonassessable, free and clear of
all Liens other than those in favor of Agent for the benefit of Agent and
Lenders, and such equity securities were issued in compliance with all
applicable Laws.  The identity of the holders of the equity securities of each
of the Credit Parties and the percentage of their fully-diluted ownership of the
equity securities of each of the Credit Parties as of the Closing Date is set
forth on Schedule 3.4 (provided that, in the case of CardioNet, such Schedule
3.4 shall set forth the identity and fully-diluted ownership of only those
Person that identified as the holders of the equity securities of CardioNet in
CardioNet’s Schedule 14A Proxy Statement filed with the SEC on March 28, 2012,
which is the Schedule 14A Proxy Statement most recently filed by CardioNet prior
to the Closing Date).  No shares of the capital stock or other equity securities
of any Credit Party, other than those described above, are issued and
outstanding as of the Closing Date.  Except as set forth on Schedule 3.4, as of
the Closing Date there are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from any Credit Party of any equity securities of any
such entity.

 

Section 3.5            Financial Information.  All information delivered to
Agent and pertaining to the financial condition of any Credit Party fairly
presents the financial position of such Credit Party as of such date in
conformity with GAAP (and as to unaudited financial statements, subject to
normal year-end adjustments and the absence of footnote disclosures).  Since
December 31, 2011, there has been no development, event, act, condition or
occurrence of any nature that has occurred that has had or could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

Section 3.6            Litigation.  Except for the Pending CID and other
Litigation (if any) as set forth on Schedule 3.6 as of the Closing Date, and
except as hereafter disclosed to Agent in writing, there is no Litigation
pending against, or to such Borrower’s knowledge threatened in writing against
or affecting, any Credit Party or, to such Borrower’s knowledge, any party to
any Operative Document other than a Credit Party.  There is no Litigation
pending in which an adverse decision could reasonably be expected to have a
Material Adverse Effect or which in any manner draws into question the validity
of any of the Operative Documents.

 

Section 3.7            Ownership of Property.  Each Borrower and each of its
Subsidiaries is the lawful owner of, has good and marketable title to and is in
lawful possession of, or has valid leasehold interests in, all properties and
other assets (real or personal, tangible, intangible or mixed) purported or
reported to be owned or leased (as the case may be) by such Person.

 

Section 3.8            No Default.  No Event of Default, or to such Borrower’s
knowledge, Default, has occurred and is continuing.  No Credit Party is in
breach or default under or with respect to any contract, agreement, lease or
other instrument to which it is a party or by which its property is bound or
affected, which breach or default could reasonably be expected to have a
Material Adverse Effect.

 

Section 3.9            Labor Matters.    As of the Closing Date, there are no
strikes or other labor disputes pending or, to any Borrower’s knowledge,
threatened (in writing with respect to any such disputes other than strikes)
against any Credit Party.  Hours worked and payments made to the employees

 

39

--------------------------------------------------------------------------------

 

of the Credit Parties have not been in violation of the Fair Labor Standards Act
or any other applicable Law dealing with such matters.  All payments due from
the Credit Parties, or for which any claim may be made against any of them, on
account of wages and employee and retiree health and welfare insurance and other
benefits have been paid or accrued as a liability on their books, as the case
may be.  The consummation of the transactions contemplated by the Financing
Documents will not give rise to a right of termination or right of renegotiation
on the part of any union under any collective bargaining agreement to which it
is a party or by which it is bound.

 

Section 3.10         Regulated Entities.  No Credit Party is an “investment
company” or a company “controlled” by an “investment company” or a “subsidiary”
of an “investment company,” all within the meaning of the Investment Company Act
of 1940.

 

Section 3.11         Margin Regulations.  None of the proceeds from the Loans
have been or will be used, directly or indirectly, for the purpose of purchasing
or carrying any “margin stock” (as defined in Regulation U of the Federal
Reserve Board), for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any “margin stock” or for any other
purpose which might cause any of the Loans to be considered a “purpose credit”
within the meaning of Regulation T, U or X of the Federal Reserve Board.

 

Section 3.12         Compliance With Laws; Anti-Terrorism Laws.

 

(a)           Each Credit Party is in compliance with the requirements of all
applicable Laws, except for such Laws the noncompliance with which could not
reasonably be expected to have a Material Adverse Effect.

 

(b)           None of the Credit Parties nor any of their Subsidiaries (i) is in
violation of any Anti-Terrorism Law, (ii) engages in or conspires to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law, (iii) is a Blocked Person, or is controlled by a Blocked
Person, (iv) is acting or will act for or on behalf of a Blocked Person, (v) is
associated with, or will become associated with, a Blocked Person or (vi) is
providing, or will provide, material, financial or technical support or other
services to or in support of acts of terrorism of a Blocked Person.  No Credit
Party nor any of their Subsidiaries or agents acting or benefiting in any
capacity in connection with the transactions contemplated by this Agreement,
(A) conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Blocked Person, or
(B) deals in, or otherwise engages in any transaction relating to, any property
or interest in property blocked pursuant to Executive Order No. 13224, any
similar executive order or other Anti-Terrorism Law.

 

Section 3.13         Taxes.  All federal, state and local tax returns, tax
reports and statements required to be filed by or on behalf of each Credit Party
have been filed with the appropriate Governmental Authorities in all
jurisdictions in which such returns, reports and statements are required to be
filed and, except to the extent subject to a Permitted Contest, all material
Taxes (including real property Taxes) and other charges shown to be due and
payable in respect thereof have been timely paid prior to the date on which any
fine, penalty, interest, late charge or loss may be added thereto for nonpayment
thereof.  Except to the extent subject to a Permitted Contest, all material
state and local sales and use Taxes required to be paid by each Credit Party
have been paid.  All federal and state returns have been filed by each Credit
Party for all periods for which returns were due with respect to employee income
tax withholding, social security and unemployment taxes, and, except to the
extent subject to a Permitted Contest, the amounts shown thereon to be due and
payable have been paid in full or adequate provisions therefor have been made.

 

40

--------------------------------------------------------------------------------

 

 

Section 3.14         Compliance with ERISA.

 

(a)           Each ERISA Plan (and the related trusts and funding agreements)
complies in form and in operation with, has been administered in compliance
with, and the terms of each ERISA Plan satisfy, the applicable requirements of
ERISA and the Code in all material respects.  Each ERISA Plan which is intended
to be qualified under Section 401(a) of the Code is so qualified, and the United
States Internal Revenue Service has issued a favorable determination letter with
respect to each such ERISA Plan which may be relied on currently.  No Credit
Party has incurred liability for any material excise tax under any of
Sections 4971 through 5000 of the Code.

 

(b)           Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, each Borrower and each Subsidiary
is in compliance with the applicable provisions of ERISA and the provision of
the Code relating to ERISA Plans and the regulations and published
interpretations therein.  During the thirty-six (36) month period prior to the
Closing Date or the making of any Loan, (i) no steps have been taken to
terminate any Pension Plan, and (ii) no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA.  No condition exists or event or transaction has
occurred with respect to any Pension Plan which could result in the incurrence
by any Credit Party of any material liability, fine or penalty.  No Credit Party
has incurred liability to the PBGC (other than for current premiums) with
respect to any employee Pension Plan.  All contributions (if any) have been made
on a timely basis to any Multiemployer Plan that are required to be made by any
Credit Party or any other member of the Controlled Group under the terms of the
plan or of any collective bargaining agreement or by applicable Law; no Credit
Party nor any member of the Controlled Group has withdrawn or partially
withdrawn from any Multiemployer Plan, incurred any withdrawal liability with
respect to any such plan or received notice of any claim or demand for
withdrawal liability or partial withdrawal liability from any such plan, and no
condition has occurred which, if continued, could result in a withdrawal or
partial withdrawal from any such plan, and no Credit Party nor any member of the
Controlled Group has received any notice that any Multiemployer Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any such
plan is or has been funded at a rate less than that required under Section 412
of the Code, that any such plan is or may be terminated, or that any such plan
is or may become insolvent.

 

Section 3.15         Consummation of Operative Documents; Brokers.  Except for
fees payable to Agent and/or Lenders, no broker, finder or other intermediary
has brought about the obtaining, making or closing of the transactions
contemplated by the Operative Documents, and no Credit Party has or will have
any obligation to any Person in respect of any finder’s or brokerage fees,
commissions or other expenses in connection herewith or therewith.

 

Section 3.16         Related Transactions.  All transactions contemplated by the
Operative Documents to be consummated on or prior to the date hereof have been
so consummated (including, without limitation, the disbursement and transfer of
all funds in connection therewith) in all material respects pursuant to the
provisions of the applicable Operative Documents, true and complete copies of
which have been delivered to Agent, and in compliance with all applicable Law,
except for such Laws the noncompliance with which would not reasonably be
expected to have a Material Adverse Effect.

 

Section 3.17         Material Contracts.  Except for the Operative Documents and
the other agreements set forth on Schedule 3.17, as of the Closing Date there
are no (a) employment agreements covering the management of any Credit Party,
(b) collective bargaining agreements or other similar labor agreements covering
any employees of any Credit Party, (c) agreements for managerial, consulting or
similar services to which any Credit Party is a party or by which it is bound,
(d) agreements regarding any

 

41

--------------------------------------------------------------------------------

 

Credit Party, its assets or operations or any investment therein to which any of
its equity holders is a party or by which it is bound, (e) real estate
leases, Intellectual Property licenses or other lease or license agreements to
which any Credit Party is a party, either as lessor or lessee, or as licensor or
licensee (other than licenses arising from the purchase of “off the shelf”
products), (f) vendor or supply agreements or similar agreements to which any
Credit Party is a party and pursuant to which any one or more of the Credit
Parties purchases goods or services from a third party, (g) third party billing
arrangements and other customer contracts to which any Credit Party is a party,
in each case with respect to the preceding clauses (a) through (f) requiring
payment by Credit Parties of more than $500,000 in any year (excluding, in the
case of any such contract or agreement described in clause (e), any such
contract or agreement that can be terminated by the applicable Credit Parties
without cause on no more than 30 days notice and without payment of any penalty
or termination fee or payment of any guaranteed payments or “take or pay”
payments or any similar payment of amounts that would otherwise be payable by
such Credit Parties under such contract or agreement in the absence of any such
termination) and in each case with respect to the preceding clause (g) providing
for (or expected to provide for) revenues to Credit Parties of more than
$500,000 in any year, (h) partnership agreements to which any Credit Party is a
general partner or joint venture agreements to which any Credit Party is a
party, or (i) any other agreements or instruments to which any Credit Party is a
party, and the breach, nonperformance or cancellation of which, or the failure
of which to renew, could reasonably be expected to have a Material Adverse
Effect (all of such contracts and agreements of Borrowers of the type described
in the foregoing clauses (a) through (i), collectively with the Operative
Documents, the “Material Contracts”).  Schedule 3.17 sets forth, with respect to
each real estate lease agreement to which any Borrower is a party (as a lessee)
as of the Closing Date, the address of the subject property and the annual
rental (or, where applicable, a general description of the method of computing
the annual rental).  The consummation of the transactions contemplated by the
Financing Documents will not give rise to a right of termination in favor of any
party to any Material Contract (other than any Credit Party), except for such
Material Contracts the noncompliance with which would not reasonably be expected
to have a Material Adverse Effect.

 

Section 3.18         Compliance with Environmental Requirements; No Hazardous
Materials.  Except in each case as set forth on Schedule 3.18:

 

(a)           no notice, notification, demand, request for information,
citation, summons, complaint or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is pending,
or to such Borrower’s knowledge, threatened in writing by any Governmental
Authority or other Person with respect to any (i) alleged violation by any
Credit Party of any Environmental Law, (ii) alleged failure by any Credit Party
to have any Permits required in connection with the conduct of its business or
to comply with the terms and conditions thereof, (iii) any generation,
treatment, storage, recycling, transportation or disposal of any Hazardous
Materials, or (iv) release of Hazardous Materials; and

 

(b)           to the knowledge of each Borrower, no property now owned or leased
by any Credit Party and, and no such property previously owned or leased by any
Credit Party, to which any Credit Party has, directly or indirectly, transported
or arranged for the transportation of any Hazardous Materials, is listed or, to
such Borrower’s knowledge, proposed for listing, on the National Priorities List
promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or any similar
state list or is the subject of federal, state or local enforcement actions or,
to the knowledge of such Borrower, other investigations which may lead to claims
against any Credit Party for clean-up costs, remedial work, damage to natural
resources or personal injury claims, including, without limitation, claims under
CERCLA.

 

42

--------------------------------------------------------------------------------

 

Section 3.19         Intellectual Property.  Each Credit Party owns, is licensed
to use or otherwise has the right to use, all Intellectual Property that is
material to the condition (financial or other), business or operations of such
Credit Party.  All Intellectual Property existing as of the Closing Date which
is issued, registered or pending with any United States or foreign Governmental
Authority (including, without limitation, any and all applications for the
registration of any Intellectual Property with any such United States or foreign
Governmental Authority) and all licenses under which any Borrower is the
licensee of any such registered Intellectual Property (or any such application
for the registration of Intellectual Property) owned by another Person are set
forth on Schedule 3.19, and upon any acquisition or creation by any Credit Party
of, or filing by any Credit Party of any application for the registration of any
such registered Intellectual Property or license for the use of any such
registered Intellectual Property (or application therefor), Borrowers shall
promptly (but in any event not later than the delivery by Borrowers of the next
quarterly Compliance Certificate required pursuant to Section 4.1 above) deliver
notice of such acquisition, creation, filing or license to Agent.  Such
Schedule 3.19 indicates in each case whether such registered Intellectual
Property (or application therefore) is owned or licensed by such Credit Party,
and in the case of any such licensed registered Intellectual Property (or
application therefore), lists the name and address of the licensor and the name
and date of the agreement pursuant to which such item of Intellectual Property
is licensed and whether or not such license is an exclusive license.  All
registered Intellectual Property of each Credit Party is duly and properly
registered, filed or issued in the appropriate office and jurisdictions for such
registrations, filings or issuances, except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect. To such Borrower’s
knowledge, each Credit Party conducts its business without infringement or claim
of infringement of any Intellectual Property rights of others and there is no
infringement or claim of infringement by others of any Intellectual Property
rights of any Credit Party, which infringement or claim of infringement could
reasonably be expected to have a Material Adverse Effect.

 

Section 3.20         Solvency.  After giving effect to the Loan advances and the
liabilities and obligations of each Borrower under the Operative Documents, each
Borrower and each additional Credit Party is Solvent.

 

Section 3.21         Full Disclosure.  None of the written information
(financial or otherwise) furnished by or on behalf of any Credit Party to Agent
or any Lender in connection with the consummation of the transactions
contemplated by the Operative Documents, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which such statements were made.  All financial projections delivered to Agent
and the Lenders by Borrowers (or their agents) have been prepared on the basis
of the assumptions stated therein.  Such projections represent each Borrower’s
good faith estimate of such Borrower’s future financial performance and such
assumptions are believed by such Borrower to be fair and reasonable in light of
current business conditions ; provided, however, that Borrowers can give no
assurance that such projections will be attained.

 

Section 3.22         Subsidiaries.  Borrowers do not own any stock, partnership
interests, limited liability company interests or other equity securities except
for Permitted Investments and except as set forth on Schedule 3.4.

 

ARTICLE 4- AFFIRMATIVE COVENANTS

 

Each Borrower agrees that, so long as any Credit Exposure exists:

 

Section 4.1            Financial Statements and Other Reports.  Each Borrower
will deliver to Agent:  (a) as soon as available, but no later than thirty days
(30) days after the last day of each fiscal month that

 

43

--------------------------------------------------------------------------------

 

is not also the last month in a fiscal quarter, a company prepared consolidated
balance sheet and income statement covering Borrowers’ and their Consolidated
Subsidiaries’ consolidated operations during the period, prepared under GAAP,
consistently applied, certified by a Responsible Officer of Borrower
Representative and in a form acceptable to Agent, together with a Compliance
Certificate as evidence that no Event of Default has occurred, (b) as soon as
available, but no later than forty-five (45) days after the last day of each
fiscal quarter, a company prepared consolidated balance sheet, cash flow and
income statement covering Borrowers’ and their Consolidated Subsidiaries’
consolidated operations during the period, prepared under GAAP, consistently
applied, certified by a Responsible Officer of Borrower Representative and in a
form acceptable to Agent, together with a Compliance Certificate as evidence
that no Event of Default has occurred; (c) together with the financial reporting
package described in (b) above, evidence of payment and satisfaction of all
payroll, withholding and similar taxes due and owing by all Borrowers with
respect to the payroll period(s) occurring during such fiscal quarter; (d) as
soon as available, but no later than ninety (90) days after the last day of
Borrower’s fiscal year, audited consolidated financial statements prepared under
GAAP, consistently applied, together with an unqualified opinion on the
financial statements from an independent certified public accounting firm
acceptable to Agent in its reasonable discretion, together with a Compliance
Certificate as evidence that no Event of Default has occurred; (e) within five
(5) days of delivery or filing thereof, copies of all statements, reports and
notices made available to Borrower’s security holders or to any holders of
Subordinated Debt and copies of all reports and other filings made by Borrower
with any stock exchange on which any securities of any Borrower are traded
and/or the SEC; (f) a prompt (and in any event within five (5) Business Days) 
report of any legal actions pending or threatened in writing against any
Borrower or any of its Subsidiaries that could result in damages or costs to any
Borrower or any of its Subsidiaries of One Million Dollars ($1,000,000) or more;
(g) prompt (and in any event within three (3) Business Days) written notice of
an event that materially and adversely affects the ability of Borrowers to use
any Intellectual Property owned and/or licensed by Borrowers as necessary for
the operation of the businesses of Borrowers as they are conducted on the
Closing Date; and (h) budgets, sales projections, operating plans and other
financial information and information, reports or statements regarding the
Borrowers, their business and the Collateral as Agent may from time to time
reasonably request.  Promptly (any in any event within ten (10) Business Days)
upon their becoming available, Borrowers shall deliver to Agent copies of all
Material Contracts.  Each Borrower will, within ten (10) Business Days after the
last day of each month, deliver to Agent a duly completed Borrowing Base
Certificate signed by a Responsible Officer of Borrower Representative, with
aged listings of accounts receivable and accounts payable (by invoice date). 
Borrowers shall, every ninety (90) days on a schedule to be designated by Agent,
and at such other times as Agent shall reasonably request, deliver to Agent a
schedule of Eligible Accounts denoting, for the thirty (30) largest Account
Debtors during such quarter, such Account Debtor’s credit rating(s), if any, as
rated by A.M. Best Company, Standard & Poor’s Corporation, Moody’s Investors
Service, Inc., FITCH, Inc. or other applicable rating agent.

 

Section 4.2            Payment and Performance of Obligations.  Each Borrower
(a) will pay and discharge, and cause each Subsidiary to pay and discharge, on a
timely basis as and when due, all of their respective obligations and
liabilities, except for such obligations and/or liabilities (i) that may be the
subject of a Permitted Contest, and (ii) the nonpayment or nondischarge of which
could not reasonably be expected to have a Material Adverse Effect or result in
a Lien against any Collateral, except for Permitted Liens, (b) without limiting
anything contained in the foregoing clause (a), pay all amounts due and owing in
respect of material Taxes (including without limitation, payroll and
withholdings tax liabilities) on a timely basis as and when due, and in any case
prior to the date on which any fine, penalty, interest, late charge or loss may
be added thereto for nonpayment thereof, (c) will maintain, and cause each
Subsidiary to maintain, in accordance with GAAP, appropriate reserves for the
accrual of all of their respective obligations and liabilities, and (d) will not
breach or permit any Subsidiary to breach, or permit to exist any default under,
the terms of any lease, commitment, contract, instrument or obligation to which
it is a

 

44

--------------------------------------------------------------------------------

 

party, or by which its properties or assets are bound, except for such breaches
or defaults which could not reasonably be expected to have a Material Adverse
Effect.

 

Section 4.3            Maintenance of Existence.  Each Borrower will preserve,
renew and keep in full force and effect and in good standing, and will cause
each Subsidiary to preserve, renew and keep in full force and effect and in good
standing, their respective existence and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business.

 

Section 4.4            Maintenance of Property; Insurance.

 

(a)           Each Borrower will keep, and will cause each Subsidiary to keep,
all property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted.

 

(b)           Upon completion of any Permitted Contest, Borrowers shall, and
will cause each Subsidiary to, promptly pay the amount due, if any, and deliver
to Agent proof of the completion of the contest and payment of the amount due,
if any .

 

(c)           As long as reasonably available within the insurance marketplace,
each Borrower will maintain (i) casualty insurance on all real and personal
property on an all risks basis, covering the repair and replacement cost of all
such property and coverage, business interruption and rent loss (if applicable)
coverages with extended period of indemnity (for the period reasonably required
by Agent from time to time) and indemnity for extra expense, in each case
without application of coinsurance and with agreed amount endorsements,
(ii) general and professional liability insurance (including products/completed
operations liability coverage) , and (iii) such other insurance coverage in such
amounts and with respect to such risks as Agent may reasonably request from time
to time, it being understood that the insurance reflected on Schedule 4.4
(subject to the provisions of item #5 on Schedule 7.4) is acceptable to the
Agent and so long as the Borrowers maintain such coverage (with the same or with
similarly qualified carriers), no additional insurance will be required by
Agent; provided, however, that in no event shall such insurance be in amounts or
with coverage less than, or with carriers with qualifications materially
inferior to, any of the insurance or carriers in existence as of the Closing
Date, as evidenced by the insurance certificates attached hereto as Schedule
4.4.  All such insurance shall be provided by insurers having an A.M. Best
policyholders rating reasonably acceptable to Agent.

 

(d)           As reasonably available within the insurance marketplace, on or
prior to the Closing Date, and at all times thereafter, each Borrower will cause
Agent to be named as an additional insured, assignee and lender loss payee
(which shall include, as applicable, identification as mortgagee), as
applicable, on each insurance policy required to be maintained pursuant to this
Section 4.4 pursuant to endorsements issued by the insurers issuing such
policies in form and substance acceptable to Agent, which such endorsements
shall, at a minimum, include effective waivers (whether under the terms of any
such policy or otherwise) by the insurer of all claims for insurance premiums
against all loss payees and additional insureds named in such endorsements and
all rights of subrogation against all loss payees and additional insureds named
in such endorsements, and that if all or any part of such policy is canceled,
the insurer will forthwith give notice thereof to each additional insured,
assignee and loss payee named in such endorsements and that no cancellation in
coverage thereof shall be effective until at least thirty (30) days after
receipt by each additional insured, assignee and loss payee named in such
endorsements of written notice thereof, except for ten (10) days for non-payment
of premium.  Borrowers shall deliver to Agent and the Lenders (i) on the Closing
Date, a certificate from Borrowers’ insurance broker dated such date showing the
amount of coverage as of such date, and endorsements as described in the
preceding sentence with respect to each applicable insurance policy, (ii) on an
annual basis, and upon the request of

 

45

--------------------------------------------------------------------------------

 

any Lender through Agent from time to time, full information as to the insurance
carried, (iii) within five (5) days of receipt of notice of cancellation from
any insurer, a copy of any notice of cancellation from that existing on the date
of this Agreement, (iv) forthwith, notice of any cancellation of coverage by any
Borrower, and (v) at least one (1) Business Days prior to expiration of any
policy of insurance, evidence of renewal of such insurance upon the terms and
conditions herein required.

 

(e)           In the event any Borrower fails to provide Agent with evidence of
the insurance coverage required by this Agreement, Agent may purchase insurance
at Borrowers’ expense to protect Agent’s interests in the Collateral.  This
insurance may, but need not, protect such Borrower’s interests.  The coverage
purchased by Agent may not pay any claim made by such Borrower or any claim that
is made against such Borrower in connection with the Collateral.  Such Borrower
may later cancel any insurance purchased by Agent, but only after providing
Agent with evidence that such Borrower has obtained insurance as required by
this Agreement.  If Agent purchases insurance for the Collateral, Borrowers will
be responsible for the costs of that insurance to the fullest extent provided by
law, including interest and other charges imposed by Agent in connection with
the placement of the insurance, until the effective date of the cancellation or
expiration of the insurance.  The costs of the insurance may be added to the
Obligations.  The costs of the insurance may be more than the cost of insurance
such Borrower is able to obtain on its own.

 

Section 4.5            Compliance with Laws and Material Contracts.  Each
Borrower will comply, and cause each Subsidiary to comply, with the requirements
of all applicable Laws and Material Contracts, except to the extent that failure
to so comply could not reasonably be expected to (a) have a Material Adverse
Effect, or (b) result in any Lien upon either (i) a material portion of the
assets of any such Person in favor of any Governmental Authority, or (ii) any
Collateral which is part of the Borrowing Base; provided that, notwithstanding
anything to the contrary in this clause (b), it shall not be deemed a breach of
this clause (b) to the extent that any such Lien results on any Collateral that
is part of the Borrowing Base to the extent that the obligations secured by such
Liens, together with any obligations for taxes or governmental charges of the
type described in clause (d) of the definition of Permitted Liens secured by
Liens on Accounts also described in clause (d) of the definition of Permitted
Liens, shall not exceed $50,000 outstanding at any one time but only if and to
the extent that such Liens on Collateral with is part of the Borrowing Base are
junior in priority to the Liens of Agent on such Collateral..

 

Section 4.6            Inspection of Property, Books and Records.  Each Borrower
will keep, and will cause each Subsidiary to keep, proper books of record
substantially in accordance with GAAP in which full, true and correct entries
shall be made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to permit, at the
sole cost of the Borrowers (but only to the extent of Borrowers’ obligations for
such costs pursuant to Section 2.2(e) above), representatives of Agent and of
any Lender to visit and inspect any of their respective properties, to examine
and make abstracts or copies from any of their respective books and records, to
conduct a collateral audit and analysis of their respective operations and the
Collateral, to verify the amount and age of the Accounts, the identity and
credit of the respective Account Debtors, to review the billing practices of
Borrowers and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants as often
as may reasonably be desired.  In the absence of a Default or an Event of
Default, Agent or any Lender exercising any rights pursuant to this Section 4.6
shall give the applicable Borrower or any applicable Subsidiary commercially
reasonable prior notice of such exercise.  No notice shall be required during
the existence and continuance of any Default or Event of Default or any time
during which Agent reasonably believes a Default or Event of Default exists.

 

Section 4.7            Use of Proceeds.  Borrowers shall use the proceeds of
Revolving Loans solely for (a) transaction fees incurred in connection with the
Financing Documents and the refinancing on the

 

46

--------------------------------------------------------------------------------

 

Closing Date of Debt, and (b) for working capital needs of Borrowers and their
Subsidiaries.  No portion of the proceeds of the Loans will be used for family,
personal, agricultural or household use.

 

Section 4.8            Estoppel Certificates.  After written request by Agent,
Borrowers, within fifteen (15) days and at their expense, will furnish Agent
with a statement, duly acknowledged and certified, setting forth (a) the amount
of the original principal amount of the Notes, and the unpaid principal amount
of the Notes, (b) the rate of interest of the Notes, (c) the date payments of
interest and/or principal were last paid, (d) any offsets or defenses to the
payment of the Obligations, and if any are alleged, the nature thereof, (e) that
the Notes and this Agreement have not been modified or if modified, giving
particulars of such modification, and (f) that there has occurred and is then
continuing no Default or if such Default exists, the nature thereof, the period
of time it has existed, and the action being taken to remedy such Default. 
After written request by Agent, Borrowers, within fifteen (15) days and at their
expense, will furnish Agent with a certificate, signed by a Responsible Officer
of Borrowers, updating all of the representations and warranties contained in
this Agreement and the other Financing Documents and certifying that all of the
representations and warranties contained in this Agreement and the other
Financing Documents, as updated pursuant to such certificate, are true, accurate
and complete in all material respects as of the date of such certificate.

 

Section 4.9            Notices of Litigation and Defaults.  Borrowers will give
prompt written notice (and in any event within three (3) Business Days) to Agent
(a) of (I) any litigation or governmental proceedings pending or threatened (in
writing) against Borrowers or other Credit Party which would reasonably be
expected to have a Material Adverse Effect with respect to Borrowers or any
other Credit Party or which in any manner calls into question the validity or
enforceability of any Financing Document and (II) without limiting the
generality of the preceding clause (I), any and all written correspondence sent
or received by Borrowers and/or their legal to or from any Governmental
Authority and/or its legal counsel in connection with the Pending CID or in
connection with any further civil investigative demand proceeds or investigation
regarding Borrowers’ use of diagnostic codes for Medicare billings commenced or
pursued by any Governmental Authority (including the DOJ WD Washington) that is
outside of the scope of the Pending CID (which notice shall include a copy of
such correspondence), (b) upon any Borrower becoming aware of the existence of
any Default or Event of Default, (c) if any Credit Party is in breach or default
under or with respect to any Material Contract, or if any Credit Party is in
breach or default under or with respect to any other contract, agreement, lease
or other instrument to which it is a party or by which its property is bound or
affected, which breach or default could reasonably be expected to have a
Material Adverse Effect, (d) of any strikes or other labor disputes pending or,
to any Borrower’s knowledge, threatened (in writing in the case of disputes
other than strikes) against any Credit Party, (e) if there is any infringement
or claim of infringement by any other Person with respect to any Intellectual
Property rights of any Credit Party that could reasonably be expected to have a
Material Adverse Effect, or if there is any claim by any other Person that any
Credit Party in the conduct of its business is infringing on the Intellectual
Property Rights of others, and (f) of all returns, recoveries, disputes and
claims that involve more than $500,000.  Borrowers represent and warrant that
Schedule 4.9 sets forth a complete list of all matters existing as of the
Closing Date for which notice could be required under this Section.

 

Section 4.10         Hazardous Materials; Remediation.  If any release or
disposal of Hazardous Materials shall occur or shall have occurred on any real
property or any other assets of any Borrower or any other Credit Party, such
Borrower will cause, or direct the applicable Credit Party to cause, the prompt
containment and removal of such Hazardous Materials and the remediation of such
real property or other assets as is necessary to comply with all Environmental
Laws.  Without limiting the generality of the foregoing, each Borrower shall,
and shall cause each other Credit Party to, comply with each

 

47

--------------------------------------------------------------------------------

 

Environmental Law requiring the performance at any real property by any Borrower
or any other Credit Party of activities in response to the release or threatened
release of a Hazardous Material.

 

Section 4.11         Further Assurances.

 

(a)           Each Borrower will, and will cause each Subsidiary to, at its own
cost and expense, promptly and duly take, execute, acknowledge and deliver all
such further acts, documents and assurances as may from time to time be
necessary or as Agent or the Required Lenders may from time to time reasonably
request in order to carry out the intent and purposes of the Financing Documents
and the transactions contemplated thereby, including all such actions to
(i) establish, create, preserve, protect and perfect a first priority Lien
(subject only to Permitted Liens) in favor of Agent for itself and for the
benefit of the Lenders on the Collateral (including Collateral acquired after
the date hereof), and (ii) unless Agent shall agree otherwise in writing, cause
all Subsidiaries of Borrowers to be jointly and severally obligated with the
other Borrowers under all covenants and obligations under this Agreement,
including the obligation to repay the Obligations; providing that,
notwithstanding anything to the contrary contained in the foregoing or otherwise
in this Agreement, no Subsidiary of any Borrower that is incorporated, formed or
organized under the laws of any jurisdiction outside of the United States shall
be required to become obligated (as a Borrower, a Guarantor or otherwise) for
the repayment of the Obligations.

 

(b)           Upon receipt of an affidavit of an officer of Agent or a Lender as
to the loss, theft, destruction or mutilation of any Note or any other Financing
Document which is not of public record, and, in the case of any such mutilation,
upon surrender and cancellation of such Note or other applicable Financing
Document, Borrowers will issue, in lieu thereof, a replacement Note or other
applicable Financing Document, dated the date of such lost, stolen, destroyed or
mutilated Note or other Financing Document in the same principal amount thereof
and otherwise of like tenor.

 

(c)           Upon the formation or acquisition of a new Subsidiary, including
as a result of the closing and consummation of any Permitted Acquisition,
Borrowers shall (i) pledge, have pledged or cause or have caused to be pledged
to the Agent pursuant to a pledge agreement in form and substance satisfactory
to the Agent, all (subject only to the limitations set forth in the final
paragraph of Schedule 9.1) of the outstanding shares of equity interests or
other equity interests of such new Subsidiary owned directly or indirectly by
any Borrower, along with undated stock or equivalent powers for such
certificates, executed in blank; (ii) except in the case of (x) any Subsidiary
of any Borrower that is incorporated, formed or organized under the laws of any
jurisdiction outside of the United States or (y) any other Subsidiary with
respect to which Agent shall agree otherwise in writing in its sole discretion,
cause the new Subsidiary to take such other actions (including entering into or
joining any Security Documents) as are necessary or advisable in the reasonable
opinion of the Agent in order to grant the Agent, acting on behalf of the
Lenders, a first priority Lien on all real and personal property of such
Subsidiary in existence as of such date and in all after acquired property,
which first priority Liens are required to be granted pursuant to this Agreement
(and, in all cases (including the case of any Subsidiary described in the
exceptions set forth at the beginning of this clause (ii)), Agent shall have
received all lien searches and other searches of the type described in
Section 7.3 hereof, the results of which shall be consistent with the
requirements of this clause (ii)  (taking such exceptions into account) and the
representations, warranties and covenants applicable to Credit Parties under
this Agreement and the other Financing Agreement); (iii)  except in the case of
(x) any Subsidiary of any Borrower that is incorporated, formed or organized
under the laws of any jurisdiction outside of the United States or (y) any other
Subsidiary with respect to which Agent shall agree otherwise in writing in its
sole discretion, cause such new Subsidiary to either (at the election of Agent
in its sole discretion) become a Borrower hereunder with joint and several
liability for all obligations of Borrowers hereunder and under the other
Financing Documents pursuant to a joinder agreement or other similar agreement
in form and substance satisfactory

 

48

--------------------------------------------------------------------------------

 

to Agent or to become a Guarantor of the obligations of Borrowers hereunder and
under the other Financing Documents pursuant to a guaranty and suretyship
agreement in form and substance satisfactory to Agent; and (iv)  except in the
case of (x) any Subsidiary of any Borrower that is incorporated, formed or
organized under the laws of any jurisdiction outside of the United States or
(y) any other Subsidiary with respect to which Agent shall agree otherwise in
writing in its sole discretion, cause the new Subsidiary to deliver certified
copies of such Subsidiary’s certificate or articles of incorporation, together
with good standing certificates, by-laws (or other operating agreement or
governing documents) resolutions of the Board of Directors or other governing
body, approving and authorize the execution and delivery of the Security
Documents, incumbency certificates and to execute and/or deliver such other
documents and legal opinions or to take such other actions as may be requested
by the Agent, in each case, in form and substance satisfactory to the Agent.

 

(d)           Upon the request of Agent, Borrowers shall obtain a landlord’s
agreement or mortgagee agreement, as applicable, from the lessor of each leased
property or mortgagee of owned property with respect to any business location
where any portion of the Collateral included in or proposed to be included in
the Borrowing Base, or the records relating to such Collateral and/or software
and equipment relating to such records or Collateral, is stored or located,
which agreement or letter shall be reasonably satisfactory in form and substance
to Agent.  Borrowers shall timely and fully pay and perform its material
obligations under all leases and other agreements with respect to each leased
location where any Collateral, or any records related thereto, is or may be
located.

 

Section 4.12         Right of First Refusal.  Borrowers hereby agree that if, at
any time during the term hereof, any Borrower receives from a third party an
offer, term sheet or commitment, or any Borrower makes a proposal substantially
acceptable to or accepted by any person or entity (all of the foregoing being
referred to as an “Offer”), which Offer provides for working capital financing,
accounts receivable financing, or inventory financing, the applicable Borrower
shall first forward the Offer to MCF, which shall have ten (10) days after
receipt thereof (the “Option Period”) to agree to provide similar financing in
the place of such person or entity upon the terms and conditions set forth in
the Offer and to notify the applicable Borrower in writing of MCF’s acceptance
of the Offer (the “Acceptance Notice”).  If the Borrower has not received an
Acceptance Notice within the Option Period, the Borrower shall be free to
consummate the transaction described in the Offer with the third party providing
the Offer (the “Financing Transaction”); provided, however, that the foregoing,
and MCF’s failure to respond to issue an Acceptance Notice, shall not be
construed as a waiver of any of the terms, covenants or conditions of the
Financing Documents.  In the event that the Financing Transaction is not
consummated under similar terms with such person or entity during the one
hundred twenty (120) day period following the expiration of the Option Period,
or any material term is changed, the applicable Borrower shall not be permitted
to consummate the Financing Transaction without again complying with this
Section.  For purposes of this Section, “MCF” shall mean and include either of
MCF or any other parent company, subsidiary or Affiliate of MCF, and the
Acceptance Notice and consummation of such financing transaction may be executed
by MCF or any other parent company, subsidiary or Affiliate of MCF.  Nothing in
this Section is intended, or shall be construed, to constitute Agent’s, MCF’s or
any other Lender’s consent to the consummation of any transaction described in
any Offer.

 

Section 4.13         Power of Attorney.  Each of the officers of Agent is hereby
irrevocably made, constituted and appointed the true and lawful attorney for
Borrowers (without requiring any of them to act as such) with full power of
substitution to do the following:  (a)  endorse the name of Borrowers upon any
and all checks, drafts, money orders, and other instruments for the payment of
money that are payable to Borrowers and constitute collections on Borrowers’
Accounts; (b) so long as Agent has provided not less than three (3) Business
Days’ prior written notice to Borrower to perform the same and Borrower has
failed to take such action, execute in the name of Borrowers any schedules,
assignments, instruments,

 

49

--------------------------------------------------------------------------------

 

documents, and statements that Borrowers are obligated to give Agent under this
Agreement; (c) after the occurrence and during the continuance of an Event of
Default, take any action Borrowers are required to take under this Agreement;
(d) so long as Agent has provided not less than three (3) Business Days’ prior
written notice to Borrower to perform the same and Borrower has failed to take
such action, do such other and further acts and deeds in the name of Borrowers
that Agent may deem necessary or desirable to perfect Agent’s security interest
or Lien in any Collateral; (e) after the occurrence and during the continuance
of an Event of Default, do such other and further acts and deeds in the name of
Borrowers that Agent may deem necessary or desirable to perfect Agent’s security
interest or Lien in any Collateral or to enforce any Account or other
Collateral, provided that Agent shall use its commercially reasonable efforts to
notify Borrower Representative promptly upon any exercise by Agent of its powers
of attorney under this clause (e) but provided further that, no failure by Agent
to give any such notice shall result in any liability from Agent to any Credit
Party nor have any adverse effect on the powers of attorney granted by Borrowers
to Agent under this clause (e) or any actions taken by Agent pursuant to such
powers of attorney prior to or after any such failure; and (f) after the
occurrence and during the continuance of an Event of Default, do such other and
further acts and deeds in the name of Borrowers that Agent may deem necessary or
desirable to enforce its rights with regard to any Account or other Collateral. 
This power of attorney shall be irrevocable and coupled with an interest.

 

Section 4.14         Borrowing Base Collateral Administration.

 

(a)           All data and other information relating to Accounts or other
intangible Collateral shall at all times be kept by Borrowers, at their
respective principal offices and shall not be moved from such locations without
(i) providing prior written notice to Agent, and (ii) obtaining the prior
written consent of Agent, which consent shall not be unreasonably withheld.

 

(b)           Borrowers shall provide prompt written notice to each Person who
either is currently an Account Debtor or becomes an Account Debtor at any time
following the date of this Agreement that directs each Account Debtor to make
payments into the Lockbox, and hereby authorizes Agent, upon Borrowers’ failure
to send such notices within ten (10) days after the date of this Agreement (or
ten (10) days after the Person becomes an Account Debtor), to send any and all
similar notices to such Person.  Agent reserves the right to notify Account
Debtors that Agent has been granted a Lien upon all Accounts.

 

ARTICLE 5- NEGATIVE COVENANTS

 

Each Borrower agrees that, so long as any Credit Exposure exists:

 

Section 5.1            Debt; Contingent Obligations.  No Borrower will, or will
permit any Subsidiary to, directly or indirectly, create, incur, assume,
guarantee or otherwise become or remain directly or indirectly liable with
respect to, any Debt, except for Permitted Debt.  No Borrower will, or will
permit any Subsidiary to, directly or indirectly, create, assume, incur or
suffer to exist any Contingent Obligations, except for Permitted Contingent
Obligations.

 

Section 5.2            Liens.  No Borrower will, or will permit any Subsidiary
to, directly or indirectly, create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except for Permitted Liens.

 

Section 5.3            Restricted Distributions.  No Borrower will, or will
permit any Subsidiary to, directly or indirectly, declare, order, pay, make or
set apart any sum for any Restricted Distribution, except for Permitted
Distributions.

 

50

--------------------------------------------------------------------------------

 

Section 5.4            Restrictive Agreements.  No Borrower will, or will permit
any Subsidiary to, directly or indirectly (a) enter into or assume any agreement
(other than the Financing Documents and any agreements for purchase money debt
permitted under clause (c) of the definition of Permitted Debt) prohibiting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired, or (b) create or otherwise cause or suffer to exist
or become effective any consensual encumbrance or restriction of any kind
(except as provided by the Financing Documents) on the ability of any Subsidiary
to: (i) pay or make Restricted Distributions to any Borrower or any Subsidiary;
(ii) pay any Debt owed to any Borrower or any Subsidiary; (iii) make loans or
advances to any Borrower or any Subsidiary; or (iv) transfer any of its property
or assets to any Borrower or any Subsidiary.

 

Section 5.5            Payments and Modifications of Subordinated Debt. 
Borrower will not, and will not permit any Subsidiary to, directly or indirectly
(a) declare, pay, make or set aside any amount for payment in respect of
Subordinated Debt, except for payments made in full compliance with and
expressly permitted under the Subordination Agreement, (b) amend or otherwise
modify the terms of any Subordinated Debt, except for amendments or
modifications made in full compliance with the Subordination Agreement,
(c) declare, pay, make or set aside any amount for payment in respect of any
Subordinated Debt hereinafter incurred that, by its terms, or by separate
agreement, is subordinated to the Obligations, except for payments made in full
compliance with and expressly permitted under the subordination provisions
applicable thereto, or (d) amend or otherwise modify the terms of any such
Subordinated Debt if the effect of such amendment or modification is to
(i) increase the interest rate or fees on, or change the manner or timing of
payment of, such Subordinated Debt, (ii) accelerate or shorten the dates upon
which payments of principal or interest are due on, or the principal amount of,
such Subordinated Debt, (iii) change in a manner adverse to any Credit Party or
Agent any event of default or add or make more restrictive any covenant with
respect to such Subordinated Debt, (iv) change the prepayment provisions of such
Subordiated Debt or any of the defined terms related thereto, (v) change the
subordination provisions thereof (or the subordination terms of any guaranty
thereof), or (vi) change or amend any other term if such change or amendment
would materially increase the obligations of the obligor or confer additional
material rights on the holder of such Subordinated Debt in a manner adverse to
Borrower, any Subsidiaries, Agents or Lenders.  Borrower shall, prior to
entering into any such amendment or modification, deliver to Agent reasonably in
advance of the execution thereof, any final or execution form copy thereof.

 

Section 5.6            Consolidations, Mergers and Sales of Assets; Change in
Control.  No Borrower will, or will permit any Subsidiary to, directly or
indirectly (a) consolidate or merge or amalgamate with or into any other Person,
except in connection with a Permitted Acquisition as permitted by Section 5.7
below, provided that, (x) in any such consolidation or merger or amalgamation by
CardioNet in connection with a Permitted Acquisition, CardioNet shall be the
surviving Person and (y) in any other such consolidation or merger or
amalgamation by any other Borrower or Subsidiary in connection with a Permitted
Acquisition, after giving effect to such Permitted Acquisition, the surviving
Person shall be a wholly-owned Subsidiary of CardioNet and shall be (or shall
have become, pursuant to Section 4.11 hereof) a Borrower hereunder, or
(b) consummate any Asset Dispositions other than Permitted Asset Dispositions. 
No Borrower will suffer or permit to occur any Change in Control with respect to
itself, any Subsidiary or any Guarantor.

 

Section 5.7            Purchase of Assets, Investments.  No Borrower will, or
will permit any Subsidiary to, directly or indirectly (a) acquire or enter into
any agreement to acquire all or substantially all of the assets of any Person or
of any line of business or business unit or asset group of any Person;
(b) engage or enter into any agreement to engage in any joint venture or
partnership with any other Person; or (c) acquire or own or enter into any
agreement to acquire or own any Investment in any Person other than Permitted
Investments; provided that, notwithstanding anything to the contrary contained
in the

 

51

--------------------------------------------------------------------------------

 

foregoing or otherwise in this Agreement, Borrowers may enter into and close and
consummate any Permitted Acquisition so long as all of the terms conditions set
forth in definition of Permitted Acquisition have been fully complied with and
satisfied as to such transaction.

 

Section 5.8            Transactions with Affiliates.  Except as otherwise
disclosed on Schedule 5.8, and except for transactions that are disclosed to
Agent in advance of being entered into and which contain terms that are no less
favorable to the applicable Borrower or any Subsidiary, as the case may be, than
those which might be obtained from a third party not an Affiliate of any Credit
Party, no Borrower will, or will permit any Subsidiary to, directly or
indirectly, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of any Borrower.  Notwithstanding anything to the
contrary provided for in this Section 5.8 or otherwise in this Agreement, from
and after the Closing Date, no Borrower shall make any intercompany loans to or
other Investments in, nor otherwise transfer any assets to or enter into any
transactions with, any Subsidiary that is not also a Borrower or a Guarantor,
except that (x) any Borrower may continue to hold its Investments in any such
Subsidiary existing as of the Closing Date, (y) such Subsidiaries may make
Permitted Distributions to Borrowers, and (z) with respect to cardioCORE Lab
Ltd., a company organized under the laws of England and Wales and a wholly-owned
direct Subsidiary of cardioCORE Lab, Inc. (“cardioCORE UK”), Borrowers may make
further intercompany loans to and Investments in cardioCORE UK after the Closing
Date so long as the aggregate outstanding principal amount of all such
intercompany loans plus the aggregate outstanding amount of all such Investments
(net of any return of capital) made after the Closing Date shall not exceed
$50,000 at any one time.

 

Section 5.9            Modification of Organizational Documents.  No Borrower
will, or will permit any Subsidiary to, directly or indirectly, amend or
otherwise modify any Organizational Documents of such Person, except for
Permitted Modifications.

 

Section 5.10         Modification of Certain Agreements.  No Borrower will, or
will permit any Subsidiary to, directly or indirectly, amend or otherwise modify
any Material Contract, which amendment or modification in any case:  (a) is
contrary to the terms of this Agreement or any other Financing Document; or
(b) could reasonably be expected to be adverse to the rights, interests or
privileges of the Agent or the Lenders or their ability to enforce the same  . 
Each Borrower shall, prior to entering into any amendment or other modification
of any of the foregoing documents, deliver to Agent reasonably in advance of the
execution thereof, any final or execution form copy of amendments or other
modifications to such documents, and such Borrower agrees not to take, nor
permit any of its Subsidiaries to take, any such action with respect to any such
documents without obtaining such approval from Agent.

 

Section 5.11         Conduct of Business.  No Borrower will, or will permit any
Subsidiary to, directly or indirectly, engage in any line of business other than
those businesses engaged in on the Closing Date and described on Schedule 5.11
and businesses reasonably related thereto in the healthcare industry.  No
Borrower will, or will permit any Subsidiary to, other than in the ordinary
course of business, change its normal billing payment and reimbursement policies
and procedures with respect to its Accounts (including, without limitation, the
amount and timing of finance charges, fees and write-offs).

 

Section 5.12         Lease Payments.  No Borrower will, or will permit any
Subsidiary to, directly or indirectly, incur or assume (whether pursuant to a
Guarantee or otherwise) any liability for rental payments except in the ordinary
course of business.

 

Section 5.13         Limitation on Sale and Leaseback Transactions.  No Borrower
will, or will permit any Subsidiary to, directly or indirectly, enter into any
arrangement with any Person whereby, in a substantially contemporaneous
transaction, any Borrower or any Subsidiaries sells or transfers all or

 

52

--------------------------------------------------------------------------------

 

substantially all of its right, title and interest in an asset and, in
connection therewith, acquires or leases back the right to use such asset.

 

Section 5.14         Deposit Accounts and Securities Accounts; Payroll and
Benefits Accounts.  No Borrower will, or will permit any Subsidiary to, directly
or indirectly, establish any new Deposit Account or Securities Account without
prior written notice to Agent, and, with respect to Deposit Accounts but subject
to Section 7.4, unless Agent, such Borrower or such Subsidiary and the bank,
financial institution or securities intermediary at which the account is to be
opened enter into a Deposit Account Control Agreement (or, if applicable, with
respect to only any Deposit Account into which proceeds of Accounts from
Governmental Account Debtors are paid, a Deposit Account Restriction Agreement)
prior to or concurrently with the establishment of such Deposit Account. 
Borrowers represent and warrant that Schedule 5.14 lists all of the Deposit
Accounts and Securities Accounts of each Borrower as of the Closing Date.  The
provisions of this Section requiring Deposit Account Control Agreements shall
not apply to Deposit Accounts exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of Borrowers’
employees and identified to Agent by Borrowers as such; provided, however, that
at all times that any Obligations remain outstanding, Borrower shall maintain
one or more separate Deposit Accounts to hold any and all amounts to be used for
payroll, payroll taxes and other employee wage and benefit payments, and shall
not commingle any monies allocated for such purposes with funds in any other
Deposit Account.

 

Section 5.15         Compliance with Anti-Terrorism Laws.  Agent hereby notifies
Borrowers that pursuant to the requirements of Anti-Terrorism Laws, and Agent’s
policies and practices, Agent is required to obtain, verify and record certain
information and documentation that identifies Borrowers and its principals,
which information includes the name and address of each Borrower and its
principals and such other information that will allow Agent to identify such
party in accordance with Anti-Terrorism Laws.  No Borrower will, or will permit
any Subsidiary to, directly or indirectly, knowingly enter into any Material
Contracts with any Blocked Person or any Person listed on the OFAC Lists.  Each
Borrower shall immediately notify Agent if such Borrower has knowledge that any
Borrower, any additional Credit Party or any of their respective Affiliates or
agents acting or benefiting in any capacity in connection with the transactions
contemplated by this Agreement is or becomes a Blocked Person or (a) is
convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is
arraigned and held over on charges involving money laundering or predicate
crimes to money laundering.  No Borrower will, or will permit any Subsidiary to,
directly or indirectly, (i) conduct any business or engage in any transaction or
dealing with any Blocked Person, including, without limitation, the making or
receiving of any contribution of funds, goods or services to or for the benefit
of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to Executive
Order No. 13224, any similar executive order or other Anti-Terrorism Law, or
(iii) engage in or conspire to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.

 

ARTICLE 6— [RESERVED]

 

ARTICLE 7- CONDITIONS

 

Section 7.1            Conditions to Closing.  The obligation of each Lender to
enter into and become bound under this Agreement and the other Financing
Documents and, if applicable make any initial Loans requested by Borrowers to be
made on the Closing Date, shall be subject to the receipt by Agent of each
agreement, document and instrument set forth on the closing checklist prepared
by Agent or its counsel, each in form and substance satisfactory to Agent, and
such other closing deliverables reasonably

 

53

--------------------------------------------------------------------------------

 

requested by Agent and Lenders, and to the satisfaction of the following
conditions precedent, each to the satisfaction of Agent and Lenders and their
respective counsel in their sole discretion:

 

(a)           evidence of the consummation of the transactions (other than the
funding of the Loan) contemplated by the Operative Documents including, without
limitation, the funding of any and all investments contemplated by the Operative
Documents;

 

(b)           the payment of all fees, expenses and other amounts due and
payable under each Financing Document;

 

(c)           Since December 31, 2011, there has been no development, event,
act, condition or occurrence of any nature that has occurred that has had or
could, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect;

 

(d)           the receipt of the initial Borrowing Base Certificate, prepared as
of the Closing Date;

 

(e)           receipt of copies, certified as true, complete and correct by the
Borrowing Representative, of the final cardioCORE Acquisition Agreement,
complete with all schedules and exhibits thereto, and all material related
documents executed and delivered in connection with the execution and delivery
of the cardioCORE Acquisition Agreement, all as executed and delivered by all
parties thereto, and the terms and conditions of all of the foregoing shall be
satisfactory to Agent and Lenders and their respective counsel in their sole
discretion; and

 

(f)            receipt by Agent of evidence reasonably satisfactory to Agent
that the cardioCORE Acquisition has been closed and consummated in accordance
with the cardioCORE Acquisition Agreement and other material related documents
executed and delivered in connection with the execution and delivery of the
cardioCORE Acquisition Agreement.

 

Each Lender, by delivering its signature page to this Agreement, shall be deemed
to have acknowledged receipt of, and consented to and approved, each Financing
Document, each additional Operative Document and each other document, agreement
and/or instrument required to be approved by Agent, Required Lenders or Lenders,
as applicable, on the Closing Date.

 

Section 7.2            Conditions to Each Loan.  The obligation of the Lenders
to make a Loan or an advance in respect of any Loan is subject to the
satisfaction of the following additional conditions:

 

(a)           in the case of a Revolving Loan Borrowing, receipt by Agent of a
Notice of Borrowing (or telephonic notice if permitted by this Agreement) and
updated Borrowing Base Certificate;

 

(b)           the fact that, immediately after such borrowing and after
application of the proceeds thereof or after such issuance, the Revolving Loan
Outstandings will not exceed the Revolving Loan Limit;

 

(c)           the fact that, immediately before and after such advance or
issuance, no Default or Event of Default shall have occurred and be continuing;

 

(d)           the fact that (i) the representations and warranties of each
Credit Party contained in the Financing Documents that are subject to
materiality or Material Adverse Effect qualifications shall be true, correct and
complete in all respects on and as of the date of such borrowing or issuance,
except to

 

54

--------------------------------------------------------------------------------

 

the extent that any such representation or warranty relates to a specific date
in which case such representation or warranty shall be true and correct as of
such earlier date, and (ii) the representations and warranties of each Credit
Party contained in the Financing Documents that are not subject to materiality
or Material Adverse Effect qualifications shall be true, correct and complete in
all material respects on and as of the date of such borrowing or issuance,
except to the extent that any such representation or warranty relates to a
specific date in which case such representation or warranty shall be true and
correct as of such earlier date;

 

(e)           the fact that no Material Adverse Effect shall have occurred and
be continuing with respect to Borrowers or any Credit Party since the date of
this Agreement; and

 

(f)            the continued compliance by Borrowers with all of the terms,
covenants and conditions of Article 8 and, unless Agent shall elect otherwise
from time to time, the absence of any fact, event or circumstance for which
Borrower is required to give Agent notice under Article 8.

 

Each giving of a Notice of Borrowing hereunder and each acceptance by any
Borrower of the proceeds of any Loan made hereunder shall be deemed to be a
representation and warranty by each Borrower on the date of such notice or
acceptance as to the facts specified in this Section.

 

Section 7.3            Searches.  Before the Closing Date, and thereafter (as
and when determined by Agent in its discretion), Agent shall have the right to
perform, all at Borrowers’ expense, the searches described in clauses (a), (b),
and (c) below against Borrowers and any other Credit Party, the results of which
are to be consistent with Borrowers’ representations and warranties under this
Agreement and the satisfactory results of which shall be a condition precedent
to all advances of Loan proceeds:  (a) UCC searches with the Secretary of State
of the jurisdiction in which the applicable Person is organized; (b) judgment,
pending litigation, federal tax lien, personal property tax lien, and corporate
and partnership tax lien searches, in each jurisdiction searched under clause
(a) above; and (c) searches of applicable corporate, limited liability company,
partnership and related records to confirm the continued existence, organization
and good standing of the applicable Person and the exact legal name under which
such Person is organized.

 

Section 7.4            Post Closing Requirements.  Borrowers shall complete each
of the post closing obligations and/or provide to Agent each of the documents,
instruments, agreements and information listed on Schedule 7.4 attached hereto
on or before the date set forth for each such item thereon, each of which shall
be completed or provided in form and substance satisfactory to Agent.

 

ARTICLE 8— REGULATORY MATTERS

 

Section 8.1            Additional Defined Terms.   The following additional
definitions are hereby appended to Section 1.1 of this Agreement:

 

“HIPAA” means the Health Insurance Portability and Accountability Act of 1996,
as the same may be amended, modified or supplemented from time to time, and any
successor statute thereto, and any and all rules or regulations promulgated from
time to time thereunder.

 

“HIPAA Compliant” shall mean that the applicable Person is in compliance with
each of the applicable requirements of the so-called “Administrative
Simplification” provisions of HIPAA, and is not and could not reasonably be
expected to become the subject of any civil or criminal penalty, process, claim,
action or proceeding, or any administrative or other regulatory review, survey,
process or proceeding (other than routine surveys or reviews conducted by any
government health plan or other

 

55

--------------------------------------------------------------------------------

 

accreditation entity) that could result in any of the foregoing or that could
reasonably be expected to adversely affect such Person’s business, operations,
assets, properties or condition (financial or otherwise), in connection with any
actual or potential violation by such Person of the provisions of HIPAA.

 

Section 8.2            Representations and Warranties.  To induce Agent and
Lenders to enter into this Agreement and to make credit accommodations
contemplated hereby, Borrowers hereby represent and warrant that, all of the
information regarding the Borrowers set forth in Schedule 8.2(a) is true,
complete and correct, and that except as disclosed in Schedule 8.2(b), the
following statements are true, complete and correct as of the date hereof, and
Borrowers hereby covenant and agree to notify Agent within three (3) Business
Days (but in any event prior to Borrowers submitting any requests for fundings
of credit facility proceeds under this Agreement) following the occurrence of
any facts, events or circumstances known to a Borrower, whether threatened,
existing or pending, that would make any of the following representations and
warranties untrue, incomplete or incorrect (together with such supporting data
and information as shall be necessary to fully explain to Agent the scope and
nature of the fact, event or circumstance), and shall provide to Agent within
two (2) Business Days of Agent’s request, such additional information as Agent
shall request regarding such disclosure:

 

(a)           Healthcare Permits.  Borrowers have (i) each Healthcare Permit and
other rights from, and have made all declarations and filings with, all
applicable Governmental Authorities, all self regulatory authorities and all
courts and other tribunals necessary to engage in the ownership, management and
operation of the businesses of Borrowers as they are conducted on the Closing
Date or the assets of any Borrower, all of which such Healthcare Permits of
Borrowers as of the Closing Date are listed on Schedule 8.2(a), and (ii) no
knowledge that any Governmental Authority is considering limiting, suspending or
revoking any such Healthcare Permit.  All such Healthcare Permits are valid and
in full force and effect and Borrowers are in material compliance with the terms
and conditions of all such Healthcare Permits, except where failure to be in
such compliance or for a Healthcare Permit to be valid and in full force and
effect would not have a Material Adverse Effect.

 

(b)           Participation Agreements/Provider Status/Cost Reports.

 

(i)            Other than a potential adverse determination for the Borrowers
with respect to  the Pending CID and as disclosed on Schedule 3.6, there is no
investigation, audit, claim review, or other action pending or, to the knowledge
of any Borrower, threatened in writing which could result in a revocation,
suspension, termination, probation, restriction, limitation, or non-renewal of
any Third Party Payor participation agreement or provider number or other
Healthcare Permit or result in a Borrower’s exclusion from any Third Party Payor
Program, nor has any Third Party Payor Program made any decision not to renew
any participation agreement or provider agreement or other Healthcare Permit,
nor have the Borrowers made any decision not to renew any participation
agreement or provider agreement or other Healthcare Permit, nor is there any
action pending or threatened in writing to impose material intermediate or
alternative sanctions with respect to any Borrower.

 

(ii)           The Borrowers, and, to the knowledge of the Borrowers, their
contractors, have properly and legally billed all intermediaries and Third Party
Payors for services rendered and have maintained their records in all material
respects to reflect such billing practices.  No funds relating to Borrowers are
now, or, to the knowledge of Borrowers will be, withheld by any Third Party
Payor.

 

56

--------------------------------------------------------------------------------

 

(iii)          Borrowers have the requisite participation agreement or provider
number or other Healthcare Permit to bill the Medicare program and the
respective Medicaid programs in the state or states in which such Borrowers
operate (to the extent such Borrower participates in the Medicare or Medicaid
program in such state or states) and all other Third Party Payor Programs
(including, without limitation, Medicare) which have historically accounted for
any material portion of the revenues of Borrowers.

 

(iv)          All Medicare, Medicaid, and private insurance cost reports and
financial reports submitted by the Borrowers are and will be materially accurate
and complete and have not been and will not be misleading in any material
respects.  Other than a potential adverse determination for the Borrowers with
respect to the Pending CID and as disclosed on Schedule 3.6, no cost reports for
the Borrowers remain “open” or unsettled and there are no current, pending or
outstanding Medicare, Medicaid or other Third Party Payor Program reimbursement
audits or appeals pending with respect to the Borrowers.

 

(c)           No Violation of Healthcare Laws.

 

(i)            Other than a potential adverse determination for the Borrowers
with respect to  the Pending CID and as disclosed on Schedule 3.6, none of the
Borrowers are in violation of any Healthcare Laws, except where any such
violation would not have a Material Adverse Effect.

 

(ii)           Borrowers are HIPAA Compliant.

 

(d)           Proceedings.  Other than with respect to the Pending CID, no
Borrower is subject to any proceeding, suit or, to Borrowers’ knowledge,
investigation by any federal, state or local government or quasi-governmental
body, agency, board or authority or any other administrative or investigative
body (including the Office of the Inspector General of the United States
Department of Health and Human Services):  (i) which may result in the
imposition of a fine, alternative, interim or final sanction, a lower
reimbursement rate for services rendered to eligible patients which has not been
provided for on their respective financial statements, or which would have a
Material Adverse Effect on any Borrower; (ii) which could result in the
revocation, transfer, surrender, suspension or other impairment of the operating
certificates, provider agreements or Healthcare Permits of any Borrower;
(iii) which pertains to or requests any voluntary disclosure pertaining to a
potential overpayment matter involving the submission of claims to such payor by
a Borrower; or (iv) which pertains to any state or federal Medicare or Medicaid
cost reports or claims filed by any Borrower (including, without limitation, any
reimbursement audits), or any disallowance by any commission, board or agency in
connection with any audit of such cost reports;

 

(e)           Ancillary Laws.  Borrowers have received no notice, and are not
aware, of any violation of applicable antitrust laws, employment or
landlord-tenant laws of any federal, state or local government or
quasi-governmental body, agency, board or other authority with respect to the
Borrowers.

 

(f)            Hill-Burton.  No Borrower is or will be a participant in any
federal program whereby any federal, state or local government or
quasi-governmental body, agency, board or other authority may have the right to
recover funds by reason of the advance of federal funds, including, without
limitation, those authorized under the Hill-Burton Act (42 U.S.C. 291, et seq.).

 

57

--------------------------------------------------------------------------------

 

(g)           Fraud and Abuse.

 

(i)            Other than a potential adverse determination for the Borrowers
with respect to  the Pending CID and as disclosed on Schedule 3.6, no Borrower
has, or to its knowledge has been threatened to have, and to Borrowers’
knowledge, no owner, officer, manager, employee or Person with a “direct or
indirect ownership interest” (as that phrase is defined in 42 C.F.R. §420.201)
in any Borrower has, engaged in any of the following:  (A) knowingly and
willfully making or causing to be made a false statement or representation of a
material fact in any application for any benefit or payment under any Healthcare
Laws; (B) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment under any Healthcare Laws; (C) failing to disclose
knowledge by a claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment under any Healthcare Laws on its own
behalf or on behalf of another, with intent to secure such benefit or payment
fraudulently; (D) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay such remuneration
(I) in return for referring an individual to a Person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part by any Healthcare Laws, or (II) in return for
purchasing, leasing or ordering or arranging for or recommending the purchasing,
leasing or ordering of any good, facility, service, or item for which payment
may be made in whole or in part by any Healthcare Laws; (E) presenting or
causing to be presented a claim for reimbursement for services that is for an
item or services that was known or should have been known to be (I) not provided
as claimed, or (II) false or fraudulent; or (F) knowingly and willfully making
or causing to be made or inducing or seeking to induce the making of any false
statement or representation (or omitting to state a fact required to be stated
therein or necessary to make the statements contained therein not misleading) of
a material fact with respect to information required to be provided under 42
U.S.C. § 1320a-3.  All contractual arrangements to which Borrower is a party are
in compliance with all Healthcare Laws.

 

(ii)           Other than with respect to the Pending CID and as disclosed on
Schedule 3.6, no Borrower has been, or to its knowledge has been threatened to
be, and no owner, officer, manager, employee or Person with a “direct or
indirect ownership interest” (as that phrase is defined in 42 C.F.R. §420.201)
in any Borrower has been, or to its knowledge has been threatened to be: 
(A) has had a civil monetary penalty assessed against him or her pursuant to 42
U.S.C. §1320a-7a or is the subject of a proceeding seeking to assess such
penalty; (B) has been excluded from participation in a Federal Health Care
Program (as that term is defined in 42 U.S.C. §1320a-7b) or is the subject of a
proceeding seeking to assess such penalty, or has been “suspended” or “debarred”
from selling products to the U.S. government or its agencies pursuant to the
Federal Acquisition Regulation, relating to debarment and suspension applicable
to federal government agencies generally (48 C.F.R. Subpart 9.4), or other
applicable laws or regulations; (C) has been convicted (as that term is defined
in 42 C.F.R. §1001.2) of any of those offenses described in 42 U.S.C. §1320a-7b
or 18 U.S.C. §§669, 1035, 1347, 1518 or is the subject of a proceeding seeking
to assess such penalty; (D) has been involved or named in a U.S. Attorney
complaint made or any other action taken pursuant to the False Claims Act under
31 U.S.C. §§3729-3731 or qui tam action brought pursuant to 31 U.S.C. §3729 et
seq.; (E) has been made a party to any other action by any governmental
authority that may prohibit it from selling products to any governmental or
other purchaser pursuant to any law; or (F) was or has become subject to any
federal, state, local governmental or private payor civil or criminal
investigations or inquiries, proceedings, validation review, program integrity
review or statement of charges involving and/or related to its compliance with
Healthcare Laws or involving or threatening its

 

58

--------------------------------------------------------------------------------

 

participation in Medicare, Medicaid or other Third Party Payor Programs or its
billing practices with respect thereto.

 

Section 8.3            [RESERVED]

 

Section 8.4            Healthcare Operations.

 

(a)           Borrower will:

 

(i)            timely file or caused to be timely filed (after giving effect to
any extension duly obtained), all notifications, reports, submissions, Permit
renewals and reports (other than cost reports as provided in
Section 8.4(a)(ii) below) of every kind whatsoever required by Healthcare Laws
(which reports will be materially accurate and complete in all respects and not
misleading in any respect and shall not remain open or unsettled); and

 

(ii)           timely file or caused to be timely filed (after giving effect to
any extension duly obtained), all cost reports required by Healthcare Laws,
which reports shall be materially accurate and complete in all respects and not
misleading in any material respect and which shall not remain open or unsettled,
except in accordance with applicable settlement appeals procedures that are
timely and diligently pursued and except for any processing delays of any
Governmental Authority.

 

(b)           Borrower will maintain in full force and effect, and free from
restrictions, probations, conditions or known conflicts which would materially
impair the businesses of Borrowers as they are conducted on the Closing Date,
all Healthcare Permits necessary under Healthcare Laws to carry on the
businesses of Borrowers as they are conducted on the Closing Date.

 

(c)           Borrower will not suffer or permit to occur any of the following:

 

(i)            any transfer of a Healthcare Permit or rights thereunder to any
Person (other than Borrowers or Agent);

 

(ii)           any pledge or hypothecation of any Healthcare Permit as
collateral security for any indebtedness other than indebtedness to Agent;

 

(iii)          any rescission, withdrawal, revocation, amendment or modification
of or other alteration to the nature, tenor or scope of any Healthcare Permit
without Agent’s prior written consent;

 

(iv)          [RESERVED];

 

(v)           [RESERVED]; or

 

(vi)          any fact, event or circumstance for which notice to Agent is
required under Section 8.2.

 

(d)           Borrower will maintain a corporate health care regulatory
compliance program (“CCP”) which includes at least the following components and
allows Agent and/or any outside consultants from time to time to review such
CCP:  (i) standards of conduct and procedures that describe compliance policies
regarding laws with an emphasis on prevention of fraud and abuse; (ii) specific
officer within high-level personnel identified as having overall responsibility
for compliance with such

 

59

--------------------------------------------------------------------------------

 

standards and procedures; (iii) training and education programs which
effectively communicate the compliance standards and procedures to employees and
agents, including, without limitation, fraud and abuse laws and illegal billing
practices; (iv) auditing and monitoring systems and reasonable steps for
achieving compliance with such standards and procedures including, without
limitation, publicizing a report system to allow employees and other agents to
anonymously report criminal or suspect conduct and potential compliance
problems; (v) disciplinary guidelines and consistent enforcement of compliance
policies including, without limitation, discipline of individuals responsible
for the failure to detect violations of the CCP; and (vi) mechanisms to
immediately respond to detected violations of the CCP.

 

(e)           Borrower will at all times be HIPAA Compliant.

 

Section 8.5            Third Party Payor Programs.   No Borrower, shall, other
than in the ordinary course of business, materially change the terms of any
Third Party Payor Programs or its normal billing payment and reimbursement
policies and procedures with respect thereto (including, without limitation, the
amount and timing of finance charges, fees and write-offs). Borrowers will
(a) maintain in full force and effect, and free from restrictions, probations,
conditions or known conflicts which would materially impair the businesses of
Borrowers as they are conducted on the Closing Date, all Healthcare Permits
necessary under Healthcare Laws to continue to receive reimbursement under all
Third Party Payor Programs in which any Borrower participates as of the date of
this Agreement, and (b) provide to Agent upon reasonable request, an accurate,
complete and current list of all participation agreements with Third Party
Payors with respect to the business of Borrowers.  Borrowers shall at all times
comply with all requirements, contracts, conditions and stipulations applicable
to Borrowers in order to maintain in good standing and without default or
limitation all such participation agreements.

 

Section 8.6            Cures.    If there shall occur any fact, event or
circumstance for which Borrowers are required to give Agent notice under
Section 8.2 above after the Closing Date, Borrowers shall take such action as is
necessary to validly challenge or otherwise appropriately respond to such fact,
event or circumstance within any timeframe required by applicable Healthcare
Laws, and shall thereafter diligently pursue the same to a favorable conclusion,
all to the effect that the fact, event or circumstance giving rise to Borrowers’
notice obligation under Section 8.2 shall be dismissed, rescinded, eliminated
and otherwise cease to exist on that date which is the earlier to occur of
(a) sixty (60) days after the date any Borrower or any of its Affiliates became
aware of such fact, event or circumstance, or (b) the expiration of any cure
period given under applicable Healthcare Laws; provided, however, that Borrowers
will not permit to exist or occur any fact, event or circumstance which could
cause any representation or warranty in the following subsections of Section 8.2
to be materially untrue, incomplete or incorrect or which could trigger an
disclosure obligation under such subsections of Section 8.2:  (a), (b)(i) and
(g).

 

ARTICLE 9- SECURITY AGREEMENT

 

Section 9.1            Generally.   As security for the payment and performance
of the Obligations, and without limiting any other grant of a Lien and security
interest in any Security Document, Borrowers hereby assign and grant to Agent,
for the benefit of itself and Lenders, a continuing Lien on and security
interest in, upon, and to the personal property set forth on Schedule 9.1
attached hereto and made a part hereof.  Notwithstanding anything to the
contrary contained herein, no Excluded Property shall constitute Collateral
under this Agreement.

 

Section 9.2            Representations and Warranties and Covenants Relating to
Collateral.

 

(a)           Schedule 9.2 sets forth (i) each chief executive office and
principal place of business of each Borrower and each of their respective
Subsidiaries, and (ii) all of the addresses

 

60

--------------------------------------------------------------------------------

 

(including all warehouses) at which any of the Collateral is located and/or
books and records of Borrowers regarding any of the Collateral are kept, which
such Schedule 9.2 indicates in each case which Borrower(s) have Collateral
and/or books and records located at such address, and, in the case of any such
address not owned by one or more of the Borrowers(s), indicates the nature of
such location (e.g., leased business location operated by Borrower(s), third
party warehouse, consignment location, processor location, etc.) and the name
and address of the third party owning and/or operating such location.  Except
for duplicate records maintained at one or more additional locations set forth
on Schedule 9.2 relating to specifically to goods sold or services provided from
such respective locations, all of the books and records of all Borrowers
relating to the Accounts of all Borrowers are maintained at the chief executive
office and principal place of business of CardioNet indicated on Schedule 9.2.

 

(b)                                 Without limiting the generality of
Section 3.2, and except for the filing of financing statements under the UCC, no
authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority or consent of any other Person is required for (i) the
grant by each Borrower to Agent of the security interests and Liens in the
Collateral provided for under this Agreement and the other Security Documents
(if any), or (ii) the exercise by Agent of its rights and remedies with respect
to the Collateral provided for under this Agreement and the other Security
Documents or under any applicable Law, including the UCC and neither any such
grant of Liens in favor of Agent or exercise of rights by Agent shall violate or
cause a default under any agreement between any Borrower and any other Person
relating to any such collateral.

 

(c)                                  As of the Closing Date, no Borrower has any
ownership interest in any Chattel Paper (as defined in Article 9 of the UCC),
letter of credit rights, commercial tort claims, Instruments, documents (other
than equity interests in any Subsidiaries of such Borrower disclosed on
Schedule 3.4) and Borrowers shall give notice to Agent promptly (but in any
event not later than the delivery by Borrowers of the next quarterly Compliance
Certificate required pursuant to Section 4.1 above) upon the acquisition by any
Borrower of any such Chattel Paper, letter of credit rights, commercial tort
claims, Instruments, and documents.  No Person other than Agent or (if
applicable) any Lender has “control” (as defined in Article 9 of the UCC) over
any Deposit Account, investment property (including Securities Accounts and
commodities account), letter of credit rights or electronic chattel paper in
which any Borrower has any interest (except for such control arising by
operation of law in favor of any bank or securities intermediary or commodities
intermediary with whom any Deposit Account, Securities Account or commodities
account of Borrowers is maintained).

 

(d)                                 Borrowers shall not, and shall not permit
any Credit Party to, take any of the following actions or make any of the
following changes unless Borrowers have given at least thirty (30) days prior
written notice to Agent of Borrowers’ intention to take any such action (which
such written notice shall include an updated version of any Schedule impacted by
such change) and have executed any and all documents, instruments and agreements
and taken any other actions which Agent may request after receiving such written
notice in order to protect and preserve the Liens, rights and remedies of Agent
with respect to the Collateral:  (i) change the legal name or organizational
identification number of any Borrower as it appears in official filings in the
jurisdiction of its organization, (ii) change the jurisdiction of incorporation
or formation of any Borrower or Credit Party or allow any Borrower or Credit
Party to designate any jurisdiction as an additional jurisdiction of
incorporation for such Borrower or Credit Party, or change the type of entity
that it is, or (iii) change its chief executive office, principal place of
business, or the location of its records concerning the Collateral or move any
Collateral to or place any Collateral on any location that is not then listed on
the Schedules and/or establish any business location at any location that is not
then listed on the Schedules.

 

61

--------------------------------------------------------------------------------

 

(e)                                  Borrowers shall not adjust, settle or
compromise the amount or payment of any Account, or release wholly or partly any
Account Debtor, or allow any credit or discount thereon (other than adjustments,
settlements, compromises, credits and discounts in the ordinary course of
business, made while no Default or Event of Default exists and in amounts which
are not material with respect to the Account and which, after giving effect
thereto, do not cause the Borrowing Base to be less than the Revolving Loan
Outstandings) without the prior written consent of Agent.  Without limiting the
generality of this Agreement or any other provisions of any of the Financing
Documents relating to the rights of Agent after the occurrence and during the
continuance of an Event of Default, Agent shall have the right at any time after
the occurrence and during the continuance of an Event of Default to: 
(i) exercise the rights of Borrowers with respect to the obligation of any
Account Debtor to make payment or otherwise render performance to Borrowers and
with respect to any property that secures the obligations of any Account Debtor
or any other Person obligated on the Collateral, and (ii) adjust, settle or
compromise the amount or payment of such Accounts.

 

(f)                                    Without limiting the generality of
Sections 9.2(c) and 9.2(e):

 

(i)                                     Upon request by Agent, Borrowers shall
deliver to Agent all tangible Chattel Paper and all Instruments and documents
owned by any Borrower and constituting part of the Collateral duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Agent.  Borrowers shall provide Agent with
“control” (as defined in Article 9 of the UCC) of all electronic Chattel Paper
owned by any Borrower and constituting part of the Collateral by having Agent
identified as the assignee on the records pertaining to the single authoritative
copy thereof and otherwise complying with the applicable elements of control set
forth in the UCC.  Borrowers also shall deliver to Agent all security agreements
securing any such Chattel Paper and securing any such Instruments.  Borrowers
will mark conspicuously all such Chattel Paper and all such Instruments and
documents with a legend, in form and substance satisfactory to Agent, indicating
that such Chattel Paper and such instruments and documents are subject to the
security interests and Liens in favor of Agent created pursuant to this
Agreement and the Security Documents.  Borrowers shall comply with all the
provisions of Section 5.14 with respect to the Deposit Accounts and Securities
Accounts of Borrowers.

 

(ii)                                  Upon request by Agent, Borrowers shall
deliver to Agent all letters of credit on which any Borrower is the beneficiary
and which give rise to letter of credit rights owned by such Borrower which
constitute part of the Collateral in each case duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and substance
satisfactory to Agent.  Borrowers shall take any and all actions as may be
necessary or desirable, or that Agent may request, from time to time, to cause
Agent to obtain exclusive “control” (as defined in Article 9 of the UCC) of any
such letter of credit rights in a manner acceptable to Agent.

 

(iii)                               Borrowers shall promptly (and in any event
within three (3) Business Days) advise Agent upon any Borrower becoming aware
that it has any interests in any commercial tort claim that constitutes part of
the Collateral, which such notice shall include descriptions of the events and
circumstances giving rise to such commercial tort claim and the dates such
events and circumstances occurred, the potential defendants with respect such
commercial tort claim and any court proceedings that have been instituted with
respect to such commercial tort claims, and Borrowers shall, with respect to any
such commercial tort claim, execute and deliver to Agent such documents as Agent
shall request to perfect, preserve or protect the Liens, rights and remedies of
Agent with respect to any such commercial tort claim.

 

62

--------------------------------------------------------------------------------

 

(iv)                              Except for Accounts and Inventory in an
aggregate amount of $25,000, no Accounts or Inventory or other Collateral shall
at any time be in the possession or control of any warehouse, consignee, bailee
or any of Borrowers’ agents or processors without prior written notice to Agent
and the receipt by Agent, if Agent has so requested, of warehouse receipts,
consignment agreements or bailee lien waivers (as applicable) satisfactory to
Agent prior to the commencement of such possession or control.  Borrower has
notified Agent that Inventory is currently located at the locations set forth on
Schedule 9.2.  Borrowers shall, upon the request of Agent, notify any such
warehouse, consignee, bailee, agent or processor of the security interests and
Liens in favor of Agent created pursuant to this Agreement and the Security
Documents, instruct such Person to hold all such Collateral for Agent’s account
subject to Agent’s instructions and shall obtain an acknowledgement from such
Person that such Person holds the Collateral for Agent’s benefit.

 

(v)                                 Borrowers shall cause all equipment and
other tangible Personal Property other than Inventory to be maintained and
preserved in the same condition, repair and in working order as when new,
ordinary wear and tear excepted, and shall promptly make or cause to be made all
repairs, replacements and other improvements in connection therewith that are
necessary or desirable to such end.  Upon request of Agent, Borrowers shall
promptly deliver to Agent any and all certificates of title, applications for
title or similar evidence of ownership of all such tangible Personal Property
and shall cause Agent to be named as lienholder on any such certificate of title
or other evidence of ownership.  Borrowers shall not permit any such tangible
Personal Property to become fixtures to real estate unless such real estate is
subject to a Lien in favor of Agent.

 

(vi)                              Each Borrower hereby authorizes Agent to file
without the signature of such Borrower one or more UCC financing statements
relating to liens on personal property relating to all or any part of the
Collateral, which financing statements may list Agent as the “secured party” and
such Borrower as the “debtor” and which describe and indicate the collateral
covered thereby as all or any part of the Collateral under the Financing
Documents (including an indication of the collateral covered by any such
financing statement as described on Schedule 9.1  now owned or hereafter
acquired), in such jurisdictions as Agent from time to time determines are
appropriate, and to file without the signature of such Borrower any
continuations of or corrective amendments to any such financing statements, in
any such case in order for Agent to perfect, preserve or protect the Liens,
rights and remedies of Agent with respect to the Collateral.  Each Borrower also
ratifies its authorization for Agent to have filed in any jurisdiction any
initial financing statements or amendments thereto if filed prior to the date
hereof.

 

(vii)                           As of the Closing Date, no Borrower holds, and
after the Closing Date Borrowers shall promptly notify Agent in writing upon
creation or acquisition by any Borrower of, any Collateral which constitutes a
claim against any Governmental Authority, including, without limitation, the
federal government of the United States or any instrumentality or agency thereof
(but excluding any claim under Medicare, Medicaid and TRICARE), the assignment
of which claim is restricted by any applicable Law, including, without
limitation, the federal Assignment of Claims Act and any other comparable Law. 
Upon the request of Agent, Borrowers shall take such steps as may be necessary
or desirable, or that Agent may request, to comply with any such applicable Law.

 

63

--------------------------------------------------------------------------------

 

(viii)                        Borrowers shall furnish to Agent from time to time
any statements and schedules further identifying or describing the Collateral
and any other information, reports or evidence concerning the Collateral as
Agent may reasonably request from time to time.

 

ARTICLE 10- EVENTS OF DEFAULT

 

Section 10.1                            Events of Default.  For purposes of the
Financing Documents, the occurrence of any of the following conditions and/or
events, whether voluntary or involuntary, by operation of law or otherwise,
shall constitute an “Event of Default”:

 

(a)                                  (i) any Borrower shall fail to pay when due
any principal of any Loan, (ii) any Borrower shall fail to pay any within three
(3) Business Days after the same shall become due, any interest, premium, fee or
other Obligations under any Financing Document or any other amount payable under
any Financing Document, (iii) there shall occur any default in the performance
of or compliance with any of the following sections of this Agreement: 
Section 2.11, Section 4.2(b), Section 4.4(c), Section 4.6, Article 5 and
Section 7.4, or (iii) there shall occur any default in the performance of or
compliance with Section 4.1 or Article 6 (to the extent of any covenants
provided from time to time in such Article 6) of this Agreement, and Borrower
Representative has received written notice from Agent or Required Lenders of
such default;

 

(b)                                 any Credit Party defaults in the performance
of or compliance with any term contained in this Agreement or in any other
Financing Document (other than occurrences described in other provisions of this
Section 10.1 for which a different grace or cure period is specified or for
which no grace or cure period is specified and thereby constitute immediate
Events of Default) and such default is not remedied by the Credit Party or
waived by Agent within fifteen (15) Business Days after the earlier of
(i) receipt by Borrower Representative of notice from Agent or Required Lenders
of such default, or (ii) actual knowledge of any Borrower or any other Credit
Party of such default;

 

(c)                                  any representation, warranty, or
certification made by any Credit Party in any Financing Document or in any
certificate, financial statement or other document delivered pursuant to any
Financing Document is incorrect in any respect (or in any material respect if
such representation, warranty, certification or statement is not by its terms
already qualified as to materiality) when made (or deemed made);

 

(d)                                 (i) failure of any Credit Party to pay when
due or within any applicable grace period any principal, interest or other
amount on Debt (other than the Loans), or the occurrence of any breach, default,
condition or event with respect to any Debt (other than the Loans), if the
effect of such failure or occurrence is to cause or to permit the holder or
holders of any such Debt to cause such Debt or other liabilities having an
individual principal amount in excess of $1,000,000 or having an aggregate
principal amount in excess of $1,000,000 to become or be declared due prior to
its stated maturity, or (ii) the occurrence of any breach or default under any
terms or provisions of any Subordinated Debt Document or under any agreement
subordinating the Subordinated Debt to all or any portion of the Obligations, if
the effect of such occurrence is to cause or to permit the holder or holders of
any such Subordinated Debt to cause such Subordinated Debt to become or be
declared due prior to its stated maturity, or the occurrence of any other event
that would require the payment or prepayment of any Subordinated Debt under the
terms of the applicable Subordinated Debt Documents (but only to the extent such
payment or prepayment of the Subordinated Debt would be prohibited under the
applicable Subordination Agreement);

 

64

--------------------------------------------------------------------------------

 

(e)                                  any Credit Party or any Subsidiary of a
Borrower shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;

 

(f)                                    an involuntary case or other proceeding
shall be commenced against any Credit Party or any Subsidiary of a Borrower
seeking liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of forty-five (45) days; or an order for relief shall be entered
against any Credit Party or any Subsidiary of a Borrower under applicable
federal bankruptcy, insolvency or other similar law in respect of
(i) bankruptcy, liquidation, winding-up, dissolution or suspension of general
operations, (ii) composition, rescheduling, reorganization, arrangement or
readjustment of, or other relief from, or stay of proceedings to enforce, some
or all of the debts or obligations, or (iii) possession, foreclosure, seizure or
retention, sale or other disposition of, or other proceedings to enforce
security over, all or any substantial part of the assets of such Credit Party or
Subsidiary;

 

(g)                                 (i) institution of any steps by any Person
to terminate a Pension Plan if as a result of such termination any Credit Party
or any member of the Controlled Group could be required to make a contribution
to such Pension Plan, or could incur a liability or obligation to such Pension
Plan, in excess of $200,000, (ii) a contribution failure occurs with respect to
any Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA, or (iii) there shall occur any withdrawal or partial withdrawal from a
Multiemployer Plan and the withdrawal liability (without unaccrued interest) to
Multiemployer Plans as a result of such withdrawal (including any outstanding
withdrawal liability that any Credit Party or any member of the Controlled Group
have incurred on the date of such withdrawal) exceeds $250,000;

 

(h)                                 one or more final judgments or orders for
the payment of money (not paid or fully covered by insurance maintained in
accordance with the requirements of this Agreement and as to which the relevant
insurance company has acknowledged coverage) aggregating in excess of $500,000
shall be rendered against any or all Credit Parties and either (i) enforcement
proceedings shall have been commenced by any creditor upon any such judgments or
orders, or (ii) there shall be any period of thirty (30) consecutive days during
which a stay of enforcement of any such judgments or orders, by reason of a
pending appeal, bond or otherwise, shall not be in effect;

 

(i)                                     any Lien created by any of the Security
Documents shall at any time fail to constitute a valid and perfected Lien on all
of the Collateral purported to be encumbered thereby, subject to no prior or
equal Lien except Permitted Liens, or any Credit Party shall assert any of the
forgoing and/or contest the validity or perfection of any such Lien created by
any of the Security Documents;

 

(j)                                     the indictment of any Credit Party by
any Governmental Authority on any criminal felony charges or criminal charges
for any crime of fraud or other crime of moral turpitude;

 

(k)                                  a default or event of default occurs under
any Guarantee of any portion of the Obligations;

 

65

--------------------------------------------------------------------------------

 

(l)                                     any Borrower makes any payment on
account of any Debt that has been subordinated to any of the Obligations, other
than payments specifically permitted by the terms of such Subordination
Agreement;

 

(m)                               if any Borrower is or becomes an entity whose
equity is registered with the SEC, and/or is publicly traded on and/or
registered with a public securities exchange, (i) such equity fails to remain
publicly traded on and registered with a public securities exchange, or
(ii) such Borrower fails to remain registered with the SEC;

 

(n)                                 the occurrence of any development, event,
act, condition or occurrence of any nature that has had, either individually or
in the aggregate, a Material Adverse Effect, if such default shall have
continued unremedied for a period of ten (10) days after written notice from
Agent; or

 

(o)                                 the imposition of a fine against or the
creation of any liability of any Credit Party to any Governmental Authority
under any Healthcare Law in excess of $1,000,000.00 (other than in connection
with the Pending CID).

 

Notwithstanding the foregoing, if a Credit Party fails to comply with any same
provision of this Agreement two (2) times in any twelve (12) month period and
Agent has given to Borrower Representative in connection with each such failure
any notice to which Borrowers would be entitled under this Section before such
failure could become an Event of Default, then all subsequent failures by a
Credit Party to comply with such provision of this Agreement shall effect an
immediate Event of Default (without the expiration of any applicable cure
period) with respect to all subsequent failures by a Credit Party to comply with
such provision of this Agreement, and Agent thereupon may exercise any remedy
set forth in this Article 10 without affording Borrowers any opportunity to cure
such Event of Default.

 

All cure periods provided for in this Section 10.1 shall run concurrently with
any cure period provided for in any applicable Financing Documents under which
the default occurred.

 

Section 10.2                            Acceleration and Suspension or
Termination of Revolving Loan Commitment.  Upon the occurrence and during the
continuance of an Event of Default, Agent may, and shall if requested by
Required Lenders, (a) by notice to Borrower Representative suspend or terminate
the Revolving Loan Commitment and the obligations of Agent and the Lenders with
respect thereto, in whole or in part (and, if in part, each Lender’s Revolving
Loan Commitment shall be reduced in accordance with its Pro Rata Share), and/or
(b) by notice to Borrower Representative declare all or any portion of the
Obligations to be, and the Obligations shall thereupon become, immediately due
and payable, with accrued interest thereon, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by each Borrower and
Borrowers will pay the same; provided, however, that in the case of any of the
Events of Default specified in Section 10.1(e) or 10.1(f) above, without any
notice to any Borrower or any other act by Agent or the Lenders, the Revolving
Loan Commitment and the obligations of Agent and the Lenders with respect
thereto shall thereupon immediately and automatically terminate and all of the
Obligations shall become immediately and automatically due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Borrower and Borrowers will pay the same.

 

Section 10.3                            UCC Remedies.

 

(a)                                  Upon the occurrence of and during the
continuance of an Event of Default under this Agreement or the other Financing
Documents, Agent, in addition to all other rights, options, and remedies granted
to Agent under this Agreement or at law or in equity, may exercise, either
directly or

 

66

--------------------------------------------------------------------------------

 

through one or more assignees or designees, all rights and remedies granted to
it under all Financing Documents and under the UCC in effect in the applicable
jurisdiction(s) and under any other applicable law; including, without
limitation:

 

(i)                                     the right to take possession of, send
notices regarding, and collect directly the Collateral, with or without judicial
process;

 

(ii)                                  the right to (by its own means or with
judicial assistance) enter any of Borrowers’ premises and take possession of the
Collateral, or render it unusable, or to render it usable or saleable, or
dispose of the Collateral on such premises in compliance with subsection
(iii) below and to take possession of Borrowers’ original books and records, to
obtain access to Borrowers’ data processing equipment, computer hardware and
software relating to the Collateral and to use all of the foregoing and the
information contained therein in any manner Agent deems appropriate, without any
liability for rent, storage, utilities, or other sums, and Borrowers shall not
resist or interfere with such action (if Borrowers’ books and records are
prepared or maintained by an accounting service, contractor or other third party
agent, Borrowers hereby irrevocably authorize such service, contractor or other
agent, upon notice by Agent to such Person that an Event of Default has occurred
and is continuing, to deliver to Agent or its designees such books and records,
and to follow Agent’s instructions with respect to further services to be
rendered);

 

(iii)                               the right to require Borrowers at Borrowers’
expense to assemble all or any part of the Collateral and make it available to
Agent at any place designated by Lender;

 

(iv)                              the right to notify postal authorities to
change the address for delivery of Borrowers’ mail to an address designated by
Agent and to receive, open and dispose of all mail addressed to any Borrower;
and/or

 

(v)                                 the right to enforce Borrowers’ rights
against Account Debtors and other obligors, including, without limitation,
(i) the right to collect Accounts directly in Agent’s own name (as agent for
Lenders) and to charge the collection costs and out-of-pocket expenses,
including reasonable attorneys’ fees, to Borrowers, and (ii) the right, in the
name of Agent or any designee of Agent or Borrowers, to verify the validity,
amount or any other matter relating to any Accounts by mail, telephone,
telegraph or otherwise, including, without limitation, verification of
Borrowers’ compliance with applicable Laws.  Borrowers shall cooperate fully
with Agent in an effort to facilitate and promptly conclude such verification
process.  Such verification may include contacts between Agent and applicable
federal, state and local regulatory authorities having jurisdiction over the
Borrowers’ affairs, all of which contacts Borrowers hereby irrevocably
authorize.

 

(b)                                 Each Borrower agrees that a notice received
by it at least ten (10) days before the time of any intended public sale, or the
time after which any private sale or other disposition of the Collateral is to
be made, shall be deemed to be reasonable notice of such sale or other
disposition.  If permitted by applicable law, any perishable Collateral which
threatens to speedily decline in value or which is sold on a recognized market
may be sold immediately by Agent without prior notice to Borrowers.  At any sale
or disposition of Collateral, Agent may (to the extent permitted by applicable
law) purchase all or any part of the Collateral, free from any right of
redemption by Borrowers, which right is hereby waived and released.  Each
Borrower covenants and agrees not to interfere with or impose any obstacle to
Agent’s exercise of its rights and remedies with respect to the Collateral. 
Agent shall have no obligation to clean-up or otherwise prepare the Collateral
for sale.  Agent may comply with any

 

67

--------------------------------------------------------------------------------

 

applicable state or federal law requirements in connection with a disposition of
the Collateral and compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.  Agent may sell the
Collateral without giving any warranties as to the Collateral.  Agent may
specifically disclaim any warranties of title or the like.  This procedure will
not be considered to adversely affect the commercial reasonableness of any sale
of the Collateral.  If Agent sells any of the Collateral upon credit, Borrowers
will be credited only with payments actually made by the purchaser, received by
Agent and applied to the indebtedness of the purchaser.  In the event the
purchaser fails to pay for the Collateral, Agent may resell the Collateral and
Borrowers shall be credited with the proceeds of the sale. Borrowers shall
remain liable for any deficiency if the proceeds of any sale or disposition of
the Collateral are insufficient to pay all Obligations.

 

(c)                                  Without restricting the generality of the
foregoing and for the purposes aforesaid, each Borrower hereby appoints and
constitutes Agent its lawful attorney-in-fact with full power of substitution in
the Collateral, upon the occurrence and during the continuance of an Event of
Default, to (i) use unadvanced funds remaining under this Agreement or which may
be reserved, escrowed or set aside for any purposes hereunder at any time, or to
advance funds in excess of the face amount of the Notes, (ii) pay, settle or
compromise all existing bills and claims, which may be Liens or security
interests, or to avoid such bills and claims becoming Liens against the
Collateral, (iii) execute all applications and certificates in the name of such
Borrower and to prosecute and defend all actions or proceedings in connection
with the Collateral, and (iv) do any and every act which such Borrower might do
in its own behalf; it being understood and agreed that this power of attorney in
this subsection (c) shall be a power coupled with an interest and cannot be
revoked.

 

(d)                                 Agent and each Lender is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrowers’ labels, mask works, rights of use of any name, any other Intellectual
Property and advertising matter, and any similar property as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral and, in connection with Agent’s exercise of its rights under this
Article, Borrowers’ rights under all licenses (whether as licensor or licensee)
and all franchise agreements inure to Agent’s and each Lender’s benefit.

 

Section 10.4                            [RESERVED]

 

Section 10.5                            Default Rate of Interest.  At the
election of Agent or Required Lenders, after the occurrence of an Event of
Default and for so long as it continues, the Loans and other Obligations shall
bear interest at rates that are three percent (3.0%) per annum in excess of the
rates otherwise payable under this Agreement (provided that, in the case of any
Event of Default specified in Section 10.1(e) or 10.1(f) above, such default
rates shall apply immediately and automatically without the need for any
election or action of any kind on the part of Agent or any Lender).

 

Section 10.6                            Setoff Rights.  During the continuance
of any Event of Default, each Lender is hereby authorized by each Borrower at
any time or from time to time, with reasonably prompt subsequent notice to such
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 or any of such Lender’s Affiliates at any of its offices for the account
of such Borrower or any of its Subsidiaries (regardless of whether such balances
are then due to such 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
such 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

 

68

--------------------------------------------------------------------------------

 

each other Lender in accordance with their respective Pro Rata Share of the
Obligations.  Each Borrower agrees, to the fullest extent permitted by law, that
any Lender and any of such Lender’s Affiliates may exercise its right to set off
with respect to the Obligations as provided in this Section 10.6.

 

Section 10.7                            Application of Proceeds.

 

(a)                                  Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence and during the continuance of
an Event of Default, each Borrower irrevocably waives the right to direct the
application of any and all payments at any time or times thereafter received by
Agent from or on behalf of such Borrower or any Guarantor of all or any part of
the Obligations, and, as between Borrowers on the one hand and Agent and Lenders
on the other, Agent shall have the continuing and exclusive right to apply and
to reapply any and all payments received against the Obligations in such manner
as Agent may deem advisable notwithstanding any previous application by Agent.

 

(b)                                 Following the occurrence and continuance of
an Event of Default, but absent the occurrence and continuance of an
Acceleration Event, Agent shall apply any and all payments received by Agent in
respect of the Obligations, and any and all proceeds of Collateral received by
Agent, in such order as Agent may from time to time elect.

 

(c)                                  Notwithstanding anything to the contrary
contained in this Agreement, if an Acceleration Event shall have occurred, and
so long as it continues, Agent shall apply any and all payments received by
Agent in respect of the Obligations, and any and all proceeds of Collateral
received by Agent, in the following order:  first, to all fees, costs,
indemnities, liabilities, obligations and expenses incurred by or owing to Agent
with respect to this Agreement, the other Financing Documents or the Collateral;
second, to all fees, costs, indemnities, liabilities, obligations and expenses
incurred by or owing to any Lender with respect to this Agreement, the other
Financing Documents or the Collateral; third, to accrued and unpaid interest on
the Obligations (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts); fourth, to the principal
amount of the Obligations outstanding; and fifth to any other indebtedness or
obligations of Borrowers owing to Agent or any Lender under the Financing
Documents.  Any balance remaining shall be delivered to Borrowers or to whomever
may be lawfully entitled to receive such balance or as a court of competent
jurisdiction may direct.  In carrying out the foregoing, (y) amounts received
shall be applied in the numerical order provided until exhausted prior to the
application to the next succeeding category, and (z) each of the Persons
entitled to receive a payment in any particular category shall receive an amount
equal to its Pro Rata Share of amounts available to be applied pursuant thereto
for such category.

 

Section 10.8                            Waivers.

 

(a)                                  Except as otherwise provided for in this
Agreement and to the fullest extent permitted by applicable law, each Borrower
waives:  (i) presentment, demand and protest, and notice of presentment,
dishonor, intent to accelerate, acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
Financing Documents, the Notes or any other notes, commercial paper, accounts,
contracts, documents, Instruments, Chattel Paper and Guarantees at any time held
by Lenders on which any Borrower may in any way be liable, and hereby ratifies
and confirms whatever Lenders may do in this regard; (ii) all rights to notice
and a hearing prior to Agent’s or any Lender’s taking possession or control of,
or to Agent’s or any Lender’s replevy, attachment or levy upon, any Collateral
or any bond or security which might be required by any court prior to allowing
Agent or any Lender to exercise any of its remedies; and (iii) the benefit of
all valuation, appraisal and exemption Laws.  Each Borrower acknowledges that it
has been advised by counsel of its choices and

 

69

--------------------------------------------------------------------------------

 

decisions with respect to this Agreement, the other Financing Documents and the
transactions evidenced hereby and thereby.

 

(b)                                 Each Borrower for itself and all its
successors and assigns, (i) agrees that its liability shall not be in any manner
affected by any indulgence, extension of time, renewal, waiver, or modification
granted or consented to by Lender; (ii) consents to any indulgences and all
extensions of time, renewals, waivers, or modifications that may be granted by
Agent or any Lender with respect to the payment or other provisions of the
Financing Documents, and to any substitution, exchange or release of the
Collateral, or any part thereof, with or without substitution, and agrees to the
addition or release of any Borrower, endorsers, guarantors, or sureties, or
whether primarily or secondarily liable, without notice to any other Borrower
and without affecting its liability hereunder; (iii) agrees that its liability
shall be unconditional and without regard to the liability of any other
Borrower, Agent or any Lender for any tax on the indebtedness; and (iv) to the
fullest extent permitted by law, expressly waives the benefit of any statute or
rule of law or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the foregoing.

 

(c)                                  To the extent that Agent or any Lender may
have acquiesced in any noncompliance with any requirements or conditions
precedent to the closing of the Loans or to any subsequent disbursement of Loan
proceeds, such acquiescence shall not be deemed to constitute a waiver by Agent
or any Lender of such requirements with respect to any future disbursements of
Loan proceeds and Agent may at any time after such acquiescence require
Borrowers to comply with all such requirements.  Any forbearance by Agent or
Lender in exercising any right or remedy under any of the Financing Documents,
or otherwise afforded by applicable law, including any failure to accelerate the
maturity date of the Loans, shall not be a waiver of or preclude the exercise of
any right or remedy nor shall it serve as a novation of the Notes or as a
reinstatement of the Loans or a waiver of such right of acceleration or the
right to insist upon strict compliance of the terms of the Financing Documents. 
Agent’s or any Lender’s acceptance of payment of any sum secured by any of the
Financing Documents after the due date of such payment shall not be a waiver of
Agent’s and such Lender’s right to either require prompt payment when due of all
other sums so secured or to declare a default for failure to make prompt
payment.  The procurement of insurance or the payment of taxes or other Liens or
charges by Agent as the result of an Event of Default shall not be a waiver of
Agent’s right to accelerate the maturity of the Loans, nor shall Agent’s receipt
of any condemnation awards, insurance proceeds, or damages under this Agreement
operate to cure or waive any Credit Party’s default in payment of sums secured
by any of the Financing Documents.

 

(d)                                 Without limiting the generality of anything
contained in this Agreement or the other Financing Documents, each Borrower
agrees that if an Event of Default is continuing (i) Agent and Lenders shall not
be subject to any “one action” or “election of remedies” law or rule, and
(ii) all Liens and other rights, remedies or privileges provided to Agent or
Lenders shall remain in full force and effect until Agent or Lenders have
exhausted all remedies against the Collateral and any other properties owned by
Borrowers and the Financing Documents and other security instruments or
agreements securing the Loans have been foreclosed, sold and/or otherwise
realized upon in satisfaction of Borrowers’ obligations under the Financing
Documents.

 

(e)                                  Nothing contained herein or in any other
Financing Document shall be construed as requiring Agent or any Lender to resort
to any part of the Collateral for the satisfaction of any of Borrowers’
obligations under the Financing Documents in preference or priority to any other
Collateral, and Agent may seek satisfaction out of all of the Collateral or any
part thereof, in its absolute discretion in respect of Borrowers’ obligations
under the Financing Documents.  In addition, Agent shall have the right from
time to time to partially foreclose upon any Collateral in any manner and for
any amounts secured

 

70

--------------------------------------------------------------------------------

 

by the Financing Documents then due and payable as determined by Agent in its
sole discretion, including, without limitation, the following circumstances: 
(i) in the event any Borrower defaults beyond any applicable grace period in the
payment of one or more scheduled payments of principal and/or interest, Agent
may foreclose upon all or any part of the Collateral to recover such delinquent
payments, or (ii) in the event Agent elects to accelerate less than the entire
outstanding principal balance of the Loans, Agent may foreclose all or any part
of the Collateral to recover so much of the principal balance of the Loans as
Lender may accelerate and such other sums secured by one or more of the
Financing Documents as Agent may elect.  Notwithstanding one or more partial
foreclosures, any unforeclosed Collateral shall remain subject to the Financing
Documents to secure payment of sums secured by the Financing Documents and not
previously recovered.

 

(f)                                    To the fullest extent permitted by law,
each Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Collateral any equitable right otherwise
available to any Credit Party which would require the separate sale of any of
the Collateral or require Agent or Lenders to exhaust their remedies against any
part of the Collateral before proceeding against any other part of the
Collateral; and further in the event of such foreclosure each Borrower does
hereby expressly consent to and authorize, at the option of Agent, the
foreclosure and sale either separately or together of each part of the
Collateral.

 

Section 10.9                            Injunctive Relief.  The parties
acknowledge and agree that, in the event of a breach or threatened breach of any
Credit Party’s obligations under any Financing Documents, Agent and Lenders may
have no adequate remedy in money damages and, accordingly, shall be entitled to
an injunction (including, without limitation, a temporary restraining order,
preliminary injunction, writ of attachment, or order compelling an audit)
against such breach or threatened breach, including, without limitation,
maintaining any cash management and collection procedure described herein. 
However, no specification in this Agreement of a specific legal or equitable
remedy shall be construed as a waiver or prohibition against any other legal or
equitable remedies in the event of a breach or threatened breach of any
provision of this Agreement.  Each Credit Party waives, to the fullest extent
permitted by law, the requirement of the posting of any bond in connection with
such injunctive relief.  By joining in the Financing Documents as a Credit
Party, each Credit Party specifically joins in this Section as if this
Section were a part of each Financing Document executed by such Credit Party.

 

Section 10.10                     Marshalling; 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 any
payment or Agent enforces its Liens or Agent or any Lender exercises its right
of set-off, and such payment 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 therefore, 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.

 

ARTICLE 11- AGENT

 

Section 11.1                            Appointment and Authorization.  Each
Lender hereby irrevocably appoints and authorizes Agent to enter into each of
the Financing Documents to which it is a party (other than this Agreement) on
its behalf and to take such actions as Agent on its behalf and to exercise such
powers under the Financing Documents as are delegated to Agent by the terms
thereof, together with all such powers as are reasonably incidental thereto. 
Subject to the terms of Section 11.16 and to the terms of the other Financing
Documents, Agent is authorized and empowered to amend, modify, or waive any
provisions of this Agreement or the other Financing Documents on behalf of
Lenders.  The provisions of

 

71

--------------------------------------------------------------------------------

 

this Article 11 are solely for the benefit of Agent and Lenders and neither any
Borrower nor any other Credit Party shall 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 any Borrower or any other Credit
Party.  Agent may perform any of its duties hereunder, or under the Financing
Documents, by or through its agents or employees.

 

Section 11.2                            Agent and Affiliates.  Agent shall have
the same rights and powers under the Financing Documents as any other Lender and
may exercise or refrain from exercising the same as though it were not Agent,
and Agent and its Affiliates may lend money to, invest in and generally engage
in any kind of business with each Credit Party or Affiliate of any Credit Party
as if it were not Agent hereunder.

 

Section 11.3                            Action by Agent.  The duties of Agent
shall be mechanical and administrative in nature.  Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender. 
Nothing in this Agreement or any of the Financing Documents is intended to or
shall be construed to impose upon Agent any obligations in respect of this
Agreement or any of the Financing Documents except as expressly set forth herein
or therein.

 

Section 11.4                            Consultation with Experts.  Agent may
consult with legal counsel, 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 11.5                            Liability of Agent.  Neither Agent nor
any of its directors, officers, agents or employees shall be liable to any
Lender for any action taken or not taken by it in connection with the Financing
Documents, except that Agent shall be liable with respect to its specific duties
set forth hereunder but only to the extent of its own gross negligence or
willful misconduct in the discharge thereof as determined by a final
non-appealable judgment of a court of competent jurisdiction.  Neither Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into or verify (a) any statement, warranty
or representation made in connection with any Financing Document or any
borrowing hereunder; (b) the performance or observance of any of the covenants
or agreements specified in any Financing Document; (c) the satisfaction of any
condition specified in any Financing Document; (d) the validity, effectiveness,
sufficiency or genuineness of any Financing Document, any Lien purported to be
created or perfected thereby or any other instrument or writing furnished in
connection therewith; (e) the existence or non-existence of any Default or Event
of Default; or (f) the financial condition of any Credit Party.  Agent shall not
incur any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex, facsimile or
electronic transmission or similar writing) believed by it to be genuine or to
be signed by the proper party or parties.  Agent shall not be liable for any
apportionment or distribution of payments made by it in good faith and if any
such apportionment or distribution is subsequently determined to have been made
in error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount to
which they are determined to be entitled (and such other Lenders hereby agree to
return to such Lender any such erroneous payments received by them).

 

Section 11.6                            Indemnification.  Each Lender shall, in
accordance with its Pro Rata Share, indemnify Agent (to the extent not
reimbursed by Borrowers) upon demand against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from Agent’s gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction) that Agent may suffer or incur in connection with the Financing

 

72

--------------------------------------------------------------------------------

 

Documents or any action taken or omitted by Agent hereunder or thereunder.  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 indemnity and
cease, or not commence, to do the acts indemnified against even if so directed
by Required Lenders until such additional indemnity is furnished.

 

Section 11.7                            Right to Request and Act on
Instructions.  Agent may at any time request instructions from Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the Financing Documents Agent is permitted or desires to take or to
grant, and if such instructions are promptly requested, Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the
Financing Documents until it shall have received such instructions from Required
Lenders or all or such other portion of the Lenders as shall be prescribed by
this Agreement.  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 under this Agreement or any of the other Financing Documents in
accordance with the instructions of Required Lenders (or all or such other
portion of the Lenders as shall be prescribed by this Agreement) and,
notwithstanding the instructions of Required Lenders (or such other applicable
portion of the Lenders), Agent shall have no obligation to take any action if it
believes, in good faith, that such action would violate applicable Law or
exposes Agent to any liability for which it has not received satisfactory
indemnification in accordance with the provisions of Section 11.6.

 

Section 11.8                            Credit Decision.  Each Lender
acknowledges that it has, independently and without reliance upon Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under the Financing
Documents.

 

Section 11.9                            Collateral Matters.  Lenders irrevocably
authorize Agent, at its option and in its discretion, to (a) release any Lien
granted to or held by Agent under any Security Document (i) upon termination of
the Loan Commitment and payment in full of all Obligations; or (ii) constituting
property sold or disposed of as part of or in connection with any disposition
permitted under any Financing Document (it being understood and agreed that
Agent may conclusively rely without further inquiry on a certificate of a
Responsible Officer as to the sale or other disposition of property being made
in full compliance with the provisions of the Financing Documents); and
(b) release or subordinate any Lien granted to or held by Agent under any
Security Document constituting personal property described herein (it being
understood and agreed that Agent may conclusively rely without further inquiry
on a certificate of a Responsible Officer as to the identification of any
personal property described herein).  Upon request by Agent at any time, Lenders
will confirm Agent’s authority to release and/or subordinate particular types or
items of Collateral pursuant to this Section 11.9.

 

Section 11.10                     Agency for Perfection.  Agent and each Lender
hereby appoint each other Lender as agent for the purpose of perfecting Agent’s
security interest in assets which, in accordance with the Uniform Commercial
Code in any applicable jurisdiction, can be perfected by possession or control. 
Should any Lender (other than Agent) obtain possession or control of any such
assets, such Lender shall notify Agent thereof, and, promptly upon Agent’s
request therefor, shall deliver such assets to Agent or in accordance with
Agent’s instructions or transfer control to Agent in accordance with Agent’s
instructions.  Each Lender agrees that it will not have any right individually
to enforce or seek to enforce any Security Document or to realize upon any
Collateral for the Loan unless instructed to do so by Agent (or consented

 

73

--------------------------------------------------------------------------------

 

to by Agent), it being understood and agreed that such rights and remedies may
be exercised only by Agent.

 

Section 11.11                     Notice of Default.  Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
except with respect to defaults in the payment of principal, interest and fees
required to be paid to Agent for the account of Lenders, unless Agent shall have
received written notice from a Lender or a Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
“notice of default”.  Agent will notify each Lender of its receipt of any such
notice.  Agent shall take such action with respect to such Default or Event of
Default as may be requested by Required Lenders (or all or such other portion of
the Lenders as shall be prescribed by this Agreement) in accordance with the
terms hereof.  Unless and until Agent has received any such request, Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interests of Lenders.

 

Section 11.12                     Assignment by Agent; Resignation of Agent;
Successor Agent.

 

(a)                                  Agent may at any time assign its rights,
powers, privileges and duties hereunder to (i) another Lender, or (ii) any
Person to whom Agent, in its capacity as a Lender, has assigned (or will assign,
in conjunction with such assignment of agency rights hereunder) 50% or more of
its Loan, in each case without the consent of the Lenders or Borrowers. 
Following any such assignment, Agent shall give notice to the Lenders and
Borrowers.  An assignment by Agent pursuant to this subsection (a) shall not be
deemed a resignation by Agent for purposes of subsection (b) below.

 

(b)                                 Without limiting the rights of Agent to
designate an assignee pursuant to subsection (a) above, Agent may at any time
give notice of its resignation to the Lenders and Borrowers.  Upon receipt of
any such notice of resignation, Required Lenders shall have the right to appoint
a successor Agent.  If no such successor shall have been so appointed by
Required Lenders and shall have accepted such appointment within ten
(10) Business Days after the retiring Agent gives notice of its resignation,
then the retiring Agent may on behalf of the Lenders, appoint a successor Agent;
provided, however, that if Agent shall notify Borrowers and the Lenders that no
Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice from Agent that no Person has
accepted such appointment and, from and following delivery of such notice,
(i) the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Financing Documents, and (ii) all payments,
communications and determinations provided to be made by, to or through Agent
shall instead be made by or to each Lender directly, until such time as Required
Lenders appoint a successor Agent as provided for above in this paragraph.

 

(c)                                  Upon (i) an assignment permitted by
subsection (a) above, or (ii) the acceptance of a successor’s appointment as
Agent pursuant to subsection (b) above, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Agent, and the retiring Agent shall be discharged from all
of its duties and obligations hereunder and under the other Financing Documents
(if not already discharged therefrom as provided above in this paragraph).  The
fees payable by Borrowers to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between Borrowers and such
successor.  After the retiring Agent’s resignation hereunder and under the other
Financing Documents, the provisions of this Article and Section 11.12 shall
continue in effect for the benefit of such retiring Agent and its sub-agents in
respect of any actions taken or omitted to be taken by any of them while the
retiring Agent was acting or was continuing to act as Agent.

 

74

--------------------------------------------------------------------------------

 

Section 11.13                     Payment and Sharing of Payment.

 

(a)                                  Revolving Loan Advances, Payments and
Settlements; Interest and Fee Payments.

 

(i)                                     Agent shall have the right, on behalf of
Revolving Lenders to disburse funds to Borrowers for all Revolving Loans
requested or deemed requested by Borrowers pursuant to the terms of this
Agreement.  Agent shall be conclusively entitled to assume, for purposes of the
preceding sentence, that each Revolving Lender, other than any Non-Funding
Revolving Lenders, will fund its Pro Rata Share of all Revolving Loans requested
by Borrowers.  Each Revolving Lender shall reimburse Agent on demand, in
accordance with the provisions of the immediately following paragraph, for all
funds disbursed on its behalf by Agent pursuant to the first sentence of this
clause (i), or if Agent so requests, each Revolving Lender will remit to Agent
its Pro Rata Share of any Revolving Loan before Agent disburses the same to a
Borrower.  If Agent elects to require that each Revolving Lender make funds
available to Agent, prior to a disbursement by Agent to a Borrower, Agent shall
advise each Revolving Lender by telephone, facsimile or e-mail of the amount of
such Revolving Lender’s Pro Rata Share of the Revolving Loan requested by such
Borrower no later than noon (Eastern time) on the date of funding of such
Revolving Loan, and each such Revolving Lender shall pay Agent on such date such
Revolving Lender’s Pro Rata Share of such requested Revolving Loan, in same day
funds, by wire transfer to the Payment Account, or such other account as may be
identified by Agent to Revolving Lenders from time to time.  If any Lender fails
to pay the amount of its Pro Rata Share of any funds advanced by Agent pursuant
to the first sentence of this clause (i) within one (1) Business Day after
Agent’s demand, Agent shall promptly notify Borrower Representative, and
Borrowers shall immediately repay such amount to Agent.  Any repayment required
by Borrowers pursuant to this Section 11.13 shall be accompanied by accrued
interest thereon from and including the date such amount is made available to a
Borrower to but excluding the date of payment at the rate of interest then
applicable to Revolving Loans.  Nothing in this Section 11.13 or elsewhere in
this Agreement or the other Financing 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 commitments 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.

 

(ii)                                  On a Business Day of each week as selected
from time to time by Agent, or more frequently (including daily), if Agent so
elects (each such day being a “Settlement Date”), Agent will advise each
Revolving Lender by telephone, facsimile or e-mail of the amount of each such
Revolving Lender’s percentage interest of the Revolving Loan balance as of the
close of business of the Business Day immediately preceding the Settlement
Date.  In the event that payments are necessary to adjust the amount of such
Revolving Lender’s actual percentage interest of the Revolving Loans to such
Lender’s required percentage interest of the Revolving Loan balance as of any
Settlement Date, the Revolving Lender from which such payment is due shall pay
Agent, without setoff or discount, to the Payment Account before 1:00 p.m.
(Eastern time) on the Business Day following the Settlement Date the full amount
necessary to make such adjustment.  Any obligation arising pursuant to the
immediately preceding sentence shall be absolute and unconditional and shall not
be affected by any circumstance whatsoever.  In the event settlement shall not
have occurred by the date and time specified in the second preceding sentence,
interest shall accrue on the unsettled amount at the rate of interest then
applicable to Revolving Loans.

 

75

--------------------------------------------------------------------------------

 

(iii)                               On each Settlement Date, Agent shall advise
each Revolving Lender by telephone, facsimile or e-mail of the amount of such
Revolving Lender’s percentage interest of principal, interest and fees paid for
the benefit of Revolving Lenders with respect to each applicable Revolving Loan,
to the extent of such Revolving Lender’s Revolving Loan Exposure with respect
thereto, and shall make payment to such Revolving Lender before 1:00 p.m.
(Eastern time) on the Business Day following the Settlement Date of such amounts
in accordance with wire instructions delivered by such Revolving Lender to
Agent, as the same may be modified from time to time by written notice to Agent;
provided, however, that, in the case such Revolving Lender is a Defaulted
Lender, Agent shall be entitled to set off the funding short-fall against that
Defaulted Lender’s respective share of all payments received from any Borrower.

 

(iv)                              On the Closing Date, Agent, on behalf of
Lenders, may elect to advance to Borrowers the full amount of the initial Loans
to be made on the Closing Date prior to receiving funds from Lenders, in
reliance upon each Lender’s commitment to make its Pro Rata Share of such Loans
to Borrowers in a timely manner on such date.  If Agent elects to advance the
initial Loans to Borrower in such manner, Agent shall be entitled to receive all
interest that accrues on the Closing Date on each Lender’s Pro Rata Share of
such Loans unless Agent receives such Lender’s Pro Rata Share of such Loans
before 3:00 p.m. (Eastern time) on the Closing Date.

 

(v)                                 It is understood that for purposes of
advances to Borrowers made pursuant to this Section 11.13, Agent will be using
the funds of Agent, and pending settlement, (A) all funds transferred from the
Payment Account to the outstanding Revolving Loans shall be applied first to
advances made by Agent to Borrowers pursuant to this Section 11.13, and (B) all
interest accruing on such advances shall be payable to Agent.

 

(vi)                              The provisions of this Section 11.13(a) shall
be deemed to be binding upon Agent and Lenders notwithstanding the occurrence of
any Default or Event of Default, or any insolvency or bankruptcy proceeding
pertaining to any Borrower or any other Credit Party.

 

(b)                                 [RESERVED]

 

(c)                                  Return of Payments.

 

(i)                                     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 a 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,
together with interest accruing on a daily basis at the Federal Funds Rate.

 

(ii)                                  If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to any Borrower
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
Financing 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.

 

76

--------------------------------------------------------------------------------

 

(d)                                 Defaulted Lenders.  The failure of any
Defaulted Lender to make any payment required by it hereunder shall not relieve
any other Lender of its obligations to make payment, but neither any other
Lender nor Agent shall be responsible for the failure of any Defaulted Lender to
make any payment required hereunder.  Notwithstanding anything set forth herein
to the contrary, a Defaulted Lender shall not have any voting or consent rights
under or with respect to any Financing Document or constitute a “Lender” (or be
included in the calculation of “Required Lenders” hereunder) for any voting or
consent rights under or with respect to any Financing Document.

 

(e)                                  Sharing of Payments.  If any Lender shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of any Loan (other than pursuant
to the terms of Section 2.8(d)) in excess of its Pro Rata Share of payments
entitled pursuant to the other provisions of this Section 11.13, such Lender
shall purchase from the other Lenders such participations in extensions of
credit made by such other Lenders (without recourse, representation or warranty)
as shall be necessary to cause such purchasing Lender to share the excess
payment or other recovery ratably with each of them; provided, however, that if
all or any portion of the excess payment or other recovery is thereafter
required to be returned or otherwise recovered from such purchasing Lender, such
portion of such purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender the
purchase price to the ratable extent of such return or recovery, without
interest.  Each Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this clause (e) may, to the fullest extent
permitted by law, exercise all its rights of payment (including pursuant to
Section 10.6) with respect to such participation as fully as if such Lender were
the direct creditor of Borrowers in the amount of such participation).  If under
any applicable bankruptcy, insolvency or other similar law, any Lender receives
a secured claim in lieu of a setoff to which this clause (e) applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this clause (e) to share in the benefits of any recovery on such secured
claim.

 

Section 11.14                     Right to Perform, Preserve and Protect.  If
any Credit Party fails to perform any obligation hereunder or under any other
Financing Document, Agent itself may, but shall not be obligated to, cause such
obligation to be performed at Borrowers’ expense.  Agent is further authorized
by Borrowers and the Lenders to make expenditures from time to time which Agent,
in its reasonable business judgment, deems necessary or desirable to
(a) preserve or protect the business conducted by Borrowers, the Collateral, or
any portion thereof, and/or (b) enhance the likelihood of, or maximize the
amount of, repayment of the Loan and other Obligations.  Each Borrower hereby
agrees to reimburse Agent on demand for any and all costs, liabilities and
obligations incurred by Agent pursuant to this Section 11.14.  Each Lender
hereby agrees to indemnify Agent upon demand for any and all costs, liabilities
and obligations incurred by Agent pursuant to this Section 11.14, in accordance
with the provisions of Section 11.6.

 

Section 11.15                     Additional Titled Agents.  Except for rights
and powers, if any, expressly reserved under this Agreement to any bookrunner,
arranger or to any titled agent named on the cover page of this Agreement, other
than Agent (collectively, the “Additional Titled Agents”), and except for
obligations, liabilities, duties and responsibilities, if any, expressly assumed
under this Agreement by any Additional Titled Agent, no Additional Titled Agent,
in such capacity, has any rights, powers, liabilities, duties or
responsibilities hereunder or under any of the other Financing Documents. 
Without limiting the foregoing, no Additional Titled Agent shall have nor be
deemed to have a fiduciary relationship with any Lender.  At any time that any
Lender serving as an Additional Titled Agent shall have transferred to any other
Person (other than any Affiliates) all of its interests in the Loan, such Lender
shall be deemed to have concurrently resigned as such Additional Titled Agent.

 

77

--------------------------------------------------------------------------------

 

Section 11.16                     Amendments and Waivers.

 

(a)                                  No provision of this Agreement or any other
Financing Document may be amended, waived or otherwise modified unless such
amendment, waiver or other modification is in writing and is signed or otherwise
approved by Borrowers, the Required Lenders and any other Lender to the extent
required under Section 11.16(b); provided, however, that the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the parties thereto.

 

(b)                                 In addition to the required signatures under
Section 11.16(a), no provision of this Agreement or any other Financing Document
may be amended, waived or otherwise modified unless such amendment, waiver or
other modification is in writing and is signed or otherwise approved by the
following Persons:

 

(i)                                     if any amendment, waiver or other
modification would increase a Lender’s funding obligations in respect of any
Loan, by such Lender; and/or

 

(ii)                                  if the rights or duties of Agent are
affected thereby, by Agent;

 

provided, however, that, in each of (i) and (ii) above, no such amendment,
waiver or other modification shall, unless signed or otherwise approved in
writing by all the Lenders directly affected thereby, (A) reduce the principal
of, rate of interest on or any fees with respect to any Loan or forgive any
principal, interest (other than default interest) or fees (other than late
charges) with respect to any Loan; (B) postpone the date fixed for, or waive,
any payment (other than any mandatory prepayment pursuant to Section 2.1(b)(ii))
of principal of any Loan, or of interest on any Loan (other than default
interest) or any fees provided for hereunder (other than late charges) or
postpone the date of termination of any commitment of any Lender hereunder;
(C) change the definition of the term Required Lenders or the percentage of
Lenders which shall be required for Lenders to take any action hereunder;
(D) release all or substantially all of the Collateral, authorize any Borrower
to sell or otherwise dispose of all or substantially all of the Collateral or
release any Guarantor of all or any portion of the Obligations or its Guarantee
obligations with respect thereto, except, in each case with respect to this
clause (D), as otherwise may be provided in this Agreement or the other
Financing Documents (including in connection with any disposition permitted
hereunder); (E) amend, waive or otherwise modify this Section 11.16(b) or the
definitions of the terms used in this Section 11.16(b) insofar as the
definitions affect the substance of this Section 11.16(b);  (F) consent to the
assignment, delegation or other transfer by any Credit Party of any of its
rights and obligations under any Financing Document or release any Borrower of
its payment obligations under any Financing Document, except, in each case with
respect to this clause (F), pursuant to a merger or consolidation permitted
pursuant to this Agreement; or (G) amend any of the provisions of Section 10.7
or amend any of the definitions Pro Rata Share, Revolving Loan Commitment,
Revolving Loan Commitment Amount, Revolving Loan Commitment Percentage, or that
provide for the Lenders to receive their Pro Rata Shares of any fees, payments,
setoffs or proceeds of Collateral hereunder.  It is hereby understood and agreed
that all Lenders shall be deemed directly affected by an amendment, waiver or
other modification of the type described in the preceding clauses (C), (D), (E),
(F) and (G) of the preceding sentence.

 

Section 11.17                     Assignments and Participations.

 

(a)                                  Assignments.

 

(i)                                     Any Lender may at any time assign to one
or more Eligible Assignees all or any portion of such Lender’s Loan together
with all related obligations of such Lender

 

78

--------------------------------------------------------------------------------

 

hereunder.  Except as Agent may otherwise agree, the amount of any such
assignment (determined as of the date of the applicable Assignment Agreement or,
if a “Trade Date” is specified in such Assignment Agreement, as of such Trade
Date) shall be in a minimum aggregate amount equal to $1,000,000 or, if less,
the assignor’s entire interests in the outstanding Loan; provided, however,
that, in connection with simultaneous assignments to two or more related
Approved Funds, such Approved Funds shall be treated as one assignee for
purposes of determining compliance with the minimum assignment size referred to
above.  Borrowers and Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned to an
Eligible Assignee until Agent shall have received and accepted an effective
Assignment Agreement executed, delivered and fully completed by the applicable
parties thereto and a processing fee of $3,500 to be paid by the assigning
Lender; provided, however, that only one processing fee shall be payable in
connection with simultaneous assignments to two or more related Approved Funds.

 

(ii)                                  From and after the date on which the
conditions described above have been met, (A) such Eligible Assignee shall be
deemed automatically to have become a party hereto and, to the extent of the
interests assigned to such Eligible Assignee pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder, and
(B) the assigning Lender, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment Agreement, shall be
released from its rights and obligations hereunder (other than those that
survive termination pursuant to Section 12.1).  Upon the request of the Eligible
Assignee (and, as applicable, the assigning Lender) pursuant to an effective
Assignment Agreement, each Borrower shall execute and deliver to Agent for
delivery to the Eligible Assignee (and, as applicable, the assigning Lender)
Notes in the aggregate principal amount of the Eligible Assignee’s Loan (and, as
applicable, Notes in the principal amount of that portion of the principal
amount of the Loan retained by the assigning Lender).  Upon receipt by the
assigning Lender of such Note, the assigning Lender shall return to Borrower
Representative any prior Note held by it.

 

(iii)                               Agent, acting solely for this purpose as an
agent of Borrower, shall maintain at its offices located in Bethesda, Maryland a
copy of each Assignment Agreement delivered to it and a register for the
recordation of the names and addresses of each Lender, and the commitments of,
and principal amount of the Loan owing to, such Lender pursuant to the terms
hereof.  The entries in such register shall be conclusive, and Borrower, Agent
and Lenders may treat each Person whose name is recorded therein pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary.  Such register shall be available for
inspection by Borrower and any Lender, at any reasonable time upon reasonable
prior notice to Agent.

 

(iv)                              Notwithstanding the foregoing provisions of
this Section 11.17(a) or any other provision of this Agreement, any Lender may
at any time pledge or assign a security interest in all or any portion of its
rights under this Agreement to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided,
however, that no such pledge or assignment shall release such Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

(v)                                 Notwithstanding the foregoing provisions of
this Section 11.17(a) or any other provision of this Agreement, Agent has the
right, but not the obligation, to effectuate assignments of Loan via an
electronic settlement system acceptable to Agent as designated in

 

79

--------------------------------------------------------------------------------

 

writing from time to time to the Lenders by Agent (the “Settlement Service”). 
At any time when the Agent elects, in its sole discretion, to implement such
Settlement Service, each such assignment shall be effected by the assigning
Lender and proposed assignee pursuant to the procedures then in effect under the
Settlement Service, which procedures shall be consistent with the other
provisions of this Section 11.17(a).  Each assigning Lender and proposed
Eligible Assignee shall comply with the requirements of the Settlement Service
in connection with effecting any assignment of Loan pursuant to the Settlement
Service.  With the prior written approval of Agent, Agent’s approval of such
Eligible Assignee shall be deemed to have been automatically granted with
respect to any transfer effected through the Settlement Service.  Assignments
and assumptions of the Loan shall be effected by the provisions otherwise set
forth herein until Agent notifies Lenders of the Settlement Service as set forth
herein.

 

(b)                                 Participations.  Any Lender may at any time,
without the consent of, or notice to, any Borrower or Agent, sell to one or more
Persons participating interests in its Loan, commitments or other interests
hereunder (any such Person, a “Participant”).  In the event of a sale by a
Lender of a participating interest to a Participant, (i) such Lender’s
obligations hereunder shall remain unchanged for all purposes, (ii) Borrowers
and Agent shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations hereunder, and (iii) all
amounts payable by each Borrower shall be determined as if such Lender had not
sold such participation and shall be paid directly to such Lender.  Each
Borrower agrees that if amounts outstanding under this Agreement are due and
payable (as a result of acceleration or otherwise), each Participant shall be
deemed to have the right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement; provided, however, that such right of set-off shall be subject to the
obligation of each Participant to share with Lenders, and Lenders agree to share
with each Participant, as provided in Section 11.5.

 

(c)                                  Replacement of Lenders.  Within thirty
(30) days after: (i) receipt by Agent of notice and demand from any Lender for
payment of additional costs as provided in Section 2.8(d), which demand shall
not have been revoked, (ii) any Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.8(a), (iii) any Lender is a Defaulted Lender, and the
circumstances causing such status shall not have been cured or waived; or
(iv) any failure by any Lender to consent to a requested amendment, waiver or
modification to any Financing Document in which Required Lenders have already
consented to such amendment, waiver or modification but the consent of each
Lender, or each Lender affected thereby, is required with respect thereto (each
relevant Lender in the foregoing clauses (i) through (iv) being an “Affected
Lender”) each of Borrower Representative and Agent may, at its option, notify
such Affected Lender and, in the case of Borrowers’ election, the Agent, of such
Person’s intention to obtain, at Borrowers’ expense, a replacement Lender
(“Replacement Lender”) for such Lender, which Replacement Lender shall be an
Eligible Assignee and, in the event the Replacement Lender is to replace an
Affected Lender described in the preceding clause (iv), such Replacement Lender
consents to the requested amendment, waiver or modification making the replaced
Lender an Affected Lender.  In the event Borrowers or Agent, as applicable,
obtains a Replacement Lender within ninety (90) days following notice of its
intention to do so, the Affected Lender shall sell, at par, and assign all of
its Loan and funding commitments hereunder to such Replacement Lender in
accordance with the procedures set forth in Section 11.17(a); provided, however,
that (A) Borrowers shall have reimbursed such Lender for its increased costs and
additional payments for which it is entitled to reimbursement under
Section 2.8(a) or Section 2.8(d), as applicable, of this Agreement through the
date of such sale and assignment, and (B) Borrowers shall pay to Agent the
$3,500 processing fee in respect of such assignment.  In the event that a
replaced Lender does not execute an Assignment Agreement pursuant to
Section 11.17(a) within five (5) Business Days after receipt by such replaced
Lender of notice of replacement pursuant to this Section 11.17(c) and
presentation to such

 

80

--------------------------------------------------------------------------------

 

replaced Lender of an Assignment Agreement evidencing an assignment pursuant to
this Section 11.17(c), such replaced Lender shall be deemed to have consented to
the terms of such Assignment Agreement, and any such Assignment Agreement
executed by Agent, the Replacement Lender and, to the extent required pursuant
to Section 11.17(a), Borrowers, shall be effective for purposes of this
Section 11.17(c) and Section 11.17(a).  Upon any such assignment and payment,
such replaced Lender shall no longer constitute a “Lender” for purposes hereof,
other than with respect to such rights and obligations that survive termination
as set forth in Section 12.1.

 

(d)                                 Credit Party Assignments.  No Credit Party
may assign, delegate or otherwise transfer any of its rights or other
obligations hereunder or under any other Financing Document without the prior
written consent of Agent and each Lender.

 

Section 11.18                     Funding and Settlement Provisions Applicable
When Non-Funding Lenders Exist.

 

So long as Agent has not waived the conditions to the funding of Revolving Loans
set forth in Section 7.2, any Lender may deliver a notice to Agent stating that
such Lender shall cease making Revolving Loans due to the non-satisfaction of
one or more conditions to funding Loans set forth in Section 7.2, and specifying
any such non-satisfied conditions.  Any Lender delivering any such notice shall
become a non-funding Lender (a “Non-Funding Lender”) for purposes of this
Agreement commencing on the Business Day following receipt by Agent of such
notice, and shall cease to be a Non-Funding Lender on the date on which such
Lender has either revoked the effectiveness of such notice or acknowledged in
writing to each of Agent the satisfaction of the condition(s) specified in such
notice, or Required Lenders waive the conditions to the funding of such Loans
giving rise to such notice by Non-Funding Lender.  Each Non-Funding Lender shall
remain a Lender for purposes of this Agreement to the extent that such
Non-Funding Lender has Revolving Loans Outstanding in excess of zero; provided,
however, that during any period of time that any Non-Funding Lender exists, and
notwithstanding any provision to the contrary set forth herein, the following
provisions shall apply:

 

(a)                                  For purposes of determining the Pro Rata
Share of each Revolving Lender under clause (c) of the definition of such term,
each Non-Funding Lender shall be deemed to have a Revolving Loan Commitment
Amount as in effect immediately before such Lender became a Non-Funding Lender.

 

(b)                                 Except as provided in clause (a) above, the
Revolving Loan Commitment Amount of each Non-Funding Lender shall be deemed to
be zero.

 

(c)                                  The Revolving Loan Commitment at any date
of determination during such period shall be deemed to be equal to the sum of
(i) the aggregate Revolving Loan Commitment Amounts of all Lenders, other than
the Non-Funding Lenders as of such date plus (ii) the aggregate Revolving Loan
Outstandings of all Non-Funding Lenders as of such date.

 

(d)                                 Agent shall have no right to make or
disburse Revolving Loans for the account of any Non-Funding Lender pursuant to
Section 2.1(b)(i) to pay interest, fees, expenses and other charges of any
Credit Party.

 

(e)                                  To the extent that Agent applies proceeds
of Collateral or other payments received by Agent to repayment of Revolving
Loans pursuant to Section 10.7, such payments and proceeds shall be applied
first in respect of Revolving Loans made at the time any Non-Funding Lenders
exist, and second in respect of all other outstanding Revolving Loans.

 

81

--------------------------------------------------------------------------------

 

Section 11.19       Buy-Out Upon Refinancing.  MCF shall have the right to
purchase from the other Lenders all of their respective interests in the Loan at
par in connection with any refinancing of the Loan upon one or more new economic
terms, but which refinancing is structured as an amendment and restatement of
the Loan rather than a payoff of the Loan.

 

Section 11.20       Definitions.  As used in this Article 11, the following
terms have the following meanings:

 

“Approved Fund” means any (a) investment company, fund, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of business and consistent with past practices, or (b) any
Person (other than a natural person) which temporarily warehouses loans for any
Lender or any entity described in the preceding clause (a) and that, with
respect to each of the preceding clauses (a) and (b), is administered or managed
by (i) a Lender, (ii) an Affiliate of a Lender, or (iii) a Person (other than a
natural person) or an Affiliate of a Person (other than a natural person) that
administers or manages a Lender.

 

“Assignment Agreement” means an assignment agreement in form and substance
acceptable to Agent.

 

“Defaulted Lender” means, so long as such failure shall remain in existence and
uncured, any Lender which shall have failed to make any Loan or other credit
accommodation, disbursement, settlement or reimbursement required pursuant to
the terms of any Financing Document.

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, (d) any Person (other than a natural person) that is acquiring a
Lender or all or substantially all of such Lender’s asset-based loan portfolio,
and (e) any other Person (other than a natural person) approved by (i) Agent and
(ii) unless a Default or an Event of Default has occurred and is continuing,
Borrower (each such approval of Borrower not to be unreasonably withheld,
conditioned or delayed); provided, however, that notwithstanding the foregoing,
(x) “Eligible Assignee” shall not include any Borrower or any of a Borrower’s
Affiliates, and (y) no proposed assignee intending to assume all or any portion
of the Revolving Loan Commitment shall be an Eligible Assignee unless such
proposed assignee either already holds a portion of such Revolving Loan
Commitment, or has been approved as an Eligible Assignee by Agent.

 

“Federal Funds Rate” means, for any day, the rate of interest per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided, however, that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day, and (b) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Agent on such day on such transactions
as determined by Agent.

 

ARTICLE 12- MISCELLANEOUS

 

Section 12.1         Survival.  All agreements, representations and warranties
made herein and in every other Financing Document shall survive the execution
and delivery of this Agreement and the other Financing Documents and the other
Operative Documents.  The provisions of Section 2.9 and Articles 11 and 12 shall
survive the payment of the Obligations (both with respect to any Lender and all
Lenders

 

82

--------------------------------------------------------------------------------

 

collectively) and any termination of this Agreement and any judgment with
respect to any Obligations, including any final foreclosure judgment with
respect to any Security Document, and no unpaid or unperformed, current or
future, Obligations will merge into any such judgment.

 

Section 12.2         No Waivers.  No failure or delay by Agent or any Lender in
exercising any right, power or privilege under any Financing Document shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.  The rights and remedies herein and therein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.  Any reference in any Financing Document to the “continuing” nature of any
Event of Default shall not be construed as establishing or otherwise indicating
that any Borrower or any other Credit Party has the independent right to cure
any such Event of Default, but is rather presented merely for convenience should
such Event of Default be waived in accordance with the terms of the applicable
Financing Documents.

 

Section 12.3         Notices.

 

(a)           All notices, requests and other communications to any party
hereunder shall be in writing (including prepaid overnight courier, facsimile
transmission or similar writing) and shall be given to such party at its
address, facsimile number or e-mail address set forth on the signature
pages hereof (or, in the case of any such Lender who becomes a Lender after the
date hereof, in an assignment agreement or in a notice delivered to Borrower
Representative and Agent by the assignee Lender forthwith upon such assignment)
or at such other address, facsimile number or e-mail address as such party may
hereafter specify for the purpose by notice to Agent and Borrower
Representative; provided, however, that notices, requests or other
communications shall be permitted by electronic means only in accordance with
the provisions of Section 12.3(b) and (c).  Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such notice is
transmitted to the facsimile number specified by this Section and the sender
receives a confirmation of transmission from the sending facsimile machine, or
(ii) if given by mail, prepaid overnight courier or any other means, when
received or when receipt is refused at the applicable address specified by this
Section 12.3(a).

 

(b)           Notices and other communications to the parties hereto may be
delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved from time to time
by Agent, provided, however, that the foregoing shall not apply to notices sent
directly to any Lender if such Lender has notified the Agent that it is
incapable of receiving notices by electronic communication.  The Agent or
Borrower Representative may, in their discretion, agree to accept notices and
other communications to them hereunder by electronic communications pursuant to
procedures approved by it, provided, however, that approval of such procedures
may be limited to particular notices or communications.

 

(c)           Unless the Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgment), and (ii) notices or communications posted to an
Internet or intranet website shall be deemed received upon the deemed receipt by
the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available and
identifying the website address therefor, provided, however, that if any such
notice or other communication is not sent or posted during normal business
hours, such notice or communication shall be deemed to have been sent at the
opening of business on the next Business Day.

 

83

--------------------------------------------------------------------------------

 

Section 12.4         Severability.  In case any provision of or obligation under
this Agreement or any other Financing Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

 

Section 12.5         Headings.  Headings and captions used in the Financing
Documents (including the Exhibits, Schedules and Annexes hereto and thereto) are
included for convenience of reference only and shall not be given any
substantive effect.

 

Section 12.6         Confidentiality.

 

(a)           Each Credit Party agrees (i) not to transmit or disclose
provisions of any Financing Document to any Person (other than to Borrowers’
advisors and officers on a need-to-know basis or as otherwise may be required by
Law) without Agent’s prior written consent, (ii) to inform all Persons of the
confidential nature of the Financing Documents and to direct them not to
disclose the same to any other Person and to require each of them to be bound by
these provisions.

 

(b)           Agent and each Lender shall hold all non-public information
regarding the Credit Parties and their respective businesses identified as such
by Borrowers and obtained by Agent or any Lender pursuant to the requirements
hereof in accordance with such Person’s customary procedures for handling
information of such nature, except that disclosure of such information may be
made (i) to their respective agents, employees, Subsidiaries, Affiliates,
attorneys, auditors, professional consultants, rating agencies, insurance
industry associations and portfolio management services, (ii) to prospective
transferees or purchasers of any interest in the Loans, the Agent or a Lender,
provided, however, that any such Persons are bound by obligations of
confidentiality, (iii) as required by Law, subpoena, judicial order or similar
order and in connection with any litigation, or in connection with any
enforcement of, or any exercise of rights and remedies with respect to any
Collateral, (iv) as may be required in connection with the examination, audit or
similar investigation of such Person, and (v) to a Person that is a trustee,
investment advisor, collateral manager, servicer, noteholder or secured party in
a Securitization (as hereinafter defined) in connection with the administration,
servicing and reporting on the assets serving as collateral for such
Securitization. For the purposes of this Section, “Securitization” shall mean
(A) the pledge of the Loans as collateral security for loans to a Lender, or
(B) a public or private offering by a Lender or any of its Affiliates or their
respective successors and assigns, of securities which represent an interest in,
or which are collateralized, in whole or in part, by the Loans.  Confidential
information shall include only such information identified as such at the time
provided to Agent and shall not include information that either:  (y) is in the
public domain, or becomes part of the public domain after disclosure to such
Person through no fault of such Person, or (z) is disclosed to such Person by a
Person other than a Credit Party, provided, however, Agent does not have actual
knowledge that such Person is prohibited from disclosing such information.  The
obligations of Agent and Lenders under this Section 12.6 shall supersede and
replace the obligations of Agent and Lenders under any confidentiality agreement
in respect of this financing executed and delivered by Agent or any Lender prior
to the date hereof.

 

Section 12.7         Waiver of Consequential and Other Damages.  To the fullest
extent permitted by applicable law, no Borrower shall assert, and each Borrower
hereby waives, any claim against any Indemnitee (as defined below), on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of this Agreement, any other Financing Document or any agreement or
instrument contemplated hereby or thereby, the transactions contemplated hereby
or thereby, any Loan or the use of the proceeds thereof.  No Indemnitee shall be
liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications,
electronic or other

 

84

--------------------------------------------------------------------------------

 

information transmission systems in connection with this Agreement or the other
Financing Documents or the transactions contemplated hereby or thereby.

 

Section 12.8         GOVERNING LAW; SUBMISSION TO JURISDICTION.

 

(a)           THIS AGREEMENT, EACH NOTE AND EACH OTHER FINANCING DOCUMENT, AND
ALL MATTERS RELATING HERETO OR THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN
CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

(b)           EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF MONTGOMERY, STATE OF MARYLAND AND
IRREVOCABLY AGREES THAT, SUBJECT TO AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER FINANCING DOCUMENTS
SHALL BE LITIGATED IN SUCH COURTS.  EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS
TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH BORROWER BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH
BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL BE
COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

 

(c)           Each Borrower, Agent and each Lender agree that each Loan
(including those made on the Closing Date) shall be deemed to be made in, and
the transactions contemplated hereunder and in any other Financing Document
shall be deemed to have been performed in, the State of Maryland.

 

Section 12.9         WAIVER OF JURY TRIAL.   (a) EACH BORROWER, AGENT AND THE
LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  EACH BORROWER,
AGENT AND EACH LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AND THAT EACH
WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.  EACH
BORROWER, AGENT AND EACH LENDER WARRANTS AND REPRESENTS THAT IT HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

(b)           In the event any such action or proceeding is brought or filed in
any United States federal court sitting in the State of California or in any
state court of the State of California, and the waiver of jury trial set forth
in Section 12.9(a) hereof is determined or held to be ineffective or
unenforceable, the parties agree that all actions or proceedings shall be
resolved by reference to a private judge sitting without a jury, pursuant to
California Code of Civil Procedure Section 638, before a mutually acceptable
referee or, if the parties cannot agree, a referee selected by the

 

85

--------------------------------------------------------------------------------

 

Presiding Judge of the Los Angeles County, California.  Such proceeding shall be
conducted in Los Angeles County, California, with California rules of evidence
and discovery applicable to such proceeding.   In the event any actions or
proceedings are to be resolved by judicial reference, any party may seek from
any court having jurisdiction thereover any prejudgment order, writ or other
relief and have such prejudgment order, writ or other relief enforced to the
fullest extent permitted by Law notwithstanding that all actions or proceedings
are otherwise subject to resolution by judicial reference.

 

Section 12.10       Publication; Advertisement.

 

(a)           Publication.  No Credit Party will directly or indirectly publish,
disclose or otherwise use in any public disclosure, advertising material,
promotional material, press release or interview, any reference to the name,
logo or any trademark of MCF or any of its Affiliates or any reference to this
Agreement or the financing evidenced hereby, in any case except (i) as required
by Law, subpoena or judicial or similar order, in which case the applicable
Credit Party shall give Agent prior written notice of such publication or other
disclosure, or (ii) with MCF’s prior written consent.

 

(b)           Advertisement.  Each Lender and each Credit Party hereby
authorizes MCF to publish the name of such Lender and Credit Party, the
existence of the financing arrangements referenced under this Agreement, the
primary purpose and/or structure of those arrangements, the amount of credit
extended under each facility, the title and role of each party to this
Agreement, and the total amount of the financing evidenced hereby in any
“tombstone”, comparable advertisement or press release which MCF elects to
submit for publication.  In addition, each Lender and each Credit Party agrees
that MCF may provide lending industry trade organizations with information
necessary and customary for inclusion in league table measurements after the
Closing Date.  With respect to any of the foregoing, MCF shall provide Borrowers
with an opportunity to review and confer with MCF regarding the contents of any
such tombstone, advertisement or information, as applicable, prior to its
submission for publication and, following such review period, MCF may, from time
to time, publish such information in any media form desired by MCF, until such
time that Borrowers shall have requested MCF cease any such further publication.

 

Section 12.11       Counterparts; Integration.  This Agreement and the other
Financing Documents may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.  Signatures by facsimile or by electronic
mail delivery of an electronic version of any executed signature page shall bind
the parties hereto.  This Agreement and the other Financing Documents constitute
the entire agreement and understanding among the parties hereto and supersede
any and all prior agreements and understandings, oral or written, relating to
the subject matter hereof.

 

Section 12.12       No Strict Construction.  The parties hereto have
participated jointly in the negotiation and drafting of this Agreement.  In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

 

Section 12.13       Lender Approvals.  Unless expressly provided herein to the
contrary, any approval, consent, waiver or satisfaction of Agent or Lenders with
respect to any matter that is the subject of this Agreement, the other Financing
Documents may be granted or withheld by Agent and Lenders in their sole and
absolute discretion and credit judgment.

 

86

--------------------------------------------------------------------------------

 

Section 12.14       Expenses; Indemnity

 

(a)           Borrowers hereby agree to promptly pay (i) all costs and
out-of-pocket expenses of Agent (including, without limitation, the reasonable
fees, costs and out-of-pocket expenses of counsel to, and independent appraisers
and consultants retained by Agent) in connection with the examination, review,
due diligence investigation, documentation, negotiation, closing and syndication
of the transactions contemplated by the Financing Document, in connection with
the performance by Agent of its rights and remedies under the Financing
Documents and in connection with the continued administration of the Financing
Documents including (A) any amendments, modifications, consents and waivers to
and/or under any and all Financing Documents, and (B) any periodic public record
searches conducted by or at the request of Agent (including, without limitation,
title investigations, UCC searches, fixture filing searches, judgment, pending
litigation and tax lien searches and searches of applicable corporate, limited
liability, partnership and related records concerning the continued existence,
organization and good standing of certain Persons); (ii) without limitation of
the preceding clause (i), all costs and out-of-pocket expenses of Agent in
connection with the creation, perfection and maintenance of Liens pursuant to
the Financing Documents; (iii) without limitation of the preceding clause (i),
all reasonable costs and out-of-pocket expenses of Agent in connection with
(A) protecting, storing, insuring, handling, maintaining or selling any
Collateral, (B) any litigation, dispute, suit or proceeding relating to any
Financing Document, and (C) any workout, collection, bankruptcy, insolvency and
other enforcement proceedings under any and all of the Financing Documents;
(iv) without limitation of the preceding clause (i), all costs and expenses of
Agent in connection with Agent’s reservation of funds in anticipation of the
funding of the initial Loans to be made hereunder; and (v) all reasonable costs
and out-of-pocket expenses incurred by Lenders in connection with any
litigation, dispute, suit or proceeding relating to any Financing Document and
in connection with any workout, collection, bankruptcy, insolvency and other
enforcement proceedings under any and all Financing Documents, whether or not
Agent or Lenders are a party thereto.  If Agent or any Lender uses in-house
counsel for any of these purposes, Borrowers further agree that the Obligations
include reasonable charges for such work commensurate with the fees that would
otherwise be charged by outside legal counsel selected by Agent or such Lender
for the work performed.

 

(b)           Each Borrower hereby agrees to indemnify, pay and hold harmless
Agent and Lenders and the officers, directors, employees, trustees, agents,
investment advisors, collateral managers, servicers, and counsel of Agent and
Lenders (collectively called the “Indemnitees”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the fees and disbursements of counsel for such Indemnitee) in
connection with any investigative, response, remedial, administrative or
judicial matter or proceeding, whether or not such Indemnitee shall be
designated a party thereto and including any such proceeding initiated by or on
behalf of a Credit Party, and the reasonable and out-of-pocket expenses of
investigation by engineers, environmental consultants and similar technical
personnel and any commission, fee or compensation claimed by any broker (other
than any broker retained by Agent or Lenders) asserting any right to payment for
the transactions contemplated hereby, which may be imposed on, incurred by or
asserted against such Indemnitee as a result of or in connection with the
transactions contemplated hereby or by the other Operative Documents (including
(i)(A) as a direct or indirect result of the presence on or under, or escape,
seepage, leakage, spillage, discharge, emission or release from, any property
now or previously owned, leased or operated by Borrower, any Subsidiary or any
other Person of any Hazardous Materials, (B) arising out of or relating to the
offsite disposal of any materials generated or present on any such property, or
(C) arising out of or resulting from the environmental condition of any such
property or the applicability of any governmental requirements relating to
Hazardous Materials, whether or not occasioned wholly or in part by any
condition, accident or event caused by any act or omission of Borrower or any
Subsidiary, and (ii) proposed and actual

 

87

--------------------------------------------------------------------------------

 

extensions of credit under this Agreement) and the use or intended use of the
proceeds of the Loans, except that Borrower shall have no obligation hereunder
to an Indemnitee with respect to any liability resulting from the gross
negligence or willful misconduct of such Indemnitee, as determined by a final
non-appealable judgment of a court of competent jurisdiction.  To the extent
that the undertaking set forth in the immediately preceding sentence may be
unenforceable, Borrower shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable Law to the payment and
satisfaction of all such indemnified liabilities incurred by the Indemnitees or
any of them.

 

(c)           Notwithstanding anything to the contrary provided for in the
foregoing provisions of this Section 12.14 or any other provision of this
Agreement or any other Financing Document, no provision hereof or of any other
Financing Document purporting to limit Borrowers’ liabilities and indemnity
obligations with respect to any fees and expenses of Agent to the “out-of-pocket
expenses” of Agent shall be effective to limit Borrowers’ liabilities and
indemnity obligations for, and Borrowers shall promptly pay:  (x) all fees and
expenses of Agent in connection with any audits, inspections, valuation and
appraisals conducted in accordance with Section 4.6 hereof (to the extent of
Borrowers’ liability for such fees and expenses as provided for in
Section 2.2(e) hereof), including all such fees and expenses allocated in
accordance with Agent’s standard practices as in effect from time to time to any
in-house auditors or inspectors or other employees of Agent, and (y) all legal
fees and expenses in connection with any matter for which Borrowers’ are liable
under the Financing Documents for Agent’s legal expenses allocated in accordance
with Agent’s standard practices as in effect from time to time to Agent’s
in-house counsel.

 

(d)           Notwithstanding any contrary provision in this Agreement, the
obligations of Borrowers under this Section 12.14 shall survive the payment in
full of the Obligations and the termination of this Agreement. NO INDEMNITEE
SHALL BE RESPONSIBLE OR LIABLE TO THE BORROWERS OR TO ANY OTHER PARTY TO ANY
FINANCING DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY
OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY
OTHER FINANCING DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.

 

(e)           Each Borrower for itself and all endorsers, guarantors and
sureties and their heirs, legal representatives, successors and assigns, hereby
further specifically waives any rights that it may have under Section 1542 of
the California Civil Code (to the extent applicable), which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR,” and further waives any similar rights under applicable Laws.

 

Section 12.15       [RESERVED]

 

Section 12.16       Reinstatement.  This Agreement shall remain in full force
and effect and continue to be effective should any petition or other proceeding
be filed by or against any Credit Party for liquidation or reorganization,
should any Credit Party become insolvent or make an assignment for the benefit
of any creditor or creditors or should an interim receiver, receiver, receiver
and manager or trustee be appointed for all or any significant part of any
Credit Party’s assets, and shall continue to be effective or to be reinstated,
as the case may be, if at any time payment and performance of the Obligations,
or any

 

88

--------------------------------------------------------------------------------

 

part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a fraudulent preference reviewable transaction or otherwise, all as
though such payment or performance had not been made.  In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.

 

Section 12.17       Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of Borrowers and Agent and each Lender and their
respective successors and permitted assigns.

 

Section 12.18       USA PATRIOT Act Notification.  Agent (for itself and not on
behalf of any Lender) and each Lender hereby notifies Borrowers that pursuant to
the requirements of the USA PATRIOT Act, it is required to obtain, verify and
record certain information and documentation that identifies Borrowers, which
information includes the name and address of Borrower and such other information
that will allow Agent or such Lender, as applicable, to identify Borrowers in
accordance with the USA PATRIOT Act.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

89

--------------------------------------------------------------------------------

 

(Signature Page to Credit and Security Agreement)

 

IN WITNESS WHEREOF, intending to be legally bound, and intending that this
Agreement constitute an agreement executed under seal, each of the parties have
caused this Agreement to be executed under seal the day and year first above
mentioned.

 

--------------------------------------------------------------------------------

 

(Signature Page to Credit and Security Agreement)

 

BORROWERS:

 

CARDIONET, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Peter Ferola

 

 

Name:

Peter Ferola

 

 

Title:

Secretary

 

 

 

 

 

 

AGILITY CENTRALIZED RESEARCH SERVICES, INC.

 

 

BIOTEL INC.

 

 

BRAEMAR, INC.

 

 

ECG SCANNING & MEDICAL SERVICES LLC

 

 

 

 

 

 

 

 

 

 

By:

/s/ Peter Ferola

 

 

Name:

Peter Ferola

 

 

Title:

Secretary

 

 

 

 

 

 

CARDIOCORE LAB, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Peter Ferola

 

 

Name:

Peter Ferola

 

 

Title:

Secretary

 

 

 

 

 

 

Notice Address for all Borrowers:

 

 

c/o CardioNet, Inc.

 

 

Millenium III, Suite 201

 

 

227 Washington Street

 

 

Conshohocken, PA 19428

 

 

Attn: Heather Getz

 

 

Facsimile:

 

 

E-Mail: hgetz@cardionet.com

 

 

 

 

 

with a copy to:

 

 

 

 

 

Greenberg Traurig, LLP

 

 

One International Place

 

 

Boston, MA 02110

 

 

Attn: William C. Donovan

 

 

Facsimile: 617-310-6001

 

 

E-Mail: donovanw@gtlaw.com

 

--------------------------------------------------------------------------------

 

(Signature Page to Credit and Security Agreement)

 

AGENT:

 

MIDCAP FINANCIAL, LLC, as Agent

 

 

 

 

 

 

By:

/s/ Brett Robinson

 

 

Name:

Brett Robinson

 

 

Title:

Managing Director

 

 

 

 

 

 

Address:

 

 

 

 

 

7255 Woodmont Avenue, Suite 200

 

 

Bethesda, Maryland 20814

 

 

Attn: Account Manager for CardioNet transaction

 

 

Facsimile: 301-941-1450

 

 

 

 

 

With a copy to:

 

 

 

 

 

Blank Rome LLP

 

 

The Chrysler Building

 

 

405 Lexington Avenue

 

 

New York, NY 10174

 

 

Attn: Erin O’Brien Harkiewicz

 

 

Facsimile: 212-885-5001

 

 

 

 

 

Payment Account Designation:

 

 

 

 

 

Wells Fargo Bank, N.A. (McLean, VA)

 

 

ABA #: 121-000-248

 

 

Account Name: MidCap Funding IV, LLC - Collections

 

 

Account #: 2000036282803

 

 

Attention: CardioNet transaction

 

--------------------------------------------------------------------------------

 

(Signature Page to Credit and Security Agreement)

 

LENDER:

 

MIDCAP FINANCIAL, LLC, as Lender

 

 

 

 

 

 

By:

/s/ Brett Robinson

 

 

Name:

Brett Robinson

 

 

Title:

Managing Director

 

 

 

 

 

 

Address:

 

 

 

 

 

7255 Woodmont Avenue, Suite 200

 

 

Bethesda, Maryland 20814

 

 

Attn: Account Manager for CardioNet transaction

 

 

Facsimile: 301-941-1450

 

 

 

 

 

With a copy to:

 

 

 

 

 

Blank Rome LLP

 

 

The Chrysler Building

 

 

405 Lexington Avenue

 

 

New York, NY 10174

 

 

Attn: Erin O’Brien Harkiewicz

 

 

Facsimile: 212-885-5001

 

--------------------------------------------------------------------------------