EXHIBIT 10.1
 
EXPLANATORY NOTE TO THIS EXHIBIT

 
The Company’s representations and warranties included in this Loan Agreement
were made to each of the lenders hereunder. These representations and warranties
were made as of specific dates, only for purposes of this Loan Agreement and for
the benefit of the parties thereto. These representations and warranties were
subject to important exceptions and limitations agreed upon by the parties, made
for the purposes of allocating contractual risk between the parties rather than
establishing these matters as facts and were made subject to a contractual
standard of materiality that may be different from the standard generally
applicable under federal securities laws. This Loan Agreement is filed with this
report only to provide investors with information regarding its terms and
conditions, and not to provide any other factual information regarding the
Company or its business. Moreover, information concerning the subject matter of
the representations and warranties may have changed, and may continue to change,
after the date of the Loan Agreement, and such subsequent information may or may
not be fully reflected in the Company’s public reports. Accordingly, investors
should not rely on the representations and warranties contained in this Loan
Agreement or any description thereof as characterizations of the actual state of
facts or condition of the Company or its affiliates. The information in this
Loan Agreement should be considered together with the Company’s public reports
filed with the Securities and Exchange Commission.
   

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[EXECUTION
COUNTERPART]

 
LOAN AGREEMENT
 
dated as of December 30, 2010,
 
among
 
SERACARE LIFE SCIENCES, INC.,
as Borrower
 
The Guarantors
from time to time party hereto
 
CERTAIN LENDERS
 
MIDDLESEX SAVINGS BANK,
as Administrative Agent
 

 
 
 

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TABLE OF CONTENTS
 

   
Page
     
ARTICLE I          DEFINITIONS
1
     
Section 1.01
Definitions
1
Section 1.02
Principles of Interpretation
26
Section 1.03
Accounting Terms
27
Section 1.04
LC Amounts
28
   
ARTICLE II         THE CREDITS
28
     
Section 2.01
The Commitments
28
Section 2.02
Loans and Funding
29
Section 2.03
Notice of Borrowings
30
Section 2.04
Notices to Lenders; Funding of Borrowings
30
Section 2.05
Several Obligations
30
Section 2.06
[Reserved]
30
Section 2.07
Notes; Records
30
Section 2.08
Letters of Credit
31
Section 2.09
Fees
38
 
 
ARTICLE III        PAYMENTS AND PREPAYMENTS
39
     
Section 3.01
Repayment of Loans
39
Section 3.02
Interest
40
Section 3.03
Optional Prepayments
41
Section 3.04
Mandatory Prepayments
42
Section 3.05
Notice of Prepayments
44
Section 3.06
[Intentionally Omitted]
44
Section 3.07
Payments Generally
44
Section 3.08
Pro Rata Treatment
46
Section 3.09
Lender Protective Advances
46
   
ARTICLE IV        SUBSIDIARY GUARANTEE
47
     
Section 4.01
The Guarantee
47
Section 4.02
Obligations Unconditional
47
Section 4.03
Reinstatement
48
Section 4.04
Subrogation
48
Section 4.05
Remedies
49
Section 4.06
Instrument for the Payment of Money
49
Section 4.07
Continuing Guarantee
49
Section 4.08
Rights of Contribution
49
Section 4.09
General Limitation on Guarantee Obligations
50
Section 4.10
Best Interests
50
Section 4.11
Amendments to Financing Documents
50
Section 4.12
Joint and Several Obligations of Guarantors
51

 
 

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ARTICLE V          CONDITIONS
51
   
Section 5.01
Initial Loans
51
Section 5.02
Conditions to Each Loan
54
     
ARTICLE VI        REPRESENTATIONS AND WARRANTIES
55
 
 
Section 6.01
Organization; Powers
55
Section 6.02
Authorization; Enforceability
55
Section 6.03
Governmental Approvals; No Conflicts
55
Section 6.04
Financial Condition; No Material Adverse Change; Solvency
56
Section 6.05
Properties
56
Section 6.06
Litigation
56
Section 6.07
Environmental Matters
57
Section 6.08
Compliance with Laws and Agreements; No Defaults
58
Section 6.09
Investment Company Status
58
Section 6.10
Taxes
58
Section 6.11
ERISA
59
Section 6.12
Disclosure
59
Section 6.13
Margin Stock
60
Section 6.14
Capitalization
60
Section 6.15
Subsidiaries
60
Section 6.16
Investments; Deposit Accounts
60
Section 6.17
Real Property
60
Section 6.18
Material Indebtedness
61
Section 6.19
Material Liens
61
Section 6.20
Security Documents
61
Section 6.21
Receivables; Inventory; Accounts
61
Section 6.22
Anti-Terrorism Laws
62
     
ARTICLE VII        AFFIRMATIVE COVENANTS
63
   
Section 7.01
Financial Statements and Other Information
63
Section 7.02
Notices of Material Events
65
Section 7.03
Existence: Conduct of Business
66
Section 7.04
Payment of Obligations
66
Section 7.05
Maintenance of Properties; Inventory
67
Section 7.06
Insurance
67
Section 7.07
Books and Records: Inspection Rights
68
Section 7.08
Compliance with Laws
68
Section 7.09
Use of Proceeds
69
Section 7.10
Certain Obligations Respecting Subsidiaries
69
Section 7.11
Notice of Lease Defaults
70
Section 7.12
Collateral Assignment of Key Person Life Insurance
70
Section 7.13
Accounts
71
     
ARTICLE VIII      NEGATIVE COVENANTS
71
   
Section 8.01
Indebtedness
71

 
 

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Section 8.02
Liens
72
Section 8.03
Mergers, Consolidations, Etc
74
Section 8.04
Dispositions
74
Section 8.05
Sale/Leasebacks
74
Section 8.06
Lines of Business
75
Section 8.07
Investments
75
Section 8.08
Acquisitions
76
Section 8.09
Restricted Payments
78
Section 8.10
Transactions with Affiliates
79
Section 8.11
Restrictive Agreements
79
Section 8.12
Reserved
80
Section 8.13
Modifications of Certain Documents
80
Section 8.14
Certain Financial Covenants
80
     
ARTICLE IX          DEFAULTS
81
   
Section 9.01
Events of Default
81
Section 9.02
Application of Proceeds
84
     
ARTICLE X           CHANGE IN CIRCUMSTANCES
86
   
Section 10.01
Increased Costs
86
Section 10.02
Payments Free and Clear; U.S. Taxes
87
Section 10.03
Survival
89
     
ARTICLE XI           ADMINISTRATIVE AGENT
89
   
ARTICLE XII         MISCELLANEOUS
94
   
Section 12.01
Notices
94
Section 12.02
Waivers; Amendments
96
Section 12.03
Expenses: Indemnity; Damage Waiver
97
Section 12.04
Successors and Assigns
98
Section 12.05
Survival
100
Section 12.06
Counterparts: Integration; Effectiveness
101
Section 12.07
Severability
101
Section 12.08
Right of Setoff; Sharing; Payments Set Aside
101
Section 12.09
Governing Law; Jurisdiction; Service of Process
103
Section 12.10
WAIVER OF JURY TRIAL
103
Section 12.11
Headings
104
Section 12.12
Confidentiality
104
Section 12.13
USA PATRIOT Act Notice
105

 
 

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Schedules

Schedule A
 
Commitments
Schedule B
 
Eligible Inventory; Business Locations
Schedule C
 
[intentionally omitted]
Schedule D
 
Certain Foreign Account Debtors
Schedule E
 
Certain Accounts
     
Schedule 6.06
 
Litigation
Schedule 6.07
 
Environmental Matters
Schedule 6.10
 
Taxes
Schedule 6.15
 
Subsidiaries
Schedule 6.16
 
Existing Investments/Deposit Accounts
Schedule 6.17
 
Real Property
Schedule 6.18
 
Existing Indebtedness
Schedule 6.19
 
Existing Material Liens
Schedule 6.21(c)
 
Deposit Accounts
Schedule 8.01(d)(ii) 
 
ERP Equipment
Schedule 8.11
 
Restrictive Agreements

Exhibits

Exhibit A-1
Form of Revolving Note
Exhibit A-2
Form of Initial Term Note
Exhibit A-3
Form of Amended and Restated Term Note
Exhibit B
Form of Notice of Borrowing
Exhibit C
Form of Borrowing Base Certificate
Exhibit D
Form of Compliance Certificate

 
 

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LOAN AGREEMENT
 
PREAMBLE
 
AGREEMENT dated as of December 30, 2010 among SERACARE LIFE SCIENCES, INC., a
corporation duly organized and validly existing under the laws of the State of
Delaware (the “Borrower”); each Subsidiary of the Borrower that becomes a
“Guarantor” after the date hereof pursuant to Section 7.10 (each, a “Guarantor”,
and collectively, the “Guarantors”); each of the lenders signatory hereto listed
under the caption “LENDERS” on the signature pages hereto and each lender that
becomes a “Lender” after the date hereof pursuant to Section 12.04 (each, a
“Lender” and collectively, the “Lenders”); and MIDDLESEX SAVINGS BANK, as LC
Bank (defined below) and as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”).
 
A.           The Borrower has requested that the Lenders extend credit to the
Borrower in an aggregate principal amount of up to $20,000,000 (i) for working
capital and general corporate purposes and (ii) to finance certain acquisitions
and other general corporate purposes, including stock repurchases.
 
B.           The Lenders are willing to extend the requested credit on and
subject to the terms and conditions hereof.
 
Accordingly, the parties hereto agree as follows:
 
ARTICLE I

 
DEFINITIONS
 
Section 1.01   Definitions.  The following terms, as used herein, have the
following meanings:
 
“Account Control Agreement” means an agreement, reasonably satisfactory to the
Administrative Agent, among the Borrower or any other Obligor, the
Administrative Agent and a depository pursuant to which the Administrative Agent
is granted “control” (as that term is used in the UCC) over a deposit account of
the Borrower or any other Obligor.
 
“Accounts” mean all of the Borrower’s now owned or hereafter acquired right,
title and interest with respect to “accounts”, as such term is from time to time
defined in the UCC.
 
“Account Debtor” means any Person who is or may become obligated under, with
respect to, or on account of, an Account.
 
“Acquisition” means any transaction or series of related transactions for the
direct or indirect (a) acquisition by the Borrower or any of its Subsidiaries of
all or substantially all of the Property of any Person, or all or substantially
all of a line of business or division of any Person, (b) acquisition of all or
substantially all of the Equity Interests of any Person, or otherwise causing
such Person to become a Subsidiary of any Borrower, or (c) merger or
consolidation or any other combination with any Person.
 
 
 

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“Acquisition Consideration” means, with respect to any Acquisition, the total
amount of cash and noncash consideration (as determined under GAAP) paid by or
on behalf of the Borrower and its Subsidiaries for such Acquisition.
 
“Acquisition Documents” means, with respect to any Acquisition, collectively,
the purchase agreement and all other material agreements and documents required
to be entered into or delivered pursuant thereto or in connection with any
Acquisition permitted under Section 8.08(b), each in the form delivered to the
Administrative Agent and as amended as permitted hereunder.
 
“Adjusted Acquisition Consideration” means, with respect to any Acquisition, the
total cash and noncash consideration (including the fair market value of all
Equity Interests issued or transferred to the sellers thereof, and the aggregate
amounts paid or to be paid under noncompete, consulting and other affiliated
agreements with, the sellers thereof) paid by or on behalf of the Borrower and
its Subsidiaries for any such Acquisition.
 
“Administrative Agent” has the meaning set forth in the preamble.
 
“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth in Section 12.01, or such other address or
account as the Administrative Agent may from time to time notify to the Borrower
and the Lenders.
 
“Administrative Questionnaire” means, with respect to any Lender, the
administrative questionnaire, in the form provided to such Lender by the
Administrative Agent, which is duly completed and submitted by such Lender to
the Administrative Agent.
 
“Affiliate” of any Person means any Person directly or indirectly Controlled by,
Controlling or under common Control with such first Person.
 
“Agent Parties” has the meaning set forth in Section 12.01(c).
 
“Agreement” means this Loan Agreement.
 
“Amended and Restated Term Note” has the meaning set forth in Section 2.07(b).
 
“Anti-Terrorism Laws” means laws relating to terrorism or money laundering,
including the Executive Order and the Patriot Act.
 
“Applicable Lending Office” means, for each Lender, the lending office of such
Lender (or an Affiliate thereof) on such Lender’s Administrative Questionnaire
or such other offices of such Lender (or of an Affiliate thereof) as such Lender
may from time to time specify in writing to the Administrative Agent and the
Borrower as the office by which its Loans are to be made and maintained.
 
“Applicable Law” means, in relation to any Person or its Property, statutes and
rules and regulations thereunder and interpretations thereof by any Governmental
Authority charged with the administration or the interpretation thereof, and
orders, requests, directives, instructions and notices of any Governmental
Authority, in each case, applicable to and binding upon such Person or any of
its Property and having the force of law.
 
 
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“Applicable Margin” means one-half of one percent (0.50%) per annum.
 
“Appraisal Report” means, as of any date, the most recently completed appraisal
received by the Administrative Agent, in form and scope reasonably satisfactory
to the Administrative Agent, of the Borrower Group’s Accounts and Inventory by a
third-party appraiser selected by the Administrative Agent.
 
“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
 
“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.
 
“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee (with the consent of any party that is required
under Section 12.04), and accepted by the Administrative Agent, in a form
approved by the Administrative Agent.
 
“Availability Reserves” means the LC Reserves, Inventory Reserves and such other
reserves as the Majority Lenders from time to time determine in their Permitted
Discretion as being appropriate to reflect the impediments to the Lenders’
ability to realize upon the Collateral, as specified to the Borrower through the
Administrative Agent.  Without limiting the generality of the foregoing,
Availability Reserves may include (but are not limited to) reserves based on the
following (without duplication of exclusions made based on the eligibility
criteria specified in the definitions of “Eligible Accounts Receivable” and
“Eligible Inventory”):  (a) returns, rebates, discounts, allowances and customer
credits, (b) payables (based upon payables which are 120 days or more past due)
and actual recent collection history, (c) customer deposits, (d) taxes and other
governmental charges, including tax Liens, ad valorem, personal property, sales,
and other taxes which may have priority over the security interests of the
Administrative Agent in the Collateral, (e) held or post-dated checks issued by
Borrower, (f) any judgment lien against Borrower or Collateral, (g) Borrower’s
failure to pay when due and payable indebtedness owing to any trade creditor,
(h) sums that the Borrower or any other Obligor is required to pay and has
failed to pay under any Financing Document and (i) other reserves deemed
necessary by the Majority Lenders in their reasonable business judgment, based
on recommendations and/or reports by a third-party (unaffiliated with any
Lender) appraiser selected by the Administrative Agent.

“Base Rate” means, for any day, a fluctuating rate per annum equal to the rate
of interest in effect for such day as publicly announced from time to time by
Middlesex as its “prime rate.”  The “prime rate” is a rate set by Middlesex
based upon various factors including Middlesex’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate.  Any change in such rate announced by Middlesex shall take effect at the
opening of business on the day specified in the announcement of such change.
 
 
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“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.
 
“Borrower” has the meaning set forth in the preamble.
 
“Borrower Group” means, collectively, the Borrower and its Subsidiaries.
 
“Borrowing” means all Loans of the same Class made on the same date.
 
“Borrowing Base” means, as of any date of determination:  (a) an amount equal to
80% of Eligible Accounts Receivable, plus (b) an amount equal to 50% of
Governmental Accounts that satisfy all of the criteria (except for clause (k) of
the definition of “Eligible Accounts Receivable”) to be Eligible Accounts
Receivable, plus (c) an amount equal to the Eligible Inventory Advance Rate of
Eligible Inventory, minus (d) the aggregate amount of the Availability Reserves.
 
“Borrowing Base Certificate” means a certificate in the form of Exhibit C.
 
“Business Day” means any day excluding Saturday, Sunday and any other day on
which commercial banks are authorized or required to close in Massachusetts.
 
“Capital Expenditures” means, for any period, to the extent capitalized in
accordance with GAAP, expenditures of the Borrower Group for assets that are
classified as capital expenditures on the balance sheet of the Borrower Group in
accordance with GAAP including, but not limited to expenditures to acquire,
develop or construct fixed assets, plant, equipment and software (including
renewals, improvements and replacements, but excluding (i) repairs or
replacements using Net Available Proceeds and (ii) any assets to the extent
acquired with the proceeds of capital contributions) during such period computed
in accordance with GAAP.
 
“Capital Lease Obligations” means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
 
“Cash Management Agreement” means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
electronic funds transfer and other cash management arrangements.
 
“Cash Management Bank” means any Person that, at the time it enters into a Cash
Management Agreement, is a Lender or an Affiliate of a Lender, in its capacity
as a party to such Cash Management Agreement.
 
 
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“Casualty Event” means, with respect to any Property of any Person, any loss of
or damage to, or any condemnation or other taking of, such Property for which
such Person or any of its Subsidiaries receives insurance proceeds, or proceeds
of a condemnation award or other compensation.  The term Casualty Event shall
also include payment under any key person life insurance policy.
 
“Change in Control” means an event or series of events by which:
 
(a)           any “person” or “group” (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, but excluding any employee
benefit plan of such person or its subsidiaries, and any person or entity acting
in its capacity as trustee, agent or other fiduciary or administrator of any
such plan), becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5
under the Securities Exchange Act of 1934, except that a person or group shall
be deemed to have “beneficial ownership” of all securities that such person or
group has the right to acquire, whether such right is exercisable immediately or
only after the passage of time (such right, an “option right”)), directly or
indirectly, of thirty-five percent (35%) or more of the equity securities of the
Borrower entitled to vote for members of the board of directors or equivalent
governing body of the Borrower on a fully-diluted basis (and taking into account
all such securities that such “person” or “group” has the right to acquire
pursuant to any option right); or
 
(b)           during any period of 12 consecutive months, a majority of the
members of the board of directors or other equivalent governing body of the
Borrower cease to be composed of individuals (i) who were members of that board
or equivalent governing body on the first day of such period, (ii) whose
election or nomination to that board or equivalent governing body was approved
by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or
 
(c)           any Person or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation thereof, will result in its or their
acquisition of the power to exercise, directly or indirectly, Control over the
management or policies of the Borrower, or Control over the equity securities of
the Borrower entitled to vote for members of the board of directors or
equivalent governing body of the Borrower on a fully-diluted basis (and taking
into account all such securities that such Person or Persons have the right to
acquire pursuant to any option right) representing thirty-five percent (35%) or
more of the combined voting power of such securities; or
 
 (d)          except as otherwise expressly permitted under this Agreement or
with the Majority Lenders’ prior written consent, the Borrower shall cease,
directly or indirectly, to own legally and beneficially all (other than
directors’ qualifying shares and the like) of the Equity Interests in, or
otherwise Control, its Subsidiaries.
 
 
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“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.
 
“Class”, when used to refer to any Commitment, Loan or Borrowing, refers to
whether the Commitment, Loan or Borrowing is a Revolving or Term Commitment,
Loan or Borrowing, respectively.
 
“Closing Date” means the first date on which all the conditions precedent in
Section 5.01 are satisfied.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Collateral” means all of the “Collateral” referred to in the Security Documents
and all of the other Property that is or is intended under the terms of the
Security Documents to be subject to Liens in favor of the Administrative Agent
for the benefit of the Secured Parties.
 
“Collateral Access Agreement” has the meaning set forth in the Security
Agreement.
 
“Collateral Account” has the meaning set forth in the Security Agreement.
 
“Commerce Bank” means Commerce Bank and Trust Company.
 
“Commitments” means a Revolving Commitment or Term Commitment, or any
combination thereof, as the context requires.
 
“Compliance Certificate” means a compliance certificate in substantially the
form of Exhibit D.
 
“Consolidated Debt Service Coverage Ratio” means, as of any date of
determination, the ratio of:
 
(a)           (1) Consolidated EBITDA minus (2) taxes paid in cash minus (3)
Unfinanced Capital Expenditures minus (4) dividends and distributions actually
made in cash minus (5) the amount of Investments made in cash by (and not repaid
in cash to) the Borrower to any third parties (other than the Borrower’s Wholly
Owned Subsidiaries) in compliance with Section 8.07; to
 
(b)           cash Consolidated Interest Expense plus the current maturity of
long-term Indebtedness (including the principal component of any payments in
respect of Capital Lease Obligations) as scheduled, in each case, of or by the
Borrower and its Subsidiaries for the most recently completed Measurement
Period.
 
Page | 6

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“Consolidated EBITDA” means, at any date of determination, an amount equal to
Consolidated Net Income of the Borrower and its Subsidiaries on a consolidated
basis for the most recently completed Measurement Period plus (a) the following
to the extent deducted in calculating such Consolidated Net Income:  (i)
Consolidated Interest Expense, (ii) the provision for Federal, state, local and
foreign income taxes payable, (iii) depreciation and amortization expense, (iv)
non-cash adjustments arising by reason of the application of FASB Statement 142
(or its successor) (relating to changes in accounting for the amortization of
good will and certain other intangibles) and accounting principles relating to
stock based compensation expenses, (v) extraordinary or non-recurring losses,
(vi) with the Administrative Agent’s prior written consent (in its reasonable
discretion), other expenses reducing such Consolidated Net Income which do not
represent a cash item in such period or any future period and (vii) with the
Administrative Agent’s prior written consent (in its reasonable discretion),
cost savings from Acquisitions made in compliance with Section 8.08 (in each
case of or by the Borrower and its Subsidiaries for such Measurement Period) and
minus (b) the following to the extent included in calculating such Consolidated
Net Income:  (i) Federal, state, local and foreign income tax credits, and (ii)
all non-cash items increasing Consolidated Net Income (in each case of or by the
Borrower and its Subsidiaries for such Measurement Period).
 
“Consolidated Interest Expense” means, for any Measurement Period, the sum of
(a) all interest, premium payments, debt discount, fees, charges and related
expenses in connection with borrowed money (including capitalized interest) or
in connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, (b) all interest paid or
payable with respect to discontinued operations and (c) the portion of rent
expense under Capital Lease Obligations that is treated as interest in
accordance with GAAP, in each case, of or by the Borrower and its Subsidiaries
on a consolidated basis for the most recently completed Measurement Period.
 
“Consolidated Net Income” means, at any date of determination, the net income
(or loss) of the Borrower and its Subsidiaries on a consolidated basis for the
most recently completed Measurement Period; provided that Consolidated Net
Income shall exclude extraordinary gains and extraordinary losses for such
Measurement Period.
 
“Consolidated Senior Leverage Ratio” means, as of any date of determination, the
ratio of (a) the sum of (1) the aggregate outstanding principal amount of the
Loans as of such date plus (2) the aggregate LC Exposures of all Lenders as of
such date to (b) Consolidated EBITDA, in each case of the Borrower and its
Subsidiaries on a consolidated basis for the most recently completed Measurement
Period.
 
“Control” (including, with its correlative meanings, “Controlled by” and “under
common Control with”) means possession, directly or indirectly, of the power to
direct or cause the direction of management or policies (whether through
ownership of securities or other ownership interests, by contract or otherwise)
of any Person.
 
 
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“Critical Default” means any Default, except for an Event of Default specified
in Section 9.01(e) that with notice or lapse of time or both, in accordance with
Article IX, would become an Event of Default.
 
“Current Assets” means, at any time, the consolidated current assets (other than
cash and cash equivalents) of the Borrower Group.
 
“Current Casualty Event” has the meaning set forth in Section 3.04(b).
 
“Current Liabilities” means, at any time, the consolidated current liabilities
(other than the current portion of the Secured Obligations) of the Borrower
Group.
 
 “Default” means an Event of Default or an event that with notice or lapse of
time or both, in accordance with Article IX, would, unless cured or waived,
become an Event of Default.
 
“Disposition” means any sale, assignment, transfer or other disposition of any
Property (whether now owned or hereafter acquired) by any Obligor or any of its
Subsidiaries to any other Person, excluding any sale, assignment, transfer or
other disposition of any Property sold or disposed of in the ordinary course of
business.
 
 “Eligible Accounts Receivable” means Accounts of the Borrower and its
Subsidiaries subject to the Lien of the Security Documents, the value of which
shall be determined by taking into consideration, among other factors, their
book value determined in accordance with GAAP; provided, however, that none of
the following classes of Accounts shall be deemed to be Eligible Accounts
Receivable:
 
(a)           Accounts that do not arise out of sales of goods or rendering of
services in the ordinary course of the Borrower’s or the relevant Subsidiary’s
business;
 
(b)           Accounts payable other than in U.S. dollars;
 
(c)           Accounts owing from any Person that is an Affiliate of the
Borrower;
 
(d)           Accounts (other than Governmental Accounts) more than 90 days past
original invoice date; and Governmental Accounts more than 120 days past
original invoice date;
 
(e)           Accounts (other than Governmental Accounts) owing from any Person
from which an aggregate amount of more than 35% of the Accounts owing therefrom
is more than 90 days past original invoice date; and Governmental Accounts owing
from any Person from which an aggregate amount of more than 35% of the Accounts
owing therefrom is more than 120 days past original invoice date;
 
(f)            Accounts owing from any Person that (i) has disputed liability
for any Account owing from such Person or (ii) has otherwise asserted any claim,
demand or liability against the Borrower or any of its Subsidiaries, whether by
action, suit, counterclaim or otherwise; provided that for purposes of
subclauses (f)(i) and (f)(ii), such Accounts shall be excluded only to the
extent of the amounts being disputed, claimed or demanded by such Person at any
date of determination;

 
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(g)           Accounts owing from any Person that shall take or be the subject
of any action or proceeding of a type described in Sections 9.01(h), (i) or (j);
 
(h)           Accounts (i) owing from any Person that is also a supplier to or
creditor of the Borrower or any of its Subsidiaries or (ii) representing any
manufacturer’s or supplier’s credits, discounts, incentive plans or similar
arrangements entitling the Borrower or any of its Subsidiaries to discounts on
future purchase therefrom, in each case in clauses (i) and (ii) to the extent
that such Accounts may be offset or discounted by amounts owing by the Borrower
or any of its Subsidiaries to the relevant account debtor;
 
(i)            Accounts arising out of sales to account debtors outside the
United States, unless (i) such Accounts are fully backed by an irrevocable
letter of credit or credit insurance on terms, and issued by a financial
institution or insurer, acceptable to the Administrative Agent and such
irrevocable letter of credit or insurance policy is in the possession of the
Administrative Agent or (ii) such Accounts arise out of sales to the foreign
account debtors listed on Schedule D or are otherwise approved by the
Administrative Agent at its option;
 
(j)            Accounts arising out of sales on a bill-and-hold, guaranteed
sale, sale-or-return, sale on approval or consignment basis or subject to any
right of return, setoff or charge back;
 
(k)           Governmental Accounts (unless the Borrower or its relevant
Subsidiary shall have satisfied the requirements of the Assignment of Claims Act
of 1940, and any similar state legislation, and the Administrative Agent is
satisfied as to the absence of setoffs, counterclaims and other defenses on the
part of the account debtor of such Governmental Accounts), if such Governmental
Accounts owing from such account debtor exceed $100,000;
 
(l)            Accounts with respect to which the representations and warranties
set forth in Section 6.5 of the Security Agreement applicable to Accounts are
not correct;
 
(m)           Accounts with respect to which the account debtor is located in
any state that requires a creditor to file a business activity report or similar
document in order to bring suit or otherwise enforce its remedies against such
account debtor in the courts or through any judicial process of such state),
unless the Borrower has qualified to do business in such state, or has filed a
business activities report with the applicable division of taxation, the
department of revenue, or with such other state offices, as appropriate, for the
then-current year, or is exempt from such filing requirement, or such failure to
so qualify or file is, in the Administrative Agent’s Permitted Discretion,
capable of being remedied without any material delay or material cost; and
 
(n)           Accounts in respect of which the Security Agreement, after giving
effect to the related filings of financing statements that have then been made,
if any, does not or has ceased to create a valid and perfected first priority
lien or security interest in favor of the Administrative Agent, on behalf of the
Secured Parties, securing the Secured Obligations.
 
“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent and each other Lender, (ii) unless a Specified
Default has occurred, the Borrower and (iii) unless a Default has occurred and
so long as Commerce Bank is one of only two Lenders and has at least 40% of the
sum of the aggregate outstanding principal amount of the Loans and aggregate
Commitments, Commerce Bank (each such approval not to be unreasonably withheld
or delayed); provided that notwithstanding the foregoing, “Eligible Assignee”
shall not include any Obligor or any Affiliate or Subsidiary thereof.

 
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 “Eligible Inventory” means Inventory consisting of first quality saleable goods
(including raw materials and intermediate Inventory) held for sale in the
ordinary course of business of the Obligors that complies with each of the
representations and warranties respecting Eligible Inventory made by the
Obligors in this Agreement and the Security Agreement, and that is not excluded
as ineligible by virtue of the one or more of the criteria set forth below;
provided, that such criteria may be fixed and revised from time to time by the
Majority Lenders (through the Administrative Agent) in their Permitted
Discretion to address the results of any audit or appraisal performed from time
to time after the date hereof.  An item of Inventory shall not be included in
Eligible Inventory if:
 
(a)           an Obligor does not have good, valid, and marketable title
thereto;
 
(b)           it is not subject to a valid and perfected, first-priority Lien in
favor of the Administrative Agent, subject to no other Liens except Permitted
Liens;
 
(c)           it is not located at (1) one of the locations in the United States
set forth on Schedule B or (2) a location subject to a Collateral Access
Agreement and it is segregated or otherwise separately identifiable from goods
of others, if any, stored on the premises, unless it is in transit from one such
location directly to another such location;
 
(d)           it is located on real property leased by an Obligor or in a
contract warehouse, in each case, unless it is subject to a Collateral Access
Agreement executed by the lessor, warehouseman, or other third party, as the
case may be, and unless it is segregated or otherwise separately identifiable
from goods of others, if any, stored on the premises;
 
(e)           it consists of goods returned or rejected by an Obligor’s
customers;
 
(f)            it consists of goods that are obsolete or unusable, or are slow
moving, restrictive or custom items, work-in-process (as distinguished from
intermediate Inventory), or goods that constitute spare parts, supplies used or
consumed in the Obligors’ business, bill and hold goods, defective goods,
“seconds,” or Inventory acquired on consignment;
 
(g)           it fails to meet all standards imposed by any Governmental
Authority having regulatory authority over such Inventory or its use or sale;
 
(h)           it is subject to any licensing, patent, royalty, trademark, trade
name or copyright agreement with any third party from which the Borrower or any
of its Subsidiaries has received notice of a dispute in respect of any such
agreement, which dispute has a reasonable likelihood of being determined
adversely to the Borrower or any of its Subsidiaries; or
 
(i)            it does not satisfy any other requirements deemed necessary by
the Majority Lenders in their reasonable business judgment and which are
customary either in the commercial finance industry or in the lending practices
of the Majority Lenders, based on reports from a third-party appraiser
satisfactory to the Administrative Agent.

 
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“Eligible Inventory Advance Rate” means the lower of (a) forty percent (40%) and
(b) the “Net Eligible Inventory Advance Rate” set forth in the Appraisal Report.
 
“Environmental Claim” means, with respect to any Person, any written or oral
notice, claim, demand or other communication (collectively, a “claim”) by any
other Person alleging or asserting such Person’s liability for investigatory
costs, cleanup costs, governmental response costs, damages to natural resources
or other Property, personal injuries, fines or penalties arising out of, based
on or resulting from (i) the presence, or Release into the environment, of any
Hazardous Material at any location, whether or not owned by such Person, or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.  The term “Environmental Claim” shall include, without
limitation, any claim by any governmental authority for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
 
“Environmental Laws” means any and all present and future Federal, state, local
and foreign laws, rules or regulations, and any orders or decrees, in each case
as now or hereafter in effect, relating to the regulation or protection of human
health, safety or the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or toxic or hazardous
substances or wastes into the indoor or outdoor environment, including, without
limitation, ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or toxic or hazardous substances or wastes.
 
“Equipment” has the meaning specified in Section 1.1 of the Security Agreement.
 
“Equity Interest” means, as to any Person, the stock (common, preferred or in
any other manner designated), limited liability company membership or other
interest, or any other right or interest (or right to acquire any such right or
interest) however designated, evidencing ownership interests in such Person.
 
“Equity Issuance” means (a) any issuance or sale by the Borrower or any of its
Subsidiaries after the Closing Date of (i) any of its Equity Interests, (ii) any
warrants or options exercisable in respect of its Equity Interests (other than
any warrants or options issued to directors, officers or employees of the
Borrower or any of its Subsidiaries pursuant to employee benefit plans
established in the ordinary course of business or existing on the date hereof
and disclosed to the Lenders in writing and any Equity Interests of the Borrower
issued upon the exercise of such warrants or options) or (iii) any other
security or instrument representing an equity interest (or the right to obtain
any equity interest) in the Borrower or any of its Subsidiaries or (b) the
receipt by the Borrower or any of its Subsidiaries after the Closing Date of any
capital contribution (whether or not evidenced by any equity security issued by
the recipient of such contribution); provided that Equity Issuance shall not
include (x) any such issuance or sale by any Subsidiary of the Borrower to the
Borrower or any Wholly Owned Subsidiary of the Borrower or (y) any capital
contribution by the Borrower or any Wholly Owned Subsidiary of the Borrower to
any Subsidiary of the Borrower.

 
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“Equity Rights” means, with respect to any Person, any subscriptions, options,
warrants, commitments, preemptive rights or agreements of any kind (including,
without limitation, any shareholders’ or voting trust agreements) for the
issuance, sale, registration or voting of, or securities convertible into, any
additional shares of Equity Interests of any class, or partnership or other
ownership interests of any type in, such Person.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
 
“ERISA Affiliate” means any corporation or trade or business that is a member of
any group of organizations (i) described in Section 414(b) or (c) of the Code of
which the Borrower is a member and (ii) solely for purposes of potential
liability under Section 302(c)(l1) of ERISA and Section 412(c)(l 1) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which the Borrower is a
member.
 
“ERISA Event” means any of the following events or conditions:
 
(a)           any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to which the PBGC
has not by regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within 30 days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section 412 of the Code or
Section 302 of ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the issuance
of any waivers in accordance with Section 412(d) of the Code); and any request
for a waiver under Section 412(d) of the Code for any Plan;
 
(b)           the distribution under Section 4041 of ERISA of a notice of intent
to terminate any Plan or any action taken by the Borrower or an ERISA Affiliate
to terminate any Plan;
 
(c)           the institution by the PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan;
 
(d)           the complete or partial withdrawal from a Multiemployer Plan by
the Borrower or any ERISA Affiliate that results in liability under Section 4201
or 4204 of ERISA (including the obligation to satisfy secondary liability as a
result of a purchaser default) or the receipt by the Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;

 
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(e)           the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days; or
 
(f)           the adoption of an amendment to any Plan that, pursuant to Section
401(a) (29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if the Borrower or
an ERISA Affiliate fails to timely provide security to the Plan in accordance
with the provisions of such Sections.
 
“Event of Default” has the meaning set forth in Section 9.01.
 
“Excess Cash Flow” means, for any fiscal year of the Borrower, the excess (if
any) of (a) the sum, without duplication, of (i) Consolidated EBITDA for such
fiscal year and (ii) reductions to non-cash working capital of the Borrower
Group for such fiscal year (i.e., the decrease, if any, in Current Assets minus
Current Liabilities from the beginning to the end of such fiscal year) over (b)
the sum (for such fiscal year), without duplication, of (i) Consolidated
Interest Expense actually paid in cash by the Borrower and its Subsidiaries,
(ii) scheduled principal repayments, to the extent actually made, of Term Loans
pursuant to Section 3.01(b), (iii) voluntary prepayments, to the extent actually
made, of Term Loans pursuant to Section 3.03(b), (iv) all income taxes actually
paid in cash by the Borrower and its Subsidiaries,  (v) Capital Expenditures
actually made by the Borrower and its Subsidiaries in such fiscal year and (vi)
additions to non-cash working capital for such fiscal year (i.e., the increase,
if any, in Current Assets minus Current Liabilities from the beginning to the
end of such fiscal year).
 
“Excess Funding Guarantor” has the meaning set forth in Section 4.09.
 
“Excess Payment” has the meaning set forth in Section 4.09.
 
“Executive Order” means Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001.
 
“Excluded Taxes” has the meaning set forth in Section 10.02(a).
 
“Existing LC” means the LC no. 10-112 dated September 22, 2010 issued by the LC
Bank to Birchwood Fortune-SPVEF, LLC, as the beneficiary, for account of the
Borrower, in the stated amount of $46,088.00.
 
“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided 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 as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Middlesex
on such day on such transactions as determined by the Administrative Agent.

 
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“Fee Letter” means the fee letter agreement dated as of the date hereof among
the Obligors and the Administrative Agent.
 
“Financing Documents” means:
 
(a)           this Agreement;
 
(b)          the Notes;
 
(c)           the LC Documents;
 
(d)          the Guaranties;
 
(e)           the Security Documents;
 
(f)           the Post-Closing Agreement;
 
(f)           the Fee Letter; and
 
(g)          any other document, instrument or agreement now or hereafter
entered into by the Borrower or any other Obligor in connection with the Loans,
the Secured Obligations or the Collateral.
 
“Five-Year Reset Rate” means a rate per annum equal to the higher of (a) the
two-year Treasury rate plus 3.50% per annum and (b) a fixed rate of 5.49% per
annum.
 
“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes
(including such a Lender when acting in the capacity of the LC Bank).  For
purposes of this definition, the United States, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
 
“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
 
“GAAP” means generally accepted accounting principles in the United States of
America, applied on a consistent basis from prior reporting periods, if
applicable.
 
“Governmental Accounts” means Accounts owing from an account debtor that is an
agency, department or instrumentality of the United States or any state thereof.
 
“Governmental Approval” means any action required to show satisfaction of an
applicable Governmental Requirement including any permission, permit,
certificate, license, approval, waiver, variance or authorization by a
Governmental Authority.
 
“Governmental Authority” includes the country, the state, county, city and
political subdivisions in which any Person or such Person’s Property is located
or which exercises valid jurisdiction over any such Person or such Person’s
Property, and any court, agency, department, commission, board, bureau or
instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person’s Property.

 
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“Governmental Requirement” means any law, statute, code, ordinance, common law,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(whether or not having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
 
“Guarantee” means a guarantee, an endorsement, a contingent agreement to
purchase or to furnish funds for the payment or maintenance of, or otherwise to
be or become contingently liable under or with respect to, the Indebtedness,
other obligations, net worth, working capital or earnings of any Person, or a
guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any Person, or an agreement to purchase, sell or lease (as
lessee or lessor) Property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of such debtor’s
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank or other financial institution to issue a
letter of credit or other similar instrument for the benefit of another Person,
(but excluding endorsements for collection or deposit in the ordinary course of
business and product and other similar warranties given in the ordinary course
of business).  The terms “Guarantee” and “Guaranteed” used as verbs have the
correlative meanings.
 
“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement, in form
and substance reasonably satisfactory to the Administrative Agent, by an entity
that, pursuant to Section 7.10, is required to become a “Guarantor” hereunder in
favor of the Administrative Agent, LC Bank and Lenders.
 
“Guaranteed Obligations” has the meaning set forth in Section 4.01.
 
“Guarantors” has the meaning set forth in the Preamble.
 
“Guaranties” means, collectively, (a) the Subsidiary Guarantee and (b) each
Guarantee Assumption Agreement delivered pursuant to Section 7.10.
 
“Hazardous Material” means, collectively, (a) any petroleum or petroleum
products, flammable materials, explosives, radioactive materials, asbestos, urea
formaldehyde foam insulation, and transformers or other equipment that contain
polychlorinated biphenyls (“PCB’s”), (b) any chemicals or other materials or
substances that are now or hereafter become defined as or included in the
definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”,
“extremely hazardous wastes”, “restricted hazardous wastes”, “toxic substances”,
‘toxic pollutants”, “contaminants”, “pollutants” or words of similar import
under any Environmental Law and (c) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
 
“Hedge Bank” means any Person that, at the time it enters into a  Hedging
Agreement permitted under this Agreement, is a Lender or an Affiliate of a
Lender, in its capacity as a party to such Hedging Agreement.

 
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 “Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
 
“Included Taxes” has the meaning set forth in Section 10.02(a).
 
“Indebtedness” means, without duplication, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than (1) earnouts and other contingent payments in connection with any
Acquisition, solely to the extent that such contingent payments are not deemed
to be indebtedness under and in accordance with GAAP, and only if such
contingent payments are unsecured, and (2) trade accounts payable (other than
for borrowed money) arising, and accrued expenses incurred, in the ordinary
course of business so long as such trade accounts payable are payable within 180
days of the date the respective goods are delivered or the respective services
are rendered, or are being disputed in good faith by appropriate measures and
with adequate reserves in accordance with GAAP; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person but, if such
Indebtedness has not been so assumed, only to the extent of the value of such
Property; (d) the maximum amount of all direct or contingent obligations of such
Person arising under letters of credit, bankers’ acceptances, bank guaranties,
surety bonds and similar instruments issued or accepted by banks and other
financial institutions for account of such Person; (e) Capital Lease Obligations
of such Person to the extent classified as a liability on a balance sheet in
conformity with GAAP; (f) Indebtedness of others Guaranteed by such Person; (g)
net obligations of such Person under any Hedging Agreement.  The amount of any
net obligation under any Hedging Agreement on any date shall be deemed to be the
Swap Termination Value thereof as of such date.
 
“Indemnitee” has the meaning set forth in Section 12.03(b).
 
“Information” has the meaning set forth in Section 12.12(b).
 
“Initial Term Note” has the meaning set forth in Section 2.07(b).
 
“Intangible Assets” means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, computer software, copyrights,
trade names, trademarks, patents, franchises, licenses, unamortized deferred
charges, unamortized debt discount and capitalized research and development
costs.
 
“Inventory” means, as to any Person, all “inventory” (as defined in the UCC) now
owned or hereafter acquired by such Person, and all documents of title or other
documents representing any of the foregoing, but excluding all work-in-process.

 
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“Inventory Reserves” means such reserves as the Majority Lenders determine from
time to time in their Permitted Discretion as being appropriate to reflect the
impediments to the Lenders’ ability to realize upon the Collateral.  Without
limiting the generality of the foregoing, Inventory Reserves may include (but
are not limited to) reserves based on the following (without duplication of
exclusions made based on the eligibility criteria specified in the definition of
“Eligible Inventory”):  (a) the extent to which Inventory consists of goods that
(i) are obsolete, slow-moving, restrictive or custom items, bills and hold
goods, defective, damaged, prepared for return to vendor, not first quality
goods, work-in-process or raw materials or (ii) constitute spare parts,
packaging and shipping materials or supplies; (b) seasonality; (c) shrinkage;
(d) imbalance or change in Inventory character, composition or mix; (e)
markdowns; (f) the estimated costs relating to unpaid freight charges,
warehousing or storage charges, taxes, duties, and other similar unpaid costs
associated with the acquisition of Inventory by any Obligor; and (g) the
estimated reclamation claims of unpaid sellers of Inventory sold to any Obligor.
 
“Investment” means, for any Person, (a) the purchase or other acquisition
(whether for cash, Property, services, securities or otherwise) of Equity
Interests, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make such acquisition,
(b) the making of any deposit with, or advance, loan or other extension of
credit to, or capital contribution to, or Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt of or interest in, another
Person (including the purchase of Property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such Property to
such Person), but excluding any such advance, loan or extension of credit having
a term not exceeding 180 days arising in connection with the sale of inventory,
supplies or services by such Person in the ordinary course of business, or (c)
the purchase or other acquisition (in one transaction or a series of
transactions) of assets of another Person that constitute a business unit or all
or a substantial part of the business of, such Person.
 
“LC” means any standby letter of credit issued pursuant to this Agreement and
shall include the Existing LC.
 
“LC Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any LC Borrowing in accordance with its Percentage.
 
“LC Bank” means Middlesex, in its capacity as an issuer of LCs hereunder.
 
“LC Borrowing” means an extension of credit resulting from a drawing under any
LC which has not been reimbursed on the date when made or refinanced as a
Revolving Borrowing.
 
“LC Disbursement” means a payment made by the LC Bank pursuant to an LC.
 
“LC Documents” means, with respect to any LC, collectively, any application
therefor and any other agreements, instruments, guarantees or other documents
(whether general in application or applicable only to such LC) governing or
providing for (a) the rights and obligations of the parties concerned or at risk
with respect to such LC or (b) any collateral security for any of such
obligations.
 
“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn face
amount of all outstanding LCs at such time plus (b) the aggregate amount of all
LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower at such time, including all LC Borrowings.  The LC Exposure of any
Lender at any time shall be its Percentage of the total LC Exposure at such
time.

 
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“LC Reimbursement Obligations” means, at any time, the obligations of the
Borrower then outstanding, or that may thereafter arise in respect of all LCs
then outstanding, to reimburse amounts paid by the LC Bank in respect of LC
Disbursements.
 
“LC Reserves” means, at any time, the aggregate LC Exposure of all Lenders at
such time that is not fully secured by cash collateral.
 
“Lender” shall have the meaning set forth in the preamble.
 
“Lender Protective Advances” has the meaning assigned thereto in Section 3.09.
 
 “Lien” means, with respect to any Property, any mortgage, lien, pledge, charge,
security interest or similar encumbrance of any kind in respect of such
Property.  For purposes of the Financing Documents, a Person shall be deemed to
own subject to a Lien any Property that 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 (other than an operating lease)
relating to such Property.
 
“Life Insurance Proceeds” means the aggregate cash proceeds of any key man life
insurance policy received by any Obligor.
 
“Loans” means, collectively, the Revolving Loans and Term Loans.
 
“Majority Lenders” means, at any time, subject to Section 12.02(b)(v), (a) if
there are fewer than three Lenders, all Lenders, and (b) if there are three or
more Lenders, Lenders having Revolving Exposures, outstanding Term Loans and
unused Commitments representing more than 66-2/3% of the sum of the aggregate
Revolving Exposures, outstanding Term Loans and unused Commitments of all
Lenders.
 
“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X
of the Board.
 
“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent) or condition (financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole; (b) a material impairment of the rights and
remedies of the Administrative Agent, LC Bank or any Lender under any Financing
Document, or of the ability of any Obligor to perform its obligations under any
Financing Document to which it is a party; or (c) a material adverse effect upon
the legality, validity, binding effect or enforceability against any Obligor of
any Financing Document to which it is a party.
 
“Material Contract” means, with respect to any Obligor, the three largest
customer contracts to which such Obligor is a party.
 
“Material Indebtedness” means Indebtedness (other than the Loans and LC
Reimbursement Obligations) of any one or more of the Obligors in an aggregate
principal amount exceeding $500,000.

 
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“Maturity Date” means (a) with respect to the Revolving Commitments and
Revolving Loans, the Revolving Commitment Termination Date, and (b) with respect
to the Term Loans, the Term Maturity Date; provided that, in each case, if such
date is not a Business Day, the Maturity Date shall be the immediately preceding
Business Day.
 
“Maximum Revolver Amount” means the lesser of (a) $5,000,000 (as such amount may
be reduced or terminated pursuant to this Agreement) and (b) the Borrowing Base.
 
“Measurement Period” means, at any date of determination, the most recently
completed four fiscal quarters of the Borrower.
 
“Middlesex” means Middlesex Savings Bank, a Massachusetts banking corporation.
 
“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37)
of ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and that is covered by Title IV of ERISA.
 
“Net Available Proceeds” means:
 
(i)            in the case of any Disposition, the amount of Net Cash Payments
received in connection with such Disposition;
 
(ii)           in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received by
the Borrower or any other Obligor in respect of such Casualty Event net of (A)
reasonable out-of-pocket expenses incurred by the Borrower or its Subsidiaries
in connection therewith and (B) contractually required repayments of
Indebtedness to the extent secured by a Lien on such Property and any income,
transfer or other taxes payable by the Borrower or any of its Subsidiaries in
respect of such Casualty Event; and
 
(iii)          in the case of any Equity Issuance or the incurrence of
Indebtedness, the aggregate amount of all cash received by the Borrower and the
other Obligors in respect of such Equity Issuance or incurrence net of
underwriting discounts, commissions, taxes payable in connection with such
issuance or incurrence (whether payable at such time or thereafter), and other
reasonable and customary out-of-pocket fees and expenses incurred by the
Borrower or its Subsidiaries in connection therewith.
 
“Net Cash Payments” means, with respect to any Disposition, the aggregate amount
of all cash payments, received by the Borrower and any other Obligors directly
or indirectly in connection with such Disposition; provided that (a) Net Cash
Payments shall be net of (i) the amount of any legal, title and recording tax
expenses, commissions and other reasonable and customary out-of-pocket fees and
expenses (including reasonable and customary investment banking out-of-pocket
fees and expenses) paid by the Obligors in connection with such Disposition and
(ii) any Federal, state and local income or other taxes estimated to be payable
by the Obligors (including any direct or indirect equity holders thereof) as a
result of such Disposition, and (b) Net Cash Payments shall be net of any
repayments by the Obligors of Indebtedness to the extent that (i) such
Indebtedness is secured by a Lien on the Property that is the subject of such
Disposition or (ii) the transferee of (or holder of a Lien on) such Property
requires that such Indebtedness be repaid as a condition to the purchase of such
Property.

 
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“Notes” means, collectively, Revolving Notes and Term Notes.
 
“Notice of Borrowing” has the meaning set forth in Section 2.03(a).
 
“Obligors” means, collectively, the Borrower and the Guarantors.
 
“Other Taxes” has the meaning set forth in Section 10.02(b).
 
“Patent Security Agreement” means the Patent Security Agreement dated as of the
date hereof executed by the Obligors party thereto in favor of the
Administrative Agent.
 
“Patriot Act” means the USA Patriot Act, Title III of Pub. L. 107-56 (signed
into law October 26, 2001).
 
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
 
“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan or a Multiemployer Plan) that is maintained or is contributed to
by the Borrower and any ERISA Affiliate and is either covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the
Code.
 
“Percentage” means, for any Lender, the ratio (expressed as a percentage) of (a)
such Lender’s Revolving Commitment to (b) the aggregate amount of all Revolving
Commitments.
 
“Perfection Certificate” means a certificate in a form approved by the
Administrative Agent.
 
“Permitted Discretion” means a determination made in good faith and in the
exercise of prudent and reasonable (from the perspective of a secured lender)
business judgment.
 
“Permitted Investments” means investments in (a) direct obligations of the
United States or any agency thereof, or obligations guaranteed by the United
States or any agency thereof, in each case maturing within 13 months from the
date of acquisition thereof, (b) commercial paper maturing within 13 months from
the date of creation thereof rated at least Al or the equivalent by S&P or P1 or
the equivalent by Moody’s Investors Service, Inc. (“Moody’s”) at the time of the
acquisition thereof, (c) deposits maturing within 13 months from the date of
creation thereof with, including certificates of deposit and banker’s
acceptances issued by, Middlesex or any office located in the United States of
any other bank or trust company which at the time of the acquisition thereof (i)
is organized under the laws of any OECD country, including the United States or
any state thereof or the District of Columbia, (ii) has capital, surplus and
undivided profits aggregating at least $500,000,000 (as of the date of such
bank’s or trust company’s most recent financial reports) and (iii) has a short
term deposit rating of no lower than A2 or P2, as such rating is set forth from
time to time, by S&P or Moody’s, respectively, (d) fully collateralized
repurchase agreements with a term of not more than 30 days for securities
described in clause (a) above and entered into with a financial institution
satisfying the criteria described in clause (c) above; (e) securities with
maturities of 13 months or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or any political subdivision or taxing authority thereof, and rated at
least A by S&P or Moody’s; and (f) Investments, classified in accordance with
GAAP as current assets of the Borrower or any of its Subsidiaries, in money
market or similar funds registered under the Investment Company Act of 1940, as
amended, investing at least 95% of its assets in investments described in
clauses (a), (b), (c) or (e) above and which are administered by financial
institutions having a rating in the highest investment category granted thereby
by S&P or Moody’s at the time of acquisition.

 
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“Permitted Liens” means Liens permitted under Section 8.02.
 
“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
 
“Plan” means an employee benefit or other plan established or maintained by the
Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA, other
than a Multiemployer Plan.
 
“Platform” has the meaning specified in Section 7.01.
 
“Post-Closing Agreement” means the Compliance and Post-Closing Agreement dated
as of the date hereof among the Borrower and Administrative Agent.
 
“Post-Default Rate” has the meaning set forth in Section 3.02(b).
 
“Principal Payment Date” means the first Business Day of each calendar month,
commencing with April 1, 2012 (or, if the Term Commitment Termination Date
occurs before February 29, 2012, commencing with the first such date to occur
after the Term Commitment Termination Date), and the Term Maturity Date.
 
“Pro Rata Share” has the meaning set forth in Section 4.08.
 
“Property” or “Properties” means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
 
“Public Lender” has the meaning specified in Section 7.01.
 
“Quarterly Date” means the last Business Day of March, June, September and
December in each year, commencing with the first such day after the Closing
Date.
 
“Receivables” means, as at any date, the unpaid portion of the obligation, as
stated on the respective invoice, of a customer of any Obligor in respect of
goods sold and shipped or services rendered by such Obligor to such customer,
net of any credits, rebates or offsets owed to such customer and also net of any
commissions payable to third parties (and for purposes hereof, a credit or
rebate paid by check or draft of any Obligor shall be deemed to be outstanding
until such check or draft shall have been debited to the account of such Obligor
on which such check or draft was drawn).
 
 
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“Register” has the meaning set forth in Section 12.04(c).
 
“Regulation D, T, U or X” means Regulation D, T, U or X of the Board.
 
“Regulatory Change” means, with respect to any Lender, any change after the date
hereof in Federal, state or foreign law or regulations (including Regulation D)
or the adoption or making after such date of any interpretation, directive or
request applying to a class of banks including such Lender of or under any
Federal, state or foreign law or regulations (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
 
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.
 
“Release” means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including, without limitation, the movement of Hazardous
Materials through ambient air, soil, surface water, ground water, wetlands, land
or subsurface strata.
 
“Responsible Officer” means, with respect to any Obligor, the chief executive
officer, president, chief financial officer, treasurer or assistant treasurer of
such Obligor.  Any document delivered hereunder that is signed by a Responsible
Officer of an Obligor shall be conclusively presumed to have been authorized by
all necessary corporate, partnership, shareholder, director, limited liability
company and/or other action on the part of such Obligor, and such Responsible
Officer shall be conclusively presumed to have acted solely on behalf of such
Obligor in his/her capacity as such Responsible Officer (and not such Person’s
individual capacity).  Unless otherwise specified, all references to a
Responsible Officer herein shall mean a Responsible Officer of the Borrower.
 
“Restricted Payment” means (a) dividends (in cash, Property or obligations) on,
or other payments or distributions on account of, or the setting apart of money
for a sinking or other analogous fund for, or the purchase, redemption,
retirement or other acquisition of, any shares of any class of Equity Interests
of the Borrower or of any warrants, options or other rights to acquire the same
(or to make any payments to any Person, such as “phantom stock” payments, where
the amount thereof is calculated with reference to the fair market or equity
value of the Borrower or any of its Subsidiaries), but excluding dividends or
distributions payable solely in shares of Equity Interests of the Borrower; (b)
any payment of any management fee or expense, investment banking fee or similar
amount to any Affiliate of the Borrower; and (c) any payment to the holders of
any Indebtedness subordinated to the repayment of the Loans.
 
 
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“Revolving Commitment” means, as to each Lender, the commitment of such Lender
to make Revolving Loans and to acquire participations in LCs hereunder in an
aggregate principal or face amount at any one time outstanding up to but not
exceeding the amount set opposite the name of such Lender on Schedule A under
the caption “Revolving Commitment” or, in the case of a Person that becomes a
Lender pursuant to an assignment permitted under Section 12.04(b), as specified
in the respective Assignment and Acceptance pursuant to which such assignment is
effected (as the same may be reduced at any time pursuant to this Agreement).
 
“Revolving Commitment Termination Date” means the earliest to occur of (a)
February 29, 2012, (b) the date of termination of the Revolving Commitments in
accordance with the terms of the Financing Documents and (c) the first date on
which all outstanding principal of, interest on and all other amounts
outstanding in respect of the Revolving Loans shall have been paid in full.
 
“Revolving Exposure” means, with respect to any Lender at any time, the sum of
(a) the aggregate outstanding principal amount of such Lender’s Revolving Loans
plus (b) such Lender’s LC Exposure at such time.
 
“Revolving Loan” means each Loan made by a Lender to the Borrower pursuant to
Section 2.01(a).
 
“Revolving Note” has the meaning set forth in Section 2.07(a).
 
“Rolling Period” means, at any date of determination, the period of twelve
consecutive calendar months ending on, or most recently ended prior to, such
date.
 
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.
 
“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
 
“Secured Cash Management Agreement” means any Cash Management Agreement that is
entered into by and between any Obligor and any Cash Management Bank.
 
“Secured Hedge Agreement” means any Swap Contract permitted under this Agreement
that is entered into by and between any Obligor and any Hedge Bank.
 
“Secured Obligations” means all advances to, and debts, liabilities,
obligations, covenants and duties of, any Obligor arising under any Financing
Document or otherwise with respect to any Loan, LC, Secured Cash Management
Agreement or Secured Hedge Agreement, in each case whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Obligor or any Affiliate
thereof of any proceeding under any bankruptcy, insolvency or other debtor
relief laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.
 
“Secured Parties” means, collectively, the Administrative Agent, the Lenders,
the LC Bank, the Hedge Banks, the Cash Management Banks, each co-agent or
sub-agent appointed by the Administrative Agent from time to time pursuant to
Section 11.05, and the other Persons the Secured Obligations owing to which are
or are purported to be secured by the Collateral under the terms of the Security
Documents.
 
 
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“Security Agreement” means the Security Agreement dated as of the date hereof
executed by the Borrower and other Obligors in favor of the Lender.
 
“Security Documents” means the Security Agreement, the Account Control
Agreements, all Collateral Access Agreements, the Patent Security Agreement, the
Trademark Security Agreement, all Uniform Commercial Code financing statements
required by any of the foregoing to be filed with respect to the security
interests in personal Property and fixtures created pursuant thereto, and any
and all other agreements or instruments now or hereafter executed and delivered
to the Secured Parties by any Obligor or any other Person as security for the
Secured Obligations.
 
“Specified Default” means, collectively, (i) any Event of Default and (ii) any
Default described in Section 9.01(a), (b), (h), (i) or (j) that with notice or
lapse of time or both, in accordance with Article IX, would become an Event of
Default.
 
“Solvent” and “Solvency” mean, with respect to any Person or group of Persons
determined on a consolidated basis, on any date of determination, that on such
date (a) the fair value of the property of such Person or group is greater than
the total amount of liabilities, including contingent liabilities, of such
Person or group, (b) the present fair salable value of the assets of such Person
or group is not less than the amount that will be required to pay the probable
liability of such Person or group on its debts as they become absolute and
matured, (c) such Person or group does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person’s or group’s ability to
pay such debts and liabilities as they mature, (d) such Person or group is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person’s or group’s property would constitute an
unreasonably small capital, and (e) such Person or group is able to pay its
debts and liabilities, contingent obligations and other commitments as they
mature in the ordinary course of business.  The amount of contingent liabilities
at any time shall be computed as the amount that, in the light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
 
“Subordinated Debt” means unsecured Indebtedness (a) for which the Borrower is
directly and primarily liable, (b) in respect of which none of the other
Obligors is contingently or otherwise obligated and (c) that is subordinated to
the obligations of the Borrower to pay the principal of and interest on the
Loans and the LC Reimbursement Obligations hereunder on terms, and pursuant to
documentation containing other terms (including interest, amortization,
covenants and events of default) which are material in the Majority Lenders’
judgment, in form and substance satisfactory to the Majority Lenders.
 
 
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“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership or other entity of which at least a majority of
the securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, limited liability company,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, limited liability company, partnership or other entity shall have
or might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.  Unless otherwise specified, “Subsidiary” means a Subsidiary of
the Borrower.
 
“Subsidiary Guarantee” means the Subsidiary Guarantee made by the Guarantors
under Article IV in favor of the Secured Parties.
 
“Swap Termination Value” means, in respect of any one or more Hedging
Agreements, after taking into account the effect of any legally enforceable
netting agreement relating to such Hedging Agreements, (a) for any date on or
after the date such Hedging Agreements have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and (b)
for any date prior to the date referenced in clause (a), the amount(s)
determined as the mark-to-market value(s) for such Hedging Agreements, as
determined in accordance with the relevant Hedging Agrement(s).
 
“Taxes” means all taxes, charges, fees, levies or other assessments imposed by
any federal, state, local or foreign taxing authority, including, without
limitation, income, gross receipts, excise, real or personal property, sales,
occupation, use, service, leasing, environmental, value added, transfer,
payroll, and franchise taxes (and including any interest, penalties, or
additions to tax attributable to or imposed with respect to any such
assessment).
 
“Term Commitment” means, with respect to any Lender, the obligation of such
Lender to make up to four Term Loans prior to the Term Commitment Termination
Date in an aggregate principal amount up to but not exceeding the amount set
opposite the name of such Lender on Schedule A under the caption “Term
Commitment” or, in the case of a Person that becomes a Term Lender pursuant to
an assignment permitted under Section 12.04(b), as specified in the respective
instrument of assignment pursuant to which such assignment is effected (as the
same may be reduced any time or from time to time pursuant to this Agreement).
 
“Term Commitment Termination Date” means the earliest to occur of (a) February
29, 2012, (b) the date of termination of the Term Commitments in accordance with
the terms of the Financing Documents and (c) the first date on which all
outstanding principal of, interest on and all other amounts outstanding in
respect of the Term Loans shall have been paid in full.
 
“Term Loan” means each Loan (including each Termed-Out Loan) made by a Lender to
the Borrower pursuant to Section 2.01(b).
 
“Term Maturity Date” means February 28, 2019; provided, if such day is not a
Business Day, the Term Maturity Date shall be the immediately preceding Business
Day.
 
“Term Notes” means, collectively, Amended and Restated Term Notes and Initial
Term Notes.
 
“Term-Out” means, with respect to any Term Loan, the conversion and continuation
of such Term Loan as a Termed-Out Loan in accordance with Section 2.01(b)(ii) on
the Term Commitment Termination Date.  The term “Term-Out” used as a verb shall
have a correlative meaning.
 
 
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“Term-Out Date” means February 29, 2012 (provided, if such day is not a Business
Day, the Term-Out Date shall be the immediately preceding Business Day).
 
“Termed-Out Loan” has the meaning set forth in Section 2.01(b)(ii).
 
“Trademark Security Agreement” means the Trademark Security Agreement dated as
of the date hereof executed by the Obligor(s) party thereto in favor of the
Lender.
 
 “UCC” means the Uniform Commercial Code as in effect from time to time in The
Commonwealth of Massachusetts; provided that, if perfection or the effect of
perfection or non-perfection or the priority of any security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than The Commonwealth of Massachusetts, “UCC” means the
Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.
 
“Unfinanced Capital Expenditures” means for any period, Capital Expenditures for
such period other than (a) Capital Expenditures funded by proceeds of
Indebtedness (other than Revolving Loans) or equity issuances and (b) Capital
Expenditures financed by Capital Lease Obligations.
 
“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
 
“Unreimbursed Amount” has the meaning set forth in Section 2.08(f).
 
“US Copyright Office” means the United States Copyright Office.
 
“US PTO” means the United States Patent and Trademark Office.
 
“Wholly Owned Subsidiary” means, with respect to any Person, any corporation,
partnership or other entity of which all (other than directors’ qualifying
shares and the like) of the equity securities or other ownership interests
(other than, in the case of a corporation, directors’ qualifying shares) are
directly or indirectly owned or controlled by such Person or one or more Wholly
Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned
Subsidiaries of such Person.
 
Section 1.02    Principles of Interpretation.  The following rules of usage
shall apply to this Agreement and the other Financing Documents (and each
appendix, schedule, exhibit and annex thereto) unless otherwise required by the
context or unless otherwise specified therein:
 
(a)    Definitions set forth herein or in any other Financing Document shall be
equally applicable to the singular and plural forms of the terms defined.
 
 
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(b)    References to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits in any Financing Document are references to
articles, sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits in or to such Financing Document (unless expressly provided otherwise
in such Financing Document).
 
(c)    Reference to any Financing Document shall include all schedules, annexes,
exhibits and appendices to such Financing Document.
 
(d)    The headings, subheadings and table of contents used in any Financing
Document are solely for convenience of reference, shall not constitute a part of
such Financing Document and shall not affect the meaning, construction or effect
of any provision thereof.
 
(e)     References to any Person in any Financing Document shall include such
Person, its successors and permitted assigns and transferees.
 
(f)     Reference to any agreement (including any Financing Document) or
Governmental Approval in any Financing Document means such agreement as amended,
supplemented or otherwise modified from time to time in accordance with the
applicable provisions thereof or as required by any Governmental Requirement.
 
(g)    References to any law in any Financing Document includes any amendment or
modification to such law and any rules or regulations issued thereunder or any
law enacted in substitution or replacement thereof.
 
(h)    Words such as “hereunder”, “hereto”, “hereof” and “herein” and other
words of like import used in any Financing Document shall, unless the context
clearly indicates to the contrary, refer to the whole of such Financing Document
and not to any particular article, section, subsection, paragraph or clause
thereof.
 
(i)     References to “including” in any Financing Document means including
without limiting the generality of any description preceding such term.
 
(j)     Each of the parties to one or more Financing Documents and their counsel
have reviewed and revised, or requested revisions to, such Financing Document,
and the usual rule of construction that any ambiguities are to be resolved
against the drafting party shall be inapplicable in the interpretation of such
Financing Document and any amendments or exhibits hereto.
 
Section 1.03    Accounting Terms.  For purposes of Section 8.14, GAAP shall be
determined on the basis of such principles in effect on the date hereof and
consistent with those used in the preparation of the most recent audited
financial statements of the Borrower referred to in Section 6.04(a).  In the
event that any “Accounting Change” (as defined below) shall occur and such
change results in a change in the method of calculation of financial covenants,
standards or terms, or other covenants directly affected by such Accounting
Changes, in this Agreement, then the Borrower and the Administrative Agent agree
to enter into negotiations in order to amend such provisions of this Agreement
so as to equitably reflect such Accounting Changes with the desired result that
the criteria for evaluating the Borrower’s financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been
made.  Until such time as such an amendment shall have been executed and
delivered by the Borrower, the Administrative Agent and the Majority Lenders,
all financial covenants, standards and terms in this Agreement shall continue to
be calculated or construed as if such Accounting Changes had not
occurred.  “Accounting Changes” refers to changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants, the Public Borrower Accounting Oversight Board or,
if applicable, the SEC.
 
 
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Section 1.04    LC Amounts.     Unless otherwise specified herein, the amount of
an LC at any time shall be deemed to be the stated amount of such LC in effect
at such time; provided, however, that with respect to any LC that, by its terms
or the terms of any LC Document related thereto, provides for one or more
automatic increases in the stated amount thereof, the amount of such LC shall be
deemed to be the maximum stated amount of such LC after giving effect to all
such increases that are in effect at such time.
 
ARTICLE II

 
THE CREDITS
 
Section 2.01    The Commitments.
 
(a)    Revolving Loans.  Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make Revolving Loans to the Borrower from time
to time, on any Business Day on or before the Revolving Commitment Termination
Date, in an aggregate principal amount that will not result in (i) the
outstanding amount of such Lender’s Revolving Exposure exceeding such Lender’s
Revolving Commitment or (ii) the aggregate outstanding amount of all Lenders’
Revolving Exposures exceeding the lesser of (A) the Maximum Revolver Amount and
(B) the Borrowing Base then in effect (based on the most recent Borrowing Base
Certificate required to be delivered hereunder).  The Lenders shall have no
obligation to make Revolving Loans hereunder to the extent such additional
Revolving Loans would cause the aggregate Revolving Exposures of all Lenders to
exceed the availability limits described in this Section.  Within the foregoing
limits, and subject to Sections 5.01 and 5.02, the Borrower may borrow, prepay
and reborrow Revolving Loans.
 
(b)    Term Loans.
 
(i)       Subject to the terms and conditions of this Agreement and the other
Financing Documents, each Lender severally agrees to make up to four Term Loans
to the Borrower from time to time, on any Business Day prior to the Term
Commitment Termination Date, in an aggregate principal amount up to but not
exceeding such Lender’s Term Commitment; provided, that (i) the amount of any
Term Borrowing applied to finance an Acquisition permitted under Section 8.08(b)
shall not exceed 60% of the Adjusted Acquisition Consideration for such
Acquisition and (ii) the cumulative, aggregate principal amount of Term
Borrowings made to repurchase stock of the Borrower in compliance with Section
8.09(c) shall not exceed $10,000,000.  Each Term Borrowing shall consist of Term
Loans made simultaneously by the Lenders in accordance with their respective
Percentages.  Amounts prepaid or repaid in respect of any Term Loan may not be
reborrowed.
 
 
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(ii)      Term-Out.  Each Lender agrees, on the terms and conditions of this
Agreement, to Term-Out its Term Loans outstanding on the Term-Out Date, and to
convert and continue all of its Term Loans outstanding on the Term-Out Date into
a single Term Loan (such Termed-Out Term Loans and such continued Term Loan made
pursuant to this paragraph, the “Termed-Out Loan”), to the Borrower on the
Term-Out Date in a principal  amount equal to the aggregate principal amount of
such Lender’s Term Loans outstanding on the Term-Out Date immediately before
such Term-Out.  Each such Term-Out of Term Loans shall be deemed to be a Term
Borrowing for all purposes of this Agreement; provided, that Term Loans that are
Termed-Out shall not be deemed to be repaid or discharged but shall be deemed to
be continued as a Termed-Out Loan as provided hereby.  Amounts Termed-Out,
prepaid or repaid in respect of Termed-Out Loans may not be reborrowed.
 
(c)    Termination and Reduction of Commitments.  Unless previously terminated,
(i) the Revolving Commitments shall automatically terminate on the Revolving
Commitment Termination Date and (ii) the Term Commitments shall automatically
terminate on the Term Commitment Termination Date.  Any termination of the
Commitments shall be permanent.
 
(d)    Reserves; Eligibility.  Anything to the contrary in Section 2.01(a)
notwithstanding, the Majority Lenders (through the Administrative Agent) shall
have the right to establish reserves in such amounts, and with respect to such
matters, as the Majority Lenders in their Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including reserves with
respect to (i) sums that the Borrower or any other Obligor is required to pay
(such as taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and has failed to pay
under this Agreement or any other Financing Document, and (ii) amounts owing by
the Borrower or any Subsidiary to any Person to the extent secured by a Lien on,
or trust over, any of the Collateral, which Lien or trust, in the Permitted
Discretion of the Majority Lenders likely would have a priority superior to the
Administrative Agent’s Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens
or trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral.  In addition to the
foregoing, the Majority Lenders shall have the right to have the Inventory
reappraised by a qualified appraisal company selected by the Administrative
Agent (with the approval of the Majority Lenders) from time to time after the
Closing Date for the purpose of redetermining the value of the Eligible
Inventory portion of the Collateral and, as a result, redetermining the
Borrowing Base.
 
Section 2.02    Loans and Funding.
 
(a)    General.  Each Loan shall be made as part of a Borrowing consisting of
Loans of the same Class made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class.
 
(b)    Minimum Amounts.  Each Revolving Borrowing shall be in an amount of
$100,000 or an integral multiple of $100,000 in excess thereof (or, if smaller,
in an amount equal to the entire unused balance of the aggregate Revolving
Commitments).
 
(c)    [reserved]
 
 
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(d)    The Loans made by each Lender shall be made and maintained at such
Lender’s Applicable Lending Office.
 
Section 2.03    Notice of Borrowings.
 
(a)    To request a Borrowing, the Borrower shall notify the Administrative
Agent of such request by telephone not later than 12:00 noon, Boston time, three
Business Days before the date of the proposed Borrowing.  Each such telephonic
Notice of Borrowing shall be irrevocable and shall be confirmed promptly by hand
delivery or facsimile to the Administrative Agent of a written Notice of
Borrowing in substantially the form of Exhibit B and signed by the Borrower
(each such telephonic and written notice, a “Notice of Borrowing”).
 
(b)    Such written Notice of Borrowing shall specify the following information
in compliance with Section 2.02:
 
(i)       the aggregate amount and Class of the requested Borrowing;
 
(ii)      the date of such Borrowing, which shall be a Business Day; and
 
(iii)     the location and number of the Borrower’s account to which funds are
to be disbursed.
 
Section 2.04    Notice to Lenders; Funding of Borrowings.
 
(a)    Promptly after receipt of a Notice of Borrowing in accordance with
Section 2.03, the Administrative Agent shall advise each Lender of the contents
thereof and of the amount of such Lender’s Loan to be made by such Lender as
part of the requested Borrowing.
 
(b)    Each Lender shall make each Loan to be made by it under this Agreement on
the proposed date of such Loan by wire transfer of immediately available funds,
by 10:00 a.m. (Boston time), to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders.  Unless the
Administrative Agent determines that any applicable condition specified in
Article V has not been satisfied, the Administrative Agent will make the funds
so received from the Lenders available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower designated by
the Borrower in the applicable Notice of Borrowing.
 
Section 2.05    Several Obligations.  The amounts payable by the Borrower at any
time hereunder and under the Notes to each Lender shall be a separate and
independent debt.
 
Section 2.06    [Reserved].
 
Section 2.07    Notes; Records.
 
(a)    The Revolving Loans made by each Lender shall be evidenced by a single
promissory note of the Borrower (each, a “Revolving Note”) substantially in the
form of Exhibit A-1, dated the Closing Date, payable to such Lender in a
principal amount equal to the amount of its Revolving Commitment as originally
in effect and otherwise duly completed.
 
 
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(b)    The Term Loans made by each Lender pursuant to Section 2.01(b)(i) shall
be evidenced by a promissory note of the Borrower in substantially the form of
Exhibit A-2, dated the Closing Date, payable to such Lender in a principal
amount equal to the amount of such Term Loan and otherwise duly completed (an
“Initial Term Note”).  The Termed-Out Loan of each Lender pursuant to Section
2.01(b)(ii) shall be evidenced by an amended and restated promissory note of the
Borrower in substantially the form of Exhibit A-3, dated the Term-Out Date,
payable to such Lender in a principal amount equal to the amount of such
Termed-Out Loan and otherwise duly completed (an “Amended and Restated Term
Note”), which Amended and Restated Term Note of such Lender shall amend and
restate the Initial Term Notes of such Lender.
 
(c)    Each Lender shall maintain in accordance with its usual practice records
evidencing the indebtedness of the Borrower, including the date and amount of
each Loan of each Class made by such Lender to the Borrower, and each payment
made on account of the principal thereof.  The Administrative Agent shall
maintain records in which it shall record the amount of each Loan made
hereunder, the Class thereof, the amount of any principal or interest due and
payable, or to become due and payable, from the Borrower to each Lender under
this Agreement, the amount of any sum received by the Administrative Agent
hereunder for account of the Lenders and each Lender’s share thereof.  The
entries made in any Lender’s or the Administrative Agent’s records pursuant to
this Section 2.07(c) shall be conclusive evidence (absent manifest error) of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such records or
any error therein shall not affect in any manner the obligations of the Borrower
or any other Obligor to repay the Loans in accordance with this Agreement.
 
Section 2.08    Letters of Credit.
 
(a)    Subject to the terms and conditions set forth herein, in addition to the
Loans provided for in Section 2.01, the Borrower may request the LC Bank to
issue, from time to time from the Closing Date until the Revolving Commitment
Termination Date, LCs, in an aggregate face amount not exceeding the
availability limits set forth in Section 2.01(a) at any time, for the Borrower’s
account in such form as is acceptable to such LC Bank in its sole discretion;
provided that after giving effect to any issuance, extension or increase in the
amount, of any LC, (1) the Revolving Exposure of any Lender shall not exceed
such Lender’s Revolving Commitment and (2) the aggregate Revolving Exposures
shall not exceed the lesser of the Maximum Revolver Amount and the Borrowing
Base.  LCs issued hereunder (including the Existing LC) shall constitute
utilization of the Revolving Commitments.  The Existing LC shall be deemed to
have been issued pursuant hereto, and from and after the Closing Date shall be
subject to and governed by the terms and conditions hereof.
 
 
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(b)    To request the issuance of an LC (or the amendment, renewal or extension
of an outstanding LC), the Borrower shall deliver by courier or facsimile (or
transmit by electronic communication, if arrangements for doing so have been
approved by the LC Bank) to the LC Bank (reasonably in advance of the requested
date of issuance, amendment, renewal or extension) a notice requesting the
issuance of an LC, or identifying the LC to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be
a Business Day), the date on which such LC is to expire (which shall comply with
paragraph (d) of this Section), the amount of such LC, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such LC; provided, that the Existing LC shall be
renewed or extended in accordance with its terms.  If requested by the LC Bank,
the Borrower also shall submit an LC application on such LC Bank's standard form
in connection with any request for an LC. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the LC Bank relating to any
LC, the terms and conditions of this Agreement shall control.
 
(c)    An LC shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each LC the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the aggregate LC Exposure of the LC Bank
(determined for these purposes without giving effect to the participations
therein of the Lenders pursuant to paragraph (e) of this Section) shall not
exceed the availability limits specified in Section 2.01(a), and (ii) the total
Revolving Exposures shall not exceed the availability limits specified in
Section 2.01(a).
 
(d)    Each LC shall expire at or prior to the close of business on the earlier
of (i) the date twelve months after the date of the issuance of such LC (or, in
the case of any renewal or extension thereof, twelve months after the then
current expiration date of such LC, so long as such renewal or extension occurs
within three months of such then-current expiration date) and (ii) the date that
is five Business Days prior to the Revolving Commitment Termination Date;
provided, that the Existing LC shall expire or be renewed in accordance with its
terms.
 
 
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(e)    By the issuance of an LC (or an amendment to an LC increasing the amount
thereof) by the LC Bank, and without any further action on the part of such LC
Bank or the Lenders, such LC Bank hereby grants to each Lender, and each Lender
hereby acquires from such LC Bank, a participation in such LC equal to such
Lender's Percentage of the aggregate amount available to be drawn under such
LC.  Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of LCs is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including any amendment, renewal or extension of any LC or the occurrence and
continuance of a Default or reduction or termination of the Commitments.
 
In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
account of the LC Bank, such Lender's Percentage of each LC Disbursement made by
the LC Bank promptly upon the request of such LC Bank at any time from the time
of such LC Disbursement until such LC Disbursement is reimbursed by the Borrower
or at any time after any reimbursement payment is required to be refunded to the
Borrower for any reason.  Such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.  Each such payment shall be made
in the same manner as provided in Section 2.04(b) with respect to Loans made by
such Lender (and Section 2.04(b) shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to
the LC Bank the amounts so received by it from the Lenders. Promptly following
receipt by the Administrative Agent of any payment from the Borrower pursuant to
the next following paragraph, the Administrative Agent shall distribute such
payment to the LC Bank or, to the extent that the Lenders have made payments
pursuant to this paragraph to reimburse the LC Bank, then to such Lenders and
the LC Bank as their interests may appear.  Any payment made by a Lender
pursuant to this paragraph to reimburse the LC Bank for any LC Disbursement
shall not constitute a Loan and shall not relieve the Borrower of its obligation
to reimburse such LC Disbursement.
 
(f)     (1) If the LC Bank shall make any LC Disbursement in respect of an LC,
the Borrower shall reimburse such LC Bank in respect of such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement not
later than 12:00 noon, Boston time, on (i) the Business Day that the Borrower
receives notice of such LC Disbursement, if such notice is received prior to
10:00 a.m., Boston time, or (ii) the Business Day immediately following the day
that the Borrower receives such notice, if such notice is not received prior to
such time.  If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof (the “Unreimbursed
Amount”) and such Lender's Percentage thereof.  In such event, the Borrower
shall be deemed to have requested a Revolving Borrowing to be disbursed on the
date of any payment by the LC Bank of such LC Disbursement in an amount equal to
the Unreimbursed Amount, without regard to the minimum and multiples specified
in Section 2.02, but subject to the amount of the unutilized Revolving
Commitments and the conditions set forth in Section 5.02 (other than the
delivery of a Notice of Borrowing).  Any notice given by the LC Bank or the
Administrative Agent pursuant to this paragraph may be given by telephone if
immediately confirmed in writing; provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
 
(2)    Each Lender shall upon any notice pursuant to Section 2.08(f)(1) make
funds available to the Administrative Agent for the account of the LC Bank at
the Administrative Agent’s Office in an amount equal to its Percentage of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in
such notice by the Administrative Agent, whereupon, subject to the provisions of
Section 2.08(f)(3), each Lender that so makes funds available shall be deemed to
have made a Revolving Loan to the Borrower in such amount.  The Administrative
Agent shall remit the funds so received to the LC Bank.
 
 
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(3)    With respect to any Unreimbursed Amount that is not fully refinanced by a
Revolving Borrowing of Revolving Loans because the conditions set forth in
Section 5.02 cannot be satisfied or for any other reason, the Borrower shall be
deemed to have incurred from the LC Bank an LC Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which LC Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Post-Default Rate.  In such event, each Lender’s payment to the Administrative
Agent for the account of the LC Bank pursuant to Section 2.08(f)(2) shall be
deemed payment in respect of its participation in such LC Borrowing and shall
constitute a funding of such Lender’s participation in such LC Borrowing from
such Lender in satisfaction of its participation obligation under this Section
2.08.
 
(4)    Until each Lender funds its Revolving Loan or its participation in such
LC Borrowing pursuant to this Section 2.08(f) to reimburse the LC Bank for any
amount drawn under any LC, interest in respect of such Lender’s Percentage of
such amount shall be solely for the account of the LC Bank.
 
(5)    Each Lender’s obligation to make Revolving Loans or to fund its
participations in LC Borrowings to reimburse the LC Bank for amounts drawn under
LCs, as contemplated by this Section 2.08(f), shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such Lender may
have against the LC Bank, the Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, that each Lender’s obligation to make Revolving Loans pursuant to this
Section 2.08(f) is subject to the conditions set forth in Section 5.02 (other
than delivery by the Borrower of a Notice of Borrowing).  No such funding of a
participation in an LC Borrowing shall relieve or otherwise impair the
obligation of the Borrower to reimburse the LC Bank for the amount of any
payment made by the LC Bank under any LC, together with interest as provided
herein.
 
(6)    If any Lender fails to make available to the Administrative Agent for the
account of the LC Bank any amount required to be paid by such Lender pursuant to
the foregoing provisions of this Section 2.08(f) by the time specified in
Section 2.08(f)(2), the LC Bank shall be entitled to recover from such Lender
(acting through the Administrative Agent), on demand, such amount with interest
thereon for the period from the date such payment is required to the date on
which such payment is immediately available to the LC Bank at a rate per annum
equal to the greater of the Federal Funds Rate and a rate determined by the LC
Bank in accordance with banking industry rules on interbank compensation, plus
any administrative, processing or similar fees customarily charged by the LC
Bank in connection with the foregoing.  If such Lender pays such amount (with
interest and fees as aforesaid), the amount so paid shall constitute such
Lender’s Revolving Loan included in the relevant Revolving Borrowing or funding
of such Lender’s participation in respect of the relevant LC Borrowing, as the
case may be.  A certificate of the LC Bank submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this Section
2.08(f)(6) shall be conclusive absent manifest error.
 
 
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(7)    At any time after the LC Bank has made a payment under any LC and has
received from any Lender such Lender’s funding of its participation in any
related LC Borrowing in respect thereof in accordance with this Section 2.08(f),
if the Administrative Agent receives for the account of the LC Bank any payment
in respect of the related Unreimbursed Amount or interest thereon (whether
directly from the Borrower or otherwise, including proceeds of cover for LC
Exposure applied thereto by the Administrative Agent), the Administrative Agent
will distribute to such Lender its Percentage thereof in the same funds as those
received by the Administrative Agent.
 
(8)    If any payment received by the Administrative Agent for the account of
the LC Bank pursuant to Section 2.08(f)(1) is required to be returned under any
of the circumstances described in Section 12.08(e) (including pursuant to any
settlement entered into by the LC Bank in its discretion), each Lender shall pay
to the Administrative Agent for the account of the LC Bank its Percentage
thereof on demand of the Administrative Agent, plus interest thereon from the
date of such demand to the date such amount is returned by such Lender, at a
rate per annum equal to the Federal Funds Rate from time to time in effect.  The
obligations of the Lenders under this clause shall survive the payment in full
of the Secured Obligations and the termination of this Agreement.
 
(g)    The Borrower's obligation to reimburse LC Disbursements as provided in
paragraph (f) of this Section and to repay each LC Borrowing shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any LC, or any
term or provision therein, (ii) any draft or other document presented under an
LC proving to be forged, fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect, (iii) payment by the LC Bank
under an LC against presentation of a draft or other document that does not
comply strictly with the terms of such LC, and (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of the Borrower's obligations hereunder.
 
Neither the Administrative Agent, the Lenders nor the LC Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any LC by the LC Bank or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any LC (including any document required
to make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the LC Bank; provided
that the foregoing shall not be construed to excuse the LC Bank from liability
to the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
such LC Bank's gross negligence or willful misconduct when determining whether
drafts and other documents presented under an LC comply with the terms
thereof.  The parties hereto expressly agree that:
 
(i)     the LC Bank may accept documents that appear on their face to be in
substantial compliance with the terms of an LC without responsibility for
further investigation, regardless of any notice or information to the contrary,
and may make payment upon presentation of documents that appear on their face to
be in substantial compliance with the terms of such LC;
 
 
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(ii)    the LC Bank shall have the right, in its sole discretion, to decline to
accept such documents and to make such payment if such documents are not in
strict compliance with the terms of such LC; and
 
(iii)   this sentence shall establish the standard of care to be exercised by
the LC Bank when determining whether drafts and other documents presented under
an LC comply with the terms thereof (and the parties hereto hereby waive, to the
extent permitted by applicable law, any standard of care inconsistent with the
foregoing).
 
(h)    The LC Bank for any LC shall, within a reasonable time following its
receipt thereof, examine all documents purporting to represent a demand for
payment under such LC. Such LC Bank shall promptly after such examination notify
the Administrative Agent and the Borrower by telephone (confirmed by facsimile)
of such demand for payment and whether such LC Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse such
LC Bank and the Lenders with respect to any such LC Disbursement.
 
(i)     If the LC Bank for any LC shall make any LC Disbursement, then, unless
the Borrower shall reimburse such LC Disbursement in full on the date such LC
Disbursement is made, the unpaid amount thereof shall bear interest, for each
day from and including the date such LC Disbursement is made to but excluding
the date that the Borrower reimburses such LC Disbursement, at the rate per
annum then applicable to Revolving Loans; provided, if the Borrower fails to
reimburse such LC Disbursement when due pursuant to paragraph (f) of this
Section, then Section 3.02(b) shall apply.  Interest accrued pursuant to this
paragraph shall be for account of such LC Bank, except that interest accrued on
and after the date of payment by any Lender pursuant to paragraph (f) of this
Section to reimburse such LC Bank shall be for account of such Lender to the
extent of such payment.
 
(j)     The LC Bank may be replaced at any time by written agreement between the
Borrower, the Administrative Agent, the replaced LC Bank and the successor LC
Bank, which shall be a Lender or an Affiliate of a Lender.  The Administrative
Agent shall notify the Lenders of any such replacement of the LC Bank.  At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for account of the replaced LC Bank pursuant to Section
2.09(a).  From and after the effective date of any such replacement, (i) the
successor LC Bank shall have all the rights and obligations of the replaced LC
Bank under this Agreement with respect to LCs to be issued by it thereafter and
(ii) references herein to the term "LC Bank" shall be deemed to include such
successor or any previous LC Bank, or such successor and all previous LC Banks,
as the context shall require.  After the replacement of the LC Bank hereunder,
the replaced LC Bank shall remain a party hereto and shall continue to have all
the rights and obligations of the LC Bank under this Agreement with respect to
LCs issued by it prior to such replacement, but shall not be required to issue
additional LCs.
 
 
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(k)    If either (i) an Event of Default shall occur and be continuing and the
Borrower receives notice from the Administrative Agent or the Majority Lenders
(or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure
representing more than 50% of the total LC Exposure) demanding the deposit of
cash collateral pursuant to this paragraph, or (ii) the Borrower shall be
required to provide cover for LC Exposure pursuant to Section 3.04, the Borrower
shall immediately deposit into the Collateral Account an amount in cash equal
to, in the case of an Event of Default, the LC Exposure as of such date plus any
accrued and unpaid interest thereon and, in the case of cover pursuant to
Section 3.04, the amount required under Section 3.04; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in Section 9.01(h), (i) or (j).  Such deposit
shall be held by the Administrative Agent in the Collateral Account as
collateral in the first instance for the LC Exposure under this Agreement and
thereafter for the payment of the "Secured Obligations" under and as defined in
the Security Agreement, and for these purposes the Borrower hereby grants a
security interest to the Administrative Agent for the benefit of the Lenders in
the Collateral Account and in any financial assets (as defined in the UCC) or
other property held therein.
 
(l)     Unless otherwise expressly agreed by the LC Bank and the Borrower when
an LC is issued (including any such agreement applicable to the Existing LC),
the rules of the “International Standby Practices 1998” published by the
Institute of International Banking Law & Practice, Inc. (or such later version
thereof as may be in effect at the time of issuance) shall apply to each standby
LC.
 
(m)   The LC Bank shall act on behalf of the Lenders with respect to any LCs
issued by it and the documents associated therewith, and the LC Bank shall have
all of the benefits and immunities (A) provided to the Administrative Agent in
Article XI with respect to any acts taken or omissions suffered by the LC Bank
in connection with LCs of Credit issued by it or proposed to be issued by it and
Issuer Documents pertaining to such LCs as fully as if the term “Administrative
Agent” as used in Article XI included the LC Bank with respect to such acts or
omissions, and (B) as additionally provided herein with respect to the LC Bank.
 
 
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Section 2.09    Fees.
 
(a)    LC Fees.  The Borrower agrees to pay (i) to the Administrative Agent for
account of each Lender a participation fee with respect to its participations in
LCs, which shall accrue at 1.0% per annum on the average daily amount of such
Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed
LC Disbursements) during the period from and including the Closing Date to but
excluding the later of the date on which such Lender's Revolving Credit
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) to the LC Bank a fronting fee, which shall accrue at the rate
or rates per annum separately agreed upon between the Borrower and the LC Bank
on the average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Closing Date to but excluding the later of the date of termination
of the Revolving Commitments and the date on which there ceases to be any LC
Exposure, as well as the LC Bank’s standard fees with respect to the issuance,
amendment, renewal or extension of any LC or processing of drawings thereunder.
Participation fees and fronting fees accrued through and including each
Quarterly Date shall be payable on the third Business Day following such
Quarterly Date, commencing on the first such date to occur after the Closing
Date; provided that all such fees shall be payable on the date on which the
Revolving Commitments terminate and any such fees accruing after the date on
which the Revolving Commitments terminate shall be payable on demand.  Any other
fees payable to the LC Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
 
(b)    Early Termination Fees.
 
(i)       If the Borrower prepays the Term Loans in full by refinancing the Term
Loans in full with any lender(s) other than Middlesex or Commerce Bank, prior to
the stated maturity of the Term Loans, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual agreement of the parties
as to a reasonable calculation of such Lenders’ lost profits as a result
thereof, Borrower agrees to pay to the Administrative Agent for account of
Middlesex and/or Commerce Bank, in each case to the extent that Middlesex or
Commerce Bank, respectively, has outstanding Term Loans at the time of such
prepayment and will not be a lender party to such refinancing, upon the
effective date of such prepayment, an early termination fee in the amount set
forth below if such prepayment is effective in the period indicated:
 

   
Amount
 
Period
         
(1)
 
3.00% of the aggregate outstanding principal amount of the Term Loans held by
Middlesex or Commerce Bank, as applicable
 
From the date hereof to and including the first anniversary of the date of this
Agreement.
         
(2)
 
2.00% of the aggregate outstanding principal amount of the Term Loans held by
Middlesex or Commerce Bank, as applicable
 
From the first anniversary of the date of this Agreement to and including the
second anniversary of the date of this Agreement.

 
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(3)
 
1.00% of the aggregate outstanding principal amount of the Term Loans held by
Middlesex or Commerce Bank, as applicable
 
From the second anniversary of the date of this Agreement to and including the
third anniversary of the date of this Agreement.

 
(ii)      All such early termination fees shall be presumed to be the amount of
damages sustained by the Lenders as a result of such early prepayment and
termination of the Term Loans and Borrower agrees that it is reasonable under
the circumstances currently existing.  The early termination fees provided for
in this Section shall be deemed included in the Secured Obligations.
 
(c)    Fee Letter.  The Borrower hereby agrees to pay the fees in the amounts
and in the manner specified in the Fee Letter.
 
(d)    Payment; Computation.  All fees payable under this Agreement shall be
paid on the dates due, in immediately available U.S. dollars, to the
Administrative Agent for distribution to the Lenders entitled thereto.  Fees
paid shall not be refundable under any circumstances.
 
ARTICLE III

 
PAYMENTS AND PREPAYMENTS
 
Section 3.01     Repayment of Loans.
 
(a)    Revolving Loans.  The Borrower hereby unconditionally promises to pay to
the Administrative Agent for account of the Lenders the entire outstanding
principal amount of the Revolving Loans, and all accrued but unpaid interest
thereon, on the Revolving Commitment Termination Date.
 
(b)    Term Loans.  The Borrower hereby unconditionally promises to pay to the
Administrative Agent for account of the Lenders the outstanding principal amount
of the Term Loans in eighty-four (84) consecutive installments, one such
installment payable on each Principal Payment Date, in the amounts set forth
under the column titled “Principal” on the schedules to the Amended and Restated
Term Notes; provided, that (1) such amounts may be reduced as set forth in
Section 3.01(d), (2) the entire outstanding principal amount of the Term Loans,
and all accrued but unpaid interest thereon, shall mature and be due and payable
in full on the Term Maturity Date and (3) the final installment shall be in an
amount equal to the then aggregate unpaid principal amount of and accrued but
unpaid interest on all Term Loans.
 
(c)    Voluntary and Mandatory Prepayments; Adjustment of Amortization
Schedules.  Voluntary and mandatory prepayments of the Loans shall be applied as
set forth in Section 3.04(f).
 
 
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Section 3.02     Interest.
 
(a)    The Borrower hereby unconditionally promises to pay to the Administrative
Agent for account of each Lender interest on the unpaid principal amount of each
Loan made by such Lender for the period from and including the date of such Loan
to but excluding the date such Loan shall be paid in full, at the following
rates per annum:
 
(i)       if such Loan is a Revolving Loan, the higher of (A) the Base Rate (as
in effect from time to time) plus the Applicable Margin and (B) three and 49/100
percent (3.49%) per annum;
 
(ii)      if such Loan is a Term Loan, during the period beginning on the date
such Term Loan is made to but excluding the Term Commitment Termination Date,
the higher of (A) the Base Rate (as in effect from time to time) plus the
Applicable Margin and (B) three and 49/100 percent (3.49%) per annum;
 
(iii)     if such Loan is a Term Loan, during the period beginning on the Term
Commitment Termination Date to but excluding the fifth anniversary of the Term
Commitment Termination Date, the higher (as determined once on the Term
Commitment Termination Date for the duration of such period) of (A) the
five-year Treasury rate plus three percent (3.00%) per annum and (B) five and
49/100 percent (5.49%) per annum; and
 
(iv)     if such Loan is a Term Loan, from and after the fifth anniversary of
the Term Commitment Termination Date, the Five-Year Reset Rate.
 
(b)    Notwithstanding the foregoing, the Borrower acknowledges and agrees that
if an Event of Default shall have occurred and be continuing, then at the option
of the Majority Lenders, the unpaid balance of all Loans shall bear interest, to
the fullest extent permitted by law, at an interest rate (the “Post-Default
Rate”) equal to 3% per annum above the interest rate then applicable to each
such Loan in effect on the day such Event of Default occurs, until such Event of
Default is cured or waived; provided, that if an Event of Default of the kind
referred to in Sections 9.01(h), (i) or (j) occurs and is continuing, then the
unpaid balance of all Loans shall automatically bear such additional
Post-Default Rate interest, without the need for any notice or election by the
Majority Lenders or Administrative Agent.  The Borrower hereby unconditionally
agrees to pay to the Administrative Agent for account of each Lender interest at
the applicable Post-Default Rate as specified in this paragraph from time to
time on demand.
 
(c)    Accrued and unpaid interest on each Loan shall be payable (i) monthly in
arrears on the first day of each calendar month, and on the Revolving Commitment
Termination Date, Term Commitment Termination Date and Maturity Dates, and (ii)
upon the payment or prepayment thereof (as to the principal amount paid or
prepaid); provided, that interest payable at the Post-Default Rate shall be
payable on demand.
 
(d)    Whenever any amount of principal of a Loan or of interest on a Loan that
is due and payable hereunder is not paid when due, the Majority Lenders may
elect to charge, and the Borrower shall pay to the Administrative Agent for
account of each Lender, in addition thereto a late charge equal to four percent
(4%) of such past due amount.  The Borrower shall pay the Administrative Agent
for account of each Lender such late charge on demand by Administrative Agent.
 
 
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(e)    The Administrative Agent shall notify the Borrower and the Lenders to
which such interest is payable of the determination of any interest rate
provided for herein or any change thereto promptly after such determination or
change.
 
(f)     Interest on the Loans shall be computed on the basis of a year of 360
days and actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable.
 
(g)    All agreements between the Obligors and the Lenders are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the Secured Obligations or otherwise, shall the
amount paid or agreed to be paid to the Lenders for the use or the forbearance
of the Secured Obligations exceed the maximum permissible under applicable
law.  As used herein, the term “applicable law” shall mean the law of The
Commonwealth of Massachusetts in effect as of the date hereof; provided, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then the Financing Documents shall be governed by such new law
as of its effective date.  In this regard, it is expressly agreed that it is the
intent of the Borrower and the Lenders in the execution, delivery and acceptance
of the Financing Documents to contract in strict compliance with the laws of The
Commonwealth of Massachusetts from time to time in effect.  If, under or from
any circumstances whatsoever, fulfillment of any provision of any Financing
Document at the time of performance of such provision shall be due, shall
involve transcending the limit of such validity prescribed by applicable law,
then the obligation to be fulfilled shall automatically be reduced to the limits
of such validity, and if under or from any circumstances whatsoever the Lenders
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance of the Secured Obligations and to the payment
of interest.  This provision shall control every other provision of the
Financing Documents.
 
Section 3.03     Optional Prepayments.
 
(a)    Subject to Section 3.05, the Borrower shall have the right to prepay any
Revolving Borrowing in whole or in part, at any time and from time to time,
without penalty or premium, provided that:
 
(i)       each partial, optional prepayment of the Revolving Borrowings shall be
in the minimum amount of $100,000 or an integral multiple of $100,000 in excess
thereof or, if less, the full outstanding balance on the Revolving Borrowings,
as applicable, in each case together with all accrued interest on the amount
prepaid through the date of prepayment; and
 
(ii)      prepayments of Revolving Borrowings shall be made upon at least one
(1) Business Day’s notice.
 
(b)    Subject to Section 3.05, the Borrower shall have the right to prepay any
Term Borrowing in whole or in part, at any time and from time to time, provided
that:
 
 
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(i)       each partial, optional prepayment of any Term Borrowing shall be in
the minimum amount of $500,000 or an integral multiple of $250,000 in excess
thereof or, if less, the full outstanding balance on such Term Borrowing,
together with all accrued interest on the amount prepaid through the date of
prepayment and, to the extent applicable, all fees payable under Section
2.08(b); and
 
(ii)      prepayments of any Term Borrowing shall be made upon at least one (1)
Business Day’s notice.
 
Section 3.04    Mandatory Prepayments.
 
(a)    Asset Sales.  Without limiting the obligation of the Borrower to obtain
the consent of the Majority Lenders pursuant to Section 8.04 to any Disposition
not otherwise permitted under this Agreement, not more than three Business Days
following the Borrower’s receipt of Net Cash Payments from any Disposition not
permitted under Section 8.04, the Borrower will deliver to the Administrative
Agent a certificate of a Responsible Officer, in form and substance reasonably
satisfactory to the Administrative Agent, of the amount of the Net Available
Proceeds of such Disposition and either (x) reinvest such Net Available Proceeds
within 180 days or (y) prepay the Loans and/or provide cover for LC Exposure as
specified in Section 2.08(k) (and/or if an Event of Default has occurred and is
continuing and the Majority Lenders’ so require at their option, the Revolving
Commitments shall be subject to automatic reduction as provided in Section
3.04(f)), in each case in an aggregate amount equal to 100% of the Net Available
Proceeds of such Disposition.
 
(b)    Insurance Proceeds.  In the event that the Net Available Proceeds of any
Casualty Event affecting any property of Borrower or any of its Subsidiaries
(herein, the “Current Casualty Event”), and of all prior Casualty Events as to
which a prepayment has not yet been made under this paragraph, shall exceed
$50,000 then, on or before the date 180 days after the receipt by Borrower of
the proceeds of any insurance, condemnation award or other compensation in
respect of the Current Casualty Event (or upon such earlier date as such
Borrower or such Subsidiary shall have determined not to repair or replace the
property affected by the Current Casualty Event), the Borrower shall either (x)
reinvest such Net Available Proceeds within said 180 days, or (y) prepay the
Loans and/or provide cover for LC Exposure as specified in Section 2.08(k)
(and/or if an Event of Default has occurred and is continuing and the Majority
Lenders’ so require at their option, the Revolving Commitments shall be subject
to automatic reduction as provided in Section 3.04(f)), in each case in an
aggregate amount equal to 100% of the Net Available Proceeds of the Current
Casualty Event and prior Casualty Events as to which such prepayment has not yet
been made under this paragraph, to the extent such Net Available Proceeds of a
prior Casualty Event have not been reinvested under this Section
3.04(b).  Nothing in this paragraph shall be deemed to limit any obligation of
the Borrower or any Subsidiary thereof pursuant to any Security Document to
remit to a collateral or similar account maintained by the Administrative Agent
the proceeds of any insurance, condemnation award or other compensation in
respect of any Casualty Event except as provided for in this clause (b).  In the
event of receipt by any Obligor of key man life insurance proceeds, if any,
promptly after receipt by the relevant insured party of proceeds of such
insurance, if not paid directly to the Administrative Agent, the Borrower shall
prepay the Loans and/or provide cover for LC Exposure as specified in Section
2.08(k) (and/or if an Event of Default has occurred and is continuing and the
Majority Lenders’ so require at their option, the Revolving Commitments shall be
subject to automatic reduction as provided in Section 3.04(f)), within 180 days
after such receipt, in each case in an aggregate amount equal to 100% (or such
lesser percentage as the Majority Lenders may elect in their sole discretion) of
such Life Insurance Proceeds.
 
 
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(c)    Equity Issuances.  Subject to the last paragraph of Section 9.01, upon
receipt by Borrower or any other Obligor of Net Available Proceeds of any Equity
Issuance during the pendency of an Event of Default, if an Event of Default has
occurred and is continuing, then if the Majority Lenders’ so require at their
option, the Borrower shall prepay the Loans (and/or provide cover for LC
Exposure as specified in Section 2.08(k)) and/or the Revolving Commitments shall
be subject to automatic reduction, in each case in an aggregate amount equal to
100% of the Net Available Proceeds thereof.
 
(d)    Change in Control.  Upon the occurrence of a Change in Control, the
Borrower shall prepay all Loans in full.
 
(e)    Excess Cash Flow; Acquisitions.  Within five Business Days after the date
by which annual financial statements are required to have been delivered
pursuant to Section 7.01(a), if the Consolidated Senior Leverage Ratio for and
as of the end of the fiscal year covered by such annual financial statements is
greater than 2.0 to 1.0 on a pro forma basis, after giving effect to any
Acquisitions (as if such Acquisitions had been made on the first day of such
fiscal year) and related outstanding Term Borrowings made during the fiscal year
covered by such financial statements, then the Borrower shall prepay the Term
Loans in an aggregate principal amount equal to the excess (if any) of (1) 25%
of Excess Cash Flow for the fiscal year covered by such financial statements
over (2) the aggregate principal amount of Term Loans prepaid pursuant to
Section 3.03(b) during such fiscal year.
 
(f)     Application.  Prepayments and/or reductions of Commitments pursuant to
this Section 3.04 shall be applied as follows:
 
1)           first, to prepay the Term Loans and principal repayment
installments thereof ratably in inverse order of maturity;
 
2)           second, after the payment in full of the Term Loans, to prepay the
outstanding LC Borrowings, and next to prepay the outstanding Revolving Loans
ratably and next, to provide cover for LC Exposure as specified in Section
2.08(k);
 
3)           third, after the payment in full of all Loans, if an Event of
Default has occurred and is continuing and if the Majority Lenders so require at
their option, to permanently reduce the aggregate amount of the Revolving
Commitments; and
 
4)           last, any amount remaining may be retained by the Borrower for use
in the ordinary course of its business.
 
 
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Upon the drawing of any LC that has been cash collateralized, the funds held as
cash collateral shall be applied (without any further action by or notice to or
from the Borrower or any other Obligor) to reimburse the LC Bank or the Lenders,
as applicable.
 
(g)    Mandatory Prepayments of Revolving Loans.
 
(i)       If, at any time or for any reason, the aggregate Revolving Exposure
exceeds the limitations set forth in Section 2.01(a) (an “Overadvance”), the
Borrower will forthwith (i) prepay the Revolving Loans, and (ii) if so requested
by the Majority Lenders, provide cover for LC Exposure as specified in Section
2.08(k), in an aggregate amount equal to such excess.
 
(ii)      In the event of any partial reduction or termination of the Revolving
Commitments, then (x) at or prior to the date of such reduction or termination,
the Administrative Agent shall notify the Borrower of the aggregate Revolving
Exposures of all Lenders after giving effect to such reduction or termination
(as the case may be) and (y) if such sum would exceed the total Revolving
Commitments after giving effect to such reduction or termination, then the
Borrower shall, on the date of such reduction or termination, (1) prepay the
Revolving Loans, and (2) if so requested by the Majority Lenders, provide cover
for LC Exposure as specified in Section 2.08(k), in an amount sufficient to
eliminate such excess.
 
Section 3.05     Notice of Prepayments.  The Borrower shall notify the
Administrative Agent by telephone, confirmed by facsimile, of any prepayment
under Section 3.04 not later than 12:00 p.m. (Boston time), on the Business Day
of such prepayment.  Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Borrowing or part thereof to be
prepaid and (for a mandatory prepayment) a reasonably detailed calculation of
the amount of such prepayment.  Promptly after receipt of any such prepayment
notice, the Administrative Agent shall advise the relevant Lenders of the
substance thereof.  Each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing.  Except as specified in Section
3.04(b), each prepayment of a Borrowing shall be applied as set forth in Section
3.04(f).  All prepayments shall be made together with accrued interest on the
principal amount prepaid to the extent required by Section 3.02 and prepayment
fees to the extent required by Section 2.09(b).
 
Section 3.06      [Intentionally Omitted]
 
Section 3.07      Payments Generally.
 
(a)    Payments by the Obligors.  All payments to be made by any Obligor shall
be made without condition or deduction for any counterclaim, defense, recoupment
or setoff.  Except to the extent otherwise provided herein or in any other
Financing Document, each Obligor shall make all payments of principal, interest
and other amounts to be made by such Obligor under the Financing Documents in
immediately available funds, without deduction, set-off or counterclaim, to the
Administrative Agent at the Administrative Agent’s Account (except as otherwise
expressly provided in this Agreement), prior to 12:00 noon (Boston time) on the
date when due.  Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon.  The
Administrative Agent shall distribute any such payments received by it for
account of any other Person to the appropriate recipient promptly following
receipt thereof.  All amounts owing under any Financing Document are payable in
U.S. dollars.  Except to the extent otherwise provided herein, if any payment
under any Financing Document shall be due on a day that is not a Business Day,
the date for payment shall be extended to the next succeeding Business Day and
interest thereon shall be payable for the period of such extension.
 
 
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(b)    Application of Insufficient Payments.  If at any time the Administrative
Agent does not receive sufficient funds to pay fully all amounts of principal,
interest and fees then due under the Financing Documents, such funds shall be
applied (i) first, to pay interest and fees then due under this Agreement,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, to pay principal
and unreimbursed LC Disbursements then due under this Agreement, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
 
(c)    Deductions by the Administrative Agent.  If any Lender shall fail to make
any payment required to be made by it pursuant to Section 2.04(b), 2.08(e) or
(f), or 3.07(d), then the Administrative Agent may, in its discretion, apply any
amounts thereafter received by the Administrative Agent for account of such
Lender to satisfy such Lender’s obligations under said Sections until all such
obligations are fully paid.
 
(d)    Non-Receipt of Funds by Administrative Agent.  Unless the Administrative
Agent shall have been notified by a Lender or any Obligor prior to the date on
which such notifying party is scheduled to make payment to the Administrative
Agent (in the case of a Lender) of the proceeds of a Loan to be made by it
hereunder or (in the case of such Obligor) a payment to the Administrative Agent
for the account of the Lenders or the LC Bank hereunder (each payment being
herein called a “Required Payment”), which notice shall be effective upon
receipt, that it does not intend to make the Required Payment to the
Administrative Agent, the Administrative Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient(s)
on such date and, if such Lender or such Obligor (as the case may be) has not in
fact made the Required Payment to the Administrative Agent, the recipient(s) of
such payment shall, on demand, repay to the Administrative Agent the amount so
made available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the
Administrative Agent until but excluding the date the Administrative Agent
recovers such amount at (1) in the case of a payment to be made by such Lender,
the greater of the Federal Funds Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily
charged by the Administrative Agent in connection with the foregoing, and (2) in
the case of a payment to be made by such Obligor, the interest rate applicable
to Revolving Loans.  If such Lender pays its share of the applicable Borrowing
to the Administrative Agent, then the amount so paid shall constitute such
Lender’s Loan included in such Borrowing.  A notice of the Administrative Agent
to any Lender or the Borrower with respect to any amount owing under this
paragraph shall be conclusive, absent manifest error.
 
 
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(e)  Obligations of Lenders Several.  The obligations of the Lenders hereunder
to make Loans, to fund participations in LCs and to make payments pursuant to
Section 12.03(c) are several and not joint.  The failure of any Lender to make
any Loan, to fund any such participation or to make any payment under Section
12.03 on any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Loan, to purchase
its participation or to make its payment under Section 12.03.
 
Section 3.08          Pro Rata Treatment.  Except to the extent otherwise
provided in this Agreement:
 
(a)           each Borrowing of a particular Class shall be made from the
relevant Lenders, each payment of LC fees under Section 2.09 shall be made for
account of the Lenders, and each termination or reduction of Commitments of a
particular Class shall be applied to the respective Commitments of such Class of
the relevant Lenders, ratably according to the amounts of their respective
Commitments of such Class;
 
(b)           each Borrowing of any Class shall be allocated ratably among the
relevant Lenders according to the amounts of their respective Commitments of
such Class, or their respective Loans of such Class that are to be included in
such Borrowing;
 
(c)           each payment or prepayment of principal of Loans by the Borrower
shall be made for account of the relevant Lenders ratably in accordance with
their respective unpaid principal amounts of the Loans of such Class held by
them; and
 
(d)           each payment of interest on the Loans by the Borrower shall be
made for account of the relevant Lenders ratably in accordance with the amounts
of interest on such Loans then due and payable to the respective Lenders.
 
Section 3.09          Lender Protective Advances.  The Borrower hereby
authorizes the Lenders, from time to time in the Lenders’ sole discretion, (i)
after the occurrence of a Default (but without constituting a waiver of such
Default), or (ii) at any time that any of the other applicable conditions
precedent set forth in Section 5.02 have not been satisfied, to make Revolving
Loans to the Borrower on behalf of the Lenders which the Lenders, in good faith,
determine are necessary (A) to preserve or protect the Collateral, or any
portion thereof, (B) to enhance the likelihood of repayment of the Secured
Obligations, or (C) to pay any other amount chargeable to the Borrower pursuant
to the terms of this Agreement, including costs, fees, and expenses (any of the
Revolving Loans described in this Section being hereinafter referred to as
“Lender Protective Advances”).  The Lender Protective Advances shall be
repayable on demand and secured by the Collateral, shall constitute Revolving
Loans and Secured Obligations hereunder, and shall bear interest at the same
rate as Revolving Loans.
 
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ARTICLE IV

 
SUBSIDIARY GUARANTEE
 
Section 4.01         The Guarantee.  The Guarantors hereby jointly and severally
guarantee (the “Subsidiary Guarantee”), each as a primary obligor and not merely
as a surety, to each Secured Party and its successors and assigns, the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the principal of and interest on the Loans made by the Lenders to,
and the Notes held by each Lender of, the Borrower, and the prompt payment and
performance of all other amounts and all other Secured Obligations from time to
time owing to any Lender or the other Secured Parties by any Obligor under any
Financing Document, any Secured Cash Management Agreement or any Secured Hedge
Agreement (including all renewals, extensions, amendments, refinancings and
other modifications thereof and all costs, attorneys’ fees and expenses incurred
by the Secured Parties in connection with the collection or enforcement thereof,
and including all such amounts which would become due but for the operation of
the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11
USC. §362(a), and the operation of Sections 502(b) and 506(b) of the United
States Bankruptcy Code, 11 USC §502(b) and §506(b) or under similar provisions
of applicable bankruptcy or insolvency laws of other relevant jurisdictions), in
each case strictly in accordance with the terms thereof (such obligations being
herein collectively called the “Guaranteed Obligations”).  The Guarantors hereby
further jointly and severally agree that if Borrower or any other Guarantor(s)
shall fail to pay in full when due (whether at stated maturity, by acceleration
or otherwise) any of the Guaranteed Obligations, the Guarantors will promptly
pay the same in cash and/or perform the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Guaranteed Obligations, the same will be promptly paid in full
when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.
 
Section 4.02         Obligations Unconditional.  The obligations of the
Guarantors under Section 4.01 are absolute and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the obligations of the Borrower or any other Obligor under this Agreement or
any other agreement or instrument referred to herein, or any substitution,
release or exchange of any other guarantee of or security for any of the
Guaranteed Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.02 that the obligations of the Guarantors
hereunder shall be absolute and unconditional, joint and several, under any and
all circumstances.  Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not alter
or impair the liability of the Guarantors hereunder, which shall remain absolute
and unconditional as described above:
 
(a)  at any time or from time to time, without notice to the Guarantors, the
time for any performance of or compliance with any of the Guaranteed Obligations
shall be extended, or such performance or compliance shall be waived;
 
(b)  any of the acts mentioned in any of the provisions of this Agreement or any
other agreement or instrument referred to herein shall be done or omitted;
 
(c)  the maturity of any of the Guaranteed Obligations shall be accelerated, or
any term, provision or condition of this Agreement or of the Guaranteed
Obligations shall be modified, supplemented, amended or restated in any respect,
or any right under this Agreement or any other agreement or instrument referred
to herein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in whole or
in part or otherwise dealt with; or
 
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(d)  any lien or security interest granted to, or in favor of, the
Administrative Agent or any other Secured Party as security for any of the
Guaranteed Obligations shall fail to be perfected.
 
The Guarantors hereby expressly waive diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the Administrative
Agent or any other Secured Party exhaust any right, power or remedy or proceed
against any Obligor under this Loan Agreement or any other agreement or
instrument referred to herein, or against any other Person under any other
guarantee of, or security for, any of the Guaranteed Obligations.
 
Section 4.03         Reinstatement.  The obligations of the Guarantors under
this Article shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of the Borrower or any other Obligor in
respect of the Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and the Guarantors
jointly and severally agree that they will indemnify the Lenders and other
Secured Parties on demand for all costs and expenses (including fees of counsel)
incurred by the Lenders or such other Secured Parties in connection with such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
 
Section 4.04         Subrogation.  Each Guarantor hereby agrees that until the
payment and satisfaction in full in cash of all Guaranteed Obligations (other
than inchoate, unasserted indemnity obligations that expressly survive
termination of the Financing Documents) and the expiration and termination of
the Commitments of the Lenders under this Agreement, it shall waive any claim
and shall not exercise any right or remedy arising by reason of any performance
by it of its guarantee in Section 4.01, whether by subrogation or otherwise,
against any Obligor or any other guarantor of any of the Guaranteed Obligations
or any security for any of the Guaranteed Obligations.  Any amount paid to any
Guarantor on account of any such subrogation rights prior to such payment,
satisfaction, expiration and termination shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid and turned over to the
Administrative Agent in the exact form received by such Guarantor (duly endorsed
in favor of the Administrative Agent, if required), to be credited and applied
against the Guaranteed Obligations, whether matured or unmatured.  In
furtherance of the foregoing, at all times prior to such payment, satisfaction,
expiration and termination, each Guarantor shall refrain from taking any action
or commencing any proceeding against any other Obligor (or its successors or
assigns, whether in connection with a bankruptcy proceeding or otherwise) to
recover any amounts in respect of payments made under this Article IV to the
Administrative Agent. Any claims against the Borrower or any other Obligor to
which any Guarantor may be or become entitled (including, without limitation,
claims by subrogation, contribution or otherwise by reason of any payment or
performance by any Guarantor in satisfaction and discharge, in whole or in part,
of the Guaranteed Obligations) shall be and hereby are made subject and
subordinate in full to the prior payment in full, in cash, and performance in
full of the Guaranteed Obligations (other than inchoate, unasserted indemnity
obligations that expressly survive termination of the Financing Documents).  If,
notwithstanding the foregoing, any amount shall be paid to any Guarantor by the
Borrower at any time, except as expressly permitted under this Agreement, such
Guarantor shall hold such amount in trust for the benefit of the Administrative
Agent and shall forthwith deliver to the Administrative Agent such amounts, with
any necessary endorsements, for application in reduction of the Guaranteed
Obligations in accordance with the terms hereof.
 
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Section 4.05         Remedies.  The Guarantors jointly and severally agree that,
as between the Guarantors and the Lenders, the obligations of the Borrower under
this Agreement may be declared to be forthwith due and payable as provided in
Article IX (and shall be deemed to have become automatically due and payable in
the circumstances provided in the penultimate paragraph of Article IX in case of
any event described in Section 9.01(h) or (i)) for purposes of Section 4.01
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable) as
against the Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Guarantors for purposes of Section 4.01.
 
Section 4.06          Instrument for the Payment of Money.  Each Guarantor
hereby acknowledges that the guarantee in this Article constitutes an instrument
for the payment of money.
 
Section 4.07          Continuing Guarantee.  The guarantee in this Article is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
 
Section 4.08          Rights of Contribution.  The Guarantors hereby agree, as
among themselves, that if any Guarantor shall become an Excess Funding Guarantor
(as defined below) by reason of the payment by such Guarantor of any Guaranteed
Obligations, each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the next sentence), pay to such Excess Funding
Guarantor an amount equal to such Guarantor’s Pro Rata Share (as defined below
and determined, for this purpose, without reference to the properties, debts and
liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined
below) in respect of such Guaranteed Obligations.  The payment obligation of a
Guarantor to any Excess Funding Guarantor under this Section shall be
subordinate and subject in right of payment to the prior payment in full in cash
of the obligations of such Guarantor under the other provisions of this Article
and of all other Secured Obligations (other than inchoate, unasserted indemnity
obligations that expressly survive termination of the Financing Documents), and
such Excess Funding Guarantor shall not exercise any right or remedy with
respect to such excess until payment and satisfaction in full in cash of all of
the Secured Obligations (other than inchoate, unasserted indemnity obligations
that expressly survive termination of the Financing Documents).
 
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For purposes of this Section, (i) “Excess Funding Guarantor” means, in respect
of any Guaranteed Obligations, a Guarantor that has paid an amount in excess of
its Pro Rata Share of such Guaranteed Obligations, (ii) “Excess Payment” means,
in respect of any Guaranteed Obligations, the amount paid by an Excess Funding
Guarantor in excess of its Pro Rata Share of such Guaranteed Obligations and
(iii) “Pro Rata Share” means, for any Guarantor, the ratio (expressed as a
percentage) of (x) the amount by which the aggregate present fair saleable value
of all properties of such Guarantor (excluding any Equity Interests of any other
Guarantor) exceeds the amount of all the debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder and any obligations of any
other Guarantor that have been Guaranteed by such Guarantor) to (y) the amount
by which the aggregate fair saleable value of all properties of all of the
Guarantors exceeds the amount of all the debts and liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities, but excluding
the obligations of the Borrower and the Guarantors hereunder and under the other
Financing Documents) of all of the Guarantors, determined (A) with respect to
any Guarantor that is a party hereto on the Closing Date, as of the Closing
Date, and (B) with respect to any other Guarantor, as of the date such Guarantor
becomes a Guarantor hereunder.
 
Section 4.09         General Limitation on Guarantee Obligations.  In any action
or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Guarantor under Section 4.01
would otherwise, taking into account the provisions of Section 4.08, be held or
determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability under Section
4.01, then, notwithstanding any other provision hereof to the contrary, the
amount of such liability shall, without any further action by such Guarantor,
any Lender, the Administrative Agent or any other Person, be automatically
limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
 
Section 4.10         Best Interests.  Each Obligor represents and warrants to
the Lenders and Administrative Agent that it is in the best interests of such
Obligor to enter into this Agreement inasmuch as the Obligors will, as a result
of proceeds of the Loans being made available hereunder for working capital and
other financing needs of the Borrower, derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrower by the Lenders
pursuant to this Agreement, and each Obligor agrees that the Lenders are relying
on this representation in agreeing to make Loans to the Borrower.
 
Section 4.11         Amendments to Financing Documents.  Without limiting any
other term of this Agreement, each Guarantor acknowledges and agrees with the
Secured Parties that the Secured Parties may, at any time and from time to time,
without notice to or consent of the Guarantors, but with consent of the Borrower
to the extent required by the terms of this Agreement, amend, restate, modify,
supplement, waive defaults or events of default, release collateral or any
Guarantor in whole or in part or take or forbear from taking any other action
whatsoever with respect to any Financing Document, and any such action or
inaction shall not impair as in any manner affect the validity or enforceability
of the Subsidiary Guaranty.
 
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Section 4.12        Joint and Several Obligations of Guarantors.  Each of the
Guarantors hereby accepts joint and several liability under the Financing
Documents in consideration of the financial accommodations to be provided to the
Borrower by the Lenders under the Financing Documents, for the mutual benefit,
directly and indirectly, of the Guarantors and in consideration of the
undertakings of the other Guarantors to accept joint and several liability for
the Guaranteed Obligations.  The provisions of Article IV shall apply, mutatis
mutandis, to such joint and several obligations of the Guarantors, with respect
to such obligations of the Borrower, as if (i) each reference therein to the
“Guarantors” or a “Guarantor” or the like shall be deemed to be a reference to
the “Borrower” and (ii) each reference therein to the “Borrower” shall be deemed
to be a reference to the “other Obligors”.  Each Guarantor represents and
warrants to the Lenders and other Secured Parties that such Guarantor is
currently informed of the financial condition of the Borrower and of all other
circumstances which a diligent inquiry would reveal and which bear upon the risk
of nonpayment of the Guaranteed Obligations.  Each Guarantor further represents
and warrants to the Lenders and other Secured Parties that such Guarantor has
read and fully understands the terms and conditions of the Financing
Documents.  Each Guarantor hereby covenants that such Guarantor will continue to
keep informed of the Borrower’s financial condition, the financial condition of
the other Guarantors, and of all other circumstances which bear upon the risk of
nonpayment or nonperformance of the Guaranteed Obligations.
 
ARTICLE V

 
CONDITIONS
 
Section 5.01         Initial Loans.  The effectiveness of this Agreement, and
the obligations of the Lenders and/or the LC Bank to make the first extension of
credit hereunder (whether as a Borrowing or by the issuance of an LC hereunder
(including the deemed issuance of the Existing LC hereunder)), are subject to
satisfaction of the following conditions precedent:
 
(a)  No Material Adverse Change.  Since September 30, 2010, no material adverse
change in the business, assets, liabilities (actual or contingent), condition
(financial or otherwise), operations, performance or properties of the Obligors,
taken as a whole, or of the Borrower, shall have occurred and be continuing on
the Closing Date.
 
(b)  Documents.  The Administrative Agent shall have received the following
documents, each of which shall be in form and substance reasonably satisfactory
to the Administrative Agent (and to the extent expressly specified below, to
each Lender), and each dated the Closing Date unless indicated otherwise:
 
(i)           Financing Documents.  The following Financing Documents, each duly
authorized, executed and delivered by all parties thereto and in full force and
effect.
 
 
1.
Loan Agreement

 
2.
Revolving Notes

 
3.
Initial Term Notes

 
4.
Security Agreement

 
5.
Patent Security Agreement

 
6.
Trademark Security Agreement

 
7.
Fee Letter

 
8.
Post-Closing Agreement

 
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(ii)         Corporate Documents.
 
1)           A certificate of a Secretary or a Responsible Officer of each
Obligor certifying (A) the names and true signatures of the officers of such
Obligor authorized to sign the Financing Documents and the other documents to be
delivered thereunder to which such Obligor is a party, (B) that attached thereto
are true and correct copies of the Certificate of Incorporation and By-laws, or
other constitutive documents, of such Obligor, and all amendments thereto, in
each case as in effect on the Closing Date, and (C) that attached thereto are
true and correct copies of the duly adopted resolutions of the board of
directors (or other equivalent governing body) of such Obligor approving or
ratifying the Financing Documents to which such Obligor is a party and the
transactions contemplated thereby, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect.
 
2)           Certificates for each corporate Obligor with respect to the
existence (from the Secretary of State of its state of organization), foreign
qualification and good standing of each Obligor (where material in the case of
states other than an Obligor’s state of organization).
 
(iii)        Collateral.
 
1)           All documents, including acknowledgment copies of all financing
statements under the UCC, and copies of recent UCC, US PTO, US Copyright Office,
tax lien, judgment and litigation search reports, with respect to each Obligor
in each jurisdiction required by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create for
the benefit of the Secured Parties a valid, legal and first-priority perfected
Lien on the Collateral;
 
2)           from any Person holding any Lien (other than any Lien permitted
pursuant to the terms hereof) on any Collateral, such UCC termination
statements, mortgage releases or pay-off letters, releases of Liens on
intellectual property, releases of assignments of leases and rents, and other
instruments, each in proper form for recording, as the Administrative Agent may
reasonably request to release and terminate of record the Liens on any
Collateral;
 
3)           intellectual property documents in appropriate form for filing with
the US PTO and US Copyright Office;
 
4)           evidence that the Security Documents have been duly recorded and
filed in all places in the United States wherein such recording and filing are
necessary to perfect the Lien of the Secured Parties on the Collateral covered
thereby under the UCC; and
 
5)           evidence of the taking of all such other action as may be required
in order to perfect the Liens created under the Security Documents.
 
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(iv)           Officer’s Certificate.  A certificate, duly and properly executed
by a Responsible Officer of each Obligor and dated as of the Closing Date and
certifying as to, among other matters reasonably required by the Administrative
Agent, satisfaction of conditions set forth in Sections 5.01(b)(vii), 5.01(c),
5.01(d), 5.02(c) and 5.02(d), and in the second sentence of Section 5.02(e).
 
(v)            Borrowing Base Certificate.  A Borrowing Base Certificate, duly
and properly executed by a Responsible Officer of the Borrower, for the most
recently completed calendar month.
 
(vi)           Operating Budget.  An annual operating budget (which shall
include, without limitation, a projected balance sheet, income statement and
statement of cash flows) for the fiscal year ending September 30, 2011 of the
Borrower Group prepared on a monthly basis which shall set forth in reasonable
detail the assumptions underlying such budget.
 
(vii)          No Other Material Indebtedness.  After giving effect to the
transactions contemplated hereby, no Obligor shall have any material
Indebtedness outstanding other than the Loans hereunder, the guarantees thereof
and Capital Lease Obligations acceptable to the Lenders.
 
(viii)         Insurance.  Certificates as to coverage under the insurance
policies required under Section 7.06 and the Security Documents, which
certificates shall name the Administrative Agent, on behalf of the Secured
Parties, as an additional insured or loss payee, as the case may be, under all
insurance policies maintained with respect to the Properties of the Obligors
that constitute Pledged Collateral.
 
(ix)           Opinion of Counsel.  Opinion of Foley Hoag LLP, counsel to the
Obligors, addressed to the Lenders and Administrative Agent, as to matters
concerning the Obligors and the Financing Documents to which they are party as
the Administrative Agent may reasonably request.
 
(x)            Payment of Fees.  Evidence of payment of all fees due and payable
to the Lenders and Administrative Agent on or before the Closing Date, and all
reasonable out-pocket expenses required to be reimbursed or paid by the Borrower
(including the reasonable legal fees and expenses of Choate, Hall & Stewart LLP,
special counsel to the Administrative Agent) under any Financing Document.
 
(xi)           Other Documents.  Such other documents as the Administrative
Agent or special counsel to the Administrative Agent may reasonably request
prior to the date of this Agreement.
 
(c)  No Litigation.  There shall be no litigation, administrative proceeding,
governmental investigation or other legal or regulatory developments, actual or
threatened in writing, that, singly or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, or could materially and
adversely affect the ability of the Obligors to perform their respective
obligations under the Financing Documents, or the ability of the parties to
consummate the financings contemplated hereby.
 
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(d)  Requirements of Law.  The Lenders shall be satisfied that the Obligors and
their Subsidiaries shall be in full compliance with all material laws, including
Regulations T, U and X of the Board.
 
(e)  Governmental Approvals.  The Borrower shall have received all necessary
approvals from all material Governmental Authorities and from all Persons
required for the Borrower to consummate the borrowing of Loans on the Closing
Date and other transactions contemplated by the Financing Documents, and the
consummation of such transactions shall be in compliance with all Applicable
Laws.
 
Section 5.02         Conditions to Each Loan.  The obligation of any Lender to
make any Loan (other than the Term-Out of Term Loans pursuant to Section
2.01(b)(ii)), and of the LC Bank to issue, amend, renew or extend any LC, is
subject to satisfaction of the following conditions:
 
(a)  Notice of Borrowing; Borrowing Base Certificate.  The Administrative Agent
shall have received a Notice of Borrowing, duly executed and delivered in
accordance with Section 2.02, and (with respect to Revolving Loans or any LC) a
Borrowing Base Certificate for the then most recently completed calendar month,
duly executed and delivered in accordance with Section 7.01(e) or 5.01(b)(v), as
applicable.
 
(b)  Availability.  The total Revolving Exposures shall not exceed the
availability limits specified in Section 2.01 or 2.08, based in part on the
Borrowing Base reflected on the most recent Borrowing Base Certificate delivered
pursuant to Section 7.01(e).
 
(c)  Representations and Warranties.  The representations and warranties made by
each Obligor in the Financing Documents shall be true and correct in all
material respects (provided, that if any such representation warranty contains
any materiality qualification such as “in all material respects” or by referring
to a “Material Adverse Effect” or similar references, then such representation
and warranty shall be true and correct in all respects) on and as of the date of
such Loan or the date of such issuance, amendment, renewal or extension, as
applicable, with the same force and effect as if made on and as of such date
both before and after giving effect thereto, except to the extent that such
representations and warranties expressly relate to an earlier date.
 
(d)  No Default.  At the time of and immediately after giving effect to such
Loan or the issuance, amendment, renewal or extension of such LC, as applicable,
and the application of the proceeds thereof, no Default shall have occurred and
be continuing.
 
(e)  No Legal Bar.  No order, judgment or decree of any Governmental Authority
shall purport to bar any Lender from making any Loans to be made by it or the LC
Bank from issuing, amending, renewing or extending any LC, as applicable.  No
injunction or other restraining order binding on or applicable to any Obligor or
such Obligor’s Property shall have been issued or shall be pending with respect
to any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of, the
transactions contemplated by the Financing Documents.
 
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The delivery of a Notice of Borrowing, the acceptance by the Borrower of the
proceeds of each Loan, and each issuance, amendment, renewal or extension of an
LC, shall constitute a representation and warranty by the Borrower on the date
thereof that the conditions specified in this Section 5.02 (other than the first
sentence of Section 5.02(e)) have been satisfied.
 
ARTICLE VI
 
REPRESENTATIONS AND WARRANTIES
 
The Borrower represents and warrants to the Administrative Agent and the Lenders
that:
 
Section 6.01         Organization; Powers.  Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted, and is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect.
 
Section 6.02         Authorization; Enforceability.  The execution and delivery
by each of the Borrower and its Subsidiaries of, and performance of its
obligations under, the Financing Documents to which such Obligor is party, and
the consummation of the transactions contemplated thereby, are within such
Obligor’s corporate or equivalent powers and have been duly authorized by all
necessary corporate, partner, limited liability company and, if required, by all
necessary shareholder action.  This Agreement has been duly executed and
delivered by such Obligor and constitutes, and each of the other Financing
Documents to which it is a party when executed and delivered by such Obligor
will constitute, a legal, valid and binding obligation of such Obligor,
enforceable against such Obligor in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer, or similar laws of general
applicability affecting the enforcement of creditors’ rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
 
Section 6.03         Governmental Approvals; No Conflicts.  The execution and
delivery by each of the Borrower and its Subsidiaries of, and performance of
such Obligor’s obligations under, the Financing Documents to which such Obligor
is a party, and the consummation of the transactions contemplated thereby, do
not and will not (a) require any consent or approval of, registration or filing
with, or any other action by, any Governmental Authority or any other Person,
except for (i) such as have been obtained or made and disclosed in writing to
the Administrative Agent, and are in full force and effect, (ii) filing of UCC
continuation statements in respect of the Liens created pursuant to the Security
Documents, (iii) filing of intellectual property security filings outside the
United States in respect of the Liens created pursuant to the Security Documents
and (iv) filings with the SEC in connection with Borrower’s disclosure
obligations under federal securities laws, (b) contravene the charter, by-laws
or other organizational documents of such Obligor, (c) violate any Applicable
Law, (d) contravene, conflict with or result in a default under (i) any Material
Contract or any other indenture, material agreement or other material instrument
binding upon such Obligor or any of its Subsidiaries or their respective
Properties or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject,
or give rise to a right thereunder to require any payment to be made by any such
Person which could reasonably be expected to have a Material Adverse Effect, and
(e) except for the Liens created pursuant to the Security Documents, result in
the creation or imposition of any Lien on any asset of such Obligor or any of
its Subsidiaries.
 
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Section 6.04          Financial Condition; No Material Adverse Change; Solvency
 
(a)  Financial Condition.  The Borrower has heretofore furnished to the Lenders
the consolidated balance sheet and statements of income, stockholders’ equity
and cash flows of the Borrower and its Subsidiaries as of and for the period
ended September 30, 2010 audited by Mayer Hoffman McCann P.C., independent
public accountants.  Such financial statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of the Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Borrower and its Subsidiaries as of the date
thereof, including liabilities for taxes, material commitments and Indebtedness,
as and to the extent required by GAAP.
 
(b)  No Material Adverse Change.  Since September 30, 2010, there has been no
Material Adverse Effect.
 
(c)  Solvency.  The Borrower is, individually and together with its Subsidiaries
on a consolidated basis, Solvent.
 
Section 6.05          Properties.
 
(a)  Each of the Borrower and its Subsidiaries has good, legal and marketable
title to, or lawfully possesses valid and subsiding leasehold estate in and to,
all of its real and personal property and leasehold interests material to its
business, subject only to Liens permitted by Section 8.02 and except for minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties for their intended
purposes.
 
(b)  Each of the Borrower and its Subsidiaries owns, or is licensed or otherwise
has the right to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to and reasonably necessary for their respective
businesses, and to the best of Borrower’s knowledge, the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
 
Section 6.06          Litigation.
 
(a)  Except as set forth on Schedule 6.06, there are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority now pending
against or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened in writing against the Borrower or any of its Subsidiaries which (i)
have a reasonable prospect of being determined adversely against the Borrower or
any of its Subsidiaries and, if so adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect or (ii) involve in any manner adverse to the Secured Parties the
Financing Documents or the transactions contemplated thereby.
 
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(b)  Since the date of this Agreement, there has been no change in the status of
matters previously disclosed by the Borrower or any of its Subsidiaries to the
Lenders in writing that, individually or in the aggregate, has resulted in, or
could reasonably be expected to result in, a Material Adverse Effect.
 
Section 6.07          Environmental Matters.
 
(a)  Each of the Borrower and its Subsidiaries has obtained all environmental,
health and safety permits, licenses and other authorizations required under all
Environmental Laws to carry on its business as now being or as proposed to be
conducted, except to the extent failure to have any such permit, license or
authorization could not reasonably be expected to (either individually or in the
aggregate) have a Material Adverse Effect.  Each of such permits, licenses and
authorizations is in full force and effect and each of the Borrower and its
Subsidiaries is in compliance with the terms and conditions thereof, and is also
in compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except, in each case, to the extent failure
to comply therewith could not reasonably be expected to (either individually or
in the aggregate) have a Material Adverse Effect.  In addition, except as set
forth in Schedule 6.07:
 
(i)           None of the properties currently or formerly owned or operated by
any Obligor or any of its Subsidiaries is listed or proposed for listing on the
National Priorities List (“NPL”) under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (“CERCLA”), or on the
Comprehensive Environmental Response and Liability Information System, as
provided for by 40 C.F.R. § 300.5 (“CERCLIS”) or any analogous foreign, state or
local list or is adjacent to any such property; there are no and never have been
any underground or above-ground storage tanks or any surface impoundments,
septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or
have been treated, stored or disposed on any property currently owned or
operated by any Obligor or any of its Subsidiaries or, to the best of the
knowledge of the Obligors, on any property formerly owned or operated by any
Obligor or any of its Subsidiaries; there is no asbestos or asbestos-containing
material on any property currently owned or operated by any Obligor or any of
its Subsidiaries; and Hazardous Materials have not been released, discharged or
disposed of on any property currently or formerly owned or operated by any
Obligor or any of its Subsidiaries.
 
(ii)           Neither any Obligor nor any of its Subsidiaries is undertaking,
and has not completed, either individually or together with other potentially
responsible parties, any investigation or assessment or remedial or response
action relating to any actual or threatened release, discharge or disposal of
Hazardous Materials at any site, location or operation, either voluntarily or
pursuant to the order of any Governmental Authority or the requirements of any
Environmental Law, in each case that could reasonably be expected, individually
or in the aggregate, to result in a material liability to any Obligor or any of
its Subsidiaries; and all Hazardous Materials generated, used, treated, handled
or stored at, or transported to or from, any property currently or formerly
owned or operated by any Obligor or any of its Subsidiaries have been disposed
of in a manner not reasonably expected to result in material liability to any
Obligor or any of its Subsidiaries.
 
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(b)  No Liens have arisen under or pursuant to any Environmental Laws on any
site or facility owned, operated or leased by the Borrower or any of its
Subsidiaries, and, to the best of Borrower’s knowledge, no government action has
been taken or is in process that could subject any such site or facility to such
Liens, and neither the Borrower nor any of its Subsidiaries would be required to
place any notice or restriction relating to the presence of Hazardous Materials
at any site or facility owned by it in any deed to the real property on which
such site or facility is located.
 
(c)  All environmental investigations, studies, audits, tests, reviews or other
analyses conducted by or that are in the possession of the Borrower or any of
its Subsidiaries in relation to facts, circumstances or conditions at or
affecting any site or facility now or previously owned, operated or leased by
the Borrower or any of its Subsidiaries and that could reasonably be expected to
result in a Material Adverse Effect have been made available to the Lenders.
 
Section 6.08          Compliance with Laws and Agreements; No Defaults.
 
(a)  Each of the Borrower and its Subsidiaries is in compliance in all material
respects with all foreign, federal, state and local statutes, laws, ordinances,
judgments, decrees, orders and governmental rules, regulations, policies and
guidelines applicable to it.  Since September 30, 2010, neither the Borrower nor
any Subsidiary has received any notice from any Governmental Authority or any
other Person of any alleged violation or noncompliance except where failure to
be in compliance could not reasonably be expected to have a Material Adverse
Effect.   Neither the Borrower nor any Subsidiary thereof is in default under or
with respect to, or a party to, any contractual obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 
(b)  No Default has occurred and is continuing or would result from the
consummation of the transactions contemplated by this Agreement or any other
Financing Document.
 
Section 6.09          Investment Company Status.  Neither the Borrower nor any
of its Subsidiaries is an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940.
 
Section 6.10          Taxes.  The Borrower and its Subsidiaries have filed all
Federal, state and other material tax returns and reports required to be filed,
and except as disclosed in the Perfection Certificate on the date hereof (and
for which adequate reserves have been provided in accordance with GAAP), have
paid all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP.  There is no proposed tax
assessment against the Borrower or any Subsidiary that would, if made, have a
Material Adverse Effect.  On the date hereof, neither any Obligor nor any
Subsidiary thereof is party to any tax sharing agreement.  From and after the
date hereof, neither any Obligor nor any Subsidiary thereof is party to any tax
sharing agreement that results in or could reasonably be expected to result in a
Material Adverse Effect.
 
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Section 6.11          ERISA.
 
(a)  Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state laws.  Each Plan that
is intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification.  The Borrower and each ERISA Affiliate have
made all required contributions to each Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.
 
(b)  There are no pending or, to the best knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could reasonably be expected to have a Material Adverse
Effect.  There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.
 
(c)  (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
 
Section 6.12         Disclosure.  As of the date hereof, the Borrower has
disclosed to the Lenders all written agreements, instruments and corporate or
other restrictions to which it or any of its Subsidiaries or any other Obligor
is subject that, individually or in the aggregate, would reasonably be expected
to result in a Material Adverse Effect.  None of the reports, financial
statements, certificates or other written information furnished by or on behalf
of any Obligor to the Lenders in connection with the negotiation of this
Agreement and the other Financing Documents or delivered hereunder or thereunder
(as modified or supplemented by other information so furnished), taken as a
whole, contains any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, as of the date on which made, and
in the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, the Borrower
represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.
 
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Section 6.13         Margin Stock.  Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of
any extension of credit hereunder will be used to buy or carry any Margin Stock.
 
Section 6.14          Capitalization.  As of the date hereof, the Equity
Interests of the Borrower and its Subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable.
 
Section 6.15          Subsidiaries.
 
(a)  Set forth in Schedule 6.15(a) is a complete and correct list of all of the
Subsidiaries of the Borrower as of the date hereof, together with, for each such
Subsidiary, (i) the jurisdiction of organization of such Subsidiary, (ii) each
Person holding ownership interests in such Subsidiary and (iii) the nature of
the ownership interests held by each such Person and the percentage of ownership
of such Subsidiary represented by such ownership interests.
 
(b)  Except as disclosed in Schedule 6.15(b) and except to the extent expressly
permitted under Section 8.03 or 8.04 or as otherwise consented to by the
Majority Lenders in writing, (i) each of the Borrower and its Subsidiaries (if
applicable) owns, free and clear of Liens (other than Liens created pursuant to
the Security Documents and other Permitted Liens), and has the unencumbered
right to vote (subject to the terms of the Security Documents), all outstanding
ownership interests in each Person shown to be held by it in Schedule 6.15(b),
(ii) all of the issued and outstanding Equity Interests of each such Person
(excluding the Borrower) organized as a corporation is validly issued, fully
paid and nonassessable and (iii) there are no outstanding Equity Rights with
respect to such Person (excluding the Borrower) as of the date hereof, except
such as have been disclosed in the Borrower’s filings with the SEC in compliance
with applicable law.
 
Section 6.16          Investments; Deposit Accounts.  Set forth in Schedule 6.16
is a complete and correct list of all Investments (including deposit accounts,
demand deposit accounts or similar accounts) (other than Investments permitted
under Section 8.07(b) through (h)) held by the Borrower or any of its
Subsidiaries (or in which the Borrower or any of its Subsidiaries has any
interest) in any Person on the date hereof and, for each such Investment, (x)
the identity of the Person or Persons holding such Investment and (y) the nature
of such Investment.  Except as disclosed in Schedule 6.16, each of the Borrower
and its Subsidiaries owns, free and clear of all Liens (other than Liens created
pursuant to the Security Documents and Permitted Liens), all such Investments.
 
Section 6.17          Real Property.  Set forth on Schedule 6.17 is a list, as
of the date hereof, of all of the real property (including leasehold) interests
held by the Borrower or any of its Subsidiaries, indicating in each case whether
the respective property is owned or leased, the identity of the owner or lessee
and the location of the respective property.  
 
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Section 6.18         Material Indebtedness.  Schedule 6.18 is a complete and
correct list, as of the date hereof, of each credit agreement, loan agreement,
indenture, promissory note, guarantee, letter of credit or other arrangement
providing for or otherwise relating to any Indebtedness or any extension of
credit (or commitment for any extension of credit) to, or guarantee by, the
Borrower or any of its Subsidiaries outstanding on the date hereof the aggregate
principal or face amount of which equals or exceeds $100,000, and the aggregate
principal or face amount outstanding or that may become outstanding under each
such arrangement, in each case as of the date hereof, is correctly described in
Schedule 6.18.
 
Section 6.19         Material Liens.  Schedule 6.19 is a complete and correct
list, as of the date hereof, of each Lien securing Indebtedness of the Borrower
or any of its Subsidiaries (other than Liens created pursuant to the Security
Documents and Permitted Liens) outstanding on the date hereof the aggregate
principal or face amount of which equals or exceeds (or may equal or exceed)
$100,000 and covering any property of such Person, and the aggregate
Indebtedness secured (or that may be secured) by each such Lien and the property
covered by each such Lien, in each case as of the date hereof, is correctly
described in Schedule 6.19.
 
Section 6.20         Security Documents.  The Security Documents are effective
to create in favor of the Administrative Agent for the benefit of the Secured
Parties legal, valid and enforceable Liens on, and security interests in, all of
the Collateral purported to be covered thereby, and all necessary and
appropriate recordings and filings have been made in all necessary and
appropriate public offices, and all other necessary and appropriate action has
been taken, so that each such Security Document creates, in accordance with the
requirements of the Security Documents, a perfected Lien on and security
interest in all right, title, estate and interest of the Obligors in the
Collateral (with respect to Intellectual Property Collateral (used herein as
defined in the Security Agreement) and Equity Interests of foreign Subsidiaries,
to the extent that perfection is achieved by the filing of UCC financing
statements) covered thereby, prior and superior to all other Liens and subject
to no other Liens, in each case other than Permitted Liens.  When the Security
Agreement (or a short form thereof) is filed in the US PTO, and UCC financing
statements are filed in the applicable filing offices, and, with respect to
foreign Intellectual Property Collateral, appropriate filings are made in the
relevant foreign jurisdictions, the Liens created by the Security Agreement
shall constitute fully perfected Liens on, and security interests in, all right,
title and interest of the grantors thereunder in the Intellectual Property
Collateral, subject to no Liens other than Permitted Liens.
 
Section 6.21          Receivables; Inventory; Accounts.
 
(a)           Each Receivable reflected in the computations of Eligible Accounts
Receivables included in any Borrowing Base Certificate meets the criteria
enumerated in the definition of Eligible Accounts Receivables, except as
disclosed in such Borrowing Base Certificate or as disclosed in a timely manner
in a subsequent Borrowing Base Certificate or otherwise in writing to the
Administrative Agent.
 
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(b)           The Inventory reflected in the computations of Eligible Inventory
included in any Borrowing Base Certificate meets the criteria enumerated in the
definition of Eligible Inventory, except as disclosed in such Borrowing Base
Certificate or as disclosed in a timely manner in a subsequent Borrowing Base
Certificate or otherwise in writing to the Administrative Agent.  Unless
otherwise indicated in writing to the Administrative Agent (including any
Borrowing Base Certificate), (i) each Obligor has at all times maintained
correct and accurate records itemizing and describing the kind, type, quality
and quantity of Inventory in all material respects, such Obligor’s cost therefor
and daily withdrawals therefrom and additions thereto; (ii) each Obligor has not
removed any Eligible Inventory from the locations set forth or permitted in the
Financing Documents, except for sales of Inventory in the ordinary course of
such Obligor’s business and except to move Inventory directly from one location
set forth or permitted herein to another such location; (iii) such Eligible
Inventory has been produced, used, stored, shipped and maintained with all
reasonable care and caution and in accordance with applicable standards of
insurance and in conformity with applicable laws (including the requirements of
the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (iv) no Eligible Inventory has been
sold or shipped to any customer on consignment or approval, or any other basis
which entitles the customer to return or may obligate the Borrower or its
Subsidiaries  to repurchase such Inventory; and (v) all Eligible Inventory
consists of first quality saleable goods.
 
(c)           Schedule 6.21(c) lists all banks and other financial institutions
at which any Obligor maintains deposits and/or other accounts as of the date
hereof, and such Schedule correctly identifies the name, address and telephone
number of each depository, the name in which such account is held, a description
of the purpose of the account and the complete account number of such account,
in each case as of the date hereof.
 
Section 6.22         Anti-Terrorism Laws.  None of the Borrower or any of its
Subsidiaries is in violation of any Anti-Terrorism Laws.  No Obligor or, to the
best knowledge of any Obligor, any Affiliate, broker or any other agent of such
Obligor acting or benefiting in any capacity in connection with the Loans or
LCs, is any of the following:
 
(a)  a Person that is listed in the annex to, or is otherwise subject to, the
Executive Order;
 
(b)  a Person owned or controlled by, or acting for on behalf of, any Person
that is listed in the annex to, or is otherwise subject to, the Executive Order;
 
(c)  a Person with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;
 
(d)  a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order;
 
(e)  a Person that is named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control at its official website or any replacement
website or other official replacement publication of such list.
 
No Obligor and, to the knowledge of any Obligor, no Affiliate, broker or other
agent of such Obligor acting or benefiting in any capacity in connection with
the Loans or LCs (i) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any person
described in clauses (a) through (e) above, (ii) engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order or (iii) 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 Anti-Terrorism Law.
 
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ARTICLE VII

 
AFFIRMATIVE COVENANTS
 
So long as any of the Commitments are in effect and until payment in full in
cash of all Loans, all other Secured Obligations, and all other amounts payable
by the Obligors under the Financing Documents (other than inchoate, unasserted
indemnity obligations that expressly survive termination of the Financing
Documents):
 
Section 7.01          Financial Statements and Other Information.  The Borrower
will furnish to the Administrative Agent and each Lender:
 
(a)  within 120 days after the end of each fiscal year of the Borrower, the
audited consolidated balance sheet and related statements of operations,
stockholders equity and cash flows of the Borrower Group as of the end of and
for such year, setting forth in each case in comparative form the figures for
the previous fiscal year, all reported on by Mayer Hoffman McCann P.C., BDO or
other independent public accountants of recognized national standing (without a
“going concern” or like qualification or exception and without any qualification
or exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Borrower Group on a consolidated
basis in accordance with GAAP consistently applied;
 
(b)  within 50 days after the end of each of the first three fiscal quarters of
each fiscal year of the Borrower, the consolidated balance sheet and related
statements of operations and cash flows (including income statements) of the
Borrower Group as of the end of and for such fiscal quarter, and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for (or, in the case of the balance sheet, as of the end of)
the corresponding period or periods in the Borrower’s actual results of the
previous fiscal year, such consolidated statements to be certified by a
Responsible Officer of the Borrower as presenting fairly in all material
respects the financial condition and results of operations of the Borrower Group
on a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit and other adjustments and the absence of footnotes;
 
(c)  concurrently with any delivery of financial statements under clause (a) or
(b) of this Section, a Compliance Certificate of a Responsible Officer of the
Borrower, (i) certifying as to whether a Default has occurred and, if a Default
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Section 8.14 and (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
date of the audited financial statements referred to in Section 6.04 that has
affected such financial statements and, if any such change has occurred,
specifying the effect of such change on such financial statements;
 
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(d)  concurrently with any delivery of financial statements under clause (a) of
this Section, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default under Section
8.14 of this Agreement (which certificate may be limited or not delivered to the
extent required by accounting rules or guidelines or the policies of the
accounting firm);
 
(e)  as soon as available, but in any event within 20 days after the end of each
month, a Borrowing Base Certificate, including detailed accounts receivable
aging, accounts payable aging and inventory summary information, as at the end
of such month, duly certified by the chief executive officer, chief financial
officer, treasurer or controller of the Borrower;
 
(f)  within 60 days after the end of each fiscal year of the Borrower,
commencing with the fiscal year ending September 30, 2011, an annual operating
budget (which shall include, without limitation, a projected balance sheet,
income statement and statement of cash flows) for the next succeeding fiscal
year of the Borrower Group prepared on a quarterly basis which shall set forth
in reasonable detail the assumptions underlying such budget;
 
(g)  promptly after any request by the Administrative Agent or any Lender,
copies of any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the board of
directors) of any Obligor by independent accountants in connection with the
accounts or books of any Obligor or any of its Subsidiaries, or any audit of any
of them;
 
(h)  promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements, registration statements and other materials
filed by any member of the Borrower Group with the SEC, or any material
documents with any national securities exchange;
 
(i)  promptly, and in any event within five Business Days after receipt thereof
by any Obligor or any Subsidiary thereof, copies of each notice or other
correspondence received from the SEC (or comparable agency in any applicable
non-U.S. jurisdiction) concerning any investigation or possible investigation or
other inquiry by such agency regarding financial or other operational results of
any Obligor or any Subsidiary thereof; and
 
(j)  promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of any Obligor, or
compliance with the terms of any Financing Document, as the Lender may
reasonably request.
 
Documents required to be delivered pursuant to Section 7.01(a), (b) or (h) (to
the extent any such documents are included in materials otherwise filed with the
SEC) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date on which the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at the
Borrower’s website address provided pursuant to Section 12.01; provided
that:  (i) if such documents are not accessible from such Borrower’s website,
then the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender, and (ii) the Borrower shall notify
the Administrative Agent and each Lender (by facsimile or electronic mail) of
the posting of the documents required to be delivered pursuant to Section
7.01(a) and (b) and of any Form 8-Ks and, at the Administrative Agent’s request,
provide to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents.  The Administrative Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such documents.
 
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The Borrower hereby acknowledges that (a) the Administrative Agent will make
available to the Lenders and the LC Bank materials and/or information provided
by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”)
by delivering the Borrower Materials electronically using the Administrative
Agent’s customary procedures and (b) certain of the Lenders (each, a “Public
Lender”) may have personnel who do not wish to receive material non-public
information with respect to the Borrower or its Affiliates, or the respective
securities of any of the foregoing, and who may be engaged in investment and
other market-related activities with respect to such Persons’ securities.  The
Borrower hereby agrees that, at the Administrative Agent’s request, the Borrower
will use commercially reasonable efforts to identify that portion of the
Borrower Materials that may be distributed to the Public Lenders and that (w)
all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC”
which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently
on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the
Borrower shall be deemed to have authorized the Administrative Agent, the LC
Bank and the Lenders to treat such Borrower Materials as not containing any
material non-public information (although it may be sensitive and proprietary)
with respect to the Borrower or its securities for purposes of United States
Federal and state securities laws (provided, however, that to the extent such
Borrower Materials constitute Information, they shall be treated as set forth in
Section 12.12); (y) all Borrower Materials marked “PUBLIC” are permitted to be
made available through a portion of the Platform designated “Public Side
Information;” and (z) the Administrative Agent shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Side
Information.”  Notwithstanding the foregoing, the Borrower shall be under no
obligation to mark any Borrower Materials “PUBLIC”.
 
Section 7.02          Notices of Material Events.  Each Obligor will furnish to
the Administrative Agent and each Lender, promptly after obtaining knowledge of
same, written notice of the following:
 
(a)  the occurrence of any Default;
 
(b)  any matter that has resulted or, to a Responsible Officer’s knowledge,
could reasonably be expected to result in a Material Adverse Effect;
 
(c)  the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower Group in an aggregate amount exceeding $500,000;
 
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(d)  the assertion of any Environmental Claim by any Person against, or with
respect to the activities of, any Obligor or any Subsidiary thereof and any
alleged violation of or non-compliance with any Environmental Laws or any
permits, licenses or authorizations, other than any Environmental Claim or
alleged violation that could not (either individually or in the aggregate)
reasonably be expected to have a Material Adverse Effect;
 
(e)  any Disposition, Casualty Event, Equity Issuance or incurrence of
Indebtedness that would require a mandatory prepayment under Section 3.04
(excluding Dispositions pursuant to Section 8.04);
 
(f)  any material change in accounting policies or financial reporting practices
by the Borrower Group;
 
(g)  promptly after the furnishing thereof, copies of any default notices,
amendments, waivers, reservation of rights notices, or other material statements
furnished to or by any holder of Material Indebtedness or Subordinated Debt of
any Obligor or of any of the Borrower’s Subsidiaries pursuant to the terms of
any promissory note, indenture, loan or credit or similar agreement and not
otherwise required to be furnished to the Administrative Agent pursuant to
Section 7.01 or any other clause of this Section 7.02;
 
(h)  the receipt of any notice from any Person under any Material Contract
alleging any material default thereunder.
 
Each notice delivered under this Section shall be accompanied by a statement of
a Responsible Officer of the Borrower or applicable Obligor setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
 
Section 7.03         Existence: Conduct of Business.  Each Obligor will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises whose
loss would reasonably be expected to result in a Material Adverse Effect;
provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 8.03.
 
Section 7.04         Payment of Obligations.  Each Obligor will, and will cause
each of its Subsidiaries to, pay all income and other material taxes, rates,
assessments, fees, and governmental charges upon or against it or its property
but excluding de minimis non-tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) no proceedings to foreclose any Lien
which has attached as security therefore have commenced.
 
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Section 7.05          Maintenance of Properties; Inventory.
 
(a)  Each Obligor will, and will cause each of its Subsidiaries to, keep and
maintain all property material to the conduct of its business in working order
and condition, ordinary wear and tear and obsolete property and damage by
casualty excepted.
 
(b)  With respect to Inventory, the Borrower will, and will cause its
Subsidiaries to: (i) at all times maintain inventory records reasonably
satisfactory to the Administrative Agent, keeping materially correct and
accurate records itemizing and describing the kind, type, quality and quantity
of Inventory, Borrower’s cost therefor and daily withdrawals therefrom and
additions thereto; (ii) not remove any Eligible Inventory from the locations set
forth or permitted in the Financing Documents, without the prior written consent
of the Administrative Agent, which consent shall not be unreasonably denied or
delayed, except (A) for sales of Inventory in the ordinary course of business of
the Borrower and its Subsidiaries, (B) to move Inventory directly from one
location set forth or permitted herein to another such location and (C) to move
Inventory from a location that is subject to a force majeure event in order to
preserve such Inventory, so long as the Borrower delivers a Collateral Access
Agreement to the Administrative Agent for such new location within 30 days of
such move; (iii) produce, use, store, ship and maintain the Eligible Inventory
with all reasonable care and caution and in accordance with applicable standards
of insurance and in conformity with applicable laws (including the requirements
of the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (iv) not sell Eligible Inventory to any
customer on approval, or any other basis which entitles the customer to return
or may obligate the Borrower or any Subsidiary to repurchase such Inventory; (v)
shall keep the Eligible Inventory in first quality, saleable and marketable
condition; and (vi) not, without prior written consent of the Majority Lenders,
acquire or accept any Eligible Inventory on consignment or approval.
 
(c)  On July 1, 2011, and on the first Business Day in each February and July
thereafter, the Borrower will order UCC search results with respect to it and
its Subsidiaries in applicable jurisdictions, and deliver a copy of such search
results, promptly after receipt thereof, to the Administrative Agent.
 
Section 7.06          Insurance.
 
(a)  Each Obligor will, and will cause each of its Subsidiaries to, maintain,
with financially sound and reputable insurance companies not Affiliates of the
Borrower, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations.  Such insurance shall be written by financially
responsible companies selected by the Borrower and licensed to do business in
the jurisdiction in which the Collateral is located and having the highest or
second highest rating available from A. M. Best Company or an equivalent Person,
or by other companies otherwise acceptable to the Administrative Agent, and
(other than workers’ compensation) shall name the Administrative Agent as loss
payee (to the extent covering risk of loss or damage to tangible property other
than cargo coverage) and as an additional named insured as its interests may
appear (to the extent covering any other risk other than cargo coverage and
worker’s compensation insurance).  Such insurance shall provide that it will not
be canceled or reduced, or allowed to lapse without renewal, except after not
less than 30 days’ notice to the Administrative Agent.  The Borrower will advise
the Administrative Agent promptly of any policy cancellation, material reduction
or material amendment.
 
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(b)  On or before the Closing Date, the Borrower will deliver to the
Administrative Agent certificates of insurance reasonably satisfactory to the
Administrative Agent evidencing the existence of all insurance required to be
maintained by the Borrower hereunder setting forth the respective coverages,
limits of liability, carrier, policy number and period of coverage and showing
that such insurance will remain in effect through the September 30 next
succeeding the date hereof, subject only to the payment of premiums as they
become due.  Thereafter, (i) within 30 days after each September 30, the
Borrower will deliver to the Administrative Agent certificates of insurance
evidencing that all insurance required to be maintained by the Borrower
hereunder will be in effect through the following year, subject only to the
payment of premiums as they become due, and (ii) the Borrower will use its best
efforts to deliver to the Administrative Agent, within 60 days after each
September 30, copies of the insurance policies covering such following
year.  The Borrower will not obtain or carry separate insurance concurrent in
form or contributing in the event of loss with that required by this Section
unless the Administrative Agent is the named insured thereunder, with loss
payable as provided herein.  The Borrower will promptly notify the
Administrative Agent whenever any such separate insurance is obtained and shall
deliver to the Administrative Agent the certificates evidencing the same.
 
(c)  Without limiting the obligations of the Obligors under the foregoing
provisions of this Section, in the event an Obligor shall fail to maintain in
full force and effect insurance as required by the foregoing provisions of this
Section, then the Administrative Agent may, but shall have no obligation so to
do, upon 10 days’ prior written notice to the Borrower, procure insurance
covering the interests of the Secured Parties in such amounts and against such
risks as the Administrative Agent (or the Majority Lenders) shall deem
appropriate, and the Borrower shall reimburse the Administrative Agent in
respect of any premiums paid by the Administrative Agent in respect thereof.
 
Section 7.07         Books and Records: Inspection Rights.  Each Obligor will,
and will cause each of its Subsidiaries to, keep adequate books of record and
account in which full, true and correct entries are made of all material
dealings and transactions in relation to its business and activities.  Each
Obligor will, and will cause each of its Subsidiaries to, permit any
representatives of or designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Borrower; provided, that (a) so
long as no Event of Default exists, the Borrower shall not be required to pay
for more than one appraisal (including a field exam and inventory appraisal) in
any period of twelve consecutive months and (b) when an Event of Default exists
the Administrative Agent or any Lender (or any of its representatives or
designees) may do any of the foregoing at the expense of the Borrower at any
time during normal business hours and without advance notice.
 
Section 7.08          Compliance with Laws.  Each Obligor will, and will cause
each of its Subsidiaries to, comply in all material respects with all Applicable
Laws.
 
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Section 7.09          Use of Proceeds.  The proceeds of the Revolving Loans will
be used only for working capital and general corporate purposes of the Borrower,
including the payment of fees and expenses incurred in connection with the
Financing Documents.   The proceeds of the Revolving Loans will not be used to
finance any Acquisitions.  The proceeds of the Term Loans will be used only to
finance Acquisitions permitted under Section 8.08, stock repurchase permitted
under Section 8.09 and other general corporate purposes of the Borrower.  No
part of the proceeds of any Loan or LC credit extension will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations D, T, U and X.
 
Section 7.10          Certain Obligations Respecting Subsidiaries.
 
(a)  Guarantors.  Each Obligor will, and will cause each of its Subsidiaries to,
take such action from time to time as shall be necessary to ensure that all
United States domestic Subsidiaries of such Obligor are “Guarantors”
hereunder.  Without limiting the generality of the foregoing, in the event that
an Obligor or any of its Subsidiaries shall form or acquire any new United
States domestic Subsidiary that shall constitute a Subsidiary hereunder, such
Obligor will cause such new domestic Subsidiary to, within 30 days (or such
longer period as the Administrative Agent, in its sole discretion, may
designate) after such formation or acquisition:
 
(i)           become a “Guarantor” hereunder pursuant to a Guarantee Assumption
Agreement, and execute joinders to the Security Agreement and other Security
Documents thereby granting the Administrative Agent a first priority lien on all
of such Guarantor’s assets (other than Equity Interests in any foreign
Subsidiary of such Guarantor, which shall be governed by Section 7.10(b)) as
collateral security for the Guaranteed Obligations, in form and substance
reasonably satisfactory to the Administrative Agent;
 
(ii)           cause such new United States domestic Subsidiary to take such
action (including delivering such certificates evidencing such Equity Interests,
executing and delivering such UCC financing statements and, if the fair market
value of such real property is equal to or greater than $1,000,000, subject to
the following proviso, executing and delivering mortgages or deeds of trust
covering the real property and fixtures owned or leased by such Subsidiary) as
shall be necessary to create and perfect valid and enforceable first-priority
Liens on substantially all of the property of such new Subsidiary as collateral
security for the obligations of such new Subsidiary under the Financing
Documents; provided, that this clause (ii) shall not apply to real property of
such new Subsidiary acquired pursuant to an Acquisition permitted under Section
8.08(b) if (A) such real property is encumbered by an existing mortgage that is
not refinanced by Middlesex, (B) such existing mortgage lender’s security
interest is restricted to only the real property of such new Subsidiary and does
not, in the Majority Lenders’ judgment, conflict with the Administrative Agent’s
Liens granted under the Financing Documents and (C) the Borrower delivers such
Collateral Access Agreements and other Security Documents as the Majority
Lenders or Administrative Agent may reasonably request; and
 
(iii)           deliver such proof of corporate action, incumbency of officers,
opinions of counsel and other documents as is consistent with those delivered by
each Obligor pursuant to Section 5.01 on the Closing Date or as the
Administrative Agent shall have reasonably requested, all in form and substance
reasonably satisfactory to the Administrative Agent.
 
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(b)  Non-US Subsidiaries.  In the event that any Obligor shall form or acquire
any new, first-tier foreign Subsidiary, such Obligor will, and will cause such
new foreign Subsidiary to, within 30 days (or such longer period as the
Administrative Agent, in its sole discretion, may designate) after such
formation or acquisition, (i) take such action (including delivering applicable
Security Certificates (as such term is defined in the Security Agreement)) as
shall be necessary or, in the Majority Lenders’ discretion, advisable to create
and perfect a valid and enforceable first-priority Lien in favor of the
Administrative Agent on 66-2/3% of the equity interests of such new Subsidiary
as collateral security for the Secured Obligations (provided that (A) so long as
no Event of Default has occurred and is continuing, no foreign law-governed
security and/or pledge agreements shall be required for such equity interests
unless the total assets of such foreign Subsidiaries that are not so subject to
such security and /or pledge agreements exceeds, individually or in the
aggregate, $3,000,000 and (B) if an Event of Default has occurred and is
continuing, then the Administrative Agent may require the Obligors to obtain
such foreign-law governed security and/or pledge agreements for up to 66-2/3% of
the equity interests of such foreign Subsidiaries as the Administrative Agent
may designate) and (ii) deliver such proof of corporate (or similar) action,
incumbency of officers, opinions of counsel and other documents as is consistent
with those delivered by each Obligor pursuant to Section 5.01 on the Closing
Date or as the Administrative Agent shall have requested.
 
(c)  Ownership of Subsidiaries.  Each Obligor will, and will cause each of its
Subsidiaries to, take such action from time to time as shall be necessary to
ensure that each of its Subsidiaries is a Wholly Owned Subsidiary (except as
otherwise permitted in this Agreement).  In the event that any additional Equity
Interests shall be issued by any Subsidiary, subject to Section 7.10(b), the
respective Obligor agrees forthwith to deliver to the Administrative Agent
pursuant to the applicable Financing Document the certificates evidencing such
Equity Interests, accompanied by undated stock powers executed in blank and to
take such other action as the Administrative Agent shall request to perfect the
security interest created therein pursuant to the Security Agreement.
 
Section 7.11         Notice of Lease Defaults.  The Borrower will give prompt
notice to the Administrative Agent of any notice of a material default Borrower
or any Guarantor receives under any material lease of real property to which an
Obligor is party.
 
Section 7.12         Collateral Assignment of Key Person Life Insurance.  If any
Obligor obtains key person life insurance in respect of any of its officers or
directors, the Borrower will, within thirty (30) days after obtaining any such
insurance, deliver a collateral assignment relating to such key person life
insurance in form and substance reasonably satisfactory to the Administrative
Agent.
 
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Section 7.13    Accounts.  The Borrower will maintain, and cause each of the
other Obligors to maintain, their primary operating accounts, deposit accounts,
disbursement accounts, certificates of deposit, money market accounts and
savings accounts with Middlesex, except to the extent expressly permitted under
Sections 3.6 and 3.7 of the Security Agreement or the Post-Closing Agreement;
provided, that with respect to the account listed on Schedule E, the Borrower
shall (1) sweep or cause to be swept all balances therein over $50,000 every
other Business Day to Borrower’s account at Middlesex and (2) move such account
to Middlesex within 180 days after the date hereof (or such later date as the
Administrative Agent may, in its sole discretion, designate in writing).  So
long as no Event of Default has occurred and is continuing and Borrower is in
compliance with the foregoing proviso, no Account Control Agreement for the
account listed on Schedule E shall be required.
 
Section 7.14   Tax Sharing Agreements.  Borrower will (a) provide the
Administrative Agent with at least five Business Days’ prior written notice of
any Obligor entering into a tax sharing agreement, together with a copy thereof,
and (b) deliver to the Administrative Agent a copy of each tax sharing agreement
entered into by any Obligor after the date of this Agreement, together with a
certificate of the Borrower executed by a Responsible Officer certifying that
the making and performance by such Obligor of such tax sharing agreement does
not result in, and could not reasonably be expected to result in, a Material
Adverse Effect.
 
ARTICLE VIII
 
NEGATIVE COVENANTS
 
So long as any of the Commitments are in effect and until payment in full in
cash of all Loans, all other Secured Obligations, and all other amounts payable
by the Obligors under the Financing Documents (other than inchoate, unasserted
indemnity obligations that expressly survive termination of the Financing
Documents):
 
Section 8.01    Indebtedness.  The Obligors will not, nor will they permit any
of their respective Subsidiaries to, create, incur, assume or permit to exist
any Indebtedness, except:
 
(a)  Indebtedness created under the Financing Documents;
 
(b)  Indebtedness outstanding on the date hereof and set forth in Schedule 6.18,
and extensions, renewals and replacements of any such Indebtedness that do not
increase the aggregate outstanding principal amount thereof;
 
(c)  Indebtedness of an Obligor owed to any other Obligor, which Indebtedness
shall (i) be otherwise permitted under Section 8.07, (ii) constitute Collateral
under the Security Agreement and (iii) in the case of any Indebtedness of the
Borrower owed to any of its Subsidiaries, be on subordination terms reasonably
acceptable to the Administrative Agent;
 
(d)  (i) Indebtedness of the Borrower or any Subsidiary in respect of Capital
Lease Obligations and purchase money indebtedness obligations for fixed or
capital assets, provided that the aggregate principal amount of Indebtedness
permitted by this clause (d)(i) shall not exceed $1,000,000 at any time
outstanding; and (ii) Indebtedness of the Borrower in respect of Capital Lease
Obligations and purchase money indebtedness obligations for the ERP equipment
described in Schedule 8.01(d)(ii), provided that the aggregate principal amount
of Indebtedness permitted by this clause (d)(ii) shall not exceed $1,000,000 at
any time outstanding;
 
(e)  endorsements of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and

 
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(f)  Guarantees of any Obligor in respect of Indebtedness otherwise permitted
hereunder of the Borrower; and Guarantees made by the Borrower of Indebtedness
of its Subsidiaries permitted under Section 8.01(j);
 
(g)  Indebtedness of any foreign Subsidiary of the Borrower owed to any Obligor
in an aggregate principal amount not to exceed $1,000,000 outstanding at any
time;
 
(h)  obligations (contingent or otherwise) existing or arising under any Hedging
Agreement, provided that (i) such obligations are (or were) entered into by such
Person in the ordinary course of business for the purpose of directly mitigating
risks associated with fluctuations in interest rates or foreign exchange rates
and (ii) such Hedging Agreement does not contain any provision exonerating the
non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party; provided that the aggregate Swap
Termination Value thereof shall not exceed $1,000,000 (which amount may be
increased (so long as no Event of Default has occurred and is continuing) at the
Borrower’s request and with the Administrative Agent’s prior written consent,
not to be unreasonably withheld, after consultation with the Majority Lenders)
at any time outstanding;
 
(i)  with respect to an Acquisition permitted under Section 8.08, unsecured
seller Subordinated Debt (including any such Subordinated Debt in the form of
earnouts and other contingent payments in connection with any Acquisition that
constitute Indebtedness); and
 
(j)  unsecured Indebtedness in an aggregate principal amount not to exceed
$500,000 at any time outstanding.
 
Section 8.02    Liens.  No Obligor will, nor will it permit any of its
Subsidiaries to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it or its Subsidiaries, or
sign or file or suffer to exist under the Uniform Commercial Code of any
jurisdiction a financing statement that names such Obligor or any of its
Subsidiaries as debtor, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except:
 
(a)  Liens created pursuant to the Security Documents;
 
(b)  Liens existing on the date hereof and listed on Schedule 6.19 and any
renewals or extensions thereof, provided that (i) the property covered thereby
is not changed, (ii) the amount secured or benefited thereby is not increased,
(iii) the direct or any contingent obligor with respect thereto is not changed,
and (iv) any renewal or extension of the obligations secured or benefited
thereby is permitted by Section 8.01(b);
 
(c)  Liens for taxes not yet due or which are being contested in good faith and
by appropriate proceedings diligently conducted, in each case, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;
 
(d)  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 60 days or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;
 

 
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(e)  pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;
 
(f)  deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
 
(g)  easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;
 
(h)  Liens securing judgments for the payment of money not constituting an Event
of Default under Section 9.01(k);
 
(i)  Liens securing Indebtedness permitted under Section 8.01(d); provided that
(i) such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and (ii) on the date of acquisition the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired;
 
(j)  Liens securing Indebtedness permitted under Section 8.01(h); provided that
(i) at the time any such Lien is created or incurred, no Default has occurred
and is continuing, (ii) such Liens do not at any time encumber any Collateral
and (iii) such Liens do not at any time encumber any property other than cash
and Permitted Investments in an aggregate amount not exceeding $1,000,000 at any
time and the deposit or securities account to which such cash and Permitted
Investments are credited; and
 
(k)  Liens consisting of any right of offset, or statutory or other customary
bankers’ liens, existing solely with respect to cash and Permitted Investments
on deposit in or credited to Deposit Accounts or Securities Accounts
(hereinafter, as such terms are defined in the Security Agreement) maintained by
the Borrower or its Subsidiaries, in each case granted in the ordinary course of
business in favor of the bank(s) with which such accounts are maintained, so
long as (1) such Deposit Accounts or Securities Accounts are not established or
maintained for the purpose of providing such right of offset or bankers’ lien,
(2) to the extent required under the Security Agreement and Section 7.13,
Account Control Agreements with respect to such Deposit Accounts or Securities
Accounts are in full force and effect, (3) such Liens do not secure any
Indebtedness and (4) such Liens secure only such account bank’s customary fees
and expenses relating to such Deposit Accounts or Securities Accounts.
 
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Section 8.03    Mergers, Consolidations, Etc.; Subsidiaries.

(a)  The Obligors will not, nor will they permit any of their respective
Subsidiaries to, merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with any Obligor, or sell, transfer,
lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of its assets, or all or substantially
all of the Equity Interests of any of its Subsidiaries (in each case, whether
now owned or hereafter acquired), or liquidate or dissolve, except, if at the
time thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing:
 
(i)           any Subsidiary may merge with (1) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (2) any one or more
other Subsidiaries, provided that when any Guarantor is merging with another
Subsidiary that is not a Guarantor, such Guarantor shall be the continuing or
surviving Person;
 
(ii)          any Guarantor may dispose of all or substantially all of its
assets (upon voluntary liquidation or otherwise) to any Obligor;
 
(iii)         any Subsidiary that is not an Obligor may dispose of all or
substantially all its assets (including any Disposition that is in the nature of
a liquidation) to (1) another Subsidiary that is not an Obligor or (2) to an
Obligor;
 
(b)  No Obligor will form any Subsidiary without the prior written notice to the
Administrative Agent and without complying with the requirements of Section
7.10.
 
Section 8.04    Dispositions.  The Obligors will not, nor will they permit any
of their respective Subsidiaries to, make any Disposition or enter into any
agreement to make any Disposition, except:
 
(a)  Dispositions of surplus, obsolete or worn out property;
 
(b)  Dispositions of inventory in the ordinary course of business;
 
(c)  Dispositions of property by any Subsidiary of an Obligor to such Obligor;
 
(d)  Dispositions permitted by Section 8.03; and
 
(e)  Non-exclusive licenses of trademarks, service marks, trade names,
copyrights, patents, patent rights, franchises, licenses and other intellectual
property rights in the ordinary course of business and substantially consistent
with past practice;
 
provided, that any Disposition pursuant to clauses (a) through (e) (except to
the extent expressly permitted under Section 8.10) shall be for fair market
value, which may be as determined by the Board of Directors or equivalent
authority of the applicable Obligor.  Notwithstanding anything to the contrary
herein, the Obligors will not, nor will they permit any of their respective
Subsidiaries to, make any Disposition of (i) notes, accounts receivable or other
obligations owing to an Obligor, with or without recourse, except for collection
in the ordinary course of business, or (ii) any real property interests.
 
Section 8.05    Sale/Leasebacks.  The Obligors will not, nor will they permit
any of their respective Subsidiaries to, enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any of its
Property, and whereby it shall then or thereafter rent or lease as lessee such
Property or any part thereof or other Property which it intends to use for
substantially the same purpose or purposes as the Property sold or transferred,
except Capital Leases permitted under Section 8.01.

 
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Section 8.06    Lines of Business.  No Obligor will, nor will it permit any of
its Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted or contemplated to be conducted by such Obligor
and its Subsidiaries on the date of this Agreement and businesses reasonably
related thereto.
 
Section 8.07    Investments.  The Obligors will not, nor will they permit any of
their respective Subsidiaries to, make or permit to remain outstanding any
Investments except:
 
(a)  Investments outstanding on the date hereof and identified in Schedule 6.16
and any modification, replacement or renewal thereof;
 
(b)  Permitted Investments;
 
(c)  (i) Investments by the Borrower and its Subsidiaries in their respective
Subsidiaries outstanding on the date hereof, (ii) additional Investments by the
Borrower and its Subsidiaries in Obligors, (iii) additional Investments by
Subsidiaries of the Borrower that are not Obligors in other Subsidiaries that
are not Obligors and (iv) Investments constituting Indebtedness permitted under
Section 8.01(c) or (g);
 
(d)  Without duplication of Section 8.07(c)(iv), Guarantees or assumptions of
debt constituting Indebtedness permitted under Section 8.01;
 
(e)  Advances, loans or extensions of credit by the Borrower or any Subsidiary
in compliance with applicable laws to officers, directors, managers, employees
and agents of the Borrower or any Subsidiary (i) in the ordinary course of
business for travel, entertainment or relocation, out-of-pocket or other
business-related expenses not to exceed $50,000 in the aggregate at any one time
outstanding or (ii) relating to indemnification or reimbursement of such
officers, directors, managers, employees and agents in respect of liabilities
relating to their service in such capacities;
 
(f)  Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;
 
(g)  Investments permitted under Section 8.02(e), 8.02(f), 8.02(j), 8.03 or
8.08;
 
(h)  Deposits on deposit in or credited to Deposit Accounts and Securities
Accounts of the Borrower or any Subsidiary, solely to the extent such Deposit
Accounts and Securities Accounts are established and maintained strictly in
compliance with Section 7.13, the Security Agreement and the Post-Closing
Agreement; and
 
(i)  other Investments not exceeding $500,000 in the aggregate in any fiscal
year of the Borrower.

 
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Section 8.08    Acquisitions.  No Obligor will, nor will it permit any of its
Subsidiaries to, enter into any Acquisition without the prior written consent of
the Majority Lenders, other than:
 
(a)  transactions permitted by Section 8.03;
 
(b)  an Acquisition where, upon the consummation thereof, the acquired Person,
line of business, division or other property will be wholly-owned directly by
the Borrower or one or more of its Wholly Owned Subsidiaries (including as a
result of a merger or consolidation); provided that, with respect to each
purchase or other Acquisition made pursuant to this Section 8.08(b):
 
(i)           any such newly-created or acquired Subsidiary shall comply with
the requirements of Section 7.10;
 
(ii)          the lines of business of the Person to be (or the property of
which is to be) so purchased or otherwise acquired shall be within the same
general industry and lines of business as one or more of the principal
businesses of the Borrower and its Subsidiaries in the ordinary course; and such
Acquisition shall not be a hostile Acquisition;
 
(iii)         such Acquisition shall not include or result in any contingent
liabilities that could reasonably be expected to have a Material Adverse Effect
on a pro forma basis, taking into account such Acquisition;
 
(iv)        such Acquisition shall be accretive to Consolidated EBITDA,
calculated on a pro forma basis with add-back items to be mutually and
reasonably agreed among the Borrower and Administrative Agent;
 
(v)         the Majority Lenders have given their prior written consent (not to
be unreasonably withheld) to such Acquisition, except that such consent shall
not be required (A) so long as no Default has occurred and is continuing or
would result from such Acquisition and (B) (1) for an Acquisition paid for using
all cash and/or stock of the Borrower (and no proceeds of any Borrowings) or (2)
unless the cumulative, aggregate Acquisition Consideration for all Acquisitions
from the date hereof exceeds $6,500,000;
 
(vi)         immediately before and immediately after giving pro forma effect to
any such Acquisition, no Default shall have occurred and be continuing;
 
(vii)        the Borrower shall have delivered to the Administrative Agent (for
distribution to the Lenders) a certificate of a Responsible Officer setting
forth calculations in reasonable detail that demonstrate, immediately before and
immediately after giving pro forma effect to any such Acquisition, compliance
with all of the following financial covenants:

 
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1)           the pro forma historical Consolidated Debt Service Coverage Ratio
as of the most recently completed Rolling Period shall not be less than 1.35 to
1.00, such compliance to be determined on the basis of the financial information
most recently delivered to the Administrative Agent and the Lenders pursuant to
Section 7.01(a) or (b) as though such Acquisition had been consummated as of the
first day of the fiscal period covered thereby, and based on the historical
financial information of the target of the Acquisition, and including any
proposed Term Borrowing to finance such Acquisition;
 
2)           the pro forma prospective Consolidated Debt Service Coverage Ratio
as of the next succeeding twelve-month period shall not be less than 1.35 to
1.00, such compliance to be determined on the basis of the financial information
most recently delivered to the Administrative Agent and the Lenders pursuant to
Section 7.01(a) or (b) as though such Acquisition had been consummated as of the
first day of the fiscal period covered thereby, and financial projections with
respect to the Acquisition target and the Borrower Group (as determined in good
faith by the board of directors of the Borrower or such Subsidiary in their
reasonable business judgment based on reasonable assumptions), and including any
proposed Term Borrowing to finance such Acquisition;
 
3)           the pro forma historical Consolidated Senior Leverage Ratio as of
the most recently completed Rolling Period shall not exceed 2.50 to 1.00, such
compliance to be determined on the basis of the financial information most
recently delivered to the Administrative Agent and the Lenders pursuant to
Section 7.01(a) or (b) as though such Acquisition had been consummated as of the
first day of the fiscal period covered thereby, and based on the historical
financial information of the target of the Acquisition, and including any
proposed Term Borrowing to finance such Acquisition; and
 
4)           the pro forma prospective Consolidated Senior Leverage Ratio as of
the next succeeding twelve-month period shall not exceed 2.50 to 1.00, such
compliance to be determined on the basis of the financial information most
recently delivered to the Administrative Agent and the Lenders pursuant to
Section 7.01(a) or (b) as though such Acquisition had been consummated as of the
first day of the fiscal period covered thereby, and financial projections with
respect to the Acquisition target and the Borrower Group (as determined in good
faith by the board of directors of the Borrower or such Subsidiary in their
reasonable business judgment based on reasonable assumptions), and including any
proposed Term Borrowing to finance such Acquisition;
 
provided that, for each of the pro forma covenant tests described in the
foregoing clauses (1) through (4), the historical Consolidated EBITDA of the
target of such Acquisition may, at the Borrower’s reasonable request, be further
adjusted for cost savings from such Acquisition, to the extent approved in
writing by the Administrative Agent in the Administrative Agent’s reasonable
discretion;
 
(viii)      if the Acquisition Consideration for any such Acquisition(s) exceeds
$6,500,000, individually or in the aggregate from the date hereof, the
Administrative Agent may, at its option, require the Borrower to deliver to the
Administrative Agent a bank field examination, in scope and substance, and with
results, reasonably satisfactory to the Administrative Agent, of the target of
such Acquisition;

 
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(ix)         for any such Acquisition, at least forty percent (40%) of the
Adjusted Acquisition Consideration paid by or on behalf of the Borrower and its
Subsidiaries shall be paid in cash and/or stock of the Borrower; and
 
(x)          the Borrower shall have delivered to the Administrative Agent (for
distribution to each Lender), at least five Business Days prior to the date on
which any such Acquisition is to be consummated, a certificate of a Responsible
Officer, in form and substance reasonably satisfactory to the Administrative
Agent, certifying that all of the requirements set forth in this Section 8.08(b)
have been satisfied or will be satisfied on or prior to the consummation of such
Acquisition.
 
Section 8.09    Restricted Payments.  No Obligor will, nor will it permit any of
its Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment except:
 
(a)  the Borrower and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock or other common Equity
Interests of such Person;
 
(b)  Investments permitted under Sections 8.07(e) and 8.07(f);
 
(c)  repurchases of the Borrower’s stock in an aggregate, cumulative amount from
the date hereof not to exceed $20,000,000, so long as (i) no Default shall have
occurred and be continuing or will result therefrom, and (ii) the Borrower shall
have delivered to the Administrative Agent (for distribution to the Lenders) a
certificate of a Responsible Officer setting forth calculations in reasonable
detail that demonstrate, immediately before and (on a pro forma basis)
immediately after giving pro forma effect to such repurchase, compliance with
all of the following financial covenants:
 
1)           the pro forma historical Consolidated Debt Service Coverage Ratio
as of the most recently completed Rolling Period shall not be less than 1.35 to
1.00, such compliance to be determined on the basis of the financial information
most recently delivered to the Administrative Agent and the Lenders pursuant to
Section 7.01(a) or (b) as though such repurchase had been consummated as of the
first day of the fiscal period covered thereby, and including any proposed Term
Borrowing to finance such repurchase;
 
2)           the pro forma prospective Consolidated Debt Service Coverage Ratio
as of the next succeeding twelve-month period shall not be less than 1.35 to
1.00, such compliance to be determined on the basis of financial projections (as
determined in good faith by the board of directors of the Borrower in its
reasonable business judgment based on reasonable assumptions) and the financial
information most recently delivered to the Administrative Agent and the Lenders
pursuant to Section 7.01(a) or (b) as though such repurchase had been
consummated as of the first day of the fiscal period covered thereby, and
including any proposed Term Borrowing to finance such repurchase;

 
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3)           the pro forma historical Consolidated Senior Leverage Ratio as of
the most recently completed Rolling Period shall not exceed 2.50 to 1.00, such
compliance to be determined on the basis of the financial information most
recently delivered to the Administrative Agent and the Lenders pursuant to
Section 7.01(a) or (b) as though such repurchase had been consummated as of the
first day of the fiscal period covered thereby, and including any proposed Term
Borrowing to finance such repurchase; and
 
4)           the pro forma prospective Consolidated Senior Leverage Ratio as of
the next succeeding twelve-month period shall not exceed 2.50 to 1.00, such
compliance to be determined on the basis of financial projections (as determined
in good faith by the board of directors of the Borrower in its reasonable
business judgment based on reasonable assumptions) and the financial information
most recently delivered to the Administrative Agent and the Lenders pursuant to
Section 7.01(a) or (b) as though such repurchase had been consummated as of the
first day of the fiscal period covered thereby, and including any proposed Term
Borrowing to finance such repurchase; and
 
(d)  so long as no Default (including in respect of Section 8.14) has occurred
and is continuing or would result therefrom, the Borrower may declare and pay
cash dividends with respect to its Equity Interests.
 
Nothing herein shall be deemed to prohibit the payment of dividends or
distributions by any Subsidiary to its parent company.
 
Section 8.10    Transactions with Affiliates.  No Obligor will, nor will it
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of their
Affiliates, except (i) transactions in the ordinary course of business at prices
and on terms and conditions not less favorable to such Obligor or such
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties, (ii) transactions solely among Obligors and (iii) transactions solely
among foreign Subsidiaries of the Borrower.
 
Section 8.11    Restrictive Agreements.  No Obligor will, nor will it permit any
of its Subsidiaries to, directly or indirectly, enter into, incur or permit to
exist any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (i) the ability of such Obligor or any Subsidiary to create,
incur or permit to exist any Lien upon any of its property or assets in favor of
the Lender, or (ii) the ability of any Subsidiary to pay dividends or other
distributions with respect to any shares of its Equity Interests or to make or
repay loans or advances to any Obligor or any other Subsidiary or to Guarantee
Indebtedness of any Obligor or any other Subsidiary; provided that:
 
(a)  the foregoing shall not apply to (1) restrictions and conditions imposed by
law or by this Agreement and (2) restrictions and conditions existing on the
date hereof identified on Schedule 8.11 (or any extension or renewal of, or any
amendment or modification of, any such restriction or condition that does not
expand the scope thereof); and

 
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(b)  clause (i) of the foregoing shall not apply to (1) restrictions or
conditions imposed by any agreement relating to secured purchase money
Indebtedness or Capital Leases permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such purchase money
Indebtedness, (2) customary provisions in leases and other contracts restricting
the assignment thereof and (3) executory covenants between signing and closing
under an agreement related to sales of property permitted hereunder.
 
Section 8.12    Reserved.
 
Section 8.13    Modifications of Certain Documents; Tax Sharing.  No Obligor
will, nor will it permit any of its Subsidiaries to, without the prior written
consent of the Majority Lenders, (i) consent to any modification, supplement,
refinancing or waiver of any Subordinated Debt or any document evidencing any
Subordinated Debt, (ii) amend any of its or their constitutive documents or
(iii) consent to any modification, supplement or waiver of any Acquisition
Documents or any agreement evidencing or relating to Material Indebtedness, in
each case in clauses (ii) and (iii), which could reasonably be expected to be
materially adverse to the Lenders.  The Borrower will not, and will not permit
any Subsidiary to, prepay, redeem, purchase, defease or otherwise satisfy prior
to the scheduled maturity thereof in any manner, or make any payment in
violation of any subordination terms of, any Subordinated Debt. No Obligor will,
nor will it permit any of its Subsidiaries to, enter into any tax sharing
arrangement which results in, or could reasonably be expected to result in, a
Material Adverse Effect.
 
Section 8.14    Certain Financial Covenants.
 
(a)  Debt Service Coverage Ratio.  The Borrower will not permit the Consolidated
Debt Service Coverage Ratio as of the end of any fiscal quarter of the Borrower,
commencing with the fiscal quarter ending on December 31, 2010, to be less than
1.35 to 1.0.
 
(b)  Senior Leverage Ratio.  The Borrower will not permit the Consolidated
Senior Leverage Ratio at any time during any period of four fiscal quarters of
the Borrower (it being understood that the numerator of the Consolidated Senior
Leverage Ratio will be tested as of the applicable fiscal quarter end),
commencing with such period ending on September 30, 2010, to exceed 2.5 to 1.0.
 
(c)  To enable the ready and consistent determination of compliance with the
covenants set forth in this Section 8.14, the Borrower will not change the last
day of its fiscal year from September 30, or the last days of the first three
fiscal quarters in each of its fiscal years from December 31, March 31 and June
30, respectively.
 
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ARTICLE IX
 
DEFAULTS
 
Section 9.01    Events of Default.  If any of the following events (“Events of
Default”) shall occur:
 
(a)  the Borrower shall fail to pay any principal of any Loan or any LC
Reimbursement Obligation when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof or
otherwise;
 
(b)  the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Section)
payable under any Financing Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three or
more Business Days;
 
(c)  any representation or warranty made or deemed made by or on behalf of any
Obligor or any Subsidiary thereof in any Financing Document, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Financing Document, shall prove to have been incorrect in
any material respect when made or deemed made;
 
(d)  any Obligor shall fail to observe or perform any covenant, condition or
agreement contained in Section 7.01, 7.02 (other than Section 7.02(a)), 7.03
(with respect to such Obligor’s existence), 7.06, 7.07, 7.09, 7.12 or 7.13, or
in Article IV or VIII (subject, with respect to Section 8.02, to Section
9.01(e)(i) below); or any of the Guarantors fails to perform or observe any
term, covenant or agreement contained in any Guaranty; or any of the Obligors
fails to perform or observe any term, covenant or agreement contained in Section
3.3, 3.4 (subject, with respect to Section 3.4(b) of the Security Agreement, to
Section 9.01(e)(i) below), 3.6, 3.7, 3.8, 3.13 or 3.16, or in Article IV or VI,
of the Security Agreement;
 
(e)  (i) any Obligor or any of its Subsidiaries shall sign or file, or shall
suffer to exist, for a period of 30 or more days from when such Obligor or
Subsidiary obtains knowledge thereof, a financing statement in respect of a Lien
not in favor of the Administrative Agent (and not otherwise in respect of any
other Permitted Lien) that is invalid and that has not been created or attached
to any property or asset now owned or hereafter acquired by such Obligor or
Subsidiary, so long as (x) during such 30-day period such Obligor is diligently
pursuing removal of such invalid Lien and related financing statement and (y)
such invalid Lien or related financing statement could not reasonably be
expected to have a Material Adverse Effect; or (ii) any Obligor shall fail to
observe or perform any covenant, condition or agreement contained in this
Agreement (other than those specified in clause (a), (b) or (d) or (e)(i) of
this Section 9.01) or any other Financing Document to which it is party and such
failure shall continue unremedied for a period of 30 or more days after such
failure;
 
(f)  any Obligor shall fail to make any payment (whether of principal or
interest and regardless of amount) in respect of any Material Indebtedness, when
and as the same shall become due and payable, after giving effect to any
applicable notice or grace periods;
 
(g)  Any Obligor fails to observe or perform any other agreement or condition
relating to any Material Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Material Indebtedness (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to be demanded or to become due
or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity;

 
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(h)  an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of any Obligor or any Subsidiary thereof or such Person’s debts, or of a
substantial part of such Person’s assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Obligor or any Subsidiary thereof or for
a substantial part of such Person’s assets, and, in any such case, such
proceeding or petition shall continue undismissed for a period of 30 or more
days or an order or decree approving or ordering any of the foregoing shall be
entered;
 
(i)  any Obligor or any Subsidiary thereof shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Obligor or any Subsidiary thereof or for a substantial
part of such Person’s assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
 
(j)  any Obligor or any Subsidiary thereof shall become unable, admit in writing
its inability or fail generally to pay such Person’s debts as they become due;
 
(k)  one or more judgments for the payment of money in an aggregate amount in
excess of $500,000, to the extent not covered by a third-party insurance carrier
which has acknowledged such coverage in writing, shall be rendered against any
Obligor or any Subsidiary thereof or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of any Obligor or any
Subsidiary thereof to enforce any such judgment;
 
(l)  an ERISA Event shall have occurred that, in the opinion of the Lender, when
taken together with all other ERISA Events that have occurred, could reasonably
be expected to result in liability of any Obligor in an aggregate amount
exceeding (i) $500,000 in any year or (ii) $500,000 for all periods;
 
(m)  the assertion against any Obligor of an Environmental Claim that the
Majority Lenders determine in good faith will be resolved adversely to any
Obligor and would have a Material Adverse Effect (insofar as such amount is
payable by any Obligor but after deducting (i) any portion thereof that is
reasonably expected to be paid by other creditworthy Persons jointly and
severally liable therefor and (ii) any portion thereof that is covered by
independent third-party insurance as to which the insurer is rated at least “A”
by A.M. Best Company, has been notified of the potential claim and does not
dispute coverage);

 
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(n)  a Change in Control shall occur;
 
(o)  the Liens created by the Security Documents shall at any time not
constitute a valid and perfected Lien on the collateral intended to be covered
thereby (to the extent perfection by filing, registration, recordation or
possession is required herein or therein) in favor of the Administrative Agent,
free and clear of all other Liens (other than Liens permitted under Section 8.02
or under the respective Security Documents), or, except for expiration in
accordance with its terms, any of the Security Documents shall for whatever
reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by any Obligor;
 
(p)  any provision of any Financing Document, at any time after its execution
and delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full and in cash of all the Secured Obligations,
ceases to be in full force and effect; or any Obligor contests in any manner the
validity or enforceability of any provision of any Financing Document; or any
Obligor denies that it has any or further liability or obligation under any
provision of any Financing Document, or purports to revoke, terminate or rescind
any provision of any Financing Document; or any Person (other than an Obligor)
contests in any manner the validity or enforceability of any provision of any
Financing Document, and such contest could reasonably be expected either (i) to
result in a material impairment of the rights and remedies of the Administrative
Agent, LC Bank or any Lender under any Financing Document, or of the ability of
any Obligor to perform its obligations under any Financing Document to which it
is a party, or (ii) to have a material adverse effect upon the legality,
validity, binding effect or enforceability against any Obligor of any Financing
Document to which it is a party; or
 
(q)  (i)  The subordination provisions of the documents evidencing or governing
any Subordinated Debt (the “Subordination Provisions”) shall, in whole or in
part, terminate, cease to be effective or cease to be legally valid, binding and
enforceable against any holder of the applicable Subordinated Debt; or (ii) the
Borrower or any other Obligor shall, directly or indirectly, disavow or contest
in any manner (A) the effectiveness, validity or enforceability of any of the
Subordination Provisions, (B) that the Subordination Provisions exist for the
benefit of the Lender, or (C) that all payments of principal of or premium and
interest on the applicable Subordinated Debt, or realized from the liquidation
of any property of any Obligor, shall be subject to any of the Subordination
Provisions.
 
then, and in every such event (other than an event with respect to any Obligor
described in clause (h) or (i) of this Section), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Majority Lenders shall, take either or both of the following
actions, at the same or different times: (i) terminate the Commitments and any
obligation of the LC Bank to extend credit in respect of any LCs, and thereupon
the Commitments and such obligation shall terminate immediately, (ii) require
that the Borrower provide cover for LC Exposure as provided in Section 2.08(k)
and (iii) declare the Loans then outstanding to be due and payable in whole (or
in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Obligors accrued under the
Financing Documents, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Obligor; and in case of any event with respect to any
Obligor described in clause (h) or (i) of this Section, the Commitments and any
obligation of the LC Bank to extend credit in respect of any LCs shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and all other obligations
under the Financing Documents, shall automatically become due and payable, and
the obligation of the Borrower to provide cover for LC Exposure as aforesaid
shall automatically become effective, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by each Obligor.

 
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Notwithstanding the foregoing, if at the end of any fiscal quarter of the
Borrower there would exist any Event of Default with respect to one or more of
Sections 8.14(a) or (b) and the required ratios were less than 15% out of
compliance (each, a “Curable Financial Covenant Default”), such Curable
Financial Covenant shall not constitute an Event of Default until the date that
is thirty (30) days after the date the Compliance Certificate for such fiscal
quarter is required to be delivered pursuant to Section 7.01(b), during which
time the Borrower may prevent such Curable Financial Covenant Default from
becoming an Event of Default by receiving equity contributions and applying the
proceeds therefrom to repay the Loans; provided, that, (i) with respect to
Section 8.14(b), the Consolidated Senior Leverage Ratio, calculated on a pro
forma basis after giving effect to such equity contribution and prepayment as of
the date on which such Curable Financial Covenant Default occurred, does not
exceed the ratio set forth in Section 8.14(b); and (ii) with respect to Section
8.14(a), the Consolidated Debt Service Coverage Ratio, calculated on a pro forma
basis after giving effect to such equity contribution and prepayment as of the
date on which such Curable Financial Covenant Default occurred but increasing
Consolidated EBITDA for the four fiscal quarter period ending on such date on a
dollar-for-dollar basis by the amount of such prepayment, is not less than the
relevant ratio set forth in Section 8.14(a); provided, further, in each case,
that (x) no Critical Default exists (other than Curable Financial Covenant
Defaults that the Borrower has demonstrated to the reasonable satisfaction of
the Majority Lenders may be cured pursuant to a capital contribution and
prepayment of the Loans pursuant to the foregoing provision), and (y) the
Borrower has received such capital contribution on or before the date that is
thirty (30) days after the date the compliance certificate for such fiscal
quarter is required to be delivered pursuant to Section 7.01(b) and the Borrower
has applied 100% of such capital contribution to repayment of the Loans.  The
provisions of this paragraph may not be utilized in consecutive quarters, nor
more than twice while this Agreement is in effect.
 
Section 9.02    Application of Proceeds.  All proceeds received after maturity
of the Secured Obligations, whether by acceleration or otherwise, shall be
applied in the following order:
 
(i)           First, to payment of that portion of the Secured Obligations
constituting fees, indemnities, expenses and other amounts (including fees,
charges and disbursements of counsel to the Administrative Agent and amounts
payable under Article X) payable to the Administrative Agent in its capacity as
such;
 
(ii)          Second, to payment of that portion of the Secured Obligations
constituting fees, indemnities and other amounts (other than principal, interest
and LC fees) payable to the Lenders and the LC Bank (including fees, charges and
disbursements of counsel to the respective Lenders and the LC Bank arising under
the Financing Documents and amounts payable under Article X), ratably among them
in proportion to the respective amounts described in this clause Second payable
to them;

 
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(iii)         Third, to payment of that portion of the Secured Obligations
constituting accrued and unpaid LC fees and interest on the Loans, LC Borrowings
and other Secured Obligations arising under the Financing Documents, ratably
among the Lenders and the LC Bank in proportion to the respective amounts
described in this clause Third payable to them;
 
(iv)         Fourth, to payment of that portion of the Secured Obligations
constituting unpaid principal of the Loans, LC Borrowings and Secured
Obligations then owing under Secured Hedge Agreements and Secured Cash
Management Agreements, ratably among the Lenders, the LC Bank, the Hedge Banks
and the Cash Management Banks in proportion to the respective amounts described
in this clause Fourth held by them;
 
(v)          Fifth, to the Administrative Agent for the account of the LC Bank,
to provide cover for LC Exposure as provided in Section 2.08(k); and
 
(vi)         Last, the balance, if any, after all of the Secured Obligations
(other than inchoate, unasserted indemnity obligations that expressly survive
termination of the Financing Documents) have been indefeasibly paid in full in
cash, to the Borrower or as otherwise required by any Governmental Requirement.
 
Subject to Section 2.08(c), amounts used to provide cover for LC Exposure
pursuant to clause Fifth above shall be applied to satisfy drawings under such
LCs as they occur.  If any amount remains on deposit as such cover after all LCs
have either been fully drawn or expired, such remaining amount shall be applied
to the other Secured Obligations, if any, in the order set forth above.
 
Notwithstanding the foregoing, Secured Obligations arising under Secured Cash
Management Agreements and Secured Hedge Agreements shall be excluded from the
application described above if the Administrative Agent has not received written
notice thereof, together with such supporting documentation as the
Administrative Agent may request, from the applicable Cash Management Bank or
Hedge Bank, as the case may be.  Each Cash Management Bank or Hedge Bank not a
party to the Credit Agreement that has given the notice contemplated by the
preceding sentence shall, by such notice, be deemed to have acknowledged and
accepted the appointment of the Administrative Agent pursuant to the terms of
Article XI hereof for itself and its Affiliates as if a “Lender” party hereto.
 
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ARTICLE X
 
CHANGE IN CIRCUMSTANCES
 
Section 10.01  Increased Costs.
 
(a)  Increased Costs Generally.  If any Change in Law shall:
 
(i)           impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender or the LC Bank;
 
(ii)          subject any Lender or the LC Bank to any tax of any kind
whatsoever with respect to this Agreement or any LC or participation therein, or
change the basis of taxation of payments to such Lender or the LC Bank in
respect thereof (except for Indemnified Taxes or Other Taxes covered by Section
10.02 and the imposition of, or any change in the rate of, any Excluded Tax
payable by such Lender); or
 
(iii)         impose on any Lender or the LC Bank any other condition, cost or
expense affecting this Agreement or any LC or participation therein (and not
expressly excluded in clause (ii) above);
 
and the result of any of the foregoing shall be to increase the cost to such
Lender, or to increase the cost to such Lender or the LC Bank of participating
in, issuing or maintaining any LC (or of maintaining its obligation to
participate in or to issue any LC), or to reduce the amount of any sum received
or receivable by such Lender or the LC Bank hereunder (whether of principal,
interest or any other amount) then, upon request of such Lender or the LC Bank,
the Borrower will pay to such Lender or the LC Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the LC Bank, as
the case may be, for such additional costs incurred or reduction suffered.
 
(b)  Capital Requirements.  If any Lender or the LC Bank determines that any
Change in Law affecting such Lender or the LC Bank or any Applicable Lending
Office of such Lender or such Lender’s or the LC Bank’s holding company, if any,
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or the LC Bank’s capital or on the capital of such
Lender’s or the LC Bank’s holding company, if any, as a consequence of this
Agreement, the Commitments of such Lender or the Loans made by, or
participations in LCs held by, such Lender, or the LCs issued by the LC Bank, to
a level below that which such Lender or the LC Bank or such Lender’s or the LC
Bank’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s or the LC Bank’s policies and the policies of
such Lender’s or the LC Bank’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the LC
Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or the LC Bank or such Lender’s or the LC Bank’s holding company for
any such reduction suffered.
 
(c)  Certificates for Reimbursement.  A certificate of a Lender or the LC Bank
setting forth the amount or amounts necessary to compensate such Lender, the LC
Bank or the holding company thereof, as the case may be, as specified in
subsection (a) or (b) of this Section and delivered to the Borrower shall be
conclusive absent manifest error.  The Borrower shall pay such Lender or the LC
Bank, as applicable, the amount shown as due on any such certificate within 10
days after receipt thereof.

 
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(d)  Delay in Requests.  Failure or delay on the part of any Lender or the LC
Bank to demand compensation pursuant to the foregoing provisions of this Section
shall not constitute a waiver of such Lender’s or the LC Bank’s right to demand
such compensation, provided that the Borrower shall not be required to
compensate a Lender or the LC Bank pursuant to the foregoing provisions of this
Section for any increased costs incurred or reductions suffered more than nine
months prior to the date that such Lender or the LC Bank, as the case may be,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s or the LC Bank’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).
 
Section 10.02  Payments Free and Clear; U.S. Taxes.
 
(a)  Payments Free and Clear.  Any and all payments by the Borrower or any
Obligor under the Financing Documents shall be made, in accordance with Section
3.01, free and clear of and without deduction for any and all present or future
Taxes, (excluding, in the case of each Lender, the LC Bank and the
Administrative Agent, Taxes imposed on its net income or net profits, and
franchise or similar taxes imposed on it, and any branch profits imposed by the
United States or any similar tax imposed by any other jurisdiction in which the
Administrative Agent, LC Bank or such Lender is located (all such excluded Taxes
being referred to herein as “Excluded Taxes”)), by (i) any jurisdiction (or
political subdivision thereof) of which the Administrative Agent, LC Bank or
such Lender, as the case may be, is a citizen or resident or in which such
Lender has a permanent establishment (or is otherwise engaged in the active
conduct of its banking business through an office or a branch) which is such
Lender’s Applicable Lending Office, (ii) the jurisdiction (or any political
subdivision thereof) in which the Administrative Agent, LC Bank or such Lender,
as the case may be, is organized, or (iii) any jurisdiction (or political
subdivision thereof) in which Taxes are imposed as a result of the
Administrative Agent, LC Bank or such Lender, as the case may be, doing business
in such jurisdiction (all such nonexcluded Taxes being hereinafter referred to
as “Included Taxes”).  If the Borrower shall be required by law to deduct any
Included Taxes from or in respect of any sum payable hereunder to any Lender,
the LC Bank or Administrative Agent (i) the sum payable shall be increased by
the amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 10.04), such
Lender, the LC Bank or Administrative Agent, as applicable, shall receive an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, and (iii) the Borrower shall pay
the full amount deducted to the relevant taxing authority or other Governmental
Authority in accordance with applicable law.
 
(b)  Other Taxes.  In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, any
Assignment and Acceptance or any other Financing Document (hereinafter referred
to as “Other Taxes”).

 
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(c)  Indemnification.  The Borrower hereby indemnifies each Lender, the LC Bank
and the Administrative Agent for the full amount of Included Taxes and Other
Taxes (including any Included Taxes or Other Taxes imposed by any jurisdiction
on amounts payable under this Section 10.02) paid by such Lender, the LC Bank or
the Administrative Agent (on its own behalf or on behalf of any Lender), as the
case may be, and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Included Taxes or
Other Taxes were correctly or legally asserted.  Any payment pursuant to such
indemnification shall be made within 10 days after the date any Lender, the LC
Bank or the Administrative Agent, as the case may be, makes written demand
therefor.
 
(d)  Receipts.  Within 10 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender, the LC
Bank or the Administrative Agent, the Borrower will furnish to the
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof (to the extent such a receipt is available from the relevant
Governmental Authority).
 
(e)  Lender Representations.  Each Lender represents that it is either (i) a
corporation organized under the laws of the United States of America or any
state thereof or (ii) it is entitled to complete exemption from United States
withholding tax imposed on or with respect to any payments, including fees, to
be made to it pursuant to this Agreement (A) under an applicable provision of a
tax convention to which the United States of America is a party or (B) because
it is acting through a branch agency or office in the United States of America
and any payment to be received by it hereunder is effectively connected with a
trade or business in the United States of America.  Each Lender that is not a
corporation organized under the laws of the United States of America or any
state thereof agrees to provide to the Borrower and the Administrative Agent on
the Closing Date, or on the date of its delivery of the Assignment and
Acceptance pursuant to which it becomes a Lender, and at such other times as
required by United States law or as the Borrower or the Administrative Agent
shall reasonably request, two accurate and complete original signed copies of
either (A) Internal Revenue Service Form W-8ECI (or successor form) certifying
that all payments to be made to it hereunder will be effectively connected to a
United States trade or business (the “W-8ECI Certification”) or (B) Internal
Revenue Service Form W-8BEN (or successor form) certifying that it is entitled
to the benefit of a provision of a tax convention to which the United States of
America is a party which completely exempts from United States withholding tax
all payments to be made to it hereunder (the “W-8BEN Certification”).  In
addition, each Lender agrees that if it previously filed a W-8ECI Certification
it will deliver to the Borrower and the Administrative Agent a new W-8ECI
Certification prior to the first payment date occurring in each of its
subsequent taxable years; and if it previously filed a W-8BEN Certification, it
will deliver to the Borrower and the Administrative Agent a new certification
prior to the first payment date falling in the third year following the previous
filing of such certification.  Each Lender also agrees to deliver to the
Borrower and the Administrative Agent such other or supplemental forms as may at
any time be required as a result of changes in applicable law or regulation in
order to confirm or maintain in effect its entitlement to exemption from United
States withholding tax on any payments hereunder, provided that the
circumstances of the Lender at the relevant time and applicable laws permit it
to do so.  If a Lender determines, as a result of any change in either (i)
applicable law, regulation or treaty, or in any official application thereof or
(ii) its circumstances, that it is unable to submit any form or certificate that
it is obligated to submit pursuant to this Section, or that it is required to
withdraw or cancel any such form or certificate previously submitted, it shall
promptly notify the Borrower and the Administrative Agent of such fact.  If a
Lender is organized under the laws of a jurisdiction outside the United States
of America, unless the Borrower and the Administrative Agent have received a
W-8BEN Certification or W-8ECI Certification satisfactory to them indicating
that all payments to be made to such Lender hereunder are not subject to United
States withholding tax, the Borrower shall withhold taxes from such payments at
the applicable statutory rate.  Each Lender agrees to indemnify and hold
harmless from any United States taxes, penalties, interest and other expenses,
costs and losses incurred or payable by the Administrative Agent as a result of
such Lender’s failure to submit any form or certificate that it is required to
provide pursuant to this Section or as a result of its reliance on any such form
or certificate which it has provided to it pursuant to this Section.

 
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(f)  Failure to Provide Form.  For any period with respect to which a Lender has
failed to provide the Borrower with the form required pursuant to Section
10.02(e), if any (other than if such failure is due to a change in treaty,
applicable law or regulation, or in official application thereof, occurring
subsequent to the date on which a form originally was required to be provided by
such Lender), such Lender shall not be entitled to indemnification under Section
10.02(c) with respect to Taxes imposed by the United States which Taxes would
not have been imposed but for such failure to provide such forms; provided,
however, that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax become subject to Taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
 
(g)  Efforts to Avoid or Reduce.  Any Lender claiming any additional amounts
payable pursuant to this Section 10.02 shall use reasonable efforts (consistent
with legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or the Administrative Agent or to change the
jurisdiction of its Applicable Lending Office or to contest any tax imposed if
the making of such a filing or change or contesting such tax would avoid the
need for or reduce the amount of any such additional amounts that may thereafter
accrue and would not, in the sole determination of such Lender, be otherwise
disadvantageous to such Lender.
 
Section 10.03  Survival.  All of the Borrower’s obligations under this Article X
shall survive termination of the Commitments and repayment of all other Secured
Obligations hereunder.
 
ARTICLE XI
 
ADMINISTRATIVE AGENT
 
Section 11.01  Appointment and Authority.  Each of the Lenders and the LC Bank
hereby irrevocably appoints Middlesex to act on its behalf as the Administrative
Agent hereunder and under the other Financing Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto.  The provisions of this Article are solely for the benefit of the
Administrative Agent, the Lenders and the LC Bank, and no Obligor shall  have
rights as a third party beneficiary of any of such provisions.

 
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Section 11.02  Rights as a Lender.  The Person serving as the Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity.  Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with any Obligor or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.
 
Section 11.03  Exculpatory Provisions.  The Administrative Agent shall not have
any duties or obligations except those expressly set forth in the Financing
Documents.  Without limiting the generality of the foregoing, the Administrative
Agent:
 
(a)  shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing;
 
(b)  shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Financing Documents that the Administrative
Agent is required to exercise as directed in writing by the Majority Lenders (or
such other number or percentage of the Lenders as shall be expressly provided
for herein or in the other Financing Documents), provided that the
Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Financing Document or applicable law; and
 
(c)  shall not, except as expressly set forth in the Financing Documents, have
any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to any Obligor or any of its Affiliates that is
communicated to or obtained by the Person serving as the Administrative Agent or
any of its Affiliates in any capacity.
 
The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Majority Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Section 12.02 and Article IX) or (ii) in the
absence of its own gross negligence or willful misconduct.  The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
notice describing such Default is given to the Administrative Agent by the
Borrower, a Lender or the LC Bank.
 
The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Financing Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth therein or the occurrence of
any Default, (iv) the validity, enforceability, effectiveness or genuineness of
any Financing Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article V or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 
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Section 11.04  Reliance by Administrative Agent.  The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or
other writing (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person.  The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to have been made by the proper Person, and shall
not incur any liability for relying thereon.  In determining compliance with any
condition hereunder to the making of a Loan, or the issuance of an LC, that by
its terms must be fulfilled to the satisfaction of a Lender or the LC Bank, the
Administrative Agent may presume that such condition is satisfactory to such
Lender or the LC Bank unless the Administrative Agent shall have received notice
to the contrary from such Lender or the LC Bank prior to the making of such Loan
or the issuance of such LC.  The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.  The Administrative Agent may also consult with the Majority Lenders at
any time.
 
Section 11.05  Delegation of Duties.  The Administrative Agent may perform any
and all of its duties and exercise its rights and powers under any Financing
Document by or through any one or more sub-agents appointed by the
Administrative Agent.  The Administrative Agent and any such sub agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties.  The exculpatory provisions of this
Article shall apply to any such sub agent and to the Related Parties of the
Administrative Agent and any such sub agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
 
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Section 11.06  Resignation of Administrative Agent.

(a)  The Administrative Agent may at any time give notice of its resignation to
the Lenders, the LC Bank and the Borrower.  Upon receipt of any such notice of
resignation, the Majority Lenders shall have the right to appoint as a successor
(1) Commerce Bank or (2) so long as no Default has occurred and is continuing,
with the Borrower’s consent (such consent not to be unreasonably withheld or
delayed), another successor, which shall be a bank with an office in the United
States, or an Affiliate of any such bank with an office in the United
States.  If no such successor shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders and the LC Bank, appoint a
successor Administrative Agent meeting the qualifications set forth above;
provided that if the Administrative Agent shall notify the Borrower and the
Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice
and (1) the retiring Administrative Agent shall be discharged from its duties
and obligations under the Financing Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders or
the LC Bank under any Financing Document, the retiring Administrative Agent
shall continue to hold such collateral security until such time as a successor
Administrative Agent is appointed) and (2) all payments, communications and
determinations provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender and the LC Bank directly, until such
time as the Majority Lenders appoint a successor Administrative Agent as
provided for above in this Section.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to
and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations under the
Financing Documents (if not already discharged therefrom as provided above in
this Section).  The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise
agreed between the Borrower and such successor.  After the retiring
Administrative Agent’s resignation under the Financing Documents, the provisions
of this Article and Section 12.03 shall continue in effect for the benefit of
such retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent.
 
(b)  Any resignation by Middlesex as Administrative Agent pursuant to this
Section shall also constitute its resignation as LC Bank.  Upon the acceptance
of a successor’s appointment as Administrative Agent hereunder, (i) such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring LC Bank, (ii) the retiring LC Bank shall
be discharged from all of its duties and obligations under the Financing
Documents, and (iii) the successor LC Bank shall issue letters of credit in
substitution for the LCs, if any, outstanding at the time of such succession or
make other arrangements satisfactory to the retiring LC Bank to effectively
assume the obligations of the retiring LC Bank with respect to such LCs.
 
Section 11.07  Non-Reliance on Administrative Agent and Other Lenders.  Each
Lender and the LC Bank acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender or any of their
Related Parties 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 and the LC Bank also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based on any Financing
Document or any related agreement or any document furnished thereunder.
 
Section 11.08  Administrative Agent May File Proofs of Claim.  In case of the
pendency of any proceeding under any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Obligor, the Administrative Agent
(irrespective of whether the principal of any Loan or any LC Exposure shall then
be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
any Obligor) shall be entitled and empowered, by intervention in such proceeding
or otherwise:

 
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(a)  to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans, LC Exposure and all other
Secured Obligations that are owing and unpaid and to file such other documents
as may be necessary or advisable in order to have the claims of the Lenders, the
LC Bank and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the LC Bank
and the Administrative Agent and their respective agents and counsel and all
other amounts due the Lenders, the LC Bank and the Administrative Agent under
Sections 2.08(i) and (j), 2.09 and 12.03) allowed in such judicial proceeding;
and
 
(b)  to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;
 
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the LC Bank to make such payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders and the LC Bank, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.09
and 12.03.
 
Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or the LC
Bank any plan of reorganization, arrangement, adjustment or composition
affecting the Secured Obligations or the rights of any Lender or the LC Bank to
authorize the Administrative Agent to vote in respect of the claim of any Lender
or the LC Bank in any such proceeding.
 
Section 11.09  Collateral and Guaranty Matters.  The Lenders and the LC Bank
irrevocably authorize the Administrative Agent, at its option and in its
discretion,
 
(a)  to release any Lien on any property granted to or held by the
Administrative Agent under any Financing Document (i) upon termination of all
Commitments and payment in full of all Secured Obligations (other than
contingent indemnification obligations) and the expiration or termination of all
LCs (other than LCs as to which other arrangements satisfactory to the
Administrative Agent and the LC Bank shall have been made), (ii) that is sold or
otherwise disposed of or to be sold or otherwise disposed of as part of or in
connection with any sale or other disposition permitted under any Financing
Document, or (iii) subject to Section 12.02, if approved, authorized or ratified
in writing by the Majority Lenders;
 
(b)  to subordinate any Lien on any property granted to or held by the
Administrative Agent under any Financing Document to the holder of any Lien on
such property that is permitted by Section 8.02(i); and
 
(c)  to release any Guarantor from its obligations under the Guaranty if such
Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder.
 
Upon request by the Administrative Agent at any time, the Majority Lenders will
confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to release
any Guarantor from its obligations under the Guaranty pursuant to this Section
11.09.

 
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ARTICLE XII
 
MISCELLANEOUS
 
Section 12.01  Notices.
 
(a)  General.  Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
facsimile, as follows:
 
(i)           if to the Borrower or any Guarantor:
 
SeraCare Life Sciences, Inc.
37 Birch Street
Milford, MA 01757
Attention:  Gregory A. Gould, Chief Financial Officer
Facsimile No.:  508-634-3394
Email:  ggould@seracare.com

(ii)          if to the LC Bank:
 
Middlesex Savings Bank
120 Flanders Road
Westborough, MA 01581
Attn:  Tony Zhang
Phone No.:  508-599-5842
Facsimile No.:  508-870-0390
Email:  tony.zhang@middlesexbank.com

(iii)         if to the Administrative Agent:
 
Middlesex Savings Bank
120 Flanders Road
Westborough, MA 01581
Attn:  Tony Zhang
Phone No.:  508-599-5842
Facsimile No.:  508-870-0390
Email:  tony.zhang@middlesexbank.com

(iv)         if to a Lender, to it at its address or facsimile number set forth
in its Administrative Questionnaire.

 
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Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties hereto (or, in the
case of any such change by a Lender, by notice to the Borrower and
Administrative Agent).  All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to
have been given on the date of receipt.  Notices and other communications
delivered through electronic communications to the extent provided in subsection
(b) below shall be effective as provided in such subsection (b).
 
(b)  Electronic Communications.  Notices and other communications to the Lenders
and the LC Bank hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent,  provided that the foregoing
shall not apply to notices to any Lender or the LC Bank pursuant to Article II
if such Lender or the LC Bank, as applicable, has notified the Administrative
Agent that it is incapable of receiving notices under such Article by electronic
communication.  The Administrative Agent or the Borrower may, in its discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications.  Unless
the Administrative 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 acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, 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.
 
(c)  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR
COMPLETENESS OF THE BORROWER MATERIALS, AND EXPRESSLY DISCLAIM LIABILITY FOR
ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN
CONNECTION WITH THE BORROWER MATERIALS.  In no event shall the Administrative
Agent or any of its Related Parties (collectively, the “Agent Parties”) have any
liability to the Borrower, any Lender, the LC Bank or any other Person for
losses, claims, damages, liabilities or expenses of any kind (whether in tort,
contract or otherwise) arising out of the Borrower’s or the Administrative
Agent’s transmission of Borrower Materials through the Internet, except to the
extent that such losses, claims, damages, liabilities or expenses are determined
by a court of competent jurisdiction by a final and nonappealable judgment to
have resulted from the gross negligence or willful misconduct of such Agent
Party; provided, however, that in no event shall any Agent Party have any
liability to the Borrower, any Lender, the LC Bank or any other Person for
indirect, special, incidental, consequential or punitive damages (as opposed to
direct or actual damages).

 
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Section 12.02    Waivers; Amendments.
 
(a)    No Deemed Waivers: Remedies Cumulative.  No failure or delay by the
Administrative Agent, LC Bank or any Lender in exercising any right or power
under the Financing Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The
rights and remedies of the Lenders, LC Bank and Administrative Agent under the
Financing Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have.  No waiver of any provision of any
Financing Document or consent to any departure by any Obligor therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the
generality of the foregoing, the making of a Loan or issuance of an LC shall not
be construed as a waiver of any Default, regardless of whether any Lender, the
LC Bank or the Administrative Agent may have had notice or knowledge of such
Default at the time.
 
(b)    Amendments.  Neither any Financing Document nor any provision thereof may
be waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Obligors party thereto and the Majority Lenders, or
by the Obligors party thereto and the Administrative Agent with the consent of
the Majority Lenders; provided that no such agreement shall (i) increase any
Commitment of any Lender, or extend the date or decrease the amount of any
scheduled reduction thereof, without the written consent of such Lender, (ii)
reduce the principal amount of any Loan or LC Reimbursement Obligation or reduce
the rate of interest thereon, or reduce any fees payable hereunder, without the
written consent of each Lender affected thereby, (iii) postpone the scheduled
date of payment (excluding a change to mandatory prepayments) of the principal
amount of any Loan or LC Reimbursement Obligation, or any interest thereon, or
any fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Commitment, without
the written consent of each Lender affected thereby, (iv) alter the manner in
which payments or prepayments of principal, interest or other amounts hereunder
shall be applied as among the Lenders or Types or Classes of Loans, without the
written consent of each Lender, (v) change any of the provisions of this Section
or the definition of the term “Majority Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender, (vi) release all or
substantially all of the Collateral in any transaction or series of related
transactions, without the written consent of each Lender, or (vii) release any
Obligor from any of such Obligor’s guarantee obligations under Article IV
without the written consent of each Lender; and provided, further, that (x) no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent or LC Bank hereunder without the prior written consent
of the Administrative Agent or LC Bank, respectively, and (y) the Fee Letter may
be amended, or rights or privileges thereunder waived, in a writing executed
only by the parties thereto.
 
 
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Section 12.03    Expenses: Indemnity; Damage Waiver.
 
(a)    Expenses.  The Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the preparation and administration of the Financing
Documents or any amendments, modifications or waivers of the provisions thereof
(whether or not the transactions contemplated thereby shall be consummated),
(ii) all reasonable out-of-pocket expenses incurred by the LC Bank in connection
with the amendment, renewal or extension of any LC or any demand for payment
thereunder, (iii) all out-of-pocket expenses incurred by the Administrative
Agent, LC Bank and any Lender, including the fees, charges and disbursements of
any counsel for the Administrative Agent, LC Bank or any Lender, in connection
with the enforcement or protection of its rights in connection with the
Financing Documents, including its rights under this Section or in connection
with the Loans made and LCs issued hereunder, including in connection with any
workout, restructuring or negotiations in respect thereof and (iv) all costs,
expenses, taxes, assessments and other charges incurred in connection with any
filing, registration, recording or perfection of any security interest
contemplated by any Security Document or any other document referred to therein.
 
(b)    Indemnification by the Borrower.  The Borrower indemnifies the
Administrative Agent (and any sub-agent thereof), LC Bank and each Lender, and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, holds each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of the Financing Documents
or any agreement or instrument contemplated thereby, the performance by the
parties hereto of their respective obligations thereunder or the consummation of
the transactions contemplated thereby, (ii) any Loan or LC or the use of the
proceeds therefrom, any payments that the Administrative Agent is required to
make under any indemnity issued to any bank in the Security Agreement or any
Account Control Agreement to which remittances in respect of Accounts, as
defined therein, are to be made, (iii) any actual or alleged presence or release
of Hazardous Materials on or from any property owned or operated by the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way to
the Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
 
(c)    Reimbursement by Lenders.  To the extent that the Borrower for any reason
fails to indefeasibly pay any amount required under paragraph (a) or (b) of this
Section to be paid by it to the Administrative Agent (or any sub-agent thereof),
the LC Bank or any Related Party of any of the foregoing, each Lender severally
agrees to pay to the Administrative Agent (or any such sub-agent), the LC Bank
or such Related Party, as the case may be, such Lender’s Percentage (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent (or any such
sub-agent) or the LC Bank in its capacity as such, or against any Related Party
of any of the foregoing acting for the Administrative Agent (or any such
sub-agent) or LC Bank in connection with such capacity.
 
 
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(d)    Waiver of Consequential Damages.  No Obligor shall assert, and each
Obligor hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, the Financing Documents or any agreement or instrument contemplated thereby,
the transactions contemplated thereby, any Loan or the use of the proceeds
thereof.
 
(e)    Payments.  All amounts due under this Section shall be payable within
three (3) Business Days after written demand therefor.
 
Section 12.04    Successors and Assigns.
 
(a)       Assignments.  The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns permitted hereby, except that no Obligor may assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by any Obligor
without such consent shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, LC Bank and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
 
(b)       Assignments by Lenders.  Any Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under the Financing
Documents (including all or a portion of its Commitments and the Loans at the
time owing to it); provided that (i) except in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund with respect to a Lender or
an assignment of the entire remaining amount of the assigning Lender’s
Commitment(s), the amount of the Commitment(s) of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $1,000,000 unless the Borrower and the Administrative Agent
(and, in the case of an assignment of any Lender’s obligations in respect of its
LC Exposure, the LC Bank) otherwise consent (provided that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been
met), (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
the Financing Documents, (iii) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $5,000 (for which the Obligors shall have no
liability), and (iv) the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire; provided, further,
that any consent of the Borrower otherwise required under this paragraph shall
not be required if a Specified Default has occurred and is continuing. Upon
acceptance and recording pursuant to paragraph (d) of this Section, from and
after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement and the other Financing Documents, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
and the other Financing Documents (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender’s rights and obligations under
this Agreement and the other Financing Documents, such Lender shall cease to be
a party hereto but shall continue to be entitled to the benefits of Sections
10.01, 10.02 and 12.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement and the other Financing Documents that does not
comply with this paragraph shall be treated for purposes of the Financing
Documents as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
 
 
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(c)       Maintenance of Register by the Administrative Agent.  The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices in Boston a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Borrower, Administrative Agent, LC Bank and Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement and the other
Financing Documents, notwithstanding notice to the contrary.  The Register shall
be available for inspection by the Borrower, LC Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
 
(d)      Effectiveness of Assignments.  Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall accept
such Assignment and Acceptance and record the information contained therein in
the Register.  No assignment shall be effective for purposes of this Agreement
and the other Financing Documents, unless it has been recorded in the Register
as provided in this paragraph.
 
(e)      Participations.  Any Lender may, without the consent of the Borrower,
LC Bank or Administrative Agent, sell participations to one or more banks or
other entities (a “Participant”) in all or a portion of such Lenders rights and
obligations under the Financing Documents (including all or a portion of its
Commitments and the Loans owing to it); provided that (i) such Lender’s
obligations under the Financing Documents shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, LC Bank, Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under the
Financing Documents.  Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce the Financing Documents and to approve any amendment,
modification or waiver of any provision of any Financing Document; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 12.02(b) that affects such
Participant.  Subject to paragraph (f) of this Section, the Obligors agree that
each Participant shall be entitled to the benefits of Sections 10.01 and 10.02
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section.
 
 
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(f)       Limitations on Rights of Participants.  A Participant shall not be
entitled to receive any greater payment under Section 10.01 or 10.02 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.  A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 10.02 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 10.02(e), 10.02 (f) or 10.02 (g)
as though it were a Lender.
 
(g)      Certain Pledges.  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 such pledge or assignment to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such assignee for such Lender as a party hereto.
 
(h)      No Assignments to the Obligors or Affiliates.  Anything in this Section
to the contrary notwithstanding, no Lender may assign or participate any
interest in any Loan or LC Exposure held by it hereunder to any Obligor or any
of its Affiliates or Subsidiaries without the prior consent of each Lender.
 
Section 12.05    Survival.  All covenants, agreements, representations and
warranties made by any Obligor in any Financing Document and in the certificates
or other instruments delivered in connection with or pursuant to the Financing
Documents shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement, the other
Financing Documents and the making of any Loans and the issuance of any LCs,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent, LC Bank or any Lender may
have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under the Financing Documents is
outstanding and unpaid or any LC is outstanding and so long as the Commitments
have not expired or terminated.  The provisions of Sections 2.09(a) (with
respect to LC issuance fees), 4.03 and 12.03 and Articles X and XI shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the LCs and Commitments or the termination of the Financing
Documents or any provision thereof.
 
 
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Section 12.06   Counterparts: Integration; Effectiveness.  This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract.  This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract between and among the parties relating to
the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  This
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns.  Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.
 
Section 12.07   Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
 
Section 12.08    Right of Setoff; Sharing; Payments Set Aside.
 
(a)    Right of Setoff.  If an Event of Default shall have occurred and be
continuing, each Lender, the LC Bank and each of their respective Affiliates is
hereby authorized at any time and from time to time, after obtaining the prior
written consent of the Administrative Agent, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, in whatever currency) at any time held and
other obligations (in whatever currency) at any time owing by such Lender, the
LC Bank or any such Affiliate to or for the credit or the account of any Obligor
against any and all of the obligations of such Obligor now or hereafter existing
under this Agreement or any other Financing Document to such Lender or the LC
Bank, irrespective of whether or not such Lender or the LC Bank shall have made
any demand under any Financing Document and although such obligations of the
Borrower or such other Obligor may be contingent or unmatured or are owed to a
branch or office of such Lender or the LC Bank different from the branch or
office holding such deposit or obligated on such indebtedness.  The rights of
each Lender, the LC Bank and their respective Affiliates under this Section are
in addition to other rights and remedies (including other rights of setoff) that
such Lender, the LC Bank or their respective Affiliates may have.  Each Lender
and the LC Bank agrees to notify the Borrower and the Administrative Agent
promptly after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
 
 
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(b)    Sharing.  If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of (1) Secured Obligations
due and payable to such Lender under the Financing Documents at such time in
excess of its ratable share (according to the proportion of (A) the amount of
such Secured Obligations due and payable to such Lender at such time to (B) the
aggregate amount of the Secured Obligations due and payable to all Lenders under
the Financing Documents at such time) of payments on account of the Secured
Obligations due and payable to all Lenders under the Financing Documents at such
time obtained by all the Lenders at such time or (2) Secured Obligations owing
(but not due and payable) to such Lender under the Financing Documents at such
time in excess of its ratable share (according to the proportion of (i) the
amount of such Secured Obligations owing (but not due and payable) to such
Lender at such time to (ii) the aggregate amount of the Secured Obligations
owing (but not due and payable) to all Lenders under the Financing Documents at
such time) of payment on account of the Secured Obligations owing (but not due
and payable) to all Lenders under the Financing Documents at such time obtained
by all of the Lenders at such time then the Lender receiving such greater
proportion shall (x) notify the Administrative Agent of such fact, and (y)
purchase (for cash at face value) participations in the Loans and
subparticipations in L/C Obligations of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of Secured Obligations then due and payable to the Lenders or owing (but not due
and payable) to the Lenders, as the case may be, provided that:
 
(i)        if any such participations or subparticipations are purchased and all
or any portion of the payment giving rise thereto is recovered, such
participations or subparticipations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest; and
 
(ii)       the provisions of this Section shall not be construed to apply to (A)
any payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or (B) any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans or
subparticipations in L/C Obligations to any assignee or participant, other than
to the Borrower or any Subsidiary thereof (as to which the provisions of this
subsection shall apply).
 
(c)    Consent of Obligors.  Each Obligor consents to the foregoing and agrees
that any Lender acquiring a participation pursuant to the foregoing arrangements
may exercise against such Obligor all rights of set-off, banker’s lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct creditor of such Obligor in the amount of such
participation.
 
(d)    Rights of Lenders.  Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of any Obligor.
 
 
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(e)    Payments Set Aside.  To the extent that any payment by or on behalf of
the Borrower is made to the Administrative Agent, the LC Bank or any Lender, or
the Administrative Agent, the LC Bank or any Lender exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the
Administrative Agent, the LC Bank or such Lender in its discretion) to be repaid
to a trustee, receiver or any other party, in connection with any proceeding
under any insolvency, bankruptcy or similar debtor relief law or otherwise, then
(1) to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such setoff had not occurred, and (2)
each Lender and the LC Bank severally agrees to pay to the Administrative Agent
upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from
the date of such demand to the date such payment is made at a rate per annum
equal to the Federal Funds Rate from time to time in effect.  The obligations of
the Lenders and the LC Bank under clause (2) of the preceding sentence shall
survive the payment in full of the Secured Obligations and the termination of
this Agreement.
 
Section 12.09    Governing Law; Jurisdiction; Service of Process.
 
(a)    This Agreement, the other Financing Documents and any other agreement or
documents relating thereto and the rights and obligations of the parties
hereunder and thereunder shall be construed and interpreted in accordance with
the law of the Commonwealth of Massachusetts.  Each Obligor agrees that the
execution of this Agreement and the other Financing Documents, and the rights
and obligations of the parties hereunder and thereunder shall be deemed to have
a Massachusetts situs and each Obligor shall be subject to the personal
jurisdiction of the courts of the Commonwealth of Massachusetts with respect to
any action the Administrative Agent, LC Bank, any Lender or their respective
successors or assigns may commence hereunder or thereunder. Accordingly, each
Obligor hereby specifically and irrevocably consents to the jurisdiction of the
courts of the Commonwealth of Massachusetts with respect to all matters
concerning this Agreement and the other Financing Documents, the Loans, the LCs
and/or any agreement, instrument or document executed or delivered in connection
with this Agreement and the other Financing Documents or the enforcement of any
of the foregoing.
 
(b)    Each Obligor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Financing Documents in
any court referred to in Section 12.09(a).  Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
 
(c)    The Borrower and the Guarantors each irrevocably consents to service of
process in the manner provided for notices herein.  Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
 
Section 12.10    WAIVER OF JURY TRIAL.   EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO ANY FINANCING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
 
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Section 12.11    Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
 
Section 12.12    Confidentiality.
 
(a)    Each Obligor acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to such Obligor
or one or more of its Subsidiaries (in connection with this Agreement or
otherwise) by a Lender or by one or more subsidiaries or affiliates of a Lender
and each Obligor hereby authorizes each Lender to share any information
delivered to such Lender by any Obligor and its Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such subsidiary or affiliate, it being understood that any
such subsidiary or affiliate receiving such information shall be bound by the
provisions of paragraph (b) of this Section as if it were a Lender
hereunder.  Such authorization shall survive the repayment of the Loans, the
expiration or termination of the Commitments or LCs or the termination of this
Agreement or any provision hereof.
 
(b)    Each of the Administrative Agent, the Lenders and the LC Bank agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (i) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (ii) upon written notice to the Borrower, to the
extent requested by any regulatory authority, (iii) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (iv)
to any other party to this Agreement, (v) in connection with the exercise of any
remedies under any Financing Document or any suit, action or proceeding relating
to any Financing Document or the enforcement of rights thereunder, (vi) subject
to an agreement containing provisions substantially the same as those of this
paragraph, to any assignee of or Participant in, or any prospective assignee of
or Participant in, any of its rights or obligations under this Agreement, (vii)
with the consent of the Borrower or (viii) to the extent such Information (A)
becomes publicly available other than as a result of a breach of this paragraph
or (B) becomes available to the Administrative Agent, any Lender or the LC Bank
on a nonconfidential basis from a source other than an Obligor.  For the
purposes of this paragraph, “Information” means all information received from
any Obligor relating to any Obligor or its business, other than any such
information that is available to the Administrative Agent, any Lender or the LC
Bank on a nonconfidential basis prior to disclosure by an Obligor.  Any Person
required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if
such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
 
 
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Section 12.13    USA PATRIOT Act Notice.  Each Lender that is subject to the
Patriot Act and the Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies the Borrower that pursuant to the requirements of the
Patriot Act, it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow such Lender or the Administrative
Agent, as applicable, to identify the Borrower in accordance with the Patriot
Act.  The Borrower shall, promptly following a request by the Administrative
Agent or any Lender, provide all documentation and other information that the
Administrative Agent or such Lender requests in order to comply with its ongoing
obligations under applicable “know your customer” and anti-money laundering
rules and regulations, including the Patriot Act.
 
 
Page | 105

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
 
BORROWER
 
SERACARE LIFE SCIENCES, INC.
 
By:
/s/ Gregory A. Gould
 
Name:  Gregory A. Gould
 
Title:  Chief Financial Officer,
 
           Treasurer and Secretary
    GUARANTORS     [None on the date of this Agreement.]

 
 

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

 

 
ADMINISTRATIVE AGENT
     
MIDDLESEX SAVINGS BANK, as
Administrative Agent
       
By:
/s/ Tony Zhang
 
Name:
Tony Zhang
 
Title:
Vice President
       
LENDERS AND LC BANK
     
MIDDLESEX SAVINGS BANK, as a Lender and
as LC Bank
       
By:
/s/ Tony Zhang
 
Name:
Tony Zhang
 
Title:
Vice President

 
 

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

 

 
COMMERCE BANK AND TRUST COMPANY
       
By:
/s/ Scott Virzi
 
Name:
Scott Virzi
 
Title:
Vice President

 
 

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

 

SCHEDULE A

COMMITMENTS
 
Lender
 
Revolving Commitment
   
Term Commitment
 
Middlesex Savings Bank
  $ 3,000,000     $ 9,000,000  
Commerce Bank and Trust Company
  $ 2,000,000     $ 6,000,000  
TOTAL
  $ 5,000,000     $ 15,000,000  

 
 
 

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EXHIBIT A-1

FORM OF REVOLVING NOTE

$____________
December 30, 2010      

FOR VALUE RECEIVED, the undersigned SERACARE LIFE SCIENCES, INC., a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with a principal place of business located at 37 Birch
Street, Milford, Massachusetts 01757, and a mailing address in Massachusetts at
37 Birch Street, Milford, Massachusetts 01757 (hereinafter called the
"Borrower"), promises to pay to [insert name of Lender] or registered assigns
(hereinafter called the "Lender"), OR ORDER, ON DEMAND on the Revolving
Commitment Termination Date, the principal sum of ___________ ($________)
DOLLARS (or such lesser amount as may have been advanced to Borrower by Lender
from time to time hereunder) (each, an "Advance") with interest on the unpaid
balance hereof from the date hereof until paid in full in cash, at the rate and
in the manner hereinafter provided, in lawful money of the United States of
America.  All payments of principal and interest shall be made to Middlesex
Savings Bank (“Middlesex”) as administrative agent (the “Administrative Agent”)
under the Loan Agreement dated as of December 30, 2010 (as amended from time to
time, the “Loan Agreement”) among the Borrower, the guarantors party thereto,
the lenders (including the Lender) party thereto, the LC Bank party thereto and
the Administrative Agent, for account of the Lender in U.S. dollars in
immediately available funds at the Administrative Agent’s office at 120 Flanders
Road, Westborough, Massachusetts 01581.

Variable Rate; Payments:  The unpaid principal of this Note from time to time
outstanding shall bear interest, computed on the basis of the actual number of
days elapsed over a year assumed to have 360 days, at an annual rate equal to
the Prime Rate plus one-half of one percent (0.5%) per annum, but in any event
not less than 3.49% per annum ("Interest Rate").

As used herein, the “Prime Rate” means the rate from time to time announced and
made effective by Middlesex as its Prime Rate.  The Prime Rate hereunder shall
change as Middlesex's Prime Rate changes and any such change shall be effective
on the announcement date by Middlesex of such change.

Beginning on February 1, 2011 and on the first day of each and every month
thereafter during the existence of the Note, Borrower shall make payments of
interest monthly in arrears on outstanding Advances.  Principal not paid when
due hereunder shall bear interest at the rate set forth above from the date due
until so paid and shall be due and payable upon demand, whether or not an Event
of Default has occurred. Payments hereunder shall be applied first to interest
then due on the unpaid balance of principal and then to such principal.

Late Charge:  Whenever any installment of principal and/or interest due
hereunder shall not be paid when due, if so required by the requisite percentage
of lenders under the Loan Agreement, the Borrower shall pay in addition thereto
as a late charge, four percent (4%) of the amount of any such past due amount.

 
 

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

 

Revolving Credit:  Until such right is terminated by the requisite percentage of
lenders specified in the Loan Agreement by a refusal to make any further
Advances, the Borrower may borrow, repay (without penalty), and reborrow
hereunder from time to time in accordance with the Loan Agreement for working
capital and general corporate purposes of Borrower, provided that the aggregate
principal amount at any time outstanding shall not exceed the face amount of
this Note, as described in the Loan Agreement.

Security:  This Note is secured by a security interest in all assets of the
Borrower and its domestic subsidiaries, pursuant to a Security Agreement of even
date herewith among Borrower, the other grantors party thereto and the
Administrative Agent (as amended and in effect from time to time, the "Security
Agreement"), and the other Security Documents referred to in the Loan
Agreement.  All of Borrower’s obligations to the Lender however characterized
(the "Obligations") are guaranteed pursuant to a guaranty (as amended and in
effect from time to time, the "Guaranty") made by the Borrower’s domestic
subsidiaries (the “Guarantors”), if any.  Such documents, together with various
other instruments securing this Note (the terms and provisions of all of which
are incorporated herein by reference) are herein referred to as the "Security
Instruments."

Setoff:  Any deposits or other sums at any time credited by or due from the
holder to the Borrower or any Guarantor and any securities or other property of
Borrower or any Guarantor in the possession or custody of the holder may at all
times be held and treated as collateral security for the payment of this Note
and any and all other liabilities, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of said Borrower or
Guarantor to the holder; and the holder on or after default in payment hereof
that constitutes an Event of Default under and as defined in the Loan Agreement
may sell any such securities or other property at broker's board or at public or
private sale without demand, notice or advertisement of any kind, all of which
are hereby expressly waived. The holder may at any time apply or set off such
deposits or other sums against said liabilities of Borrower and Guarantors.

Demand Rate:  If so required by the requisite percentage of lenders under the
Loan Agreement, Borrower shall pay an interest rate which is three percent (3%)
per annum above the interest rate otherwise payable hereunder ("Demand Rate”)
(a) while any monetary amount remains unpaid hereunder and such failure to pay
is an Event of Default under the Loan Agreement; and (b) following the
occurrence of and during the continuation of any other Event of Default under
the Loan Agreement (or, if applicable, any of the Security Instruments), unless
and until such Event of Default is cured or waived by the requisite percentage
of lenders under the Loan Agreement.

Collection Costs:  If this Note shall not be paid in full upon demand as set
forth herein, the Borrower agrees to pay all costs and expenses of collection,
including court costs and reasonable attorneys' fees.
 
 
 

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

 

Waiver:  The Borrower and each Guarantor, and any other person now or hereafter
liable for the payment of any of the indebtedness evidenced by this Note, each
severally agrees, by making, guaranteeing or endorsing this Note or by making
any agreement to pay any of the indebtedness evidenced by this Note, to waive
presentment for payment, protest and demand, notice of protest, demand and or
dishonor and nonpayment of this Note, and consents without notice or further
assent (a) to the substitution, exchange or release of the collateral securing
this Note or any part thereof at any time, (b) to the acceptance by the holder
or holders at any time of any additional collateral or security for or other
guarantors of this Note, (c) to the modification or amendment at any time, and
from time to time of this Note, and any Security Instrument at the request of
any person liable hereon, (d) to the granting by the holder hereof of any
extension of the time for payment of this Note or for the performance of the
agreements, covenants and conditions contained in this Note, or any Security
Instrument, at the request of any other person liable hereon, and (e) to any and
all forbearances and indulgences whatsoever; and such consent shall not alter or
diminish the liability of any person.

JURY TRIAL WAIVER:  EACH OF BORROWER, GUARANTORS AND LENDER MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON THIS NOTE, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN AGREEMENT OR ANY SECURITY INSTRUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY.  THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BORROWER,
GUARANTORS AND LENDER TO ENTER INTO THE TRANSACTIONS CONTEMPLATED HEREBY.

The Borrower and Guarantors have received a copy of this Note.

This Note shall be the joint and several obligation of the Borrower and all
sureties, guarantors and endorsers, and shall be binding upon them and their
respective successors and assigns and each or any of them.

[remainder of page left intentionally blank]

 
 

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

 

IN WITNESS WHEREOF, the Borrower has executed this Note as an instrument under
seal, as of the day and year first above written.

   
BORROWER
   
Signed in the presence of:
 
SERACARE LIFE SCIENCES,
INC.
           
By:
 
Witness
 
Name:
 
Title:
, duly authorized
 
Title:
 

 
 
 

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

 

EXHIBIT A-2

FORM OF INITIAL TERM NOTE

$___________
December 30, 2010                

FOR VALUE RECEIVED, the undersigned SERACARE LIFE SCIENCES, INC., a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with a principal place of business located at 37 Birch
Street, Milford, Massachusetts 01757, and a mailing address in Massachusetts at
37 Birch Street, Milford, Massachusetts 01757 (hereinafter called the
"Borrower"), promises to pay to [insert name of Lender] or registered assigns
(hereinafter called the "Lender"), OR TO ITS ORDER, the principal sum of
___________ AND 00/100 DOLLARS ($________) (or such lesser amount of term loans
as may have been advanced to Borrower by Lender from time to time hereunder and
pursuant to the Loan Agreement (defined below)) with interest on the unpaid
balance hereof from the date hereof until paid in full in cash, at the rate and
in the manner hereinafter provided, in lawful money of the United States of
America.  All payments of principal and interest shall be made to Middlesex
Savings Bank (“Middlesex”) as administrative agent (the “Administrative Agent”)
under the Loan Agreement dated as of December 30, 2010 (as amended from time to
time, the “Loan Agreement”) among the Borrower, the guarantors party thereto,
the lenders (including the Lender) party thereto, the LC Bank party thereto and
the Administrative Agent, for account of the Lender in U.S. dollars in
immediately available funds at the Administrative Agent’s office at 120 Flanders
Road, Westborough, Massachusetts 01581.

Variable Rate; Payments:  From the date of this Note to but excluding February
29, 2012, the unpaid principal of this Note from time to time outstanding shall
bear interest, computed on the basis of the actual number of days elapsed over a
year assumed to have 360 days, at an annual rate equal to the Prime Rate plus
one-half of one percent (0.5%) per annum, but in any event not less than 3.49%
per annum ("Interest Rate").

As used herein, the Prime Rate means the rate from time to time announced and
made effective by Middlesex as its Prime Rate.  The Prime Rate hereunder shall
change as Middlesex's Prime Rate changes and any such change shall be effective
on the announcement date by Middlesex of such change.

Fixed Rate; Payments:  From and including February 29, 2012 to but excluding
February 29, 2017, the unpaid principal of this Note from time to time
outstanding shall bear interest, computed on the basis of the actual number of
days elapsed over a year assumed to have 360 days, at an annual rate equal to
the higher (as determined on February 29, 2012) of (a) the five-year Treasury
rate plus three percent (3.00%) per annum and (b) a fixed rate of five and
49/100 percent (5.49%) per annum (the “Interest Rate”).  From and after February
29, 2017, the unpaid principal of this Note from time to time outstanding shall
bear interest, computed on the basis of the actual number of days elapsed over a
year assumed to have 360 days, at an annual rate equal to the higher of (a) the
two-year Treasury rate plus three and one-half percent (3.50%) per annum and (b)
a fixed rate of five and 49/100 percent (5.49%) per annum (the “Interest Rate”).

 
 

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

 

Beginning on February 1, 2011 and on the first day of each and every month
thereafter during the term hereof, Borrower shall make payments of interest
monthly in arrears on the outstanding principal of this Note.  Unless paid in
full in cash on or before the Term-Out Date (defined below), Borrower shall make
monthly payments of principal of this Note, in eighty-four (84) consecutive
installments, one payable on each Principal Payment Date (defined
below).  Principal not paid when due hereunder shall bear interest at the rate
set forth above from the date due until so paid.  Each payment shall be applied
first to interest then due on the unpaid balance of principal and then to such
principal.  “Principal Payment Date” means the first business day of each
calendar month, commencing with April 1, 2012 (or, if the commitments of the
lenders party to the Loan Agreement to make term loans to the Borrower under the
Loan Agreement terminate before February 29, 2012, commencing with the first
such date to occur after the date such commitments terminate), and the Maturity
Date.

Amortization:  Such monthly payments shall be made in a seven (7) year,
straight-line amortization schedule to be attached by the Administrative Agent
to this Note (or any amendment and restatement of this Note as provided in the
Loan Agreement) by the Term-Out Date.

This Note shall termed-out in accordance with the Loan Agreement on February 29,
2012 (the “Term-Out Date”) and shall be due and payable on February 28, 2019
(the “Maturity Date”), unless such date is extended in a written agreement
executed by Borrower, the Guarantors (defined below), the lenders party to the
Loan Agreement (including the Lender), LC Bank party thereto and the
Administrative Agent.

Late Charge:  Whenever any installment of principal and/or interest due
hereunder shall not be paid when due, if so required by the requisite percentage
of lenders under the Loan Agreement, the Borrower shall pay in addition thereto
as a late charge, four percent (4%) of the amount of any such past due amount.

Security:  This Note is secured by a security interest in all assets of the
Borrower and its domestic subsidiaries, pursuant to a Security Agreement of even
date herewith among Borrower, the other grantors party thereto and the
Administrative Agent (as amended and in effect from time to time, the "Security
Agreement"), and the other Security Documents referred to in the Loan
Agreement.  All of Borrower’s Guaranteed Obligations (as defined in the Loan
Agreement) to the Lender (the "Obligations") are guaranteed pursuant to a
guaranty (as amended and in effect from time to time, the "Guaranty") made by
the Borrower’s domestic subsidiaries (the “Guarantors”), if any.  Such
documents, together with various other instruments securing this Note (the terms
and provisions of all of which are incorporated herein by reference) are herein
referred to as the "Security Instruments."

 
 

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

 

Default:  An Event of Default under the Loan Agreement (or, if applicable, any
of the Security Instruments) shall constitute an Event of Default hereunder, and
such events of default include, but are not limited to, the failure of Borrower
to make any payments of principal when due hereunder.  Upon the occurrence of an
Event of Default, the requisite percentage of lenders under the Loan Agreement
may, at their option, without notice or demand, declare the unpaid principal and
all accrued interest under this Note to be immediately due and payable without
presentment, demand, protest, notice of protest or other notice of dishonor of
any kind, all of which are hereby expressly waived by the Borrower for itself,
its successors and assigns.  No course of dealing or delay in accelerating the
maturity of this Note or in taking any other action with respect to any Event of
Default shall affect Lender's or Administrative Agent’s rights to take action
with respect thereto, and no waiver as to any one Event of Default shall affect
any of Lender's or Administrative Agent’s rights as to any other Event of
Default.

Setoff:  Any deposits or other sums at any time credited by or due from the
holder to the Borrower or any Guarantor and any securities or other property of
Borrower or any Guarantor in the possession or custody of the holder may at all
times be held and treated as collateral security for the payment of this Note
and any and all other liabilities, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of said respective
Borrower or any Guarantor to the holder.  The holder hereof on or after default
in payment hereof that constitutes an Event of Default hereunder may apply such
deposits or other sums to said Obligations and sell any such securities or other
property at broker's board or at public or private sale without demand, notice
or advertisement of any kind, all of which are hereby expressly waived.

Default Rate:  The requisite percentage of lenders under the Loan Agreement
shall have the option of imposing, and Borrower shall pay upon billing therefor,
an interest rate which is three percent (3%) per annum above the interest rate
otherwise payable hereunder ("Default Rate"): (a) while any monetary amount
remains unpaid hereunder and such failure to pay is an Event of Default under
the Loan Agreement; (b) following the occurrence of and during the continuance
of any other Event of Default under the Loan Agreement (or, if applicable, any
of the Security Instruments), unless and until the Event of Default is cured or
waived by the requisite percentage of lenders under the Loan Agreement; and (c)
after the Maturity Date.

Collection Costs:  If this Note shall not be paid in full whenever it shall
become due, the Borrower and Guarantors agree to pay all costs and expenses of
collection, including court costs and reasonable attorneys' fees.

Prepayment:  Borrower may make partial or a full prepayment of principal due
hereunder without penalty, provided however, that as to full prepayments made
with funds provided by any lender(s) other than Middlesex and Commerce Bank and
Trust Company, a prepayment charge will be applicable for the first three (3)
year period of this Note, on the terms more fully provided in the Loan
Agreement.  The charge will be equal to three (3%) percent of the amount of
principal of this Note prepaid for the first such year, two (2%) percent for the
second such year, and one (1%) percent for the third such year.

 
 

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

 

Waiver:  The Borrower and each Guarantor, and any other person now or hereafter
liable for the payment of any of the indebtedness evidenced by this Note, each
severally agrees, by making, guaranteeing or endorsing this Note or by making
any agreement to pay any of the indebtedness evidenced by this Note, to waive
presentment for payment, protest and demand, notice of protest, demand and or
dishonor and nonpayment of this Note, and consents without notice or further
assent (a) to the substitution, exchange or release of the collateral securing
this Note or any part thereof at any time, (b) to the acceptance by the holder
or holders at any time of any additional collateral or security for or other
guarantors of this Note, (c) to the modification or amendment at any time, and
from time to time of this Note, and any Security Instrument at the request of
any person liable hereon, (d) to the granting by the holder hereof of any
extension of the time for payment of this Note or for the performance of the
agreements, covenants and conditions contained in this Note, or any Security
Instrument, at the request of any other person liable hereon, and (e) to any and
all forbearances and indulgences whatsoever; and such consent shall not alter or
diminish the liability of any person.

JURY TRIAL WAIVER:  EACH OF BORROWER, GUARANTORS AND LENDER MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON THIS NOTE, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN AGREEMENT OR ANY SECURITY INSTRUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY.  THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BORROWER,
GUARANTORS AND LENDER TO ENTER INTO THE TRANSACTIONS CONTEMPLATED HEREBY.

The Borrower and Guarantors have received a copy of this Note.

This Note shall be the joint and several obligation of the Borrower and all
sureties, guarantors and endorsers, and shall be binding upon them and their
respective successors and assigns and each or any of them.

[remainder of page left intentionally blank]
 
 
 

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

 

IN WITNESS WHEREOF, the Borrower has executed this Note as an instrument under
seal, as of the day and year first above written.

   
BORROWER
   
Signed in the presence of:
 
SERACARE LIFE SCIENCES,
INC.
           
By:
 
Witness
 
Name:
 
Title:
, duly authorized
 
Title:
 

 
 
 

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

 

EXHIBIT A-3

[FORM OF] AMENDED AND RESTATED TERM NOTE

$___________
December 30, 2010               

FOR VALUE RECEIVED, the undersigned SERACARE LIFE SCIENCES, INC., a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with a principal place of business located at 37 Birch
Street, Milford, Massachusetts 01757, and a mailing address in Massachusetts at
37 Birch Street, Milford, Massachusetts 01757 (hereinafter called the
"Borrower"), promises to pay to [insert name of Lender] or registered assigns
(hereinafter called the "Lender"), OR TO ITS ORDER, the principal sum of
___________ AND 00/100 DOLLARS ($________) with interest on the unpaid balance
hereof from the date hereof until paid in full in cash, at the rate and in the
manner hereinafter provided, in lawful money of the United States of
America.  All payments of principal and interest shall be made to Middlesex
Savings Bank (“Middlesex”) as administrative agent (the “Administrative Agent”)
under the Loan Agreement dated as of December 30, 2010 (as amended from time to
time, the “Loan Agreement”) among the Borrower, the guarantors party thereto,
the lenders (including the Lender) party thereto, the LC Bank party thereto and
the Administrative Agent, for account of the Lender in U.S. dollars in
immediately available funds at the Administrative Agent’s office at 120 Flanders
Road, Westborough, Massachusetts 01581.

Variable Rate; Payments:  From the date of this Note to but excluding February
29, 2012, the unpaid principal of this Note from time to time outstanding shall
bear interest, computed on the basis of the actual number of days elapsed over a
year assumed to have 360 days, at an annual rate equal to the Prime Rate plus
one-half of one percent (0.5%) per annum, but in any event not less than 3.49%
per annum ("Interest Rate").

As used herein, the Prime Rate means the rate from time to time announced and
made effective by Middlesex as its Prime Rate.  The Prime Rate hereunder shall
change as Middlesex's Prime Rate changes and any such change shall be effective
on the announcement date by Middlesex of such change.

Fixed Rate; Payments:  From and including February 29, 2012 to but excluding
February 29, 2017, the unpaid principal of this Note from time to time
outstanding shall bear interest, computed on the basis of the actual number of
days elapsed over a year assumed to have 360 days, at an annual rate equal to
the higher (as determined on February 29, 2012) of (a) the five-year Treasury
rate plus three percent (3.00%) per annum and (b) a fixed rate of five and
49/100 percent (5.49%) per annum (the “Interest Rate”).  From and after February
29, 2017, the unpaid principal of this Note from time to time outstanding shall
bear interest, computed on the basis of the actual number of days elapsed over a
year assumed to have 360 days, at an annual rate equal to the higher of (a) the
two-year Treasury rate plus three and one-half percent (3.50%) per annum and (b)
a fixed rate of five and 49/100 percent (5.49%) per annum (the “Interest Rate”).
 
 
 

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

 

Beginning on February 1, 2011 and on the first day of each and every month
thereafter during the term hereof, Borrower shall make payments of interest
monthly in arrears on the outstanding principal of this Note.  Borrower shall
make monthly payments of principal of this Note, in eighty-four (84) consecutive
installments, one payable on each Principal Payment Date (defined
below).  Principal not paid when due hereunder shall bear interest at the rate
set forth above from the date due until so paid.  Each payment shall be applied
first to interest then due on the unpaid balance of principal and then to such
principal.  “Principal Payment Date” means the first business day of each
calendar month, commencing with April 1, 2012, and the Maturity Date.

Amortization:  Such monthly payments shall be made in a seven (7) year,
straight-line amortization schedule attached hereto.

This Note shall be due and payable on February 28, 2019 (the “Maturity Date”),
unless such date is extended in a written agreement executed by Borrower, the
Guarantors (defined below), the lenders party to the Loan Agreement (including
the Lender), LC Bank party thereto and the Administrative Agent.

Late Charge:  Whenever any installment of principal and/or interest due
hereunder shall not be paid when due, if so required by the requisite percentage
of lenders under the Loan Agreement, the Borrower shall pay in addition thereto
as a late charge, four percent (4%) of the amount of any such past due amount.

Security:  This Note is secured by a security interest in all assets of the
Borrower and its domestic subsidiaries, pursuant to a Security Agreement of even
date herewith among Borrower, the other grantors party thereto and the
Administrative Agent (as amended and in effect from time to time, the "Security
Agreement"), and the other Security Documents referred to in the Loan
Agreement.  All of Borrower’s Guaranteed Obligations (as defined in the Loan
Agreement) to the Lender (the "Obligations") are guaranteed pursuant to a
guaranty (as amended and in effect from time to time, the "Guaranty") made by
the Borrower’s domestic subsidiaries (the “Guarantors”), if any.  Such
documents, together with various other instruments securing this Note (the terms
and provisions of all of which are incorporated herein by reference) are herein
referred to as the "Security Instruments."

Default:  An Event of Default under the Loan Agreement (or, if applicable, any
of the Security Instruments) shall constitute an Event of Default hereunder, and
such events of default include, but are not limited to, the failure of Borrower
to make any payments of principal when due hereunder.  Upon the occurrence of an
Event of Default, the requisite percentage of lenders under the Loan Agreement
may, at their option, without notice or demand, declare the unpaid principal and
all accrued interest under this Note to be immediately due and payable without
presentment, demand, protest, notice of protest or other notice of dishonor of
any kind, all of which are hereby expressly waived by the Borrower for itself,
its successors and assigns.  No course of dealing or delay in accelerating the
maturity of this Note or in taking any other action with respect to any Event of
Default shall affect Lender's or Administrative Agent’s rights to take action
with respect thereto, and no waiver as to any one Event of Default shall affect
any of Lender's or Administrative Agent’s rights as to any other Event of
Default.
 
 
 

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

 
Setoff:  Any deposits or other sums at any time credited by or due from the
holder to the Borrower or any Guarantor and any securities or other property of
Borrower or any Guarantor in the possession or custody of the holder may at all
times be held and treated as collateral security for the payment of this Note
and any and all other liabilities, direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of said respective
Borrower or any Guarantor to the holder.  The holder hereof on or after default
in payment hereof that constitutes an Event of Default may apply such deposits
or other sums to said Obligations and sell any such securities or other property
at broker's board or at public or private sale without demand, notice or
advertisement of any kind, all of which are hereby expressly waived.

Default Rate:  The requisite percentage of lenders under the Loan Agreement
shall have the option of imposing, and Borrower shall pay upon billing therefor,
an interest rate which is three percent (3%) per annum above the interest rate
otherwise payable hereunder ("Default Rate"): (a) while any monetary amount
remains unpaid hereunder and such failure to pay is an Event of Default under
the Loan Agreement; (b) following the occurrence of an during the continuance of
any other Event of Default under the Loan Agreement (or, if applicable, any of
the Security Instruments), unless and until the Event of Default is cured or
waived by the requisite percentage of lenders under the Loan Agreement; and (c)
after the Maturity Date.

Collection Costs:  If this Note shall not be paid in full whenever it shall
become due, the Borrower and Guarantors agree to pay all costs and expenses of
collection, including court costs and reasonable attorneys' fees.

Prepayment:  Borrower may make partial or a full prepayment of principal due
hereunder without penalty, provided however, that as to full prepayments made
with funds provided by any lender(s) other than Middlesex and Commerce Bank and
Trust Company, a prepayment charge will be applicable for the first three (3)
year period of this Note, on the terms more fully provided in the Loan
Agreement.  The charge will be equal to three (3%) percent of the amount of
principal of this Note prepaid for the first such year, two (2%) percent for the
second such year, and one (1%) percent for the third such year.

Waiver:  The Borrower and each Guarantor, and any other person now or hereafter
liable for the payment of any of the indebtedness evidenced by this Note, each
severally agrees, by making, guaranteeing or endorsing this Note or by making
any agreement to pay any of the indebtedness evidenced by this Note, to waive
presentment for payment, protest and demand, notice of protest, demand and or
dishonor and nonpayment of this Note, and consents without notice or further
assent (a) to the substitution, exchange or release of the collateral securing
this Note or any part thereof at any time, (b) to the acceptance by the holder
or holders at any time of any additional collateral or security for or other
guarantors of this Note, (c) to the modification or amendment at any time, and
from time to time of this Note, and any Security Instrument at the request of
any person liable hereon, (d) to the granting by the holder hereof of any
extension of the time for payment of this Note or for the performance of the
agreements, covenants and conditions contained in this Note, or any Security
Instrument, at the request of any other person liable hereon, and (e) to any and
all forbearances and indulgences whatsoever; and such consent shall not alter or
diminish the liability of any person.

 
 

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JURY TRIAL WAIVER:  EACH OF BORROWER, GUARANTORS AND LENDER MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON THIS NOTE, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN AGREEMENT OR ANY SECURITY INSTRUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY.  THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BORROWER,
GUARANTORS AND LENDER TO ENTER INTO THE TRANSACTIONS CONTEMPLATED HEREBY.

The Borrower and Guarantors have received a copy of this Note.

This Note shall be the joint and several obligation of the Borrower and all
sureties, guarantors and endorsers, and shall be binding upon them and their
respective successors and assigns and each or any of them.

This Note amends and restates, and is not a novation of, that certain promissory
note of the Borrower made in favor of the Lender dated December 30, 2010 in the
principal amount of $________ and no/100 U.S. dollars.

[remainder of page left intentionally blank]

 
 

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IN WITNESS WHEREOF, the Borrower has executed this Note as an instrument under
seal, as of the day and year first above written.

    BORROWER        
Signed in the presence of:
  SERACARE LIFE SCIENCES,     INC.        
  
 
By:
  
Witness
   
Name:
Title:           , duly authorized
   
Title:

 
 
 

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EXHIBIT B

FORM OF NOTICE OF BORROWING

[Date]

Middlesex Savings Bank, as the Administrative
Agent under the Loan Agreement referred to below

Ladies and Gentlemen:
 
The undersigned SeraCare Life Sciences, Inc., a Delaware corporation, refers to
the Loan Agreement, dated as of December 30, 2010 (as amended, supplemented or
otherwise modified, the “Loan Agreement”, the terms defined therein being used
herein as therein defined), among the undersigned, the Guarantors from time to
time party thereto, the lenders party thereto, the LC Bank party thereto and
Middlesex Savings Bank, as the Administrative Agent for such lenders, and hereby
gives you notice, irrevocably, pursuant to Section 2.03 of the Loan Agreement
that the undersigned hereby wishes to borrow under the Loan Agreement, and in
that connection sets forth below the information relating to such Borrowing as
required by Section 2.03 of the Loan Agreement:
 
1.           The requested Borrowing is to be (select as applicable):
 
 
a.
¨ A [Revolving] [Term] Borrowing.

 
2.           The aggregate amount of the requested Borrowing is $[_________].
 
3.           The date of the requested Borrowing is ______, _____, which is a
Business Day.
 
4.           The location and number of the Borrower’s account to which funds
are to be disbursed is: ____________________________________.
 
[Signature Page Follows]

 
 

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The Borrower hereby represents and warrants that the conditions specified in
Section 5.02 of the Loan Agreement shall be satisfied on and as of the date of
the requested Borrowing.

 

 
Very truly yours,
     
SERACARE LIFE SCIENCES, INC.
     
By:
  
 
Name: 
  
 
Title:
  

 
 

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EXHIBIT C

FORM OF BORROWING BASE CERTIFICATE

Date:  ________, ____                            
 
To:          Middlesex Savings Bank, as
Administrative Agent under the
Agreement referred to below
 
Ladies and Gentlemen:
 
Reference is made to that certain Loan Agreement, dated as of December 30, 2010
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), among the undersigned, the Guarantors from time to time
party thereto, the lenders party thereto, the LC Bank party thereto and
Middlesex Savings Bank, as the Administrative Agent for such lenders.
 
The undersigned Responsible Officer1 hereby certifies (on behalf of the Borrower
and not in such person’s individual capacity) as of the date hereof that he/she
is the ___________________________________ of the Borrower, and that, as such,
he/she is authorized to execute and deliver this Certificate to the
Administrative Agent on the behalf of the Borrower, and that:
 
 
1.
Each Receivable reflected in the computations of Eligible Accounts Receivables
included in this Borrowing Base Certificate meets the criteria enumerated in the
definition of Eligible Accounts Receivables[, except [describe]].

 
 
2.
The Inventory reflected in the computations of Eligible Inventory included in
this Borrowing Base Certificate meets the criteria enumerated in the definition
of Eligible Inventory[, except [describe]].

 

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1           This certificates should be from the chief executive officer,
president, chief financial officer or treasurer of the Borrower.

 
 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of                                ,                      .
 

 
SERACARE LIFE SCIENCES, INC.
            
By:
  
   
Name:
  
   
Title:
  

 

 
 

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SeraCare Borrowing Base Certificate

Accounts Receivable
   
Date
 
Balance per Aging: Mass
       
Balance per Aging: Maryland
       
Total Accounts Receivable Per Aging
A
    0              
MinusInvoices >90 days from invoice date
         
Minus Taint factor 35%
         
Minus Contra receivables up to A/P amount
         
Minus Bill and hold receivables
         
Minus Aged credits
         
Minus Government receivables
         
Minus All Foreign receivables except the top 6 accounts
         
Minus Other recommended ineligibles
         
Eligible Accounts Receivables
      0  
Advance Rate
      80 %
Accounts Receivable Availability 1
B
    -              
Government Recievables
         
  Minus Invoices >120 days from invoice date
         
Eligible Government Receivables
      0  
Advance Rate
      50 %
Accounts Receivable Availability 2
C
    -              
Total Accounts Receivable Availability (B+C)
D
    -  

Inventory
   
Date
 
Raw Material
       
  Minus 2 Year Old Inventory - Raw Material
       
  Minus Inventory Reserve - Raw Material
       
Eligible Raw Material
E
    0  
Advance Rate
      34 %
Raw Material Availability
E1
    0              
Intermediates
         
  Minus 2 Year Old Inventory - Intermediates
         
  Minus Inventory Reserve - Intermediates
         
Eligible Intermediates
F
    0  
Advance Rate
      6 %
Intermediates Availability
F1
    0              
Finished Goods - Bulk
         
  Minus 2 Year Old Inventory - FG Bulk
         
  Minus Inventory Reserve - FG Bulk
         
Eligible Finished Goods - Bulk
G
    0  
Advance Rate
      81 %
Finished Goods - Bulk Availability
G1
    0              
Finished Goods - Disease State
         
  Minus 2 Year Old Inventory - FG Disease
         
  Minus Inventory Reserve - FG Disease
         
Eligible Finished Goods - Disease
H
    0  
Advance Rate
      57 %
Finished Goods - Disease State Availability
H1
    0              
Gross Inventory Availability (E1+F1+G1+H1)
I
    0              
  Minus Liquidation Expense
      1,239,303  
  Minus Other Recommended Reserve
         
Inventory Availability 1
      (1,239,303 )            
Total Eligible Inventory (E+F+G+H)
      -              
  Minus Liquidation Expense
      1,239,303              
Net Eligible Inventory
      (1,239,303 )
  Advance Rate
      40 %
Inventory Availability 2
J
    (495,721 )            
The Smaller of Inventory Availability 1 and 2
K
    (1,239,303 )

 
 
 

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Accounts Receivable and Inventory Borrowing Base
   
Date
             
Total Availability (D+K)
L
    (1,239,303 )            
Maximum Availability
M
    5,000,000  
Letter of Credit Issued
N
       
Line of Credit Outstanding
O
       
Net Availability - Smaller of (L-N-O) and (M-N-O)
      (1,239,303 )

 
 

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EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:  ________, ____                            
 
To:           Middlesex Savings Bank, as
Administrative Agent under the
Agreement referred to below
 
Ladies and Gentlemen:
 
Reference is made to that certain Loan Agreement, dated as of December 30, 2010
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), among the undersigned, the Guarantors from time to time
party thereto, the lenders party thereto, the LC Bank party thereto and
Middlesex Savings Bank, as the Administrative Agent for such lenders.
 
The undersigned Responsible Officer2 hereby certifies (on behalf of the Borrower
and not in such person’s individual capacity) as of the date hereof that he/she
is the ___________________________________ of the Borrower, and that, as such,
he/she is authorized to execute and deliver this Certificate to the
Administrative Agent on the behalf of the Borrower, and that:
 
[Use following paragraph 1 for fiscal year-end financial statements]
 
1.           The Borrower has delivered the year-end audited financial
statements required by Section 7.01(a) of the Agreement for the fiscal year of
the Borrower ended as of the above date, together with the report and opinion of
an independent certified public accountant required by such section.
 
[Use following paragraph 1 for fiscal quarter-end financial statements]
 
1.           The Borrower has delivered the unaudited financial statements
required by Section 7.01(b) of the Agreement for the fiscal quarter of the
Borrower ended as of the above date.  Such consolidated financial statements
fairly present in all material respects the financial condition and results of
operations of the Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject only to normal year-end and
other audit adjustments and the absence of footnotes.
 
2.           The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and condition (financial or otherwise) of
the Borrower during the accounting period covered by such financial statements.
  

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2           This certificates should be from the chief executive officer,
president, chief financial officer or treasurer of the Borrower.

 
 

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3.           A review of the activities of the Borrower during such fiscal
period has been made under the supervision of the undersigned with a view to
determining whether during such fiscal period the Borrower performed and
observed all its Secured Obligations under the Financing Documents, and
 
[select one:]
 
[to the best knowledge of the undersigned, during such fiscal period the
Borrower performed and observed each covenant and condition of the Financing
Documents applicable to it, and no Default has occurred and is continuing.]
 
—or—
 
[to the best knowledge of the undersigned, the following covenants or conditions
have not been performed or observed and the following is a list of each such
Default and its nature and status:]
 
4.           To the best knowledge of the undersigned, the representations and
warranties of the Borrower contained in Article VI of the Agreement and all
representations and warranties of any Obligor that are contained in any document
furnished at any time under or in connection with the Financing Documents, are
true and correct in all material respects (provided, that if any such
representation warranty contains any materiality qualification such as “in all
material respects” or by referring to a “Material Adverse Effect” or similar
references, then such representation and warranty shall be true and correct in
all respects) on and as of the date hereof, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for
purposes of this Compliance Certificate, the representations and warranties
contained in the second sentence of Section 6.04(a) of the Agreement shall be
deemed to refer to the most recent statements furnished pursuant to clauses (a)
and (b) of Section 7.01 of the Agreement, including the statements in connection
with which this Compliance Certificate is delivered.
 
5.           The financial covenant analyses and information set forth on
Schedules 1 and 2 attached hereto are true and accurate on and as of the date of
this Certificate.
 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of                                ,                      .
 

 
SERACARE LIFE SCIENCES, INC.
           
By:
  
   
Name: 
  
   
Title:
  

 
 
 

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For the Fiscal Quarter/Year ended ___________________, ____ (“Statement Date”)
[Note:  All financial covenant calculations to be conformed to final
definitions]
 
SCHEDULE 1
to the Compliance Certificate
($ in 000’s)
 
I.
 
Section 8.14(a) – Consolidated Debt Service Coverage Ratio.
                                 
A.
 
Consolidated EBITDA for Measurement Period ending on above date (“Subject
Period”):
 
$______
                               
1.
 
Consolidated Net Income for Subject Period:
 
$______
                               
2.
 
Consolidated Interest Expense for Subject Period:
 
$______
                               
3.
 
Provision for income taxes for Subject Period:
 
$______
                               
4.
 
Depreciation expenses for Subject Period:
 
$______
                               
5.
 
Amortization expenses for Subject Period:
 
$______
                               
6.
 
Non-cash adjustments arising from application of FASB Statement 142 (or its
successor) and accounting principles relating to stock-based compensation
expense
 
$______
                               
7.
 
Extraordinary or non-recurring losses
 
$______
                               
8.
 
Other non-cash items reducing Consolidated Net Income and consented to by the
Administrative Agent in its reasonable discretion
 
$______
                               
9.
 
Cost savings from permitted Acquisitions and consented to by the Administrative
Agent in its reasonable discretion
 
$______
                               
10.
 
Income Tax credits for Subject Period:
 
$______
                               
11.
 
Non-cash increases to Consolidated Net Income for Subject Period:
 
$______
                               
12.
 
Consolidated EBITDA (Lines II.A.1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 +9 - 10 – 11):
 
$______
                           
B.
 
Cash Taxes for Subject Period:
 
$______
                           
C.
 
Unfinanced Capital Expenditures for Subject Period:
 
$______
 

 
 

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D.
 
Dividends and distributions made in Subject Period:
 
$______
                     
E.
 
The amount of Investments made in cash by (and not repaid in cash to) the
Borrower to any third parties (other than the Borrower’s Wholly Owned
Subsidiaries) in compliance with Section 8.07 in Subject Period:
 
$______
                     
F.
 
Cash Consolidated Interest Expense for Subject Period:
 
$______
                     
G.
 
Current maturity of long-term Indebtedness for Subject Period:
 
$______
                     
H.
 
Consolidated Interest Coverage Ratio ([Line I.A.12 – Line I.B – Line I.C – Line
I.D – Line I.E] ¸ [Line I.F + Line I.G]):
 
____ to 1
                         
Minimum required:  1.35 to 1
                       
II.
 
Section 8.14(b) – Consolidated Senior Leverage Ratio.
                       
A.
 
Aggregate outstanding principal amount of the Loans at Statement Date
 
$______
                       
B.
 
Aggregate LC Exposures at Statement Date
 
$______
                       
C.
 
Consolidated EBITDA for Subject Period (Line I.A.12 above):
 
$______
                       
D.
 
Consolidated Leverage Ratio ([Line II.A + Line II.B] ¸ Line II.C):
 
____ to 1
                           
Maximum permitted:  2.5 to 1
       

 
 
 

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For the Fiscal Quarter/Year ended ___________________(“Statement Date”)
 
SCHEDULE 2
to the Compliance Certificate

($ in 000’s)
 
Consolidated EBITDA
(in accordance with the definition of Consolidated EBITDA
as set forth in the Agreement)

 
Consolidated
EBITDA
 
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
   
Quarter
Ended
   
Twelve
Months
Ended
 
Consolidated Net Income
                                                                               
     
+ Consolidated Interest Expense
                                                                               
 
+ income taxes
                                                                               
 
+ depreciation expense
                                                                               
 
+ amortization expense
                                                                               
 
+ non-cash adjustments arising by reason of the application of FASB Statement
142 (or its successor) (relating to changes in accounting for the amortization
of good will and certain other intangibles) and accounting principles relating
to stock based compensation expenses
                                                                               
 
+ extraordinary or non-recurring losses
                                                                               
 
+ with the Administrative Agent’s prior written consent (in its reasonable
discretion), other expenses reducing such Consolidated Net Income which do not
represent a cash item in such period or any future period
                                                                               
 
+ with the Administrative Agent’s prior written consent (in its reasonable
discretion), cost savings from Acquisitions made in compliance with Section 8.08
                                                                               
 
-  income tax credits
                                                                               
 
-  non-cash income
                                                                               
 
= Consolidated EBITDA
                                       

 
 
 

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