Exhibit 10.1
REVOLVING CREDIT
AND
SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
WITH
OSTEOTECH, INC.
AND
All other persons joined hereto as a borrower from time to time
(BORROWERS)
December 29, 2009

 

 

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TABLE OF CONTENTS

              Page  
 
       
I. DEFINITIONS
    1  
1.1. Accounting Terms
    1  
1.2. General Terms
    1  
1.3. Uniform Commercial Code Terms
    21  
1.4. Certain Matters of Construction
    21    
II. ADVANCES, PAYMENTS
    22  
2.1. Revolving Advances
    22  
2.2. Procedure for Revolving Advances Borrowing
    23  
2.3. Disbursement of Advance Proceeds
    25  
2.4. Reserved
    25  
2.5. Maximum Advances
    25  
2.6. Repayment of Advances
    25  
2.7. Repayment of Excess Advances
    26  
2.8. Statement of Account
    26  
2.9. Reserved
    26  
2.10. Reserved
    26  
2.11. Reserved
    26  
2.12. Reserved
    26  
2.13. Reserved
    26  
2.14. Reserved
    26  
2.15. Reserved
    26  
2.16. Reserved
    26  
2.17. Reserved
    26  
2.18. Reserved
    26  
2.19. Additional Payments
    27  
2.20. Manner of Borrowing and Payment
    27  
2.21. Mandatory Prepayments
    28  
2.22. Use of Proceeds
    29  
2.23. Defaulting Lender
    29    
III. INTEREST AND FEES
    30  
3.1. Interest
    30  
3.2. Reserved
    30  
3.3. Closing Fee and Facility Fee
    31  
3.4. Collateral Evaluation Fee and Collateral Monitoring Fee
    31  
3.5. Computation of Interest and Fees
    31  
3.6. Maximum Charges
    31  
3.7. Increased Costs
    31  
3.8. Basis For Determining Interest Rate Inadequate or Unfair
    32  
3.9. Capital Adequacy
    33  
3.10. Gross Up for Taxes
    34  
3.11. Withholding Tax Exemption
    34  

 

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              Page  
 
       
IV. COLLATERAL: GENERAL TERMS
    35  
4.1. Security Interest in the Collateral
    35  
4.2. Perfection of Security Interest
    35  
4.3. Disposition of Collateral
    36  
4.4. Preservation of Collateral
    36  
4.5. Ownership of Collateral
    36  
4.6. Defense of Agent’s and Lenders’ Interests
    37  
4.7. Books and Records
    37  
4.8. Financial Disclosure
    38  
4.9. Compliance with Laws
    38  
4.10. Inspection of Premises
    38  
4.11. Insurance
    38  
4.12. Failure to Pay Insurance
    39  
4.13. Payment of Taxes
    39  
4.14. Payment of Leasehold Obligations
    40  
4.15. Receivables
    40  
4.16. Inventory
    42  
4.17. Maintenance of Equipment
    43  
4.18. Exculpation of Liability
    43  
4.19. Environmental Matters
    43  
4.20. Financing Statements
    45    
V. REPRESENTATIONS AND WARRANTIES
    45  
5.1. Authority
    45  
5.2. Formation and Qualification
    46  
5.3. Survival of Representations and Warranties
    46  
5.4. Tax Returns
    46  
5.5. Financial Statements
    46  
5.6. Entity Names
    47  
5.7. O.S.H.A. and Environmental Compliance
    47  
5.8. Solvency; No Litigation, Violation, Indebtedness or Default
    47  
5.9. Patents, Trademarks, Copyrights and Licenses
    49  
5.10. Licenses and Permits
    49  
5.11. Default of Indebtedness
    49  
5.12. No Default
    50  
5.13. No Burdensome Restrictions
    50  
5.14. No Labor Disputes
    50  
5.15. Margin Regulations
    50  
5.16. Investment Company Act
    50  
5.17. Disclosure
    50  
5.18. Reserved
    50  
5.19. Swaps
    51  
5.20. Conflicting Agreements
    51  
5.21. Application of Certain Laws and Regulations
    51  
5.22. Business and Property of Borrowers
    51  
5.23. Section 20 Subsidiaries
    51  
5.24. Anti-Terrorism Laws
    51  
5.25. Trading with the Enemy
    52  

 

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              Page  
 
       
VI. AFFIRMATIVE COVENANTS
    52  
6.1. Payment of Fees
    52  
6.2. Conduct of Business and Maintenance of Existence and Assets
    52  
6.3. Violations
    53  
6.4. Government Receivables
    53  
6.5. Fixed Charge Coverage Ratio
    53  
6.6. Execution of Supplemental Instruments
    53  
6.7. Payment of Indebtedness
    53  
6.8. Standards of Financial Statements
    53  
6.9. Federal Securities Laws
    54    
VII. NEGATIVE COVENANTS
    54  
7.1. Merger, Consolidation, Acquisition and Sale of Assets
    54  
7.2. Creation of Liens
    54  
7.3. Guarantees
    54  
7.4. Investments
    54  
7.5. Loans
    55  
7.6. Capital Expenditures
    55  
7.7. Dividends
    55  
7.8. Indebtedness
    55  
7.9. Nature of Business
    56  
7.10. Transactions with Affiliates
    56  
7.11. Leases
    56  
7.12. Subsidiaries
    56  
7.13. Fiscal Year and Accounting Changes
    56  
7.14. Pledge of Credit
    56  
7.15. Amendment of Articles of Incorporation, By-Laws
    56  
7.16. Compliance with ERISA
    57  
7.17. Prepayment of Indebtedness
    57  
7.18. Anti-Terrorism Laws
    57  
7.19. Membership/Partnership Interests
    58  
7.20. Trading with the Enemy Act
    58    
VIII. CONDITIONS PRECEDENT
    58  
8.1. Conditions to Initial Advances
    58  
8.2. Conditions to Each Advance
    61    
IX. INFORMATION AS TO BORROWERS
    61  
9.1. Disclosure of Material Matters
    61  
9.2. Schedules
    61  
9.3. Environmental Reports
    62  
9.4. Litigation
    62  
9.5. Material Occurrences
    62  
9.6. Reserved
    62  
9.7. Annual Financial Statements
    63  
9.8. Quarterly Financial Statements
    63  

 

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              Page  
 
       
9.9. Monthly Financial Statements
    63  
9.10. Other Reports
    63  
9.11. Additional Information
    63  
9.12. Projected Operating Budget
    64  
9.13. Reserved
    64  
9.14. Reserved
    64  
9.15. ERISA Notices and Requests
    64  
9.16. Additional Documents
    65    
X. EVENTS OF DEFAULT
    65  
10.1. Nonpayment
    65  
10.2. Breach of Representation
    65  
10.3. Financial Information
    65  
10.4. Judicial Actions
    65  
10.5. Noncompliance
    65  
10.6. Judgments
    65  
10.7. Bankruptcy
    66  
10.8. Inability to Pay
    66  
10.9. Subsidiary Bankruptcy
    66  
10.10. Material Adverse Effect
    66  
10.11. Lien Priority
    66  
10.12. Cross Default
    66  
10.13. Change of Ownership
    66  
10.14. Invalidity
    66  
10.15. Licenses
    67  
10.16. Seizures
    67  
10.17. Operations
    67  
10.18. Pension Plans
    67    
XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT
    67  
11.1. Rights and Remedies
    68  
11.2. Agent’s Discretion
    69  
11.3. Setoff
    69  
11.4. Rights and Remedies not Exclusive
    70  
11.5. Allocation of Payments After Event of Default
    70    
XII. WAIVERS AND JUDICIAL PROCEEDINGS
    70  
12.1. Waiver of Notice
    70  
12.2. Delay
    71  
12.3. Jury Waiver
    71    
XIII. EFFECTIVE DATE AND TERMINATION
    71  
13.1. Term
    71  
13.2. Termination
    71    
XIV. REGARDING AGENT
    72  
14.1. Appointment
    72  
14.2. Nature of Duties
    72  
14.3. Lack of Reliance on Agent and Resignation
    73  

 

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              Page  
 
       
14.4. Certain Rights of Agent
    73  
14.5. Reliance
    73  
14.6. Notice of Default
    74  
14.7. Indemnification
    74  
14.8. Agent in its Individual Capacity
    74  
14.9. Delivery of Documents
    74  
14.10. Borrowers’ Undertaking to Agent
    74  
14.11. No Reliance on Agent’s Customer Identification Program
    75  
14.12. Other Agreements
    75    
XV. BORROWING AGENCY
    75  
15.1. Borrowing Agency Provisions
    75  
15.2. Waiver of Subrogation
    76    
XVI. MISCELLANEOUS
    76  
16.1. Governing Law
    76  
16.2. Entire Understanding
    77  
16.3. Successors and Assigns; Participations; New Lenders
    79  
16.4. Application of Payments
    81  
16.5. Indemnity
    81  
16.6. Notice
    82  
16.7. Survival
    84  
16.8. Severability
    84  
16.9. Expenses
    84  
16.10. Injunctive Relief
    84  
16.11. Consequential Damages
    85  
16.12. Captions
    85  
16.13. Counterparts; Facsimile Signatures
    85  
16.14. Construction
    85  
16.15. Confidentiality; Sharing Information
    85  
16.16. Publicity
    86  
16.17. Certifications From Banks and Participants; US PATRIOT Act
    86  

 

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LIST OF EXHIBITS AND SCHEDULES
Exhibits

     
Exhibit A
  Hospitals
Exhibit 1.2
  Borrowing Base Certificate
Exhibit 2.1(a)
  Revolving Credit Note
Exhibit 8.1(k)
  Financial Condition Certificate
Exhibit 16.3
  Commitment Transfer Supplement
 
   
Schedules
   
 
   
Schedule 1.1
  Leasehold Interests
Schedule 1.2
  Permitted Encumbrances
Schedule 4.5
  Equipment and Inventory Locations
Schedule 4.15(h)
  Deposit and Investment Accounts
Schedule 4.19
  Real Property
Schedule 5.1
  Consents
Schedule 5.2(a)
  States of Qualification and Good Standing
Schedule 5.2(b)
  Subsidiaries
Schedule 5.4
  Federal Tax Identification Number
Schedule 5.6
  Prior Names
Schedule 5.8(b)
  Litigation; Indebtedness
Schedule 5.8(d)
  Plans
Schedule 5.9(a)
  Patents and Patent Applications
Schedule 5.9(c)
  Intellectual Property Challenges
Schedule 5.10
  Licenses and Permits

 

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REVOLVING CREDIT
AND
SECURITY AGREEMENT
Revolving Credit and Security Agreement dated as of December 29, 2009 among
OSTEOTECH, INC., a corporation under the laws of the State of Delaware
(“Osteotech”) and each other Person joined hereto as a borrower from time to
time (Osteotech and each such Person, each a “Borrower”, and collectively
“Borrowers”), the financial institutions which are now or which hereafter become
a party hereto (collectively, the “Lenders” and individually a “Lender”) and PNC
BANK, NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity,
the “Agent”).
IN CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrowers, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
1.1. Accounting Terms. As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrowers for the fiscal year ended December 31,
2008.
1.2. General Terms. For purposes of this Agreement the following terms shall
have the following meanings:
“Accountants” shall have the meaning set forth in Section 9.7 hereof.
“Advances” shall mean and include the Revolving Advances.
“Affiliate” of any Person shall mean (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director, managing member, general
partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or
(iii) of any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (x) to
vote 10% or more of the Equity Interests having ordinary voting power for the
election of directors of such Person or other Persons performing similar
functions for any such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by ownership of Equity Interests,
contract or otherwise.
“Agent” shall have the meaning set forth in the preamble to this Agreement and
shall include its successors and assigns.
“Agent Advances” shall have the meaning set forth in Section 16.2(b) hereof.

 

 

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“Agreement” shall mean this Revolving Credit and Security Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the
highest of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open
Rate in effect on such day plus 1/2 of 1% and (iii) the Daily LIBOR Rate plus
1%. For purposes of this definition, “Daily LIBOR Rate” shall mean, for any day,
the rate per annum determined by Agent by dividing (x) the Published Rate by
(y) a number equal to 1.00 minus the percentage prescribed by the Federal
Reserve for determining the maximum reserve requirements with respect to any
eurocurrency funding by banks on such day. For the purposes of this definition,
“Published Rate” shall mean the rate of interest published each Business Day in
The Wall Street Journal “Money Rates” listing under the caption “London
Interbank Offered Rates” for a one month period (or, if no such rate is
published therein for any reason, then the Published Rate shall be the
eurodollar rate for a one month period as published in another publication
determined by Agent).
“Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or
money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the
Applicable Laws comprising or implementing the Bank Secrecy Act, and the
Applicable Laws administered by the United States Treasury Department’s Office
of Foreign Asset Control (as any of the foregoing Applicable Laws may from time
to time be amended, renewed, extended, or replaced).
“Applicable Law” shall mean all laws, rules and regulations (including, without
limitation, the National Organ Transplant Act, as in effect from time to time),
applicable to the Person, conduct, transaction, covenant, Other Document or
contract in question, including all applicable common law and equitable
principles; all provisions of all applicable state, federal and foreign
constitutions, statutes, rules, regulations, treaties, directives and orders of
any Governmental Body, and all orders, judgments and decrees of all courts and
arbitrators.
“Applicable Margin” for Revolving Advances shall mean (a) for Domestic Rate
Loans, 2%; and (b) for Eurodollar Rate Loans, 3%.
“Authority” shall have the meaning set forth in Section 4.19(d) hereof.
“Base Rate” shall mean the base commercial lending rate of PNC as publicly
announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate;
provided that in no event shall such rate be less than 3% per annum. This rate
of interest is determined from time to time by PNC as a means of pricing some
loans to its customers and is neither tied to any external rate of interest or
index nor does it necessarily reflect the lowest rate of interest actually
charged by PNC to any particular class or category of customers of PNC.
“Blocked Accounts” shall have the meaning set forth in Section 4.15(h) hereof.
“Blocked Account Bank” shall have the meaning set forth in Section 4.15(h)
hereof.
“Blocked Person” shall have the meaning set forth in Section 5.24(b) hereof.

 

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“Borrower” or “Borrowers” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such
Persons.
“Borrowers on a Consolidated Basis” shall mean the consolidation in accordance
with GAAP of the accounts or other items of the Borrowers and their respective
Subsidiaries.
“Borrowers’ Account” shall have the meaning set forth in Section 2.8 hereof.
“Borrowing Agent” shall mean Osteotech.
“Borrowing Base Certificate” shall mean a certificate in substantially the form
of Exhibit 1.2 duly executed by the President, Chief Financial Officer,
Treasurer or Assistant Treasurer of the Borrowing Agent, or a designee of
President, Chief Financial Officer, Treasurer or Assistant Treasurer of the
Borrowing Agent, and delivered to Agent, appropriately completed, by which such
officer shall certify to Agent the Formula Amount and calculation thereof as of
the date of such certificate.
“Business Day” shall mean any day other than Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required by law to be closed
for business in East Brunswick, New Jersey and, if the applicable Business Day
relates to any Eurodollar Rate Loans, such day must also be a day on which
dealings are carried on in the London interbank market.
“Capital Expenditures” shall mean expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements, substitutions
or additions thereto which have a useful life of more than one year, including
the total principal portion of Capitalized Lease Obligations, or the development
of Intellectual Property which has a useful life of more than one year, which,
in accordance with GAAP, would be classified as capital expenditures.
“Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower
represented by obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
“Cash Balance Excess” shall have the meaning set forth in Section 6.5 hereof.
“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.
“Change of Ownership” shall mean (a) 100% of the Equity Interests of any
Subsidiary is no longer owned (directly or indirectly) or controlled by
Osteotech (including for the purposes of any calculation of percentage
ownership, any Equity Interests into which any Equity Interests of any
Subsidiary held by Osteotech are convertible or for which any such Equity
Interests of any Subsidiary or of any other Person may be exchanged and any
Equity Interests issuable to Osteotech upon exercise of any warrants, options or
similar rights which may at the time of calculation be held by Osteotech),
unless any of the foregoing is the result of a transaction permitted under
Section 7.1 hereof, (b) (i) any “person” or “group of persons” (within the
meaning of Section 13(d) or 14(a) of the Exchange Act) shall have acquired
beneficial ownership (within the meaning of Rule

 

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13d-3 promulgated by the SEC under the Exchange Act) of 35% or more of the
voting Equity Interest of Osteotech; or (ii) from and after the date hereof,
individuals who on the date hereof constitute the Board of Directors of
Osteotech (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of Osteotech was
approved by a vote of a majority of the directors then still in office who were
either directors on the date hereof or whose election or nomination for election
was previously approved) cease for any reason to constitute a majority of the
board of directors of Osteotech then in office; or (c) any merger, consolidation
or sale of substantially all of the property or assets of any Borrower or any
direct or indirect Subsidiary of any Borrower unless any of the foregoing is the
result of a transaction permitted under Section 7.1 hereof or a transaction in
which a Subsidiary is merged into or consolidated with any other Subsidiary or a
Borrower, provided that, in the case of a merger into or consolidation with a
Borrower, the Borrower is the surviving Person (and in the case of a merger into
or consolidation with Osteotech, Osteotech is the surviving Person). For
purposes of this definition, control or controlled shall mean the power (direct
or indirect) to direct or cause the direction of the management and policies of
any Person, by contract or otherwise.
“Charges” shall mean all taxes, charges, fees, imposts, levies or other
assessments, including all net income, gross income, gross receipts, sales, use,
ad valorem, value added, transfer, franchise, profits, inventory, capital stock,
license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation and property taxes, custom duties, fees,
assessments, liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by
any taxing or other authority, domestic or foreign (including the Pension
Benefit Guaranty Corporation or any environmental agency or superfund), upon the
Collateral or any Borrower.
“Closing Date” shall mean December 29, 2009 or such other date as may be agreed
to by the parties hereto.
“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended
or supplemented from time to time, and any successor statute of similar import,
and the rules and regulations thereunder, as from time to time in effect.
“Collateral” shall mean, excluding the Excluded Assets:
(a) all Receivables;
(b) all Equipment;
(c) all General Intangibles;
(d) all Inventory;
(e) all Investment Property;
(f) all Subsidiary Stock;
(g) the Leasehold Interests;

 

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(h) all of each Borrower’s right, title and interest in and to, whether now
owned or hereafter acquired and wherever located, (i) its respective goods and
other property including, but not limited to, all merchandise returned or
rejected by Customers, relating to or securing any of the Receivables; (ii) all
of each Borrower’s rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienor, including stoppage in transit, setoff,
detinue, replevin, reclamation and repurchase; (iii) all additional amounts due
to any Borrower from any Customer relating to the Receivables; (iv) other
property, including warranty claims, relating to any goods securing the
Obligations; (v) all of each Borrower’s contract rights, rights of payment which
have been earned under a contract right, instruments (including promissory
notes), documents, chattel paper (including electronic chattel paper), warehouse
receipts, deposit accounts, letters of credit and money; (vi) all commercial
tort claims (whether now existing or hereafter arising) including in connection
with Osteotech, Inc. v. Regeneration Technologies, Inc., Civil File No. 06-4249,
District of New Jersey; (vii) if and when obtained by any Borrower, all real and
personal property of third parties in which such Borrower has been granted a
lien or security interest as security for the payment or enforcement of
Receivables; (viii) all letter of credit rights (whether or not the respective
letter of credit is evidenced by a writing); (ix) all supporting obligations;
and (x) any other goods, personal property or real property now owned or
hereafter acquired in which any Borrower has expressly granted a security
interest or may in the future grant a security interest to Agent hereunder, or
in any amendment or supplement hereto or thereto, or under any other agreement
between Agent and any Borrower;
(i) all of each Borrower’s ledger sheets, ledger cards, files, correspondence,
records, books of account, business papers, computers, computer software (owned
by any Borrower or in which it has an interest), computer programs, tapes, disks
and documents relating to (a), (b), (c), (d), (e), (f), (g) or (h) of this
Paragraph; and
(j) all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h) or
(i) in whatever form, including, but not limited to: cash, deposit accounts
(whether or not comprised solely of proceeds), certificates of deposit,
insurance proceeds (including hazard, flood, liability and credit insurance),
negotiable instruments and other instruments for the payment of money, chattel
paper, security agreements, documents, eminent domain proceeds, condemnation
proceeds and commercial tort claim proceeds.
“Commitment Percentage” of any Lender shall mean the percentage set forth below
such Lender’s name on the signature page hereof as same may be adjusted upon any
assignment by a Lender pursuant to Section 16.3(c) or (d) hereof.
“Commitment Transfer Supplement” shall mean a document in the form of
Exhibit 16.3 hereto, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
“Compliance Certificate” shall mean a compliance certificate to be signed by the
President, Chief Financial Officer, Treasurer or Assistant Treasurer of the
Borrowing Agent, or a designee of Chief Financial Officer, Treasurer or
Assistant Treasurer of the Borrowing Agent, which shall state that, based on an
examination sufficient to permit such officer to make an informed statement, no
Default or Event of Default exists, or if such is not the case, specifying such
Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Borrowers with respect to such default
and such certificate shall have appended thereto calculations which set forth
Borrowers’ compliance with the requirements or restrictions imposed by
Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11 hereof.

 

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“Consents” shall mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental Bodies and
other third parties, domestic or foreign, necessary to carry on any Borrower’s
business or necessary (including to avoid a conflict or breach under any
agreement, instrument, other document, license, permit or other authorization)
for the execution, delivery or performance of this Agreement, the Other
Documents, including any Consents required under all applicable federal, state
or other Applicable Law.
“Controlled Group” shall mean, at any time, each Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control and all other entities which, together with
any Borrower, are treated as a single employer under Section 414 of the Code.
“Customer” shall mean and include the account debtor with respect to any
Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with any Borrower,
pursuant to which such Borrower is to deliver any personal property or perform
any services.
“Debt Payment” shall mean collectively, Senior Debt Payments and Subordinated
Debt Payments.
“Default” shall mean an event, circumstance or condition which, with the giving
of notice or passage of time or both, would constitute an Event of Default.
“Default Rate” shall have the meaning set forth in Section 3.1 hereof.
“Defaulting Lender” shall have the meaning set forth in Section 2.23(a) hereof.
“Depository Accounts” shall have the meaning set forth in Section 4.15(h)
hereof.
“Designated Lender” shall have the meaning set forth in Section 16.2(b) hereof.
“Documents” shall have the meaning set forth in Section 8.1(c) hereof.
“Dollar” and the sign “$” shall mean lawful money of the United States of
America.
“Domestic Rate Loan” shall mean any Advance that bears interest based upon the
Alternate Base Rate.
“Early Termination Date” shall have the meaning set forth in Section 13.1
hereof.

 

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“Earnings Before Interest and Taxes” shall mean for any period the sum of
(i) net income (or loss) of Borrowers on a Consolidated Basis for such period
(excluding extraordinary gains and losses), plus (ii) all interest expense of
Borrowers on a Consolidated Basis for such period, plus (iii) all charges
against income of Borrowers on a Consolidated Basis for such period for foreign,
federal, state and local taxes actually paid.
“EBITDA” shall mean for any period the sum of (i) Earnings Before Interest and
Taxes for such period plus (ii) depreciation expenses for Borrowers on a
Consolidated Basis for such period, plus (iii) amortization expenses for
Borrowers on a Consolidated Basis for such period plus (iv) stock-based
compensation, plus (v) payments for all fees, commissions and charges set forth
herein and with respect to any Advances.
“Eligible Receivables” shall mean and include with respect to each Borrower,
each Receivable of such Borrower arising in the Ordinary Course of Business and
which Agent, in its reasonable credit judgment, shall deem to be an Eligible
Receivable, based on such considerations as Agent may from time to time deem
appropriate in its reasonable credit judgment. A Receivable shall not be deemed
eligible unless such Receivable is subject to Agent’s first priority perfected
security interest and no other Lien (other than Permitted Encumbrances), and is
evidenced by an invoice or other documentary evidence satisfactory to Agent. In
addition, no Receivable shall be an Eligible Receivable if:
(a) it arises out of a sale made by any Borrower to an Affiliate of any Borrower
or to a Person controlled by an Affiliate of any Borrower;
(b) it is due or unpaid more than (i) ninety (90) days after the original
invoice date with regard to Receivables from any Customer that is not a
Hospital, or (ii) one hundred twenty (120) days after the original invoice date
with regard to Receivables from any Customer that is a Hospital;
(c) fifty percent (50%) or more of the Receivables from such Customer are not
deemed Eligible Receivables hereunder. Such percentage may, in Agent’s
reasonable credit judgment, be increased or decreased from time to time;
(d) any covenant, representation or warranty contained in this Agreement with
respect to such Receivable has been breached;
(e) the Customer shall (i) apply for, suffer, or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property or call a meeting of its
creditors, (ii) admit in writing its inability, or be generally unable, to pay
its debts as they become due or cease operations of its present business,
(iii) make a general assignment for the benefit of creditors, (iv) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing;
(f) the sale is to a Customer outside the continental United States of America;

 

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(g) the sale to the Customer is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper;
(h) Agent believes, in its reasonable credit judgment, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer’s financial inability to pay;
(i) the Customer is the United States of America, any state or any department,
agency or instrumentality of any of them, unless the applicable Borrower assigns
its right to payment of such Receivable to Agent pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C.
Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes
or ordinances;
(j) the goods giving rise to such Receivable have not been delivered to and
accepted by the Customer or the services giving rise to such Receivable have not
been performed by the applicable Borrower and accepted by the Customer or the
Receivable otherwise does not represent a final sale;
(k) the Receivable is subject to any offset, deduction, defense, dispute, or
counterclaim, but only to the extent such offset, deduction, defense, dispute or
counterclaim reduces the amount to be paid with respect to such Receivable; the
Customer is also a creditor or supplier of a Borrower, but only to the extent of
any amount owing to such Customer; or the Receivable is contingent in any
respect or for any reason;
(l) the applicable Borrower has made any agreement with any Customer for any
deduction therefrom, except for discounts or allowances made in the Ordinary
Course of Business consistent with past practices, for prompt payment, all of
which discounts or allowances are reflected in the calculation of the face value
of each respective invoice related thereto;
(m) any return, rejection or repossession of the merchandise has occurred or the
rendition of services has been disputed, to the extent such dispute affects the
amount to be paid; or
(n) such Receivable is not payable to a Borrower.
“Environmental Complaint” shall have the meaning set forth in Section 4.19(d)
hereof.
“Environmental Laws” shall mean all federal, state and local environmental, land
use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes relating to the protection of the environment and/or
governing the use, storage, treatment, generation, transportation, processing,
handling, production or disposal of Hazardous Substances and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of federal, state and local governmental agencies and authorities
with respect thereto.
“Equipment” shall mean and include as to each Borrower all of such Borrower’s
goods (other than Inventory) whether now owned or hereafter acquired and
wherever located including all equipment, machinery, apparatus, motor vehicles,
fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.

 

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“Equity Interests” of any Person shall mean any and all shares, rights to
purchase, options, warrants, general, limited or limited liability partnership
interests, member interests, participation or other equivalents of or interest
in (regardless of how designated) equity of such Person, whether voting or
nonvoting, including common stock, preferred stock, convertible securities or
any other “equity security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and the rules and regulations promulgated thereunder.
“Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current
Interest Period relating thereto the interest rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) determined by Agent by dividing
(i) the rate which appears on the Bloomberg Page BBAM1 (or on such other
substitute Bloomberg page that displays rates at which US dollar deposits are
offered by leading banks in the London interbank deposit market), or the rate
which is quoted by another source selected by Agent which has been approved by
the British Bankers’ Association as an authorized information vendor for the
purpose of displaying rates at which US dollar deposits are offered by leading
banks in the London interbank deposit market (an “Alternative Source”), at
approximately 11:00 a.m., London time two (2) Business Days prior to the first
day of such Interest Period (or if there shall at any time, for any reason, no
longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate
Source, a comparable replacement rate determined by the Agent at such time
(which determination shall be conclusive absent manifest error)) for an amount
comparable to such Eurodollar Rate Loan and having a borrowing date and a
maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus
the Reserve Percentage.
The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan
that is outstanding on the effective date of any change in the Reserve
Percentage as of such effective date. The Agent shall give prompt notice to the
Borrowing Agent of the Eurodollar Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest error.
“Eurodollar Rate Loan” shall mean an Advance at any time that bears interest
based on the Eurodollar Rate.
“Event of Default” shall have the meaning set forth in Article X hereof.
“Exchange Act” shall have the mean the Securities Exchange Act of 1934, as
amended.
“Excluded Assets” shall mean Equipment subject to a purchase money Lien or
capital lease to the extent that the instrument or other agreement evidencing
the purchase money Indebtedness or Capital Lease Obligations, as the case may
be, secured by such Lien or capital lease on such Equipment limits a Borrower’s
ability to grant a security interest therein to Agent; provided however, that
such Equipment shall be excluded from the Collateral only for so long as such
purchase money Indebtedness or Capital Lease Obligations, as the case may be,
remains outstanding, and upon the earlier of the termination of such limitation
or the satisfaction of such Indebtedness, such Equipment shall be included in
the term “Collateral” without any further action on the part of any Borrower or
Agent.

 

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“Executive Order No. 13224” shall mean the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.
“Federal Funds Effective Rate” for any day shall mean the rate per annum (based
on a year of 360 days and actual days elapsed and rounded upward to the nearest
1/100 of 1%) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
federal funds transactions arranged by federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the “Federal Funds
Effective Rate” as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
“Federal Funds Effective Rate” for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
“Federal Funds Open Rate” for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed) which is the daily federal funds open
rate as quoted by ICAP North America, Inc. (or any successor) as set forth on
the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such
other substitute Bloomberg Screen that displays such rate), or as set forth on
such other recognized electronic source used for the purpose of displaying such
rate as selected by PNC (an “Alternate Source”) (or if such rate for such day
does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on
any Alternate Source, or if there shall at any time, for any reason, no longer
exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate
Source, a comparable replacement rate determined by the PNC at such time (which
determination shall be conclusive absent manifest error); provided however, that
if such day is not a Business Day, the Federal Funds Open Rate for such day
shall be the “open” rate on the immediately preceding Business Day. If and when
the Federal Funds Open Rate changes, the rate of interest with respect to any
advance to which the Federal Funds Open Rate applies will change automatically
without notice to the Borrowers, effective on the date of any such change.
“Fixed Charge Coverage Ratio” shall mean and include, with respect to any fiscal
period, the ratio of (a) EBITDA minus Unfinanced Capital Expenditures made
during such period minus cash taxes paid during such period minus dividends and
distributions on account of any Equity Interests paid during such period to
(b) all Debt Payments made during such period.
“Formula Amount” shall have the meaning set forth in Section 2.1(a) hereof.
“GAAP” shall mean generally accepted accounting principles in the United States
of America in effect from time to time.

 

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“General Intangibles” shall mean and include as to each Borrower all of such
Borrower’s general intangibles, whether now owned or hereafter acquired,
including all payment intangibles, all choses in action, causes of action,
corporate or other business records, inventions, designs, patents, patent
applications, equipment formulations, manufacturing procedures, quality control
procedures, trademarks, trademark applications, service marks, trade secrets,
goodwill, copyrights, design rights, software, computer information, source
codes, codes, records and updates, registrations, licenses, franchises, customer
lists, tax refunds, tax refund claims, computer programs, all claims under
guaranties, security interests or other security held by or granted to such
Borrower to secure payment of any of the Receivables by a Customer (other than
to the extent covered by Receivables) all rights of indemnification and all
other intangible property of every kind and nature (other than Receivables).
“Governmental Body” shall mean any nation or government, any state or other
political subdivision thereof or any entity, authority, agency (including,
without limitation, the Food and Drug Administration), division or department
exercising the legislative, judicial, regulatory or administrative functions of
or pertaining to a government.
“Guarantor” shall mean any Person who may hereafter guarantee payment or
performance of the whole or any part of the Obligations and “Guarantors” means
collectively all such Persons.
“Guarantor Security Agreement” shall mean any Security Agreement executed by any
Guarantor in favor of Agent securing the Guaranty of such Guarantor, in form and
substance satisfactory to Agent.
“Guaranty” shall mean any guaranty of the obligations of Borrowers executed by a
Guarantor in favor of Agent for its benefit and for the ratable benefit of
Lenders, in form and substance satisfactory to Agent.
“Hazardous Discharge” shall have the meaning set forth in Section 4.19(d)
hereof.
“Hazardous Substance” shall mean, without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, Hazardous Wastes, hazardous or Toxic Substances or related materials
as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable Environmental Law and in
the regulations adopted pursuant thereto.
“Hazardous Wastes” shall mean all waste materials subject to regulation under
CERCLA, RCRA or applicable state law, and any other applicable Federal and state
laws now in force or hereafter enacted relating to hazardous waste disposal.
“Hedge Liabilities” shall have the meaning provided in the definition of
“Lender-Provided Interest Rate Hedge”.
“Hospital” shall mean each of the Customers listed on Exhibit A hereto, and such
other Customers as Agent may, in its sole discretion, designate in writing from
time to time.

 

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“Indebtedness” of a Person at a particular date shall mean all obligations of
such Person which in accordance with GAAP would be classified upon a balance
sheet as liabilities (except capital stock and surplus earned or otherwise) and
in any event, without limitation by reason of enumeration, shall include all
indebtedness, debt and other similar monetary obligations of such Person whether
direct or guaranteed, and all premiums, if any, due at the required prepayment
dates of such indebtedness, and all indebtedness secured by a Lien on assets
owned by such Person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Person provided that, the amount of
indebtedness secured by a Lien on assets owned by such Person which is
non-recourse to such Person shall be equal to the lesser of (i) such
indebtedness and (ii) the fair market value of such assets. Any indebtedness of
such Person resulting from the acquisition by such Person of any assets subject
to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby,
whether or not actually so created, assumed or incurred. The term “Indebtedness”
as used in this Agreement shall exclude, in any event, liabilities with respect
to accrued salaries, vacation, other employee benefits and other similar items
incurred in the Ordinary Course of Business.
“Ineligible Security” shall mean any security which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
“Intellectual Property” shall mean property constituting under any Applicable
Law a patent, patent application, copyright, trademark, service mark, trade
name, mask work, trade secret or license or other right to use any of the
foregoing.
“Intellectual Property Claim” shall mean the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise) that
any Borrower’s ownership, use, marketing, sale or distribution of any Inventory,
Equipment, Intellectual Property or other property or asset violates of any
ownership of or right to use any Intellectual Property of such Person.
“Interest Period” shall mean the period provided for any Eurodollar Rate Loan
pursuant to Section 2.2(b) hereof.
“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap,
adjustable strike cap, adjustable strike corridor or similar agreements entered
into by any Borrower or its Subsidiaries in order to provide protection to, or
minimize the impact upon, such Borrower, any Guarantor and/or their respective
Subsidiaries of increasing floating rates of interest applicable to
Indebtedness.
“Inventory” shall mean and include as to each Borrower all of such Borrower’s
now owned or hereafter acquired goods, merchandise and other personal property,
wherever located, to be furnished under any consignment arrangement, contract of
service or held for sale or lease, all raw materials, work in process, finished
goods and materials and supplies of any kind, nature or description which are or
might be used or consumed in such Borrower’s business or used in selling or
furnishing such goods, merchandise and other personal property, and all
documents of title or other documents representing them.

 

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“Investment Property” shall mean and include as to each Borrower, all of such
Borrower’s now owned or hereafter acquired securities (whether certificated or
uncertificated), securities entitlements, securities accounts, commodities
contracts and commodities accounts.
“Leasehold Interests” shall mean all of each Borrower’s right, title and
interest in and to the premises described on Schedule 1.1.
“Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a
transferee, successor or assign of any Lender.
“Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is
provided by any Lender and with respect to which the Agent confirms meets the
following requirements: such Interest Rate Hedge (i) is documented in a standard
International Swap Dealer Association Agreement, (ii) provides for the method of
calculating the reimbursable amount of the provider’s credit exposure in a
reasonable and customary manner, and (iii) is entered into for hedging (rather
than speculative) purposes. The liabilities of any Borrower to the provider of
any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be
“Obligations” hereunder, guaranteed obligations under the Guaranty and secured
obligations under the Guarantor Security Agreement and otherwise treated as
Obligations for purposes of each of the Other Documents. The Liens securing the
Hedge Liabilities shall be pari passu with the Liens securing all other
Obligation under this Agreement and the Other Documents.
“License Agreement” shall mean any agreement between any Borrower and a Licensor
pursuant to which such Borrower is authorized to use any Intellectual Property
in connection with the manufacturing, marketing, sale or other distribution of
any Inventory of such Borrower or otherwise in connection with such Borrower’s
business operations.
“Licensor” shall mean any Person from whom any Borrower obtains the right to use
(whether on an exclusive or non-exclusive basis) any Intellectual Property in
connection with such Borrower’s manufacture, marketing, sale or other
distribution of any Inventory or otherwise in connection with such Borrower’s
business operations.
“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien (whether statutory or otherwise), Charge,
claim or encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind or
nature whatsoever including any conditional sale or other title retention
agreement, any lease having substantially the same economic effect as any of the
foregoing (other than an operating lease), and the filing of, or agreement to
give, any financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction (other than cautionary filings related to operating
leases).
“Lien Waiver Agreement” shall mean an agreement which is executed in favor of
Agent by a Person who owns or occupies premises at which any Collateral may be
located from time to time and by which such Person shall waive or subordinate
any Lien that such Person may ever have with respect to any of the Collateral
and shall authorize Agent from time to time to enter upon the premises to
inspect or remove the Collateral from such premises or to use such premises to
store or dispose of such Collateral.

 

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“Material Adverse Effect” shall mean a material adverse effect on (a) the
financial condition, results of operations, assets, business, or properties of
any Borrower, (b) any Borrower’s ability to duly and punctually pay or perform
the Obligations in accordance with the terms thereof, (c) the value of the
Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien
or (d) the practical realization of the benefits of Agent’s and each Lender’s
rights and remedies under this Agreement and the Other Documents.
“Maximum Revolving Advance Amount” shall mean $10,000,000.
“Modified Commitment Transfer Supplement” shall have the meaning set forth in
Section 16.3(d) hereof.
“Multiemployer Plan” shall mean a “multiemployer plan” as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
“Multiple Employer Plan” shall mean a Plan which has two or more contributing
sponsors (including any Borrower or any member of the Controlled Group) at least
two of whom are not under common control, as such a plan is described in
Section 4064 of ERISA.
“Note” shall mean the Revolving Credit Note.
“Obligations” shall mean and include any and all loans, advances, debts,
liabilities, obligations, covenants and duties owing by any Borrower to Lenders
or Agent or to any other direct or indirect subsidiary or affiliate of Agent or
any Lender of any kind or nature, present or future (including any interest or
other amounts accruing thereon after maturity, or after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding relating to any Borrower, whether or not a claim for post-filing
or post-petition interest or other amounts is allowed in such proceeding),
whether or not evidenced by any note, guaranty or other instrument, whether
arising under any agreement, instrument or document, (including this Agreement
and the Other Documents) whether or not for the payment of money, whether
arising by reason of an extension of credit, opening of a letter of credit,
loan, equipment lease or guarantee, under any interest or currency swap, future,
option or other similar agreement (including, without limitation, any Hedge
Liabilities), or in any other manner, whether arising out of overdrafts or
deposit or other accounts or electronic funds transfers (whether through
automated clearing houses or otherwise) or out of the Agent’s or any Lenders
non-receipt of or inability to collect funds or otherwise not being made whole
in connection with depository transfer check or other similar arrangements,
whether direct or indirect (including those acquired by assignment or
participation), absolute or contingent, joint or several, due or to become due,
now existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, regardless of how such indebtedness or liabilities arise or by
what agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, including, but not limited to, any and all of any
Borrower’s Indebtedness and/or liabilities under this Agreement, the Other
Documents or under any other agreement between Agent or Lenders and any Borrower
(specifically including, without limitation, any debts, liabilities or
obligations of any Borrower to PNC under the P-Card Agreement or under any other
purchase card or credit card facility) and any amendments, extensions, renewals
or increases and all costs and expenses of Agent and any Lender incurred in the
documentation, negotiation, modification, enforcement, collection or otherwise
in connection with any of the foregoing, including but not limited to reasonable
attorneys’ fees and expenses and all obligations of any Borrower to Agent or
Lenders to perform acts or refrain from taking any action.

 

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“Ordinary Course of Business” shall mean with respect to any Borrower, the
ordinary course of such Borrower’s business as conducted on the Closing Date.
“Other Documents” shall mean the Note, the Questionnaire, the Pledge Agreement,
any Guaranty, any Guarantor Security Agreement, any Lender-Provided Interest
Rate Hedge and any and all other agreements, instruments and documents,
including guaranties, pledges, powers of attorney, consents, interest or
currency swap agreements or other similar agreements and all other writings
heretofore, now or hereafter executed by any Borrower or any Guarantor and/or
delivered to Agent or any Lender in respect of the transactions contemplated by
this Agreement.
“Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(b)
hereof.
“Participant” shall mean each Person who shall be granted the right by any
Lender to participate in any of the Advances and who shall have entered into a
participation agreement in form and substance satisfactory to such Lender.
“Payee” shall have the meaning set forth in Section 3.10 hereof.
“P-Card Agreement” shall mean that certain Visa Purchasing Card Agreement
between Osteotech and PNC, effective as of September 25, 2007, as may be amended
from time to time.
“P-Card Reserve” shall mean an amount that Agent may reasonably determine, but
in no event to exceed the maximum amount available under the P-Card Agreement,
if, at any time, the sum of (a) cash balances on deposit at Agent plus
(b) Undrawn Availability is less than $5,000,000.
“Payment Office” shall mean initially Two Tower Center Boulevard, East
Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrowing Agent and to each Lender to be the
Payment Office.
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor.
“Pension Benefit Plan” shall mean at any time any employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Code and either (i) is maintained by any member of the
Controlled Group for employees of any member of the Controlled Group; or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the Controlled Group for employees of
any entity which was at such time a member of the Controlled Group.

 

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“Permitted Encumbrances” shall mean:
(a) Liens in favor of Agent for the benefit of Agent and Lenders securing the
Obligations;
(b) Liens for taxes, assessments or other governmental charges not delinquent or
being Properly Contested;
(c) Liens disclosed in the financial statements referred to in Section 5.5, the
existence of which Agent has consented to in writing;
(d) deposits or pledges to secure obligations under worker’s compensation,
social security or similar laws, or under unemployment insurance;
(e) deposits or pledges to secure bids, tenders, contracts (other than contracts
for the payment of money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature arising in the Ordinary Course of
Business;
(f) Liens arising by virtue of the rendition, entry or issuance against any
Borrower or any Subsidiary, or any property of any Borrower or any Subsidiary,
of any judgment, writ, order, or decree for so long as each such Lien does not
cause an Event of Default and is at all times junior in priority to any Liens in
favor of Agent;
(g) Liens of landlords, Liens of collecting banks under the Uniform Commercial
Code on items in the course of collection, Liens and rights of set-off of banks
(including pursuant to any deposit account agreement), statutory and common law
Liens of carriers, warehousemen, mechanics, repairmen, workmen and materialmen,
and other Liens imposed by Applicable Law or other like Liens arising in the
Ordinary Course of Business with respect to obligations which are not due or
which are being Properly Contested;
(h) Liens placed upon fixed assets hereafter acquired to secure a portion of the
purchase price thereof, provided that (x) any such lien shall not encumber any
other property of any Borrower and (y) the aggregate amount of Indebtedness
secured by such Liens incurred as a result of such purchases during any fiscal
year shall not exceed the amount provided for in Section 7.6; provided that in
no event may any such Liens be in favor of Key Equipment Finance, Inc. (“Key”)
until the financing statement in favor of Key, as of record on the Closing Date,
has been amended to limit the collateral described therein to specific office
equipment financed by Key;
(i) licenses (with respect to Intellectual Property and other property), leases
or subleases granted to third parties not interfering in any material respect
with the ordinary conduct of the business of any Borrower;
(j) easements, zoning restrictions, rights-of-way, covenants and other
restrictions, encroachments, and other minor defects or irregularities in title
or other similar encumbrances, in each case which do not and will not interfere
in any material respect with the ordinary conduct of the business of any
Borrower;

 

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(k) Liens arising from precautionary filings of Uniform Commercial Code
financing statements relating solely to leases and other transactions not
prohibited by this Agreement;
(l) any (i) interest or title of a lessor or sublessor or lessee or sublessee
under any lease not prohibited by this Agreement, (ii) Lien or restriction that
the interest or title of such lessor or sublessor may be subject to, or
(iii) subordination of the interest of the lessee or sublessee under such lease
to any Lien or restriction referred to in the preceding clause (ii);
(m) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of customs duties in connection with the importation or
exportation of goods;
(n) other Liens incidental to the conduct of any Borrower’s business or the
ownership of its property and assets which were not incurred in connection with
the borrowing of money or the obtaining of advances or credit, and which do not
in the aggregate materially detract from Agent’s or Lenders’ rights in and to
the Collateral or the value of any Borrower’s property or assets or which do not
materially impair the use thereof in the operation of any Borrower’s business;
and
(o) Liens disclosed on Schedule 1.2; provided that such Liens shall secure only
those obligations which they secure on the Closing Date and shall not
subsequently apply to any other property or assets of any Borrower.
“Person” shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, limited liability
partnership, institution, public benefit corporation, joint venture, entity or
Governmental Body (whether federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).
“Plan” shall mean any employee benefit plan within the meaning of Section 3(3)
of ERISA (including a Pension Benefit Plan), maintained for employees of any
Borrower or any member of the Controlled Group or any such Plan to which any
Borrower or any member of the Controlled Group is required to contribute on
behalf of any of its employees.
“Pledge Agreement” shall mean the Pledge Agreement executed by Osteotech in
favor of Agent for its benefit and for the ratable benefit of Lenders, in
respect of the Subsidiary Stock, in form and substance satisfactory to Agent.
“PNC” shall have the meaning set forth in the preamble to this Agreement and
shall extend to all of its successors and assigns.

 

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“Properly Contested” shall mean, in the case of any Indebtedness or Lien, as
applicable, of any Person (including any taxes) that is not paid as and when due
or payable by reason of such Person’s bona fide dispute concerning its liability
to pay same or concerning the amount thereof, (a) such Indebtedness or Lien, as
applicable, is being properly contested in good faith by appropriate proceedings
promptly instituted and diligently conducted; (b) such Person has established
appropriate reserves as shall be required in conformity with GAAP; (c) the non-
payment of such Indebtedness will not have a Material Adverse Effect and will
not result in the forfeiture of any assets of such Person; (d) no Lien is
imposed upon any of such Person’s assets with respect to such Indebtedness
unless such Lien is at all times junior and subordinate in priority to the Liens
in favor of the Agent (except only with respect to property taxes that have
priority as a matter of applicable state law) and enforcement of such Lien is
stayed during the period prior to the final resolution or disposition of such
dispute; (e) if such Indebtedness or Lien, as applicable, results from, or is
determined by the entry, rendition or issuance against a Person or any of its
assets of a judgment, writ, order or decree, enforcement of such judgment, writ,
order or decree is stayed pending a timely appeal or other judicial review; and
(f) if such contest is abandoned, settled or determined adversely (in whole or
in part) to such Person, such Person forthwith pays such Indebtedness and all
penalties, interest and other amounts due in connection therewith.
“Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.
“Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.
“Questionnaire” shall mean the Documentation Information Questionnaire and the
responses thereto provided by Borrowing Agent and delivered to Agent.
“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901
et seq., as same may be amended from time to time.
“Real Property” shall mean all of each Borrower’s right, title and interest in
and to the owned and leased premises identified on Schedule 4.19 hereto or which
is hereafter owned or leased by any Borrower.
“Receivables” shall mean and include, as to each Borrower, all of such
Borrower’s accounts, contract rights, instruments (including those evidencing
indebtedness owed to such Borrower by its Affiliates), documents, chattel paper
(including electronic chattel paper), general intangibles relating to accounts,
drafts and acceptances, credit card receivables and all other forms of
obligations owing to such Borrower arising out of or in connection with the sale
or lease of Inventory or the rendition of services, all supporting obligations,
guarantees and other security therefor, whether secured or unsecured, now
existing or hereafter created, and whether or not specifically sold or assigned
to Agent hereunder.
“Receivables Advance Rate” shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.
“Register” shall have the meaning set forth in Section 16.3(e) hereof.
“Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.
“Reportable Event” shall mean a reportable event described in Section 4043(c) of
ERISA or the regulations promulgated thereunder.
“Required Lenders” shall mean Lenders holding at least fifty percent (50%) of
the Advances and, if no Advances are outstanding, shall mean Lenders holding
fifty percent (50%) of the Commitment Percentages; provided, however, if there
are fewer than three (3) Lenders, Required Lenders shall mean all Lenders.

 

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“Reserve Percentage” shall mean as of any day the maximum percentage in effect
on such day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including
supplemental, marginal and emergency reserve requirements) with respect to
eurocurrency funding (currently referred to as “Eurocurrency Liabilities”).
“Revolving Advances” shall mean Advances made under Section 2.1 hereof.
“Revolving Credit Note” shall mean, collectively, the promissory notes referred
to in Section 2.1(a) hereof.
“Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the
sum of the Alternate Base Rate plus the Applicable Margin with respect to
Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus the Applicable
Margin with respect to Eurodollar Rate Loans.
“SEC” shall mean the Securities and Exchange Commission or any successor
thereto.
“Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company
controlling PNC, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Senior Debt Payments” shall mean and include the sum of (a) all cash actually
expended by any Borrower to make (i) interest payments on any Advances
hereunder, plus (ii) payments for all fees, commissions and charges set forth
herein and with respect to any Advances, plus (iii) payments on account of
Capitalized Lease Obligations, plus (iv) payments with respect to any other
Indebtedness for borrowed money other than Subordinated Debt Payments, and
(b) without duplication, all interest expense accrued on Eurodollar Rate Loans.
“Settlement Date” shall mean the Closing Date and thereafter Wednesday or
Thursday of each week or more frequently if Agent deems appropriate unless such
day is not a Business Day in which case it shall be the next succeeding Business
Day.
“Stock Repurchase Plan” shall mean the Osteotech stock repurchase program
publicly announced by Osteotech on December 11, 2008.
“Subordinated Debt Payments” shall mean and include all cash actually expended
by any Borrower to make payments of principal, interest and premium on account
of any Subordinated Loan.
“Subordinated Loan” shall mean any loan incurred by any Borrower that is
subordinated to the Obligations on written terms and conditions satisfactory to
Agent in Agent’s sole and absolute discretion.

 

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“Subsidiary” of any Person shall mean a corporation or other entity of whose
Equity Interests having ordinary voting power (other than Equity Interests
having such power only by reason of the happening of a contingency) to elect a
majority of the directors of such corporation, or other Persons performing
similar functions for such entity, are owned, directly or indirectly, by such
Person.
“Subsidiary Stock” shall mean 65% of the issued and outstanding Equity Interests
of OST Developpment, SA.
“Term” shall have the meaning set forth in Section 13.1 hereof.
“Termination Event” shall mean (a) a Reportable Event with respect to any Plan
or Multiemployer Plan; (b) the withdrawal of any Borrower or any member of the
Controlled Group from a Plan or Multiemployer Plan during a plan year in which
such entity was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA; (c) the providing of notice of intent to terminate a Plan in a distress
termination described in Section 4041(c) of ERISA; (d) the institution by the
PBGC of proceedings to terminate a Plan or Multiemployer Plan; (e) any event or
condition (i) which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (ii) that may result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA; or (f) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any
Borrower or any member of the Controlled Group from a Multiemployer Plan.
“Toxic Substance” shall mean and include any material present on the Real
Property or the Leasehold Interests which has been shown to have significant
adverse effect on human health or which is subject to regulation under the Toxic
Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law,
or any other applicable Federal or state laws now in force or hereafter enacted
relating to toxic substances. “Toxic Substance” includes but is not limited to
asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
“Trading with the Enemy Act” shall mean the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) and any enabling legislation or executive order relating thereto.
“Transferee” shall have the meaning set forth in Section 16.3(d) hereof.
“Undrawn Availability” at a particular date shall mean an amount equal to
(a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance
Amount, minus (b) the sum of (i) the outstanding amount of Advances plus
(ii) all amounts due and owing to any Borrower’s trade creditors which are
outstanding sixty (60) days beyond the due date unless otherwise on formal
written extended terms, plus (iii) fees and expenses for which Borrowers are
liable but which have not been paid or charged to Borrowers’ Account.
“Unfinanced Capital Expenditures” shall mean all Capital Expenditures of
Borrowers other than those made utilizing financing provided by the applicable
seller or third party lenders. For the avoidance of doubt, Capital Expenditures
made by a Borrower utilizing Revolving Advances shall be deemed Unfinanced
Capital Expenditures.

 

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“Uniform Commercial Code” shall have the meaning set forth in Section 1.3
hereof.
“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.
“Week” shall mean the time period commencing with the opening of business on a
Wednesday and ending on the end of business the following Tuesday.
1.3. Uniform Commercial Code Terms. All terms used herein and defined in the
Uniform Commercial Code as adopted in the Commonwealth of Pennsylvania from time
to time (the “Uniform Commercial Code”) shall have the meaning given therein
unless otherwise defined herein. Without limiting the foregoing, the terms
“accounts”, “chattel paper”, “commercial tort claims”, “instruments”, “general
intangibles”, “goods”, “payment intangibles”, “proceeds”, “supporting
obligations”, “securities”, “investment property”, “documents”, “deposit
accounts”, “software”, “letter of credit rights”, “inventory”, “equipment” and
“fixtures”, as and when used in the description of Collateral shall have the
meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code.
To the extent the definition of any category or type of collateral is expanded
by any amendment, modification or revision to the Uniform Commercial Code, such
expanded definition will apply automatically as of the date of such amendment,
modification or revision.
1.4. Certain Matters of Construction. The terms “herein”, “hereof” and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. All references
herein to Articles, Sections, Exhibits and Schedules shall be construed to refer
to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any
pronoun used shall be deemed to cover all genders. Wherever appropriate in the
context, terms used herein in the singular also include the plural and vice
versa. All references to statutes and related regulations shall include any
amendments of same and any successor statutes and regulations. Unless otherwise
provided, all references to any instruments or agreements to which Agent is a
party, including references to any of the Other Documents, shall include any and
all modifications or amendments thereto and any and all extensions or renewals
thereof. All references herein to the time of day shall mean the time in New
York, New York. Unless otherwise provided, all financial calculations shall be
performed with Inventory valued on a first-in, first-out basis. Whenever the
words “including” or “include” shall be used, such words shall be understood to
mean “including, without limitation” or “include, without limitation”. A Default
or Event of Default shall be deemed to exist at all times during the period
commencing on the date that such Default or Event of Default occurs to the date
on which such Default or Event of Default is waived in writing pursuant to this
Agreement or, in the case of a Default, is cured within any period of cure
expressly provided for in this Agreement; and an Event of Default shall
“continue” or be “continuing” until such Event of Default has been waived in
writing by the Required Lenders. Any Lien referred to in this Agreement or any
of the Other Documents as having been created in favor of Agent, any agreement
entered into by Agent pursuant to this Agreement or any of the Other Documents,
any payment made by or to or funds received by Agent pursuant to or as
contemplated by this Agreement or any of the Other Documents, or any act taken
or omitted to be taken by Agent, shall, unless

 

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otherwise expressly provided, be created, entered into, made or received, or
taken or omitted, for the benefit or account of Agent and Lenders. Wherever the
phrase “to the best of Borrowers’ knowledge” or words of similar import relating
to the knowledge or the awareness of any Borrower are used in this Agreement or
Other Documents, such phrase shall mean and refer to (i) the actual knowledge of
a senior officer of any Borrower or (ii) the knowledge that a senior officer
would have obtained if he had engaged in good faith and diligent performance of
his duties, including the making of such reasonably specific inquiries as may be
necessary of the employees or agents of such Borrower and a good faith attempt
to ascertain the existence or accuracy of the matter to which such phrase
relates. All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or otherwise within the
limitations of, another covenant shall not avoid the occurrence of a default if
such action is taken or condition exists. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached will not affect the incorrectness of a breach of a
representation or warranty hereunder.
II. ADVANCES, PAYMENTS.
2.1. Revolving Advances.
(a) Amount of Revolving Advances. Subject to the terms and conditions set forth
in this Agreement including Section 2.1(b), each Lender, severally and not
jointly, will make Revolving Advances to Borrowers in aggregate amounts
outstanding at any time equal to such Lender’s Commitment Percentage of the
lesser of (x) the Maximum Revolving Advance Amount or (y) an amount equal to the
sum of:
(i) up to 85%, subject to the provisions of Section 2.1(b) hereof (“Receivables
Advance Rate”), of Eligible Receivables, minus
(ii) such reserves as Agent may reasonably deem proper and necessary from time
to time, including, without limitation, the P-Card Reserve; provided that with
respect to any individual reserve in excess of $500,000 (other than the P-Card
Reserve), Agent shall provide fifteen (15) days’ prior written notice of the
imposition hereof.
The amount derived from (x) Section 2.1(a)(y)(i) minus (y) Section 2.1(a)(y)(ii)
at any time and from time to time shall be referred to as the “Formula Amount”.
The Revolving Advances shall be evidenced by one or more secured promissory
notes (collectively, the “Revolving Credit Note”) substantially in the form
attached hereto as Exhibit 2.1(a).
(b) Discretionary Rights. The Receivables Advance Rate may be increased or
decreased by Agent at any time and from time to time (upon five (5) Business
Days’ prior notice) in the exercise of its reasonable credit judgment, following
a field examination, as a result of which Agent reasonably determines that a
change in the Receivables Advance Rate is appropriate. Each Borrower consents to
any such increases or decreases and acknowledges that decreasing the Receivables
Advance Rate or increasing or imposing reserves may limit or restrict Advances
requested by Borrowing Agent. The rights of Agent under this subsection are
subject to the provisions of Section 16.2(b).

 

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2.2. Procedure for Revolving Advances Borrowing.
(a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 1:30
p.m. on a Business Day of a Borrower’s request to incur, on that day, a
Revolving Advance hereunder. Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any other
agreement with Agent or Lenders, or with respect to any other Obligation, become
due, same shall be deemed a request for a Revolving Advance maintained as a
Domestic Rate Loan as of the date such payment is due, in the amount required to
pay in full such interest, fee, charge or Obligation under this Agreement or any
other agreement with Agent or Lenders, and such request shall be irrevocable.
(b) Notwithstanding the provisions of subsection (a) above, in the event any
Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall give
Agent written notice by no later than 12:00 p.m. on the day which is three
(3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed,
specifying (i) the date of the proposed borrowing (which shall be a Business
Day), (ii) the type of borrowing and the amount on the date of such Advance to
be borrowed, which amount shall be in an aggregate principal amount that is not
less than $500,000 and integral multiples of $100,000 in excess thereof, and
(iii) the duration of the first Interest Period therefor. Interest Periods for
Eurodollar Rate Loans shall be for one, two, three or six months; provided, if
an Interest Period would end on a day that is not a Business Day, it shall end
on the next succeeding Business Day unless such day falls in the next succeeding
calendar month in which case the Interest Period shall end on the next preceding
Business Day. No Eurodollar Rate Loan shall be made available to any Borrower
during the continuance of a Default or an Event of Default. After giving effect
to each requested Eurodollar Rate Loan, including those which are converted from
a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more
than three (3) Eurodollar Rate Loans, in the aggregate.
(c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date
such Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent
may elect as set forth in subsection (b)(iii) above provided that the exact
length of each Interest Period shall be determined in accordance with the
practice of the interbank market for offshore Dollar deposits and no Interest
Period shall end after the last day of the Term.
Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to
Section 2.2(d), as the case may be. Borrowing Agent shall elect the duration of
each succeeding Interest Period by giving irrevocable written notice to Agent of
such duration not later than 12:00 p.m. on the day which is three (3) Business
Days prior to the last day of the then current Interest Period applicable to
such Eurodollar Rate Loan. If Agent does not receive timely notice of the
Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed to
have elected to convert to a Domestic Rate Loan subject to Section 2.2(d)
hereinbelow.

 

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(d) Provided that no Event of Default shall have occurred and be continuing,
Borrowing Agent may, on the last Business Day of the then current Interest
Period applicable to any outstanding Eurodollar Rate Loan, or on any Business
Day with respect to Domestic Rate Loans, convert any such loan into a loan of
another type in the same aggregate principal amount provided that any conversion
of a Eurodollar Rate Loan shall be made only on the last Business Day of the
then current Interest Period applicable to such Eurodollar Rate Loan. If
Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent
written notice by no later than 12:00 p.m. (i) on the day which is three
(3) Business Days’ prior to the date on which such conversion is to occur with
respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or
(ii) on the day which is one (1) Business Day prior to the date on which such
conversion is to occur with respect to a conversion from a Eurodollar Rate Loan
to a Domestic Rate Loan, specifying, in each case, the date of such conversion,
the loans to be converted and if the conversion is from a Domestic Rate Loan to
a Eurodollar Rate Loan, the duration of the first Interest Period therefor.
(e) At its option and upon written notice given prior to 12:00 p.m. (New York
time) at least three (3) Business Days’ prior to the date of such prepayment,
any Borrower may prepay the Eurodollar Rate Loans in whole at any time or in
part from time to time with accrued interest on the principal being prepaid to
the date of such repayment. Such Borrower shall specify the date of prepayment
of Advances which are Eurodollar Rate Loans and the amount of such prepayment.
In the event that any prepayment of a Eurodollar Rate Loan is required or
permitted on a date other than the last Business Day of the then current
Interest Period with respect thereto, such Borrower shall indemnify Agent and
Lenders therefor in accordance with Section 2.2(f) hereof.
(f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders
harmless from and against any and all losses or expenses that Agent and Lenders
may sustain or incur as a consequence of any prepayment, conversion of or any
default by any Borrower in the payment of the principal of or interest on any
Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a
prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or
Lenders to lenders of funds obtained by it in order to make or maintain its
Eurodollar Rate Loans hereunder; provided that no such indemnification shall be
required as a result of a prepayment of a Eurodollar Rate Loan arising from the
mandatory application of proceeds of Collateral under Sections 2.7 and 4.15(d).
A certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by Agent or any Lender to Borrowing Agent shall be conclusive
absent manifest error.
(g) Notwithstanding any other provision hereof, if any Applicable Law, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for any Lender (for purposes of this subsection (g), the term “Lender”
shall include any Lender and the office or branch where any Lender or any
corporation or bank controlling such Lender makes or maintains any Eurodollar
Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of
Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and
Borrowers shall, if any affected Eurodollar Rate Loans are then outstanding,
promptly upon request from Agent, either pay all such affected Eurodollar Rate
Loans or convert such affected Eurodollar Rate Loans into loans of another type.
If any such payment or conversion of any Eurodollar Rate Loan is made on a day
that is not the last day of the Interest Period applicable to such Eurodollar
Rate Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or
amounts as may be necessary to compensate Lenders for any loss or expense
sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a
result of such payment or conversion, including (but not limited to) any
interest or other amounts payable by Lenders to lenders of funds obtained by
Lenders in order to make or maintain such Eurodollar Rate Loan. A certificate as
to any additional amounts payable pursuant to the foregoing sentence submitted
by Lenders to Borrowing Agent shall be conclusive absent manifest error.

 

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2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed from
whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrowers to Agent or Lenders,
shall be charged to Borrowers’ Account on Agent’s books. During the Term,
Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The
proceeds of each Revolving Advance requested by Borrowing Agent on behalf of any
Borrower or deemed to have been requested by any Borrower under Section 2.2(a)
hereof shall, with respect to requested Revolving Advances to the extent Lenders
make such Revolving Advances, be made available to the applicable Borrower on
the day so requested by way of credit to such Borrower’s operating account at
PNC, or such other bank as Borrowing Agent may designate following notification
to Agent, in immediately available federal funds or other immediately available
funds or, with respect to Revolving Advances deemed to have been requested by
any Borrower, be disbursed to Agent to be applied to the outstanding Obligations
giving rise to such deemed request.
2.4. Reserved.
2.5. Maximum Advances. The aggregate balance of Revolving Advances outstanding
at any time shall not exceed the lesser of (a) the Maximum Revolving Advance
Amount or (b) the Formula Amount.
2.6. Repayment of Advances.
(a) The Revolving Advances shall be due and payable in full on the last day of
the Term subject to earlier prepayment as herein provided.
(b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts
or any other items of payment relating to and/or proceeds of Collateral may not
be collectible by Agent on the date received. In consideration of Agent’s
agreement to conditionally credit Borrowers’ Account as of the next Business Day
following the Agent’s receipt of those items of payment, each Borrower agrees
that, in computing the charges under this Agreement, all items of payment (other
than payments received by wire transfers, internal account transfers or
electronic depository checks which shall be deemed applied on the Business Day
received) shall be deemed applied by Agent on account of the Obligations one
(1) Business Day after the Business Day on which such payment constitutes good
funds in Agent’s account. Agent is not, however, required to credit Borrowers’
Account for the amount of any item of payment which is reasonably determined to
be unsatisfactory to Agent and Agent may charge Borrowers’ Account for the
amount of any item of payment which is returned to Agent unpaid.

 

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(c) All payments of principal, interest and other amounts payable hereunder, or
under any of the Other Documents shall be made to Agent at the Payment Office
not later than 1:00 P.M. (New York time) on the due date therefor in lawful
money of the United States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all Obligations due and owing hereunder by charging Borrowers’
Account or by making Advances as provided in Section 2.2 hereof.
(d) Borrowers shall pay principal, interest, and all other amounts payable
hereunder, or under any related agreement, without any deduction whatsoever,
including, but not limited to, any deduction for any setoff or counterclaim.
2.7. Repayment of Excess Advances. The aggregate balance of Advances outstanding
at any time in excess of the maximum amount of Advances permitted hereunder
shall be immediately due and payable without the necessity of any demand, at the
Payment Office, whether or not a Default or Event of Default has occurred.
2.8. Statement of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account (“Borrowers’ Account”) in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and amount of each payment in respect thereof; provided,
however, the failure by Agent to record the date and amount of any Advance shall
not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrowing Agent a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and other transactions between
Agent and Borrowers during such month. The monthly statements shall be deemed
correct and binding upon Borrowers in the absence of manifest error and shall
constitute an account stated between Lenders and Borrowers unless Agent receives
a written statement of Borrowers’ specific exceptions thereto within thirty
(30) days after such statement is received by Borrowing Agent. The records of
Agent with respect to the loan account shall be conclusive evidence absent
manifest error of the amounts of Advances and other charges thereto and of
payments applicable thereto.
2.9. Reserved.
2.10. Reserved.
2.11. Reserved.
2.12. Reserved.
2.13. Reserved.
2.14. Reserved.
2.15. Reserved.
2.16. Reserved.
2.17. Reserved.
2.18. Reserved.

 

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2.19. Additional Payments. Any sums expended by Agent or any Lender due to any
Borrower’s failure to perform or comply with its obligations under this
Agreement or any Other Document including any Borrower’s obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers’
Account as a Revolving Advance and added to the Obligations. Agent shall
endeavor to advise Borrowers promptly of any such charges.
2.20. Manner of Borrowing and Payment.
(a) Each borrowing of Revolving Advances shall be advanced according to the
applicable Commitment Percentages of Lenders.
(b) Each payment (including each prepayment) by any Borrower on account of the
principal of and interest on the Revolving Advances, shall be applied to the
Revolving Advances pro rata according to the applicable Commitment Percentages
of Lenders. Except as expressly provided herein, all payments (including
prepayments) to be made by any Borrower on account of principal, interest and
fees shall be made without set off or counterclaim and shall be made to Agent on
behalf of the Lenders to the Payment Office, in each case on or prior to 1:00
P.M., New York time, in Dollars and in immediately available funds.
(c) (1) Notwithstanding anything to the contrary contained in Sections 2.20(a)
and (b) hereof, commencing with the first Business Day following the Closing
Date, each borrowing of Revolving Advances shall be advanced by Agent and each
payment by any Borrower on account of Revolving Advances shall be applied first
to those Revolving Advances advanced by Agent. On or before 1:00 P.M., New York
time, on each Settlement Date commencing with the first Settlement Date
following the Closing Date, Agent and Lenders shall make certain payments as
follows: (I) if the aggregate amount of new Revolving Advances made by Agent
during the preceding Week (if any) exceeds the aggregate amount of repayments
applied to outstanding Revolving Advances during such preceding Week, then each
Lender shall provide Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (w) such Revolving Advances and
(x) such repayments and (II) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with funds in an amount equal to its applicable Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving Advances.
(i) Each Lender shall be entitled to earn interest at the applicable Revolving
Interest Rate on outstanding Advances which it has funded.
(ii) Promptly following each Settlement Date, Agent shall submit to each Lender
a certificate with respect to payments received and Advances made during the
Week immediately preceding such Settlement Date. Such certificate of Agent shall
be conclusive in the absence of manifest error.

 

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(d) If any Lender or Participant (a “benefited Lender”) shall at any time
receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefited Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender’s Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender’s Advances may exercise all rights of payment (including rights of
set-off) with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed in writing, by
any Lender that such Lender will not make the amount which would constitute its
applicable Commitment Percentage of the Advances available to Agent, Agent may
(but shall not be obligated to) assume that such Lender shall make such amount
available to Agent on the next Settlement Date and, in reliance upon such
assumption, make available to Borrowers a corresponding amount. Agent will
promptly notify Borrowing Agent of its receipt of any such notice from a Lender.
If such amount is made available to Agent on a date after such next Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Effective Rate (computed on the basis of a
year of 360 days) during such period as quoted by Agent, times (ii) such amount,
times (iii) the number of days from and including such Settlement Date to the
date on which such amount becomes immediately available to Agent. A certificate
of Agent submitted to any Lender with respect to any amounts owing under this
paragraph (e) shall be conclusive, in the absence of manifest error. If such
amount is not in fact made available to Agent by such Lender within three
(3) Business Days after such Settlement Date, Agent shall be entitled to recover
such an amount, with interest thereon at the rate per annum then applicable to
such Revolving Advances hereunder, on demand from Borrowers; provided, however,
that Agent’s right to such recovery shall not prejudice or otherwise adversely
affect Borrowers’ rights (if any) against such Lender.
2.21. Mandatory Prepayments. Subject to Section 4.3 hereof, when any Borrower
sells or otherwise disposes of any Collateral, other than Inventory or Equipment
in the Ordinary Course of Business consistent with past practices, Borrowers
shall repay the Advances in an amount equal to the net proceeds of such sale
(i.e., gross proceeds less the reasonable costs of such sales or other
dispositions), such repayments to be made promptly but in no event more than 30
Business Days following receipt of such net proceeds, and until the date of
payment, such proceeds shall be held in trust for Agent, provided that, (i) no
such prepayment or holding in trust shall be required with respect to such
proceeds received during any fiscal year of a Borrower in an aggregate amount
not exceeding $1,000,000, (ii) no Borrower shall be required to make any such
prepayment prior to the date on which the aggregate amount of such proceeds with
respect to which no such prepayment has been made is greater than $1,000,000,
(iii) no such prepayment shall be required to the extent Borrowing Agent
provides written notice to Agent within fifteen (15) Business Days following
receipt of such net proceeds of a Borrower’s intent to use such net proceeds to
acquire replacement assets within 180 days of such sale or other disposition,
and (iv) such proceeds are in fact utilized within such 180-day period. Any
proceeds not so utilized shall be paid in accordance with this Section. The
foregoing shall not be deemed to be implied consent to any such sale otherwise
prohibited by the terms and conditions hereof. Such repayments shall be applied
to the Advances in such order as Agent may determine, subject to Borrowers’
ability to reborrow Revolving Advances in accordance with the terms hereof.

 

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2.22. Use of Proceeds.
(a) Borrowers shall apply the proceeds of Advances to (i) pay fees and expenses
relating to this transaction, and (ii) provide for its working capital needs.
(b) Without limiting the generality of Section 2.22(a) above, neither the
Borrowers nor any other Person which may in the future become party to this
Agreement or the Other Documents as a Borrower or Guarantor, intends to use nor
shall they use any portion of the proceeds of the Advances, directly or
indirectly, for any purpose in violation of the Trading with the Enemy Act.
2.23. Defaulting Lender.
(a) Notwithstanding anything to the contrary contained herein, in the event any
Lender (x) has refused (which refusal constitutes a breach by such Lender of its
obligations under this Agreement) to make available its portion of any Advance,
(y) notifies either Agent or Borrowing Agent that it does not intend to make
available its portion of any Advance or has made a public statement to the
effect that it does not intend to comply with its funding obligations (if the
actual refusal or failure to comply would constitute a breach by such Lender of
its obligations under this Agreement) or (z) (i) become or is insolvent or has a
parent company that has become or is insolvent or (ii) become the subject of a
bankruptcy or insolvency proceeding, or has had a receiver, conservator,
trustee, administrator, assignee for the benefit of creditors or similar Person
charged with reorganization or liquidation of its business or custodian,
appointed for it, or has taken any action in furtherance of, or indicating its
consent to, approval of or acquiescence in any such proceeding or appointment or
has a parent company that has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee, administrator, assignee
for the benefit of creditors or similar Person charged with reorganization or
liquidation of its business or custodian appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment (each, a “Lender Default”),
all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as
to which a Lender Default is in effect and of the other parties hereto shall be
modified to the extent of the express provisions of this Section 2.23 while such
Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the “Non-Defaulting
Lenders”) which are not Defaulting Lenders based on their respective Commitment
Percentages, and no Commitment Percentage of any Lender or any pro rata share of
any Advances required to be advanced by any Lender shall be increased as a
result of such Lender Default. Amounts received in respect of principal of any
type of Advances shall be applied to reduce the applicable Advances of each
Lender (other than any Defaulting Lender) pro rata based on the aggregate of the
outstanding Advances of that type of all Lenders at the time of such
application; provided, that, Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender’s
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including any principal, interest or fees). Amounts payable
to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may
hold and, in its discretion, re-lend to a Borrower the amount of such payments
received or retained by it for the account of such Defaulting Lender.

 

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(c) A Defaulting Lender shall not be entitled to give instructions to Agent or
to approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have
either Advances outstanding or a Commitment Percentage.
(d) Other than as expressly set forth in this Section 2.23, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify Agent)
and the other parties hereto shall remain unchanged. Nothing in this
Section 2.23 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(e) In the event a Defaulting Lender retroactively cures to the satisfaction of
Agent the breach which caused a Lender to become a Defaulting Lender, such
Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as
a Lender under this Agreement.
III. INTEREST AND FEES.
3.1. Interest. Interest on Advances shall be payable in arrears on the first day
of each month with respect to Domestic Rate Loans and, with respect to
Eurodollar Rate Loans, at the end of each Interest Period or, for Eurodollar
Rate Loans with an Interest Period in excess of three months, at the earlier of
(a) each three months from the commencement of such Eurodollar Rate Loan or
(b) the end of the Interest Period. Interest charges shall be computed on the
actual principal amount of Advances outstanding during the month at a rate per
annum equal to the Revolving Interest Rate. Whenever, subsequent to the date of
this Agreement, the Alternate Base Rate is increased or decreased, the Revolving
Interest Rate for Domestic Rate Loans shall be similarly changed without notice
or demand of any kind by an amount equal to the amount of such change in the
Alternate Base Rate during the time such change or changes remain in effect. The
Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without
notice or demand of any kind on the effective date of any change in the Reserve
Percentage as of such effective date. Agent shall advise Borrowers promptly
after any such change. Upon and after the occurrence of an Event of Default, and
during the continuation thereof, at the option of Agent or at the direction of
Required Lenders, and following written notice thereof to Borrowing Agent, the
Obligations shall bear interest at the applicable Revolving Interest Rate plus
two (2%) percent per annum (as applicable, the “Default Rate”).
3.2. Reserved.

 

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3.3. Closing Fee and Facility Fee.
(a) Closing Fee. Upon the execution of this Agreement, Borrowers shall pay to
Agent for the ratable benefit of Lenders a closing fee of $100,000 less that
portion of the commitment fee of $25,000 heretofore paid by Borrowers to Agent
remaining after application of such fee to out of pocket expenses.
(b) Facility Fee. If, for any calendar quarter during the Term, the average
daily unpaid balance of the Revolving Advances for each day of such calendar
quarter does not equal the Maximum Revolving Advance Amount, then Borrowers
shall pay to Agent for the ratable benefit of Lenders a fee at a rate equal to
one-half of one percent (.50%) per annum on the amount by which the Maximum
Revolving Advance Amount exceeds such average daily unpaid balance. Such fee
shall be payable to Agent in arrears on the first day of each calendar quarter
with respect to the previous calendar quarter.
3.4. Collateral Evaluation Fee and Collateral Monitoring Fee.
(a) Collateral Evaluation Fee. Borrowers shall pay Agent a collateral evaluation
fee equal to $750.00 per month commencing on the first day of the month
following the Closing Date and on the first day of each month thereafter during
the Term. The collateral evaluation fee shall be deemed earned in full on the
date when same is due and payable hereunder and shall not be subject to rebate
or proration upon termination of this Agreement for any reason.
(b) Collateral Monitoring Fee. Borrowers shall pay to Agent on the first day of
each month following any month in which Agent performs any collateral monitoring
— namely any field examination, collateral analysis or other business analysis,
the need for which is to be determined by Agent and which monitoring is
undertaken by Agent or for Agent’s benefit — a collateral monitoring fee in an
amount equal to $850.00 per day for each person employed to perform such
monitoring, plus all costs and disbursements incurred by Agent in the
performance of such examination or analysis.
3.5. Computation of Interest and Fees. Interest and fees hereunder shall be
computed on the basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the Revolving
Interest Rate for Domestic Rate Loans during such extension.
3.6. Maximum Charges. In no event whatsoever shall interest and other charges
charged hereunder exceed the highest rate permissible under law. In the event
interest and other charges as computed hereunder would otherwise exceed the
highest rate permitted under law, such excess amount shall be first applied to
any unpaid principal balance owed by Borrowers, and if the then remaining excess
amount is greater than the previously unpaid principal balance, Lenders shall
promptly refund such excess amount to Borrowers and the provisions hereof shall
be deemed amended to provide for such permissible rate.
3.7. Increased Costs. In the event that any Applicable Law, or any change
therein or in the interpretation or application thereof, or compliance by any
Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent
or any Lender and

 

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any corporation or bank controlling Agent or any Lender) and the office or
branch where Agent or any Lender (as so defined) makes or maintains any
Eurodollar Rate Loans with any request or directive (whether or not having the
force of law) from any central bank or other financial, monetary or other
authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever with respect
to this Agreement or any Other Document or change the basis of taxation of
payments to Agent or any Lender of principal, fees, interest or any other amount
payable hereunder or under any Other Documents (except for changes in the rate
of tax on the overall net income of Agent or any Lender by the jurisdiction in
which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit, assessment
or similar requirement against assets held by, or deposits in or for the account
of, advances or loans by, or other credit extended by, any office of Agent or
any Lender, including pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or
(c) impose on Agent or any Lender or the London interbank Eurodollar market any
other condition with respect to this Agreement or any Other Document;
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrowers shall pay Agent or such Lender with reasonable promptness
after demand, such additional amount as will compensate Agent or such Lender for
such additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the
Eurodollar Rate, as the case may be. Agent or such Lender shall certify in
writing to Borrowing Agent the amount of such additional cost or reduced amount
to Borrowing Agent, and such certification shall be conclusive absent manifest
error. Borrowers shall not be required to compensate a Lender pursuant to this
Section 3.7 for any increased cost or reduction in respect of a period occurring
more than 180 days prior to the date on which such Lender notifies Borrowing
Agent of an event giving rise to such claim and such Lender’s intention to seek
compensation therefor.
3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the event that
Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar Rate
applicable pursuant to Section 2.2 hereof for any Interest Period; or
(b) Dollar deposits in the relevant amount and for the relevant maturity are not
available in the London interbank Eurodollar market, with respect to an
outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed
conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,

 

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then Agent shall give Borrowing Agent prompt written or telephonic notice of
such determination. If such notice is given, (i) any such requested Eurodollar
Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent shall
notify Agent no later than 12:00 p.m. (New York City time) two (2) Business Days
prior to the date of such proposed borrowing, that its request for such
borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate
Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been
converted to an affected type of Eurodollar Rate Loan shall be continued as or
converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent,
no later than 12:00 p.m. (New York City time) two (2) Business Days prior to the
proposed conversion, shall be maintained as an unaffected type of Eurodollar
Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be
converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent,
no later than 12:00 p.m. (New York City time) two (2) Business Days prior to the
last Business Day of the then current Interest Period applicable to such
affected Eurodollar Rate Loan, shall be converted into an unaffected type of
Eurodollar Rate Loan, on the last Business Day of the then current Interest
Period for such affected Eurodollar Rate Loans. Until such notice has been
withdrawn, Lenders shall have no obligation to make an affected type of
Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and
no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.
3.9. Capital Adequacy.
(a) In the event that Agent or any Lender shall have determined that any
Applicable Law or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or such Lender
(for purposes of this Section 3.9, the term “Lender” shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) and the
office or branch where Agent or such Lender (as so defined) makes or maintains
any Eurodollar Rate Loans with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on Agent or such Lender’s capital as a consequence of its obligations
hereunder to a level below that which Agent or such Lender could have achieved
but for such adoption, change or compliance (taking into consideration Agent’s
and each Lender’s policies with respect to capital adequacy) by an amount deemed
by Agent or such Lender to be material, then, from time to time, Borrowers shall
pay to Agent or such Lender, with reasonable promptness following receipt of the
certificate described in clause (b), below, such additional amount or amounts as
will compensate Agent or such Lender for such reduction, provided that,
Borrowers shall not be required to compensate Agent or a Lender pursuant to this
Section 3.9 for any such reduction in respect of a period occurring more than
180 days prior to the date on which Agent or such Lender notifies Borrowing
Agent of an event giving rise to such claim and Agent’s or such Lender’s
intention to seek compensation therefor. In determining such amount or amounts,
Agent or such Lender may use any reasonable averaging or attribution methods.
The protection of this Section 3.9 shall be available to Agent and each Lender
regardless of any possible contention of invalidity or inapplicability with
respect to the Applicable Law or condition; provided that, in the event the
Applicable Law or condition is found to be invalid or inapplicable to Agent or
such Lender after payment by Borrowers, Agent or such Lender, as applicable,
shall promptly refund all amounts paid by Borrowers pursuant to this Section
3.9.

 

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(b) A certificate of Agent or such Lender setting forth such amount or amounts
as shall be necessary to compensate Agent or such Lender with respect to
Section 3.9(a) hereof when delivered to Borrowing Agent shall be conclusive
absent manifest error.
3.10. Gross Up for Taxes. If any Borrower shall be required by Applicable Law to
withhold or deduct any taxes from or in respect of any sum payable under this
Agreement or any of the Other Documents to Agent, or any Lender, assignee of any
Lender, or Participant (each, individually, a “Payee” and collectively, the
“Payees”), (a) the sum payable to such Payee or Payees, as the case may be,
shall be increased as may be necessary so that, after making all required
withholding or deductions, the applicable Payee or Payees receives an amount
equal to the sum it would have received had no such withholding or deductions
been made (the “Gross-Up Payment”), (b) such Borrower shall make such
withholding or deductions, and (c) such Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law. Notwithstanding the foregoing, no Borrower shall
be obligated to make any portion of the Gross-Up Payment that is attributable to
any withholding or deductions that would not have been paid or claimed had the
applicable Payee or Payees properly claimed a complete exemption with respect
thereto pursuant to Section 3.11 hereof.
3.11. Withholding Tax Exemption.
(a) Each Payee that is not incorporated under the Laws of the United States of
America or a state thereof (and, upon the written request of Agent, each other
Payee) agrees that it will deliver to Borrowing Agent and Agent two (2) duly
completed appropriate valid Withholding Certificates (as defined under
§1.1441-1(c)(16) of the Income Tax Regulations (“Regulations”)) certifying its
status (i.e., U.S. or foreign person) and, if appropriate, making a claim of
reduced, or exemption from, U.S. withholding tax on the basis of an income tax
treaty or an exemption provided by the Code. The term “Withholding Certificate”
means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related
statements and certifications as required under §1.1441-1(e)(2) and/or (3) of
the Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations;
or any other certificates under the Code or Regulations that certify or
establish the status of a payee or beneficial owner as a U.S. or foreign person.
(b) Each Payee required to deliver to Borrowing Agent and Agent a valid
Withholding Certificate pursuant to Section 3.11(a) hereof shall deliver such
valid Withholding Certificate as follows: (A) each Payee which is a party hereto
on the Closing Date shall deliver such valid Withholding Certificate at least
five (5) Business Days prior to the first date on which any interest or fees are
payable by any Borrower hereunder for the account of such Payee; (B) each Payee
shall deliver such valid Withholding Certificate at least five (5) Business Days
before the effective date of such assignment or participation (unless Agent in
its sole discretion shall permit such Payee to deliver such Withholding
Certificate less than five (5) Business Days before such date in which case it
shall be due on the date specified by Agent). Each Payee which so delivers a
valid Withholding Certificate further undertakes to deliver to Borrowing Agent
and Agent two (2) additional copies of such Withholding Certificate (or a
successor form) on or before the date that such Withholding Certificate expires
or becomes obsolete or after the occurrence of any event requiring a change in
the most recent Withholding Certificate so delivered by it, and such amendments
thereto or extensions or renewals thereof as may be reasonably requested by
Borrowing Agent or Agent.

 

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(c) Notwithstanding the submission of a Withholding Certificate claiming a
reduced rate of or exemption from U.S. withholding tax required under
Section 3.11(b) hereof, Agent shall be entitled to withhold United States
federal income taxes at the full 30% withholding rate if in its reasonable
judgment it is required to do so under the due diligence requirements imposed
upon a withholding agent under §1.1441-7(b) of the Regulations. Further, Agent
is indemnified under §1.1461-1(e) of the Regulations against any claims and
demands of any Payee for the amount of any tax it deducts and withholds in
accordance with regulations under §1441 of the Code.
IV. COLLATERAL: GENERAL TERMS
4.1. Security Interest in the Collateral. To secure the prompt payment and
performance to Agent and each Lender of the Obligations, each Borrower hereby
assigns, pledges and grants to Agent for its benefit and for the ratable benefit
of each Lender a continuing security interest in and to and Lien on all of its
Collateral, whether now owned or existing or hereafter acquired or arising and
wheresoever located. Each Borrower shall mark its books and records as may be
necessary or appropriate to evidence, protect and perfect Agent’s security
interest and shall cause its financial statements to reflect such security
interest. Each Borrower shall promptly provide Agent with written notice of all
commercial tort claims, such notice to contain the case title together with the
applicable court and a brief description of the claim(s). Upon delivery of each
such notice, such Borrower shall be deemed to hereby grant to Agent a security
interest and lien in and to such commercial tort claims and all proceeds
thereof. Agent and Lenders expressly recognize that Agent’s security interest in
any human tissue held in public trust by any Borrower pursuant to any state,
federal or international law or regulation is strictly limited to the extent of
such Borrower’s right, title and interest therein.
4.2. Perfection of Security Interest. Each Borrower shall take all action that
may be necessary or desirable, or that Agent may request, so as at all times to
maintain the validity, perfection, enforceability and priority of Agent’s
security interest in and Lien on the Collateral or to enable Agent to protect,
exercise or enforce its rights hereunder and in the Collateral, including, but
not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining Lien Waiver Agreements as to premises specified by
Agent in Agent’s reasonable credit judgment, (iii) delivering to Agent, endorsed
or accompanied by such instruments of assignment as Agent may specify, and
stamping or marking, in such manner as Agent may specify, any and all chattel
paper, instruments, letters of credits and advices thereof and documents
evidencing or forming a part of the Collateral, (iv) entering into warehousing,
lockbox and other custodial arrangements reasonably requested by and
satisfactory to Agent, and (v) executing and delivering financing statements,
control agreements, instruments of pledge, mortgages, notices and assignments,
in each case in form and substance satisfactory to Agent, relating to the
creation, validity, perfection, maintenance or continuation of Agent’s security
interest and Lien in the Collateral under the Uniform Commercial Code or other
Applicable Law. By its signature hereto, each Borrower hereby authorizes Agent
to file against such Borrower, one or more financing, continuation or amendment
statements pursuant to the Uniform Commercial Code in form and substance
satisfactory to Agent and describing the Collateral. All charges, expenses and
fees Agent may incur in doing any of the foregoing, and any local taxes relating
thereto, after notice thereof to Borrowing Agent and a request for payment,
shall be charged to Borrowers’ Account as a Revolving Advance of a Domestic Rate
Loan and added to the Obligations, or, at Agent’s option, shall be paid to Agent
for its benefit and for the ratable benefit of Lenders immediately upon demand.

 

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4.3. Disposition of Collateral. Each Borrower will safeguard and protect all
Collateral for Agent’s general account and make no disposition thereof whether
by sale, lease or otherwise except (a) the sale of Collateral and Equipment in
the Ordinary Course of Business consistent with past practices, and (b) the sale
of Equipment outside the Ordinary Course of Business in an aggregate amount not
to exceed $500,000 in any fiscal year, and with respect to clause (b), such
Borrower complies with the requirements set forth in Section 2.21.
4.4. Preservation of Collateral. Following the occurrence and during the
continuance of a Default or Event of Default in addition to the rights and
remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such
steps as Agent deems necessary to protect Agent’s interest in and to preserve
the Collateral, including the hiring of such security guards or the placing of
other security protection measures as Agent may deem appropriate; (b) may employ
and maintain at any of any Borrower’s premises a custodian who shall have full
authority to do all acts necessary to protect Agent’s interests in the
Collateral; (c) may lease warehouse facilities to which Agent may move all or
part of the Collateral; (d) may use any Borrower’s owned or leased lifts,
hoists, trucks and other facilities or equipment for handling or removing the
Collateral; and (e) shall have, and is hereby granted, a right of ingress and
egress to the places where the Collateral is located on property owned or leased
by Borrower, and may proceed over and through any of Borrower’s owned or leased
property, subject to the rights of lessors of such leased property, provided
that, for any Borrower’s “clean room” environment, such right of ingress and
egress may not occur until representatives of Agent are compliant with such
Borrower’s training and standard operating procedures required for such “clean
room” environment. Each Borrower shall cooperate fully with all of Agent’s
efforts to preserve the Collateral and will take such actions to preserve the
Collateral as Agent may direct. All of Agent’s expenses of preserving the
Collateral, including any expenses relating to the bonding of a custodian, shall
be charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic
Rate Loan and added to the Obligations.
4.5. Ownership of Collateral.
(a) With respect to the Collateral, at the time the Collateral becomes subject
to Agent’s security interest: (i) each Borrower shall be the sole owner of and
fully authorized and able to sell, transfer, pledge and/or grant a first
priority security interest in each and every item of its respective Collateral
to Agent; and, except for Permitted Encumbrances the Collateral shall be free
and clear of all Liens and encumbrances whatsoever; (ii) each document and
agreement executed by each Borrower or delivered to Agent or any Lender in
connection with this Agreement shall be true and correct in all respects;
(iii) all signatures and endorsements of each Borrower that appear on such
documents and agreements shall be genuine and each Borrower shall have full
capacity to execute same; and (iv) each Borrower’s Equipment and Inventory shall
be located as set forth on Schedule 4.5 and shall not be removed from such
location(s) without the prior written consent of Agent except with respect to
the sale of Inventory in the Ordinary Course of Business and Equipment to the
extent permitted in Section 4.3 hereof.

 

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(b) (i) Subject to the final sentence of Schedule 4.5 hereto, there is no
location at which any Borrower has any Inventory (except for Inventory in
transit) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5
hereto contains a correct and complete list, as of the Closing Date, of the
legal names and addresses of each warehouse at which Inventory of any Borrower
is stored; (iii) Schedule 4.5 hereto sets forth a correct and complete list as
of the Closing Date of (A) each place of business of each Borrower and (B) the
chief executive office of each Borrower; and (iv) Schedule 4.5 hereto sets forth
a correct and complete list as of the Closing Date of the location, by state and
street address, of all Real Property owned or leased by each Borrower, together
with the names and addresses of any landlords.
4.6. Defense of Agent’s and Lenders’ Interests. Until (a) payment and
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent’s interests in the Collateral shall continue in full force and
effect. During such period no Borrower shall, without Agent’s prior written
consent, pledge, sell (except Collateral in the Ordinary Course of Business to
the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer
to exist a Lien upon or encumber or allow or suffer to be encumbered in any way
except for Permitted Encumbrances, any part of the Collateral. Each Borrower
shall defend Agent’s interests in the Collateral against any and all Persons
whatsoever other than holders of Permitted Encumbrances and purchasers of
Collateral permitted in Section 4.3 hereof. At any time following demand by
Agent for payment of all Obligations following the occurrence and during the
continuance of an Event of Default, Agent shall have the right to take
possession of the indicia of the Collateral and the Collateral in whatever
physical form contained, including: labels, stationery, documents, instruments
and advertising materials. If Agent exercises this right to take possession of
the Collateral following the occurrence and during the continuance of an Event
of Default, Borrowers shall, upon demand, assemble it in the best manner
possible and make it available to Agent at a place reasonably convenient to
Agent. In addition, with respect to all Collateral, Agent and Lenders shall be
entitled to all of the rights and remedies set forth herein and further provided
by the Uniform Commercial Code or other Applicable Law. Each Borrower shall upon
Agent’s request during the continuance of a Default or Event of Default, at its
option, instruct all suppliers, carriers, forwarders, warehousers or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver same to Agent and/or subject to
Agent’s order and if they shall come into any Borrower’s possession, they, and
each of them, shall be held by such Borrower in trust as Agent’s trustee, and
such Borrower will immediately deliver them to Agent in their original form
together with any necessary endorsement.
4.7. Books and Records. Each Borrower shall (a) keep proper books of record and
account in which full, true and correct entries will be made of all dealings or
transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including by reason of enumeration, accruals for
premiums, if any, due on required payments and accruals for depreciation,
obsolescence, or amortization of properties), which should be set aside from
such earnings in connection with its business. All determinations pursuant to
this subsection shall be made in accordance with, or as required by, GAAP
consistently applied in the opinion of such independent public accountant as
shall then be regularly engaged by Borrowers.

 

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4.8. Financial Disclosure. Each Borrower hereby irrevocably authorizes and
directs all accountants and auditors employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
such Borrower’s financial statements, trial balances or other accounting records
of any sort in the accountant’s or auditor’s possession, and to disclose to
Agent and each Lender any information such accountants may have concerning such
Borrower’s financial status and business operations. Each Borrower hereby
authorizes all Governmental Bodies to furnish to Agent and each Lender copies of
reports or examinations relating to such Borrower, whether made by such Borrower
or otherwise; however, Agent and each Lender will attempt to obtain such
information or materials directly from such Borrower prior to obtaining such
information or materials from such accountants or Governmental Bodies.
4.9. Compliance with Laws. Each Borrower shall comply with all Applicable Laws
with respect to the Collateral or any part thereof or to the operation of such
Borrower’s business the non-compliance with which could reasonably be expected
to have a Material Adverse Effect. Each Borrower may, however, contest or
dispute any Applicable Laws in any reasonable manner, provided that any related
Lien is inchoate or stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent’s Lien on or security interest
in the Collateral. The assets of Borrowers at all times shall be maintained in
accordance with the requirements of all insurance carriers which provide
insurance with respect to the assets of Borrowers so that such insurance shall
remain in full force and effect.
4.10. Inspection of Premises. At all reasonable times Agent and each Lender
shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Borrower’s books, records, audits, correspondence
and all other papers relating to the Collateral and the operation of each
Borrower’s business. Agent, any Lender and their agents may enter upon any
premises of any Borrower at any time during business hours and at any other
reasonable time, and from time to time, for the purpose of inspecting the
Collateral and any and all records pertaining thereto and the operation of such
Borrower’s business; provided that, for any Borrower’s “clean room” environment,
such right of entry and inspection may not occur until representatives of Agent
are compliant with such Borrower’s training and standard operating procedures
required for such “clean room” environment.
4.11. Insurance. The assets and properties of each Borrower at all times shall
be maintained in accordance with the requirements of all insurance carriers
which provide insurance with respect to the assets and properties of such
Borrower so that such insurance shall remain in full force and effect. Each
Borrower shall bear the full risk of any loss of any nature whatsoever with
respect to the Collateral. At each Borrower’s own cost and expense in amounts
and with carriers acceptable to Agent, each Borrower shall (a) keep all its
insurable properties and properties in which such Borrower has an interest
insured against the hazards of fire, flood, sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Borrower’s including business interruption insurance; (b) maintain a
bond in such amounts as is customary in the case of companies engaged in
businesses

 

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similar to such Borrower insuring against larceny, embezzlement or other
criminal misappropriation of insured’s officers and employees who may either
singly or jointly with others at any time have access to the assets or funds of
such Borrower either directly or through authority to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker’s compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which such Borrower is engaged in business; and (e) furnish Agent with
(i) copies of all policies and evidence of the maintenance of such policies by
the renewal thereof at least five (5) days before any expiration date, and
(ii) appropriate loss payable endorsements in form and substance satisfactory to
Agent, naming Agent as an additional insured and lender loss payee as its
interests may appear with respect to all insurance coverage referred to in
clauses (a) and (c) above, and providing (A) that all proceeds under property
casualty policies shall be payable to Agent, (B) no such insurance shall be
affected by any act or neglect of the insured or owner of the property described
in such policy, and (C) that such policy and loss payable clauses may not be
cancelled, amended or terminated unless at least thirty (30) days’ prior written
notice is given to Agent, provided that, as long as no Event of Default has
occurred and is continuing, any payments received by Agent in an aggregate
amount of less than $2,000,000 shall be paid over to Borrowing Agent. In the
event of any casualty loss thereunder, the carriers named therein hereby are
directed by Agent and the applicable Borrower to make payment for such loss to
Agent and not to such Borrower and Agent jointly, provided that, as long as no
Event of Default has occurred and is continuing, any payments received by Agent
in an aggregate amount of less than $2,000,000 shall be paid over to Borrowing
Agent. If any insurance losses are paid by check, draft or other instrument
payable to any Borrower and Agent jointly, Agent may endorse such Borrower’s
name thereon and do such other things as Agent may deem advisable to reduce the
same to cash. Agent is hereby authorized to adjust and compromise claims under
insurance coverage referred to in clauses (a) and (b) above after an Event of
Default has occurred and is continuing. After an Event of Default has occurred
and is continuing, or with respect to any proceeds that are in an aggregate
amount in excess of $2,000,000 all such recoveries received by Agent upon any
such insurance shall be promptly applied to the Obligations, in such order as
Agent in its sole discretion shall determine. Any surplus following such
application shall be paid by Agent to Borrowers or applied as may be otherwise
required by law. Any deficiency following such application thereon shall be paid
by Borrowers to Agent, on demand.
4.12. Failure to Pay Insurance. If any Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor on behalf of such
Borrower, and charge Borrowers’ Account therefor as a Revolving Advance of a
Domestic Rate Loan and such expenses so paid shall be part of the Obligations.
4.13. Payment of Taxes. Each Borrower will pay, when due, all taxes, assessments
and other Charges lawfully levied or assessed upon such Borrower or any of the
Collateral including real and personal property taxes, assessments and charges
and all franchise, income, employment, social security benefits, withholding,
and sales taxes. If any tax by any Governmental Body is or

 

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may be imposed on or as a result of any transaction between any Borrower and
Agent or any Lender which Agent or any Lender may be required to withhold or pay
or if any taxes, assessments, or other Charges remain unpaid after the date
fixed for their payment, or if any claim shall be made which, in Agent’s or any
Lender’s opinion, could reasonably be expected to create a valid Lien on the
Collateral, Agent may without notice to Borrowers pay the taxes, assessments or
other Charges and each Borrower hereby indemnifies and holds Agent and each
Lender harmless in respect thereof. Agent will not pay any taxes, assessments or
Charges to the extent that any applicable Borrower has Properly Contested those
taxes, assessments or Charges. The amount of any payment by Agent under this
Section 4.13 shall be charged to Borrowers’ Account as a Revolving Advance
maintained as a Domestic Rate Loan and added to the Obligations and, until
Borrowers shall furnish Agent with an indemnity therefor (or supply Agent with
evidence satisfactory to Agent that due provision for the payment thereof has
been made), Agent may hold without interest any balance standing to Borrowers’
credit and Agent shall retain its security interest in and Lien on any and all
Collateral held by Agent.
4.14. Payment of Leasehold Obligations. Each Borrower shall at all times pay,
when and as due, its rental obligations under all leases under which it is a
tenant, and shall otherwise comply, in all material respects, with all other
terms of such leases and keep them in full force and effect and, at Agent’s
request will provide evidence of having done so.
4.15. Receivables.
(a) Nature of Receivables. Each of the Receivables shall be a bona fide and
valid account representing a bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto
(provided immaterial or unintentional invoice errors shall not be deemed to be a
breach hereof) with respect to a sale or lease and delivery of goods upon stated
terms of a Borrower, or work, labor or services theretofore rendered by a
Borrower as of the date each Receivable is created. Same shall be due and owing
in accordance with the applicable Borrower’s standard terms of sale without
dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrowers to Agent.
(b) Solvency of Customers. Each Customer, to the best of each Borrower’s
knowledge, as of the date each Receivable is created, is and will be solvent and
able to pay all Receivables on which the Customer is obligated in full when due
or with respect to such Customers of any Borrower who are not solvent such
Borrower has set up on its books and in its financial records bad debt reserves
adequate to cover such Receivables.
(c) Location of Borrowers. Each Borrower’s chief executive office is located at
Eatontown, New Jersey. Until written notice is given to Agent by Borrowing Agent
of any other office at which any Borrower keeps its records pertaining to
Receivables, all such records shall be kept at such executive office.
(d) Collection of Receivables. Borrowers shall instruct their Customers to
deliver all remittances upon Receivables to such lockbox or Blocked Account as
Agent shall designate from time to time as contemplated by Section 4.15(h)
hereof or as otherwise agreed to from time to time by Agent. Notwithstanding the
foregoing, to the extent any Borrower receives any remittances upon Receivables,
such Borrower will, at such Borrower’s sole cost and expense, but on Agent’s
behalf and for Agent’s account, collect as Agent’s property and in trust for
Agent all amounts received on Receivables, and shall cause such remittances to
be deposited to such lockbox or Blocked Account promptly after receipt thereof
in the form received. Each Borrower shall deposit in the Blocked Account or,
upon request by Agent, deliver to Agent, in original form and on the date of
receipt thereof, all checks, drafts, notes, money orders, acceptances, cash and
other evidences of Indebtedness. All Receivables received by Agent pursuant to
this Section 4.15(d) shall be applied to pay the Obligations.

 

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(e) Notification of Assignment of Receivables. At any time after the occurrence
and during the continuance of an Event of Default, Agent shall have the right to
send notice of the assignment of, and Agent’s security interest in and Lien on,
the Receivables to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral. During the continuance of an Event of
Default, Agent may in its sole discretion, have the sole right to collect the
Receivables, take possession of the Collateral, or both. Agent’s actual
collection expenses, including, but not limited to, stationery and postage,
telephone and telegraph, secretarial and clerical expenses and the salaries of
any collection personnel used for collection, may be charged to Borrowers’
Account and added to the Obligations.
(f) Power of Agent to Act on Borrowers’ Behalf. In connection with the
administration of a lockbox or Blocked Account designated for deposit of
remittances of payments of Receivables, Agent shall have the right to receive,
endorse, assign and/or deliver in the name of Agent or any Borrower any and all
checks, drafts and other instruments for the payment of money relating to the
Receivables, and each Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed. Each Borrower hereby constitutes
Agent or Agent’s designee as such Borrower’s attorney with power (i) to endorse
such Borrower’s name upon any notes, acceptances, checks, drafts, money orders
or other evidences of payment or Collateral; (ii) after an Event of Default has
occurred and is continuing, to sign such Borrower’s name on any invoice or bill
of lading relating to any of the Receivables, drafts against Customers,
assignments and verifications of Receivables; (iii) to send verifications of
Receivables to any Customer; (iv) to sign such Borrower’s name on all financing
statements or any other documents or instruments deemed necessary or appropriate
by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and
to file same; (v) after an Event of Default has occurred and is continuing, to
demand payment of the Receivables; (vi) after an Event of Default has occurred
and is continuing, to enforce payment of the Receivables by legal proceedings or
otherwise; (vii) after an Event of Default has occurred and is continuing, to
exercise all of such Borrower’s rights and remedies with respect to the
collection of the Receivables and any other Collateral; (viii) after an Event of
Default has occurred and is continuing, to settle, adjust, compromise, extend or
renew the Receivables; (ix) after an Event of Default has occurred and is
continuing, to settle, adjust or compromise any legal proceedings brought to
collect Receivables; (x) after an Event of Default has occurred and is
continuing, to prepare, file and sign such Borrower’s name on a proof of claim
in bankruptcy or similar document against any Customer; (xi) after an Event of
Default has occurred and is continuing to prepare, file and sign such Borrower’s
name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables; and (xii) after an Event of Default
has occurred and is continuing to do all other acts and things necessary to
carry out this Agreement. All acts of said attorney or designee are hereby
ratified and approved, and said attorney or designee shall not be liable for any
acts of omission or commission nor for any error of judgment or mistake of fact
or of law, unless done maliciously or with gross (not mere) negligence (as
determined by a court of competent jurisdiction in a final non-appealable
judgment); this power being coupled with an interest is irrevocable while any of
the Obligations remain unpaid. Agent shall have the right at any time following
the occurrence and during the continuance of an Event of Default or Default, to
change the address for delivery of mail addressed to any Borrower to such
address as Agent may designate and to receive, open and dispose of all mail
addressed to any Borrower.

 

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(g) No Liability. Neither Agent nor any Lender shall, under any circumstances or
in any event whatsoever, have any liability for any error or omission or delay
of any kind occurring in the settlement, collection or payment of any of the
Receivables or any instrument received in payment thereof, or for any damage
resulting therefrom. Following the occurrence and during the continuance of an
Event of Default or Default Agent may, without notice or consent from any
Borrower, sue upon or otherwise collect, extend the time of payment of,
compromise or settle for cash, credit or upon any terms any of the Receivables
or any other securities, instruments or insurance applicable thereto and/or
release any obligor thereof.
(h) Establishment of a Lockbox Account, Dominion Account. All proceeds of
Collateral shall be deposited by Borrowers into either (i) a lockbox account,
dominion account or such other “blocked account” (“Blocked Accounts”)
established at a bank or banks (each such bank, a “Blocked Account Bank”)
pursuant to an arrangement with such Blocked Account Bank as may be selected by
Borrowing Agent and be acceptable to Agent or (ii) depository accounts
(“Depository Accounts”) established at the Agent for the deposit of such
proceeds. Each applicable Borrower, Agent and each Blocked Account Bank shall
enter into a deposit account control agreement in form and substance
satisfactory to Agent directing such Blocked Account Bank to transfer such funds
so deposited to Agent, either to any account maintained by Agent at said Blocked
Account Bank or by wire transfer to appropriate account(s) of Agent. All funds
deposited in such Blocked Accounts shall immediately become the property of
Agent for the purposes of perfecting Agent’s Lien on such funds and for use by
the Agent in applying such funds promptly to the Obligations. Borrowing Agent
shall obtain the agreement by each Blocked Account Bank to waive any offset
rights against the funds so deposited. Neither Agent nor any Lender assumes any
responsibility for such blocked account arrangement, including any claim of
accord and satisfaction or release with respect to deposits accepted by any
Blocked Account Bank thereunder. If the outstanding balance of the Revolving
Advances is zero, Agent shall transfer any deposited funds in accordance with
Borrowing Agent’s direction. All deposit accounts and investment accounts of
each Borrower and its Subsidiaries are set forth on Schedule 4.15(h).
(i) Adjustments. No Borrower will, without Agent’s consent, compromise or adjust
any Receivables (or extend the time for payment thereof) or accept any returns
of merchandise or grant any additional discounts, allowances or credits thereon
except for those compromises, adjustments, returns, discounts, credits and
allowances as have been heretofore customary in the business of such Borrower.
4.16. Inventory. To the extent Inventory held for sale or lease has been
produced by any Borrower, it has been and will be produced by such Borrower in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.

 

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4.17. Maintenance of Equipment. The Equipment shall be maintained in good
operating condition and repair (reasonable wear and tear excepted) and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved. No
Borrower shall use or operate the Equipment in violation of any law, statute,
ordinance, code, rule or regulation.
4.18. Exculpation of Liability. Nothing herein contained shall be construed to
constitute Agent or any Lender as any Borrower’s agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of any Borrower’s obligations under any contract or
agreement assigned to Agent or such Lender, and neither Agent nor any Lender
shall be responsible in any way for the performance by any Borrower of any of
the terms and conditions thereof.
4.19. Environmental Matters.
(a) Borrowers shall ensure that the Real Property and all operations and
businesses conducted thereon remains in compliance with all Environmental Laws
and Borrowers shall not place or permit to be placed any Hazardous Substances on
any Real Property except as permitted by Applicable Law or appropriate
governmental authorities.
(b) Borrowers shall establish and maintain a system to assure and monitor
continued compliance with all applicable Environmental Laws which system shall
include periodic reviews of such compliance.
(c) Borrowers shall (i) employ in connection with the use of the Real Property
appropriate technology necessary to maintain compliance with any applicable
Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at
the Real Property only at facilities and with carriers that maintain valid
permits under RCRA and any other applicable Environmental Laws. Borrowers shall
use their best efforts to obtain certificates of disposal, such as hazardous
waste manifest receipts, from all treatment, transport, storage or disposal
facilities or operators employed by Borrowers in connection with the transport
or disposal of any Hazardous Waste generated at the Real Property.
(d) In the event any Borrower obtains, gives or receives notice of any Release
or threat of Release of a reportable quantity of any Hazardous Substances at the
Real Property (any such event being hereinafter referred to as a “Hazardous
Discharge”) or receives any notice of violation, request for information or
notification that it is potentially responsible for investigation or cleanup of
environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of Environmental Laws affecting the Real Property or any Borrower’s
interest therein (any of the foregoing is referred to herein as an
“Environmental Complaint”) from any Person, including any state agency
responsible in whole or in part for environmental matters in the state in which
the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the “Authority”), then Borrowing
Agent shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which any Borrower is aware giving rise to
the Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in and Lien on the Real
Property and the Collateral and is not intended to create nor shall it create
any obligation upon Agent or any Lender with respect thereto.

 

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(e) Borrowing Agent shall promptly forward to Agent copies of any request for
information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by any Borrower
to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Borrower and the Authority regarding such claims to
Agent until the claim is settled. Borrowing Agent shall promptly forward to
Agent copies of all documents and reports concerning a Hazardous Discharge at
the Real Property that any Borrower is required to file under any Environmental
Laws. Such information is to be provided solely to allow Agent to protect
Agent’s security interest in and Lien on the Real Property and the Collateral.
(f) Borrowers shall respond promptly to any Hazardous Discharge or Environmental
Complaint and take all necessary action in order to safeguard the health of any
Person and to avoid subjecting the Collateral or Real Property to any Lien. If
any Borrower shall fail to respond promptly to any Hazardous Discharge or
Environmental Complaint or any Borrower shall fail to comply with any of the
requirements of any Environmental Laws, Agent on behalf of Lenders may, but
without the obligation to do so, for the sole purpose of protecting Agent’s
interest in the Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize third parties to enter onto the Real Property) and take
such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Domestic Rate Loans constituting Revolving Advances shall
be paid upon demand by Borrowers, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and any Borrower.
(g) Promptly upon the written request of Agent from time to time, Borrowers
shall provide Agent, at Borrowers’ expense, with an environmental site
assessment or environmental audit report prepared by an environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with a
reasonable degree of certainty the existence of a Hazardous Discharge and the
potential costs in connection with abatement, cleanup and removal of any
Hazardous Substances found on, under, at or within the Real Property. Any report
or investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent. If such estimates, individually or in
the aggregate, exceed $100,000, Agent shall have the right to require Borrowers
to post a bond, letter of credit or other security reasonably satisfactory to
Agent to secure payment of these costs and expenses.

 

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(h) Borrowers shall defend and indemnify Agent and Lenders and hold Agent,
Lenders and their respective employees, agents, directors and officers harmless
from and against all loss, liability, damage and expense, claims, costs, fines
and penalties, including attorney’s fees, suffered or incurred by Agent or
Lenders under or on account of any Environmental Laws, including the assertion
of any Lien thereunder, with respect to any Hazardous Discharge, the presence of
any Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property as a result of the foregoing
except to the extent such loss, liability, damage and expense is attributable to
any Hazardous Discharge resulting from actions on the part of Agent or any
Lender. Borrowers’ obligations under this Section 4.19 shall arise upon the
discovery of the presence of any Hazardous Substances at the Real Property,
whether or not any federal, state, or local environmental agency has taken or
threatened any action in connection with the presence of any Hazardous
Substances. Borrowers’ obligation and the indemnifications hereunder shall
survive the termination of this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real Property shall
be deemed to include all of each Borrower’s right, title and interest in and to
its owned and leased premises.
4.20. Financing Statements. Except as respects the financing statements filed by
Agent, the financing statements described on Schedule 1.2 and financing
statements filed with respect to other Permitted Encumbrances, no financing
statement covering any of the Collateral or any proceeds thereof is on file in
any public office.
V. REPRESENTATIONS AND WARRANTIES.
Each Borrower represents and warrants as follows:
5.1. Authority. Each Borrower has full power, authority and legal right to enter
into this Agreement and the Other Documents and to perform all its respective
Obligations hereunder and thereunder. This Agreement and the Other Documents
have been duly executed and delivered by each Borrower, and this Agreement and
the Other Documents constitute the legal, valid and binding obligation of such
Borrower enforceable in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors’ rights generally. The execution,
delivery and performance of this Agreement and of the Other Documents (a) are
within such Borrower’s corporate powers, have been duly authorized by all
necessary corporate action, are not in contravention of Applicable Law or the
terms of such Borrower’s by-laws, certificate of incorporation or other
applicable documents relating to such Borrower’s formation or to the conduct of
such Borrower’s business or of any material agreement or undertaking to which
such Borrower is a party or by which such Borrower is bound, (b) will not
conflict with or violate any Applicable Law or regulation, or any judgment,
order or decree of any Governmental Body, (c) will not require the Consent of
any Governmental Body or any other Person, except those Consents set forth on
Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled
prior to the Closing Date and which are in full force and effect and (d) will
not conflict with, nor result in any breach in any of the provisions of or
constitute a default under or result in the creation of any Lien except
Permitted Encumbrances upon any asset of such Borrower under the provisions of
any agreement, charter document, instrument, by-law or other instrument to which
such Borrower is a party or by which it or its property may be bound.

 

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5.2. Formation and Qualification.
(a) Each Borrower is duly incorporated and in good standing under the laws of
the state listed on Schedule 5.2(a) and is qualified to do business and is in
good standing in the states listed on Schedule 5.2(a) which constitute all
states in which qualification and good standing are necessary for such Borrower
to conduct its business and own its property and where the failure to so qualify
could reasonably be expected to have a Material Adverse Effect on such Borrower.
Each Borrower has delivered to Agent true and complete copies of its certificate
of incorporation and by-laws.
(b) The only Subsidiaries of Osteotech and each Borrower are listed on
Schedule 5.2(b).
5.3. Survival of Representations and Warranties. All representations and
warranties of such Borrower contained in this Agreement and the Other Documents
shall be true at the time of such Borrower’s execution of this Agreement and the
Other Documents, and shall survive the execution, delivery and acceptance
thereof by the parties thereto and the closing of the transactions described
therein or related thereto.
5.4. Tax Returns. Each Borrower’s federal tax identification number is set forth
on Schedule 5.4. Each Borrower has filed all federal, state and local tax
returns and other reports each is required by law to file and has paid all
taxes, assessments, fees and other governmental charges that are due and
payable, except where the failure so to file or pay could not reasonably be
expected to have a Material Adverse Effect. Federal tax returns of each Borrower
have been examined and reported upon by the appropriate taxing authority or
closed by applicable statute and satisfied for all fiscal years prior to and
including the fiscal year ending December 31, 2005. The provision for taxes on
the books of each Borrower is adequate for all years not closed by applicable
statutes, and for its current fiscal year, and no Borrower has any knowledge of
any deficiency or additional assessment in connection therewith not provided for
on its books.
5.5. Financial Statements. The consolidated and consolidating balance sheets of
Borrowers, their Subsidiaries and such other Persons described therein
(including the accounts of all Subsidiaries for the respective periods during
which a subsidiary relationship existed) as of December 31, 2008, and the
related statements of income, changes in stockholder’s equity, and changes in
cash flow for the period ended on such date, all accompanied by reports thereon
containing opinions without qualification by independent certified public
accountants, copies of which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (except for changes in application in
which such accountants concur) and present fairly the financial position of
Borrowers and their Subsidiaries at such date and the results of their
operations for such period. Since September 30, 2009, there has been no change
in the condition, financial or otherwise, of Borrowers or their Subsidiaries as
shown on the consolidated balance sheet as of such date and no change in the
aggregate value of machinery and equipment owned by Borrowers and their
respective Subsidiaries, except changes in the Ordinary Course of Business, none
of which individually or in the aggregate has been materially adverse.

 

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5.6. Entity Names. Except as set forth on Schedule 5.6, no Borrower has been
known by any other corporate name in the past five years and does not sell
Inventory under any other name, nor has any Borrower been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years.
5.7. O.S.H.A. and Environmental Compliance.
(a) Each Borrower has duly complied with, and its facilities, business, assets,
property, leaseholds, Real Property and Equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act, the Environmental Protection Act, RCRA and all other Environmental
Laws; there have been no outstanding citations, notices or orders of
non-compliance issued to any Borrower or relating to its business, assets,
property, leaseholds or Equipment under any such laws, rules or regulations
which could reasonably be expected to have a Material Adverse Effect.
(b) Each Borrower has been issued all required federal, state and local
licenses, certificates or permits relating to all applicable Environmental Laws.
(c) (i) There are no visible signs of releases, spills, discharges, leaks or
disposal (collectively referred to as “Releases”) of Hazardous Substances at,
upon, under or within any Real Property or any premises leased by any Borrower;
(ii) there are no underground storage tanks or polychlorinated biphenyls on the
Real Property or any premises leased by any Borrower; (iii) neither the Real
Property nor any premises leased by any Borrower has ever been used as a
treatment, storage or disposal facility of Hazardous Waste; and (iv) no
Hazardous Substances are present on the Real Property or any premises leased by
any Borrower, excepting such quantities as are handled in accordance with all
applicable manufacturer’s instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of any Borrower or of its tenants.
5.8. Solvency; No Litigation, Violation, Indebtedness or Default.
(a) Each Borrower is solvent, able to pay its debts as they mature, has capital
sufficient to carry on its business and all businesses in which it is about to
engage, and (i) as of the Closing Date, the fair present saleable value of its
assets, calculated on a going concern basis, is in excess of the amount of its
liabilities and (ii) subsequent to the Closing Date, the fair saleable value of
its assets (calculated on a going concern basis) will be in excess of the amount
of its liabilities.
(b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any pending or
threatened litigation, arbitration, actions or proceedings which could
reasonably be expected to have a Material Adverse Effect, and (ii) any
Indebtedness for borrowed money or Capitalized Lease Obligations, other than the
Obligations.

 

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(c) No Borrower is in violation of any Applicable Law in any respect which could
reasonably be expected to have a Material Adverse Effect, nor is any Borrower in
violation of any order of any court, Governmental Body or arbitration board or
tribunal.
(d) No Borrower nor any member of the Controlled Group maintains or contributes
to any Plan other than (i) as of the Closing Date, those listed on
Schedule 5.8(d) hereto and (ii) thereafter, as permitted under this Agreement.
(i) No Pension Benefit Plan has incurred any “accumulated funding deficiency,”
as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether
or not waived, and each Borrower and each member of the Controlled Group has met
all applicable minimum funding requirements under Section 302 of ERISA in
respect of each Pension Benefit Plan; (ii) each Pension Benefit Plan which is
intended to be a qualified plan under Section 401(a) of the Code as currently in
effect has been determined by the Internal Revenue Service to be qualified under
Section 401(a) of the Code and the trust related thereto is exempt from federal
income tax under Section 501(a) of the Code; (iii) neither any Borrower nor any
member of the Controlled Group has incurred any liability to the PBGC other than
for the payment of premiums, and there are no premium payments which have become
due which are unpaid; (iv) no Pension Benefit Plan has been terminated by the
plan administrator thereof nor by the PBGC, and there is no occurrence which
would cause the PBGC to institute proceedings under Title IV of ERISA to
terminate any Pension Benefit Plan; (v) at this time, the current value of the
assets of each Pension Benefit Plan exceeds the present value of the accrued
benefits and other liabilities of such Pension Benefit Plan and neither any
Borrower nor any member of the Controlled Group knows of any facts or
circumstances which would materially change the value of such assets and accrued
benefits and other liabilities; (vi) neither any Borrower nor any member of the
Controlled Group has breached any of the responsibilities, obligations or duties
imposed on it by ERISA with respect to any Pension Benefit Plan; (vii) neither
any Borrower nor any member of a Controlled Group has incurred any liability for
any excise tax arising under Section 4972 or 4980B of the Code, and no fact
exists which could give rise to any such liability; (viii) neither any Borrower
nor any member of the Controlled Group nor any fiduciary of, nor any trustee to,
any Pension Benefit Plan, has engaged in a material non-exempt “prohibited
transaction” described in Section 406 of the ERISA or Section 4975 of the Code
nor taken any action which would constitute or result in a Termination Event
with respect to any such Pension Benefit Plan which is subject to ERISA;
(ix) each Borrower and each member of the Controlled Group has made all
contributions due and payable with respect to each Pension Benefit Plan;
(x) there exists no event described in Section 4043(b) of ERISA, for which the
thirty (30) day notice period has not been waived; (xi) neither any Borrower nor
any member of the Controlled Group maintains or contributes to any Plan which
provides health, accident or life insurance benefits to former employees, their
spouses or dependents, other than in accordance with Section 4980B of the Code,
section 601 of ERISA or state law, or under an agreement with an executive;
(xii) neither any Borrower nor any member of the Controlled Group has withdrawn,
completely or partially, from any Multiemployer Plan so as to incur liability
under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no
fact which would reasonably be expected to result in any such liability; and
(xiv) to the best of each Borrower’s knowledge, no Plan fiduciary (as defined in
Section 3(21) of ERISA) has any liability for breach of fiduciary duty or for
any failure in connection with the administration or investment of the assets of
a Plan.

 

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5.9. Patents, Trademarks, Copyrights and Licenses.
(a) All patents and patent applications owned or utilized by any Borrower are
valid and have been duly registered or filed with all appropriate Governmental
Bodies and are, as of the Closing Date, set forth on Schedule 5.9(a) hereto.
(b) All trademarks, trademark applications, service marks, service mark
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by any Borrower are
valid and have been duly registered or filed with all appropriate Governmental
Bodies.
(c) Subject to Borrowers’ rights under Section 6.2, the intellectual property
rights described in Sections 5.9 (a) and (b) constitute all of the intellectual
property rights which are necessary for the operation of any Borrower’s
business, and there is no objection to or pending challenge to the validity of
any such patent, trademark, copyright, design rights, trade name, trade secret
or license and no Borrower is aware of any grounds for any challenge, except as
set forth in Schedule 5.8(b) hereto. Each patent, patent application, patent
license, trademark, trademark application, trademark license, service mark,
service mark application, service mark license, design rights, copyright,
copyright application and copyright license owned or held by any Borrower and
all trade secrets used by any Borrower consist of original material or property
developed by such Borrower or was lawfully acquired by such Borrower from the
proper and lawful owner thereof. Subject to Borrowers’ rights under Section 6.2,
each of such items has been maintained so as to preserve the value thereof from
the date of creation or acquisition thereof.
(d) With respect to all software used by any Borrower, such Borrower is in
possession of all source and object codes related to each piece of software or
is the beneficiary of a source code escrow agreement.
5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each Borrower
(a) is in compliance with and (b) has procured and is now in possession of, all
licenses or permits required by any applicable federal, state or local law, rule
or regulation for the operation of its business in each jurisdiction wherein it
is now conducting or proposes to conduct business and where the failure to
procure such licenses or permits could reasonably be expected to have a Material
Adverse Effect.
5.11. Default of Indebtedness. No Borrower is in default (a) in the payment of
the principal of or interest on any Indebtedness for borrowed money or
Capitalized Lease Obligations, or (b) under any instrument or agreement under or
subject to which any Indebtedness has been issued which would reasonably be
expected to have a Material Adverse Effect, and no event has occurred under the
provisions of any such instrument or agreement which with or without the lapse
of time or the giving of notice, or both, constitutes or would constitute an
event of default thereunder which would reasonably be expected to have a
Material Adverse Effect.

 

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5.12. No Default. No Borrower is in default in the payment or performance of any
of its contractual obligations which would be reasonably expected to have a
Material Adverse Effect and no Default has occurred and is continuing.
5.13. No Burdensome Restrictions. No Borrower is party to any contract or
agreement the performance of which could reasonably be expected to have a
Material Adverse Effect. Each Borrower has heretofore delivered to Agent true
and complete copies of all material contracts to which it is a party or to which
it or any of its properties is subject as of the Closing Date. No Borrower has
agreed or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien which is not a Permitted Encumbrance.
5.14. No Labor Disputes. No Borrower is involved in any labor dispute; there are
no strikes or walkouts or union organization of any Borrower’s employees
threatened or in existence and no labor contract is scheduled to expire during
the Term.
5.15. Margin Regulations. No Borrower is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or “carrying” any “margin stock” within
the respective meanings of each of the quoted terms under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
“purchasing” or “carrying” “margin stock” as defined in Regulation U of such
Board of Governors.
5.16. Investment Company Act. No Borrower is an “investment company” registered
or required to be registered under the Investment Company Act of 1940, as
amended, nor is it controlled by such a company.
5.17. Disclosure. No representation or warranty made by any Borrower in this
Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith excluding projections and pro forma
financial information referred to in the following sentence, contains any untrue
statement of a material fact or, when taken as a whole, omits to state any
material fact necessary to make the statements herein or therein not misleading
in light of the circumstances in which such statements were made. Any
projections and pro forma financial information contained in such materials were
based upon good faith estimates and assumptions believed by Borrowers to be
reasonable at the time made, it being recognized by Agent and Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There is no fact known to any Borrower or which
reasonably should be known to such Borrower which such Borrower has not
disclosed to Agent in writing with respect to the transactions contemplated by
this Agreement or available to Agent and Lenders in filings with the SEC for use
in connection with the transactions contemplated hereby which could reasonably
be expected to have a Material Adverse Effect.
5.18. Reserved.

 

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5.19. Swaps. As of the Closing Date, no Borrower is a party to, nor will it be a
party to, any swap agreement whereby such Borrower has agreed or will agree to
swap interest rates or currencies.
5.20. Conflicting Agreements. No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on any Borrower or affecting the
Collateral conflicts with, or requires any Consent which has not already been
obtained to, or would in any way prevent the execution, delivery or performance
of, the terms of this Agreement or the Other Documents.
5.21. Application of Certain Laws and Regulations. No Borrower is subject to any
law, statute, rule or regulation which regulates the incurrence of any
Indebtedness, including laws, statutes, rules or regulations relative to common
or interstate carriers or to the sale of electricity, gas, steam, water,
telephone, telegraph or other public utility services.
5.22. Business and Property of Borrowers. Upon and after the Closing Date,
Borrowers do not propose to engage in any business other than the manufacture of
biologic and regenerative products used primarily in the health care industry
and activities necessary to conduct the foregoing. On the Closing Date, each
Borrower will own all the property and possess all of the rights and Consents
necessary for the conduct of the business of such Borrower.
5.23. Section 20 Subsidiaries. Borrowers do not intend to use and shall not use
any portion of the proceeds of the Advances, directly or indirectly, to purchase
during the underwriting period, or for 30 days thereafter, Ineligible Securities
being underwritten by a Section 20 Subsidiary.
5.24. Anti-Terrorism Laws.
(a) General. Neither any Borrower nor, to any Borrower’s actual knowledge any
Affiliate of any Borrower, is in violation of any Anti-Terrorism Law or engages
in or conspires to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law.
(b) Executive Order No. 13224. Neither any Borrower nor, to any Borrower’s
actual knowledge any Affiliate of any Borrower or their respective agents acting
or benefiting in any capacity in connection with the Advances or other
transactions hereunder, is any of the following (each a “Blocked Person”):
(i) a Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224;
(ii) a Person owned or controlled by, or acting for or on behalf of, any Person
that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order No. 13224;
(iii) a Person or entity with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;

 

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(iv) a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order No. 13224;
(v) a Person or entity that is named as a “specially designated national” on the
most current list published by the U.S. Treasury Department Office of Foreign
Asset Control at its official website or any replacement website or other
replacement official publication of such list, or
(vi) a Person or entity who is affiliated or associated with a Person or entity
listed above.
Neither any Borrower nor to the knowledge of any Borrower, any of its agents
acting in any capacity in connection with the Advances or other transactions
hereunder (i) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked
Person, or (ii) deals in, or otherwise engages in any transaction relating to,
any property or interests in property blocked pursuant to the Executive Order
No. 13224.
5.25. Trading with the Enemy. No Borrower has engaged, nor does it intend to
engage, in any business or activity prohibited by the Trading with the Enemy
Act.
VI. AFFIRMATIVE COVENANTS.
Each Borrower shall, until payment in full of the Obligations (other than
unasserted indemnification claims) and termination of this Agreement:
6.1. Payment of Fees. Pay to Agent on demand all usual and customary fees and
expenses which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the establishment and maintenance of any Blocked Accounts or
Depository Accounts as provided for in Section 4.15(h). Agent may, upon notice
to Borrowing Agent, charge Borrowers’ Account for all such fees and expenses.
6.2. Conduct of Business and Maintenance of Existence and Assets. (a) Conduct
continuously and operate actively its business according to good business
practices and maintain all of its properties useful or necessary in its business
in good working order and condition (reasonable wear and tear excepted and
except as may be disposed of in accordance with the terms of this Agreement),
including all licenses, patents, copyrights, design rights, tradenames, trade
secrets and trademarks and take all actions necessary to enforce and protect the
validity of any intellectual property right or other right included in the
Collateral, except for licenses, patents, copyrights, design rights, trade
names, trade secrets and trademarks deemed by a Borrower to no longer be useful
in such Borrower’s business; (b) keep in full force and effect its existence and
comply in all material respects with the Applicable Laws governing the conduct
of its business where the failure to do so could reasonably be expected to have
a Material Adverse Effect; and (c) make all such reports and pay all such
franchise and other taxes and license fees and do all such other acts and things
as may be lawfully required to maintain its rights, licenses, leases, powers and
franchises under the laws of the United States or any political subdivision
thereof where the failure to do so could reasonably be expected to have a
Material Adverse Effect.

 

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6.3. Violations. Promptly notify Agent in writing of any violation of any law,
statute, regulation or ordinance of any Governmental Body, or of any agency
thereof, applicable to any Borrower which could reasonably be expected to have a
Material Adverse Effect.
6.4. Government Receivables. Take all steps necessary to protect Agent’s
interest in the Collateral under the Federal Assignment of Claims Act, the
Uniform Commercial Code and all other applicable state or local statutes or
ordinances and deliver to Agent appropriately endorsed, any instrument or
chattel paper connected with any Receivable arising out of contracts between any
Borrower and the United States, any state or any department, agency or
instrumentality of any of them, if such Receivable is included in the Formula
Amount.
6.5. Fixed Charge Coverage Ratio. Commencing March 31, 2010, cause to be
maintained as of the end of each fiscal quarter, a Fixed Charge Coverage Ratio
of not less than 1.1 to 1.0; provided that for the fiscal quarters ending
March 31, 2010, June 30, 2010, September 30, 2010 and December 31, 2010,
Borrowers shall not be obligated to maintain such minimum Fixed Charge Coverage
Ratio if Borrowers maintain for each day during any such quarter, cash balances
on deposit at Agent in excess of the outstanding amount (for such day) of
Revolving Advances (the “Cash Balance Excess”). If during any such fiscal
quarter, Borrowers fail to maintain the Cash Balance Excess, then for such
quarter and for each and every fiscal quarter thereafter, Borrowers shall be
obligated to maintain such minimum Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio shall be measured as of each fiscal quarter end on a rolling four
(4) quarter basis; provided that: (A) for the first testing period under this
Section 6.5, the Fixed Charge Coverage Ratio shall be measured on the basis of
the fiscal quarter then ending; (B) for the second test period under this
Section 6.5, the Fixed Charge Coverage Ratio shall be measured on the basis of
the two consecutive fiscal quarters then ending and (C) for the third test
period under this Section 6.5, the Fixed Charge Coverage Ratio shall be measured
on the basis of the three consecutive fiscal quarters then ending.
6.6. Execution of Supplemental Instruments. Execute and deliver to Agent from
time to time, upon demand, such supplemental agreements, statements, assignments
and transfers, or instructions or documents relating to the Collateral, and such
other instruments as Agent may reasonably request, in order that the full intent
of this Agreement may be carried into effect.
6.7. Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before
maturity (subject, where applicable, to specified grace periods and, in the case
of the trade payables, to normal payment practices) all its obligations and
liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and each Borrower shall have provided for such reserves as Agent may
reasonably deem proper and necessary, subject at all times to any applicable
subordination arrangement in favor of Lenders.
6.8. Standards of Financial Statements. Cause all financial statements referred
to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 and 9.13 as to which GAAP is
applicable to be complete and correct in all material respects (subject, in the
case of interim financial statements, to normal year-end audit adjustments and
the absence of footnotes) and to be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein (except as concurred in by such reporting accountants or officer, as the
case may be, and disclosed therein).

 

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6.9. Federal Securities Laws. Promptly file all periodic reports required under
the Exchange Act and/or Securities Act.
VII. NEGATIVE COVENANTS.
No Borrower shall, until satisfaction in full of the Obligations (other than
unasserted indemnification claims) and termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale of Assets.
(a) Enter into any merger, consolidation or other reorganization with or into
any other Person or acquire all or a substantial portion of the assets or Equity
Interests of any Person or permit any other Person to consolidate with or merge
with it, provided that a Borrower may merge into or consolidate with another
Borrower or any Subsidiary, as long as a Borrower is the surviving Person (and
with respect to any merger or consolidation involving Osteotech, as long as
Osteotech is the surviving Person).
(b) Sell, lease, transfer or otherwise dispose of any of its properties or
assets, except (i) dispositions of Collateral or Equipment to the extent
expressly permitted by Section 4.3 and (ii) any other sales or dispositions
expressly permitted by this Agreement.
7.2. Creation of Liens. Create or suffer to exist any Lien or transfer upon or
against any of its property or assets now owned or hereafter acquired, except
Permitted Encumbrances.
7.3. Guarantees. Become liable upon the obligations or liabilities of any Person
by assumption, endorsement or guaranty thereof or otherwise (other than to
Lenders) except the endorsement of checks in the Ordinary Course of Business and
guaranties of obligations or liabilities of Subsidiaries in an aggregate amount,
determined in accordance with GAAP, not to exceed $1,000,000 at any time.
7.4. Investments. Purchase or acquire obligations or Equity Interests of, or any
other interest in, any Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof, (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers’
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof, (e) investments arising from the receipt of advance payments
from Customers, (f) advances and deposits to vendors arising in the Ordinary
Course of Business, (g) loans and advances to officers and employees of such
Borrower or its Subsidiaries in the Ordinary Course of Business not to exceed
the aggregate amount of $100,000 at any time outstanding, (h) extended payment
terms to Customers of such Borrower in the Ordinary Course of Business, provided
that such extended payments terms do not affect the status of any Receivables of
such Customer as an Eligible Receivable hereunder, (i) investments held by such
Borrower in connection with the satisfaction or enforcement of debt or claims
due or owing to such Borrower or as security for any such debt or claim,
(j) promissory notes and other non-cash consideration received by such Borrower
in connection with conveyances, sales leases or sub-leases, assignments,
transfers and dispositions permitted by Section 4.3, and (k) other obligations
of and interests in other Persons in an aggregate amount not to exceed $750,000
at any time.

 

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7.5. Loans. Make advances, loans or extensions of credit to any Person,
including any Subsidiary or Affiliate, except with respect to (a) the extension
of commercial trade credit in connection with the sale of Collateral in the
Ordinary Course of Business consistent with past practices, (b) (without
duplication of any investments permitted under Section 7.4), loans and advances
to its officers and employees in the Ordinary Course of Business not to exceed
the aggregate amount of $100,000 at any time outstanding, and (c) intercompany
loans, excluding transactions related to the extension of commercial trade
credit in the Ordinary Course of Business, not to exceed the aggregate principal
amount of $2,000,000, plus accrued interest, outstanding at any one time.
7.6. Capital Expenditures. Contract for, purchase or make any expenditure or
commitments for Capital Expenditures in any fiscal year in an aggregate amount
for all Borrowers in excess of $4,000,000.
7.7. Dividends. Declare, pay or make any dividend or distribution on any shares
of the common stock or preferred stock of any Borrower (other than dividends or
distributions payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the purchase, redemption
or other retirement of any common or preferred stock, or of any options to
purchase or acquire any such shares of common or preferred stock of any
Borrower; provided that Osteotech may repurchase its stock pursuant to the Stock
Repurchase Plan in an amount not to exceed $500,000 in the aggregate in any
fiscal year if no Event of Default or Default shall have occurred and be
continuing, or after giving effect to such repurchase would occur, on the date
of such repurchase.
7.8. Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
(exclusive of trade debt) except in respect of (a) Indebtedness to Lenders;
(b) Indebtedness incurred for Capital Expenditures permitted under Section 7.6
hereof; (c) Indebtedness disclosed on Schedule 5.8(b) hereto, together with any
refinancing, refunding, renewal, modification, extension or replacement thereof
(provided that such refinancing, refunding, renewal, modification, extension or
replacement may not increase the principal amount or extend the maturity date of
such Indebtedness), (d) Indebtedness owed to Customers of such Borrower arising
from the receipt of advance payments from a Customer, (e) obligations of such
Borrower in respect of performance bonds and completion, guarantee, surety and
similar bonds, in each case obtained in the ordinary course of business to
support statutory and contractual obligations arising in the Ordinary Course of
Business, (f) Indebtedness arising from the honoring of a bank or other
financial institution of a check, draft or other similar instrument drawn
against insufficient funds in the Ordinary Course of Business, and (g) other
unsecured Indebtedness not to exceed the aggregate amount of $500,000 at any
time outstanding. Notwithstanding anything herein to the contrary, no Borrower
shall, after the Closing Date, incur any additional Indebtedness to Key until
the financing statement in favor of Key, as of record on the Closing Date, has
been amended to limit the collateral described therein to specific office
equipment financed by Key.

 

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7.9. Nature of Business. Substantially change the nature of the business in
which it is presently engaged, nor except as specifically permitted hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the Ordinary Course of Business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
7.10. Transactions with Affiliates. Directly or indirectly, purchase, acquire or
lease any property from, or sell, transfer or lease any property to, or
otherwise enter into any transaction or deal with, any Affiliate, except
(a) transactions disclosed to the Agent or which are in the Ordinary Course of
Business consistent with past practices, on an arm’s-length basis on terms and
conditions no less favorable than terms and conditions which would have been
obtainable from a Person other than an Affiliate, (b) any transaction permitted
by Section 7.1(a) hereof involving a Subsidiary, any transaction permitted by
Section 7.4(g), 7.5(b) or 7.5(c) hereof or any dividend or distribution
permitted by Section 7.7 hereof, (c) payment of customary fees and expenses to
members of the board of directors of such Borrower, (d) payment of employee
compensation to any Affiliate who is an individual in such Person’s capacity as
an officer, employee or consultant of such Borrower, (e) extended payment terms
allowed, in the Ordinary Course of Business, by such Borrower to another
Borrower or any Subsidiary in respect of accounts receivable owed to it by such
other Borrower or any Subsidiary, and (f) purchases and sales of Inventory made
between such Borrower and another Borrower or any Subsidiary, in each case in
the Ordinary Course of Business and at prices not less (in any material respect)
than the lower of cost or market value of such Inventory.
7.11. Leases. Enter as lessee into any lease arrangement for real or personal
property (unless capitalized and permitted under Section 7.6 hereof) if after
giving effect thereto, aggregate annual rental payments for all leased property
would exceed $2,500,000 in any one fiscal year in the aggregate for all
Borrowers.
7.12. Subsidiaries.
(a) Form any Subsidiary.
(b) Enter into any partnership, joint venture or similar arrangement.
7.13. Fiscal Year and Accounting Changes. Change its fiscal year from
December 31 or make any change (a) in accounting treatment and reporting
practices except as required by GAAP or (b) in tax reporting treatment except as
required by Applicable Law.
7.14. Pledge of Credit. Now or hereafter pledge Agent’s or any Lender’s credit
on any purchases or for any purpose whatsoever or use any portion of any Advance
in or for any business other than such Borrower’s business as conducted on the
date of this Agreement.
7.15. Amendment of Articles of Incorporation, By-Laws. Amend, modify or waive
any term or material provision of its Certificate of Incorporation or By-Laws
which would be adverse in any respect to Agent or a Lender, unless required by
Applicable Law. Notwithstanding the foregoing, no Borrower may amend its
Certificate of Incorporation or other applicable organizational documents to
change its jurisdiction of organization or form of entity without thirty
(30) days prior to written notice to Agent.

 

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7.16. Compliance with ERISA. (a) (i) Maintain, or permit any member of the
Controlled Group to maintain, or (ii) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
Pension Benefit Plan, other than those Pension Benefit Plans disclosed on
Schedule 5.8(d) or any other Pension Benefit Plan for which Agent has provided
its prior written consent, (b) engage, or permit any member of the Controlled
Group to engage, in any non-exempt “prohibited transaction”, as that term is
defined in section 406 of ERISA and Section 4975 of the Code, (c) incur, or
permit any member of the Controlled Group to incur, any “accumulated funding
deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of
the Code, (d) terminate, or permit any member of the Controlled Group to
terminate, any Pension Benefit Plan where such event could result in any
liability of any Borrower or any member of the Controlled Group or the
imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (e) assume, or permit any
member of the Controlled Group to assume, any obligation to contribute to any
Multiemployer Plan not disclosed on Schedule 5.8(d), (f) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any
Multiemployer Plan; (g) fail promptly to notify Agent of the occurrence of any
Termination Event, (h) fail to comply, or permit a member of the Controlled
Group to fail to comply, with the material requirements of ERISA or the Code or
other Applicable Laws in respect of any Plan, (i) fail to meet, or permit any
member of the Controlled Group to fail to meet, all minimum funding requirements
under ERISA or the Code or postpone or delay or allow any member of the
Controlled Group to postpone or delay any funding requirement with respect of
any Pension Benefit Plan.
7.17. Prepayment of Indebtedness. At any time, directly or indirectly, prepay
any Indebtedness (other than to Lenders and other than prepayments of trade debt
in the Ordinary Course of Business), or repurchase, redeem, retire or otherwise
acquire any Indebtedness of any Borrower, other than, so long as no Default or
Event of Default then exists, in an amount in excess of $1,000,000 in the
aggregate during any fiscal year.
7.18. Anti-Terrorism Laws. No Borrower shall, until satisfaction in full of the
Obligations and termination of this Agreement, nor shall it permit any
Subsidiary or agent to:
(a) Conduct any business or engage in any transaction or dealing with any
Blocked Person, including the making or receiving any contribution of funds,
goods or services to or for the benefit of any Blocked Person.
(b) Deal in, or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order No. 13224.
(c) Engage in or conspire to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT Act or
any other Anti-Terrorism Law. Borrower shall deliver to Lenders any
certification or other evidence requested from time to time by any Lender in its
sole discretion, confirming Borrower’s compliance with this Section.

 

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7.19. Membership/Partnership Interests. Elect to treat or permit any of its
Subsidiaries to (x) treat its limited liability company membership interests or
partnership interests, as the case may be, as securities as contemplated by the
definition of “security” in Section 8-102(15) and by Section 8-103 of Article 8
of Uniform Commercial Code or (y) certificate its limited liability company
membership interests or partnership interests, as the case may be.
7.20. Trading with the Enemy Act. Engage in any business or activity in
violation of the Trading with the Enemy Act.
VIII. CONDITIONS PRECEDENT.
8.1. Conditions to Initial Advances. The agreement of Lenders to make the
initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Agent, immediately prior to or concurrently with the
making of such Advances, of the following conditions precedent:
(a) Note. Agent shall have received the Note duly executed and delivered by an
authorized officer of each Borrower;
(b) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by this Agreement, any related
agreement or under law or reasonably requested by the Agent to be filed,
registered or recorded in order to create, in favor of Agent, a perfected
security interest in or lien upon the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received
an acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings of Borrowers. Agent shall have received a copy of the
resolutions in form and substance reasonably satisfactory to Agent, of the Board
of Directors of each Borrower authorizing (i) the execution, delivery and
performance of this Agreement, the Notes, and any related agreements
(collectively the “Documents”) and (ii) the granting by each Borrower of the
security interests in and liens upon the Collateral in each case certified by
the Secretary or an Assistant Secretary of each Borrower as of the Closing Date;
and, such certificate shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded as of the date of such
certificate;
(d) Incumbency Certificates of Borrowers. Agent shall have received a
certificate of the Secretary or an Assistant Secretary of each Borrower, dated
the Closing Date, as to the incumbency and signature of the officers of each
Borrower executing this Agreement, the Other Documents, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;

 

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(e) Certificates. Agent shall have received a copy of the Articles or
Certificate of Incorporation of each Borrower and all amendments thereto,
certified by the Secretary of State or other appropriate official of its
jurisdiction of incorporation together with copies of the By-Laws of each
Borrower and all material agreements of each Borrower’s shareholders certified
as accurate and complete by the Secretary of each Borrower;
(f) Good Standing Certificates. Agent shall have received good standing
certificates for each Borrower dated not more than 15 days prior to the Closing
Date, issued by the Secretary of State or other appropriate official of each
Borrower’s jurisdiction of incorporation and each jurisdiction where the conduct
of each Borrower’s business activities or the ownership of its properties
necessitates qualification;
(g) Legal Opinion. Agent shall have received the executed legal opinion of
Dorsey & Whitney, LLP in form and substance satisfactory to Agent which shall
cover such matters incident to the transactions contemplated by this Agreement,
the Notes, the Other Documents, and related agreements as Agent may reasonably
require and each Borrower hereby authorizes and directs such counsel to deliver
such opinions to Agent and Lenders;
(h) No Litigation. (i) No litigation, investigation or proceeding before or by
any arbitrator or Governmental Body shall be continuing or threatened against
any Borrower or against the officers or directors of any Borrower (A) in
connection with this Agreement, the Other Documents or any of the transactions
contemplated thereby and which, in the reasonable opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other order
of any nature materially adverse to any Borrower or the conduct of its business
or inconsistent with the due consummation of the Transactions shall have been
issued by any Governmental Body;
(i) Financial Condition Certificates. Agent shall have received an executed
Financial Condition Certificate in the form of Exhibit 8.1(k).
(j) Collateral Examination. Agent shall have completed Collateral examinations
and received appraisals, the results of which shall be satisfactory in form and
substance to Lenders, of the Receivables, Inventory, General Intangibles, and
Equipment of each Borrower and all books and records in connection therewith;
(k) Fees. Agent shall have received all fees payable to Agent and Lenders on or
prior to the Closing Date hereunder, including pursuant to Article III hereof;
(l) Insurance. Agent shall have received in form and substance satisfactory to
Agent, certificates of insurance showing Agent as lender loss payee, and
certificates of Borrowers’ liability insurance policies showing Agent as an
additional insured, all in accordance with the requirements of Section 4.11;
(m) Payment Instructions. Agent shall have received written instructions from
Borrowing Agent directing the application of proceeds of the initial Advances
made pursuant to this Agreement;

 

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(n) Blocked Accounts. Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts with financial
institutions acceptable to Agent for the collection or servicing of the
Receivables and proceeds of the Collateral;
(o) Consents. Agent shall have received any and all Consents necessary to permit
the effectuation of the transactions contemplated by this Agreement and the
Other Documents; and, Agent shall have received such Consents and waivers of
such third parties as might assert claims with respect to the Collateral, as
Agent and its counsel shall deem necessary;
(p) No Adverse Material Change. (i) Since September 30, 2009, there shall not
have occurred any event, condition or state of facts which could reasonably be
expected to have a Material Adverse Effect and (ii) no representations made or
information supplied to Agent or Lenders shall have been proven to be inaccurate
or misleading in any material respect;
(q) Leasehold Agreements. Agent shall have received landlord, mortgagee or
warehouseman agreements satisfactory to Agent with respect to all premises
leased by Borrowers at which books and records are located;
(r) Contract Review. Agent shall have reviewed all material contracts of
Borrowers as Agent may reasonably determine including leases, union contracts,
labor contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent;
(s) Closing Certificate. Agent shall have received a closing certificate signed
by the Chief Financial Officer of each Borrower dated as of the date hereof,
stating that (i) all representations and warranties set forth in this Agreement
and the Other Documents are true and correct on and as of such date,
(ii) Borrowers are on such date in compliance with all the terms and provisions
set forth in this Agreement and the Other Documents and (iii) on such date no
Default or Event of Default has occurred or is continuing;
(t) Borrowing Base. Agent shall have received evidence from Borrowers that the
aggregate amount of Eligible Receivables is sufficient in value and amount to
support Advances in the amount requested by Borrowers on the Closing Date;
(u) Undrawn Availability. After giving effect to the initial Advances hereunder
(if any), and without giving effect to any cash on Borrowers’ balance sheet,
Borrowers shall have Undrawn Availability of at least $3,000,000;
(v) Compliance with Laws. Agent shall be reasonably satisfied that each Borrower
is in compliance with all Applicable Laws including those with respect to the
Federal Occupational Safety and Health Act, the Environmental Protection Act,
ERISA and the Trading with the Enemy Act; and
(w) Other. All corporate and other proceedings, and all documents, instruments
and other legal matters in connection with the Transactions shall be
satisfactory in form and substance to Agent and its counsel.

 

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8.2. Conditions to Each Advance. The agreement of Lenders to make any Advance
requested to be made on any date (including the initial Advance), is subject to
the satisfaction of the following conditions precedent as of the date such
Advance is made:
(a) Representations and Warranties. Each of the representations and warranties
made by any Borrower in or pursuant to this Agreement, the Other Documents and
any related agreements to which it is a party, and each of the representations
and warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement, the
Other Documents or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties shall have
been true and correct in all material respects on and as of such earlier date;
(b) No Default. No Event of Default or Default shall have occurred and be
continuing on such date, or would exist after giving effect to the Advances
requested to be made, on such date; provided, however that Agent, in its sole
discretion, may continue to make Advances notwithstanding the existence of an
Event of Default or Default and that any Advances so made shall not be deemed a
waiver of any such Event of Default or Default; and
(c) Maximum Advances. In the case of any type of Advance requested to be made,
after giving effect thereto, the aggregate amount of such type of Advance shall
not exceed the maximum amount of such type of Advance permitted under this
Agreement.
Each request for an Advance by any Borrower hereunder shall constitute a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWERS.
Each Borrower shall, or (except with respect to Section 9.11) shall cause
Borrowing Agent on its behalf to, until satisfaction in full of the Obligations
(other than unasserted indemnification claims) and the termination of this
Agreement:
9.1. Disclosure of Material Matters. Immediately upon learning thereof, report
to Agent all matters materially affecting the value, enforceability or
collectability of any material portion of the Collateral, including any
Borrower’s reclamation or repossession of, or the return to any Borrower of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.
9.2. Schedules. Deliver to Agent on or before the fifteenth (15th) day of each
month as and for the prior month (a) accounts receivable agings inclusive of
reconciliations to the general ledger, (b) accounts payable schedules inclusive
of reconciliations to

 

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the general ledger, and (c) a Borrowing Base Certificate in form and substance
satisfactory to Agent (which shall be calculated as of the last day of the prior
month and which shall not be binding upon Agent or restrictive of Agent’s rights
under this Agreement). In addition, each Borrower will deliver to Agent at such
intervals as Agent may require: (i) confirmatory assignment schedules,
(ii) copies of Customer’s invoices, (iii) evidence of shipment or delivery,
(iv) Inventory and deferred processing cost reports and (v) such further
schedules, documents and/or information regarding the Collateral as Agent may
require including trial balances and test verifications. Agent shall have the
right to confirm and verify all Receivables by any manner and through any medium
it considers advisable and do whatever it may deem reasonably necessary to
protect its interests hereunder. The items to be provided under this Section are
to be in form satisfactory to Agent and executed by each Borrower and delivered
to Agent from time to time solely for Agent’s convenience in maintaining records
of the Collateral, and any Borrower’s failure to deliver any of such items to
Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien with
respect to the Collateral.
9.3. Environmental Reports. Furnish Agent, concurrently with the delivery of the
financial statements referred to in Sections 9.7 and 9.8, with a Compliance
Certificate signed by the President of Borrowing Agent stating, to the best of
his knowledge, that each Borrower is in compliance in all material respects with
all federal, state and local Environmental Laws. To the extent any Borrower is
not in compliance with the foregoing laws, the certificate shall set forth with
specificity all areas of non-compliance and the proposed action such Borrower
will implement in order to achieve full compliance.
9.4. Litigation. Promptly notify Agent in writing of any claim, litigation, suit
or administrative proceeding affecting any Borrower, whether or not the claim is
covered by insurance, and of any litigation, suit or administrative proceeding,
which in any such case affects any material portion of the Collateral or which
could reasonably be expected to have a Material Adverse Effect.
9.5. Material Occurrences. Promptly notify Agent in writing upon the occurrence
of (a) any Event of Default or Default; (b) any event, development or
circumstance whereby any financial statements or other reports furnished to
Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of any
Borrower as of the date of such statements; (c) any accumulated retirement plan
funding deficiency with respect to any Pension Benefit Plan which, if such
deficiency continued for two plan years and was not corrected as provided in
Section 4971 of the Code, could subject any Borrower to a tax imposed by Section
4971 of the Code; (d) each and every default by any Borrower which might result
in the acceleration of the maturity of any Indebtedness for borrowed money or
Capitalized Lease Obligations, including the names and addresses of the holders
of such Indebtedness with respect to which there is a default existing or with
respect to which the maturity has been or could be accelerated, and the amount
of such Indebtedness, (e) any lapse or other termination of any Consent issued
to any Borrower by any Governmental Body or any other Person that is material to
the operation of any Borrower’s business, (f) any refusal by any Governmental
Body or any other Person to renew or extend any such Consent, (g) filing by any
Borrower of any periodic or special reports with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs or condition of any Borrower (which notification shall
include delivery of copies of such reports) and (h) any other development in the
business or affairs of any Borrower which could reasonably be expected to have a
Material Adverse Effect; in each case describing the nature thereof and the
action Borrowers propose to take with respect thereto.
9.6. Reserved

 

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9.7. Annual Financial Statements. Furnish Agent and Lenders within one hundred
twenty (120) days after the end of each fiscal year of Osteotech, financial
statements of Borrowers on a consolidating and consolidated basis including, but
not limited to, statements of income and stockholders’ equity and cash flow from
the beginning of the current fiscal year to the end of such fiscal year and the
balance sheet as at the end of such fiscal year, all prepared in accordance with
GAAP applied on a basis consistent with prior practices, and in reasonable
detail and reported upon without qualification by an independent certified
public accounting firm selected by Borrowers and satisfactory to Agent (the
“Accountants”), it being understood and agreed that the delivery of Osteotech’s
Form 10-K, if required, promptly after the filing thereof with the Securities
and Exchange Commission shall satisfy the requirements set forth in this
Section 9.7 with respect to consolidated financial statements and reports
(subject to the time periods set forth in this Section 9.7). The reports shall
be accompanied by a Compliance Certificate.
9.8. Quarterly Financial Statements. Furnish Agent and Lenders within forty-five
(45) days after the end of each fiscal quarter, an unaudited balance sheet of
Borrowers on a consolidated and consolidating basis and unaudited statements of
income and stockholders’ equity and cash flow of Borrowers on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such quarter and for such quarter, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to Borrowers’ business, it being
understood and agreed that the delivery of Osteotech’s Form 10-Q, if required,
promptly after the filing thereof with the Securities and Exchange Commission
shall satisfy the requirements set forth in this Section 9.8 with respect to
consolidated financial statements and reports (subject to the time periods set
forth in this Section 9.8). The reports shall be accompanied by a Compliance
Certificate.
9.9. Monthly Financial Statements. Furnish Agent and Lenders within thirty
(30) days after the end of each month, an unaudited balance sheet of Borrowers
on a consolidated and consolidating basis and unaudited statements of income and
stockholders’ equity and cash flow of Borrowers on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that individually
and in the aggregate are not material to Borrowers’ business. The reports shall
be accompanied by a Compliance Certificate.
9.10. Other Reports. Furnish Agent as soon as available, but in any event within
ten (10) days after the issuance thereof, with copies of such financial
statements, reports and returns as each Borrower shall be required to file under
the Exchange Act or Securities Act.
9.11. Additional Information. Furnish Agent with such additional information as
Agent shall reasonably request in order to enable Agent to determine whether the
terms, covenants, provisions and conditions of this Agreement and the Note have
been complied with by Borrowers including, without the necessity of any request
by Agent, (a) copies of all environmental audits and reviews, (b) at least
thirty (30) days prior thereto, notice of any Borrower’s opening of any new
office or place of business or any Borrower’s closing of any existing office or
place of business, (c) promptly upon any Borrower’s learning thereof, notice of
any labor dispute to which any Borrower may become a party, any strikes or
walkouts relating to any of its plants or other facilities, and the expiration
of any labor contract to which any Borrower is a party or by which any Borrower
is bound, and (d) copies of any material notices and other communications from
any Governmental Body or Person which specifically relate to any Borrower.

 

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9.12. Projected Operating Budget. Furnish Agent and Lenders, no later than
thirty (30) days after approval by such Borrower’s board of directors (which
approval shall occur no later than January 31 of any year), commencing with
fiscal year 2011, a month by month projected operating budget and cash flow of
Borrowers on a consolidated and consolidating basis for such fiscal year
(including an income statement for each month and a balance sheet as at the end
of the last month in each fiscal quarter), such projections to be accompanied by
a certificate signed by the President or Chief Financial Officer of each
Borrower to the effect that such projections have been prepared on the basis of
sound financial planning practice consistent with past budgets and financial
statements and that such officer has no reason to question the reasonableness of
any material assumptions on which such projections were prepared. Each Borrower
shall cause its board of directors to approve such operations budget no later
than January 31 of each fiscal year.
9.13. Reserved.
9.14. Reserved.
9.15. ERISA Notices and Requests. Furnish Agent with written notice within ten
(10) days of any Borrower’s receipt of written notice in the event that (a) any
Borrower or any member of the Controlled Group knows or has reason to know that
a Termination Event has occurred, together with a written statement describing
such Termination Event and the action, if any, which such Borrower or any member
of the Controlled Group has taken, is taking, or proposes to take with respect
thereto and, when known, any action taken or threatened by the Internal Revenue
Service, Department of Labor or PBGC with respect thereto, (b) any Borrower or
any member of the Controlled Group knows or has reason to know that a material
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the
Code) has occurred together with a written statement describing such transaction
and the action which such Borrower or any member of the Controlled Group has
taken, is taking or proposes to take with respect thereto, (c) a funding waiver
request has been filed with respect to any Pension Benefit Plan together with
all communications received by any Borrower or any member of the Controlled
Group with respect to such request, (d) any increase in the benefits of any
existing Pension Benefit Plan or the establishment of any new Pension Benefit
Plan or the commencement of contributions to any Pension Benefit Plan to which
any Borrower or any member of the Controlled Group was not previously
contributing shall occur, (e) any Borrower or any member of the Controlled Group
shall receive from the PBGC a notice of intention to terminate a Pension Benefit
Plan or to have a trustee appointed to administer a Pension Benefit Plan,
together with copies of each such notice, (f) any Borrower or any member of the
Controlled Group shall receive an unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Pension Benefit Plan
under Section 401(a) of the Code, together with copies of each such letter;
(g) any Borrower or any member of the Controlled Group shall receive a notice
regarding the imposition of withdrawal liability, together with copies of each
such notice; (h) any Borrower or any member of the Controlled Group shall fail
to make a required installment or any other required payment under Section 412
of the Code on or before the due date for such installment or payment; or
(i) any Borrower or any member of the Controlled Group knows that (i) a
Multiemployer Plan has been terminated, (ii) the administrator or plan sponsor
of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (iii) the
PBGC has instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan.

 

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9.16. Additional Documents. Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to
carry out the purposes, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall constitute an
“Event of Default”:
10.1. Nonpayment. Failure by any Borrower to pay any principal or interest on
the Obligations when due, whether at maturity or by reason of acceleration
pursuant to the terms of this Agreement or by notice of intention to prepay, or
by required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Other Document;
10.2. Breach of Representation. Any representation or warranty made or deemed
made by any Borrower in this Agreement, any Other Document or any related
agreement or in any certificate, document or financial or other statement
furnished at any time in connection herewith or therewith shall prove to have
been misleading in any material respect on the date when made or deemed to have
been made;
10.3. Financial Information. Failure by any Borrower to (a)(i) furnish financial
information when due, or (ii) when requested, or (b) permit the inspection of
its books or records in accordance with this Agreement;
10.4. Judicial Actions. Issuance of a notice of Lien, levy, assessment,
injunction or attachment against any Borrower’s Inventory or Receivables or
against a material portion of any Borrower’s other property which is not stayed
or lifted within thirty (30) days;
10.5. Noncompliance. Except as otherwise provided for in Sections 10.1, 10.3 and
10.5(b), (a) failure or neglect of any Borrower to perform, keep or observe any
term, provision, condition, covenant herein contained, or contained in any Other
Document or any other agreement or arrangement, now or hereafter entered into
between any Borrower and Agent or any Lender, or (b) failure or neglect of any
Borrower to perform, keep or observe any term, provision, condition or covenant,
contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is
not cured within ten (10) days from the occurrence of such failure or neglect;
10.6. Judgments. Any judgment or judgments are rendered against all Borrowers
for an aggregate amount in excess of $500,000 and (a) enforcement proceedings
shall have been commenced by a creditor upon such judgment or (b) there shall be
any period of thirty (30) consecutive days during which a stay of enforcement of
such judgment, by reason of a pending appeal or otherwise, shall not be in
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10.7. Bankruptcy. Any Borrower shall (a) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar fiduciary of itself or of all or a substantial part of its
property, (b) make a general assignment for the benefit of creditors,
(c) commence a voluntary case under any state or federal bankruptcy laws (as now
or hereafter in effect), (d) be adjudicated a bankrupt or insolvent, (e) file a
petition seeking to take advantage of any other law providing for the relief of
debtors, (f) acquiesce to, or fail to have dismissed, within sixty (60) days,
any petition filed against it in any involuntary case under such bankruptcy
laws, or (g) take any action for the purpose of effecting any of the foregoing;
10.8. Inability to Pay. Any Borrower shall admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business;
10.9. Subsidiary Bankruptcy. Any Subsidiary of any Borrower, shall (a) apply
for, consent to or suffer the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property, (b) admit in writing its inability,
or be generally unable, to pay its debts as they become due or cease operations
of its present business, (c) make a general assignment for the benefit of
creditors, (d) commence a voluntary case under any state or federal bankruptcy
laws (as now or hereafter in effect), (e) be adjudicated a bankrupt or
insolvent, (f) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (g) acquiesce to, or fail to have
dismissed, within sixty (60) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (h) take any action for the
purpose of effecting any of the foregoing;
10.10. Material Adverse Effect. Any change in any Borrower’s results of
operations or condition (financial or otherwise) which in Agent’s reasonable
opinion has a Material Adverse Effect;
10.11. Lien Priority. Any Lien created hereunder or provided for hereby or under
any related agreement for any reason ceases to be or is not a valid and
perfected Lien having a first priority interest;
10.12. Cross Default. (a) A default of the obligations of any Borrower under the
P-Card Agreement shall occur or (b) a default of the obligations of any Borrower
under any other instrument, document or agreement to which it is a party shall
occur which either (i) involves a failure to pay principal or interest with
respect to any Indebtedness for borrowed money or Capitalized Lease Obligations
with a principal amount in excess of $500,000 or (ii) materially and adversely
affects any Borrower’s condition, affairs or prospects (financial or otherwise),
which default is not cured within any applicable grace period or, so long as
Agent and Lenders have not commenced the exercise of rights and remedies
hereunder, which is not otherwise waived within thirty (30) days after the
expiration of such cure period.
10.13. Change of Ownership. Any Change of Ownership shall occur;
10.14. Invalidity. Any material provision of this Agreement or any Other
Document shall, for any reason, cease to be valid and binding on Borrower, or
any Borrower shall so claim in writing to Agent or any Lender;

 

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10.15. Licenses. (a) Any Governmental Body shall (i) revoke, terminate, suspend
or adversely modify any license, permit, patent trademark or trade name of any
Borrower the continuation of which is material to the continuation of any
Borrower’s business, or (ii) commence proceedings to suspend, revoke, terminate
or adversely modify any such license, permit, trademark, trade name or patent
and such proceedings shall not be dismissed or discharged within sixty
(60) days, or (iii) schedule or conduct a hearing on the renewal of any license,
permit, trademark, trade name or patent necessary for the continuation of any
Borrower’s business and the staff of such Governmental Body issues a report
recommending the termination, revocation, suspension or material, adverse
modification of such license, permit, trademark, trade name or patent; or
(b) any agreement which is necessary or material to the operation of any
Borrower’s business shall be revoked or terminated and not replaced by a
substitute acceptable to Agent within thirty (30) days after the date of such
revocation or termination, and such revocation or termination and
non-replacement would reasonably be expected to have a Material Adverse Effect;
10.16. Seizures. Any portion of the Collateral shall be seized or taken by a
Governmental Body, or any Borrower or the title and rights of any Borrower or
any Original Owner which is the owner of any material portion of the Collateral
shall have become the subject matter of claim, litigation, suit or other
proceeding which might, in the opinion of Agent, upon final determination,
result in impairment or loss of the security provided by this Agreement or the
Other Documents; or
10.17. Operations. The operations of any Borrower’s manufacturing facility are
interrupted at any time for more than any period of 10 consecutive days, unless
such Borrower shall (a) be entitled to receive for such period of interruption,
proceeds of business interruption insurance in an amount sufficient to assure
that its per diem cash needs during such period is at least equal to its average
per diem cash needs for the consecutive three month period immediately preceding
the initial date of interruption and (b) receive, or receive notice that such
Borrower is entitled to receive, such proceeds in the amount described in clause
(a) preceding not later than thirty (30) days following the initial date of any
such interruption and in any event begins to receive such proceeds within sixty
(60) days of any such interruption; provided, however, that notwithstanding the
provisions of clauses (a) and (b) of this section, an Event of Default shall be
deemed to have occurred if such Borrower shall be receiving the proceeds of
business interruption insurance for a period of thirty (30) consecutive days.
10.18. Pension Plans. An event or condition specified in Sections 7.16 or 9.15
hereof shall occur or exist with respect to any Pension Benefit Plan and, as a
result of such event or condition, together with all other such events or
conditions, any Borrower or any member of the Controlled Group shall incur, or
in the opinion of Agent be reasonably likely to incur, a liability to a Pension
Benefit Plan or the PBGC (or both) which, in the reasonable judgment of Agent,
would have a Material Adverse Effect.
XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

 

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11.1. Rights and Remedies.
(a) Upon the occurrence and during the continuance of (i) an Event of Default
pursuant to Section 10.7 all Obligations shall be immediately due and payable
and this Agreement and the obligation of Lenders to make Advances shall be
deemed terminated; and, (ii) any of the other Events of Default and at any time
thereafter, at the option of Agent or at the direction of Required Lenders, all
Obligations shall be immediately due and payable and Lenders shall have the
right to terminate this Agreement and to terminate the obligation of Lenders to
make Advances and (iii) a filing of a petition against any Borrower in any
involuntary case under any state or federal bankruptcy laws, all Obligations
shall be immediately due and payable and the obligation of Lenders to make
Advances hereunder shall be terminated other than as may be required by an
appropriate order of the bankruptcy court having jurisdiction over such
Borrower. Upon the occurrence and during the continuance of any Event of
Default, Agent shall have the right to exercise any and all rights and remedies
provided for herein, under the Other Documents, under the Uniform Commercial
Code and at law or equity generally, including the right to foreclose the
security interests granted herein and to realize upon any Collateral by any
available judicial procedure and/or to take possession of and sell any or all of
the Collateral with or without judicial process. After the occurrence and during
the continuance of an Event of Default, Agent may enter any of any Borrower’s
premises or other premises without legal process and without incurring liability
to any Borrower therefor, and Agent may thereupon, or at any time thereafter, in
its discretion without notice or demand, take the Collateral and remove the same
to such place as Agent may deem advisable and Agent may require Borrowers to
make the Collateral available to Agent at a convenient place. Upon the
occurrence and during the continuance of an Event of Default, with or without
having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may elect. Except as to
that part of the Collateral which is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Agent shall
give Borrowers reasonable notification of such sale or sales, it being agreed
that in all events written notice mailed to Borrowing Agent at least ten
(10) days prior to such sale or sales is reasonable notification. At any public
sale Agent or any Lender may bid for and become the purchaser, and Agent, any
Lender or any other purchaser at any such sale thereafter shall hold the
Collateral sold absolutely free from any claim or right of whatsoever kind,
including any equity of redemption and all such claims, rights and equities are
hereby expressly waived and released by each Borrower. In connection with the
exercise of the foregoing remedies, including the sale of Inventory, Agent is
granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent
is granted permission to use all of each Borrower’s (a) trademarks, trade
styles, trade names, patents, patent applications, copyrights, service marks,
licenses, franchises and other proprietary rights which are used or useful in
connection with Inventory for the purpose of marketing, advertising for sale and
selling or otherwise disposing of such Inventory and (b) Equipment for the
purpose of completing the manufacture of unfinished goods. The cash proceeds
realized from the sale of any Collateral shall be applied to the Obligations in
the order set forth in Section 11.5 hereof. Noncash proceeds will only be
applied to the Obligations as they are converted into cash. If any deficiency
shall arise, Borrowers shall remain liable to Agent and Lenders therefor.

 

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(b) To the extent that Applicable Law imposes duties on the Agent to exercise
remedies in a commercially reasonable manner, each Borrower acknowledges and
agrees that it is not commercially unreasonable for the Agent (i) to fail to
incur expenses reasonably deemed significant by the Agent to prepare Collateral
for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against Customers
or other Persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral, (iv) to exercise collection remedies against
Customers and other Persons obligated on Collateral directly or through the use
of collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as any Borrower, for expressions of
interest in acquiring all or any portion of such Collateral, (vii) to hire one
or more professional auctioneers to assist in the disposition of Collateral,
whether or not the Collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets, (ix) to dispose of assets
in wholesale rather than retail markets, (x) to disclaim disposition warranties,
such as title, possession or quiet enjoyment, (xi) to purchase insurance or
credit enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral. Each Borrower acknowledges
that the purpose of this Section 11.1(b) is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially
unreasonable in the Agent’s exercise of remedies against the Collateral and that
other actions or omissions by the Agent shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section 11.1(b).
Without limitation upon the foregoing, nothing contained in this Section 11.1(b)
shall be construed to grant any rights to any Borrower or to impose any duties
on Agent that would not have been granted or imposed by this Agreement or by
Applicable Law in the absence of this Section 11.1(b).
11.2. Agent’s Discretion. After the occurrence and during the continuance of an
Event of Default, Agent shall have the right in its sole discretion to determine
which rights, Liens, security interests or remedies Agent may at any time
pursue, relinquish, subordinate, or modify or to take any other action with
respect thereto and such determination will not in any way modify or affect any
of Agent’s or Lenders’ rights hereunder.
11.3. Setoff. Subject to Section 14.12, in addition to any other rights which
Agent or any Lender may have under Applicable Law, upon the occurrence and
during the continuance of an Event of Default hereunder, Agent and such Lender
shall have a right, immediately and without notice of any kind, to apply any
Borrower’s property held by Agent and such Lender to reduce the Obligations;
provided that following such setoff and application, Agent or such Lender taking
such action shall endeavor to provide written notice thereof to Borrowing Agent.

 

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11.4. Rights and Remedies not Exclusive. The enumeration of the foregoing rights
and remedies is not intended to be exhaustive and the exercise of any rights or
remedy shall not preclude the exercise of any other right or remedies provided
for herein or otherwise provided by law, all of which shall be cumulative and
not alternative.
11.5. Allocation of Payments After Event of Default. Notwithstanding any other
provisions of this Agreement to the contrary, after the occurrence and during
the continuance of an Event of Default, all amounts collected or received by
Agent on account of the Obligations or any other amounts outstanding under any
of the Other Documents or in respect of the Collateral shall be paid over or
delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and expenses
(including reasonable attorneys’ fees) of the Agent in connection with enforcing
its rights and the rights of the Lenders under this Agreement and the Other
Documents and any protective advances made by the Agent with respect to the
Collateral under or pursuant to the terms of this Agreement;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and expenses
(including reasonable attorneys’ fees) of each of the Lenders to the extent
owing to such Lender pursuant to the terms of this Agreement;
FOURTH, to the payment of all of the Obligations consisting of accrued fees and
interest;
FIFTH, to the payment of the outstanding principal amount of the Obligations;
SIXTH, to all other Obligations and other obligations which shall have become
due and payable under the Other Documents or otherwise and not repaid pursuant
to clauses “FIRST” through “FIFTH” above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of the Lenders shall receive (so long as it
is not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses “FOURTH”, “FIFTH” and “SIXTH” above.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1. Waiver of Notice. Except as otherwise expressly provided herein, each
Borrower hereby waives notice of non-payment of any of the Receivables, demand,
presentment, protest and notice thereof with respect to any and all instruments,
notice of acceptance hereof, notice of loans or advances made, credit extended,
Collateral received or delivered, or any other action taken in reliance hereon,
and all other demands and notices of any description, except such as are
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12.2. Delay. No delay or omission on Agent’s or any Lender’s part in exercising
any right, remedy or option shall operate as a waiver of such or any other
right, remedy or option or of any Default or Event of Default.
12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1. Term. This Agreement, which shall inure to the benefit of and shall be
binding upon the respective successors and permitted assigns of each Borrower,
Agent and each Lender, shall become effective on the date hereof and shall
continue in full force and effect until December 28, 2012 (the “Term”) unless
sooner terminated as herein provided. Borrowers may terminate this Agreement at
any time upon ninety (90) days’ prior written notice upon payment in full of the
Obligations. In the event the Obligations are prepaid in full prior to the last
day of the Term (the date of such prepayment hereinafter referred to as the
“Early Termination Date”), Borrowers shall pay to Agent for the benefit of
Lenders an early termination fee in an amount equal to (x) two percent (2%) of
the Maximum Revolving Advance Amount if the Early Termination Date occurs on or
after the Closing Date to and including the date immediately preceding the first
anniversary of the Closing Date and (y) one-half of one percent (0.5%) of the
Maximum Revolving Advance Amount if the Early Termination Date occurs on or
after the first anniversary of the Closing Date to and including the date
immediately preceding the second anniversary of the Closing Date; provided that
if the Obligations are prepaid in full pursuant to a refinancing with any other
unit within The PNC Financial Services Group, Inc., Borrowers shall not be
obligated to pay any fee set forth in clause (x) or clause (y).
13.2. Termination. The termination of the Agreement shall not affect any
Borrower’s, Agent’s or any Lender’s rights, or any of the Obligations having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully and

 

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indefeasibly paid, disposed of, concluded or liquidated. The security interests,
Liens and rights granted to Agent and Lenders hereunder and the financing
statements filed hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that Borrowers’
Account may from time to time be temporarily in a zero or credit position, until
all of the Obligations of each Borrower have been indefeasibly paid and
performed in full after the termination of this Agreement or each Borrower has
furnished Agent and Lenders with an indemnification satisfactory to Agent and
Lenders with respect thereto. Accordingly, each Borrower waives any rights which
it may have under the Uniform Commercial Code to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be
required to send such termination statements to each Borrower, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations have been
indefeasibly paid in full in immediately available funds. All representations,
warranties, covenants, waivers and agreements contained herein shall survive
termination hereof until all Obligations are indefeasibly paid and performed in
full.
XIV. REGARDING AGENT.
14.1. Appointment. Each Lender hereby designates PNC to act as Agent for such
Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in
Sections 3.3(a) and 3.4, charges and collections (without giving effect to any
collection days) received pursuant to this Agreement, for the ratable benefit of
Lenders. Agent may perform any of its duties hereunder by or through its agents
or employees. As to any matters not expressly provided for by this Agreement
(including collection of the Note) Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding; provided, however, that Agent shall not be required to take any action
which exposes Agent to liability or which is contrary to this Agreement or the
Other Documents or Applicable Law unless Agent is furnished with an
indemnification reasonably satisfactory to Agent with respect thereto.
14.2. Nature of Duties. Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Other Documents. Neither
Agent nor any of its officers, directors, employees or agents shall be
(a) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment), or (b) responsible in any manner for any
recitals, statements, representations or warranties made by any Borrower or any
officer thereof contained in this Agreement, or in any of the Other Documents or
in any certificate, report, statement or other document referred to or provided
for in, or received by Agent under or in connection with, this Agreement or any
of the Other Documents or for the value, validity, effectiveness, genuineness,
due execution, enforceability or sufficiency of this Agreement, or any of the
Other Documents or for any failure of any Borrower to perform its obligations
hereunder. Agent shall not be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any of the Other Documents, or
to inspect the properties, books or records of any Borrower. The duties of Agent
as respects the Advances to Borrowers shall be mechanical and administrative in
nature; Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon Agent any
obligations in respect of this Agreement except as expressly set forth herein.

 

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14.3. Lack of Reliance on Agent and Resignation. Independently and without
reliance upon Agent or any other Lender, each Lender has made and shall continue
to make its own independent investigation of the financial condition and affairs
of each Borrower in connection with the making and the continuance of the
Advances hereunder and the taking or not taking of any action in connection
herewith, and its own appraisal of the creditworthiness of each Borrower. Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before making of the Advances or at any time
or times thereafter except as shall be provided by any Borrower pursuant to the
terms hereof. Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability,
collectability or sufficiency of this Agreement or any Other Document, or of the
financial condition of any Borrower, or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement, the Note, the Other Documents or the financial
condition of any Borrower, or the existence of any Event of Default or any
Default.
Agent may resign on sixty (60) days’ written notice to each of Lenders and
Borrowing Agent and upon such resignation, the Required Lenders will promptly
designate a successor Agent reasonably satisfactory to Borrowers.
Any such successor Agent shall succeed to the rights, powers and duties of
Agent, and the term “Agent” shall mean such successor agent effective upon its
appointment, and the former Agent’s rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent. After any Agent’s resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
14.4. Certain Rights of Agent. If Agent shall request instructions from Lenders
with respect to any act or action (including failure to act) in connection with
this Agreement or any Other Document, Agent shall be entitled to refrain from
such act or taking such action unless and until Agent shall have received
instructions from the Required Lenders; and Agent shall not incur liability to
any Person by reason of so refraining. Without limiting the foregoing, Lenders
shall not have any right of action whatsoever against Agent as a result of its
acting or refraining from acting hereunder in accordance with the instructions
of the Required Lenders.
14.5. Reliance. Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram, order or other document or
telephone message believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or entity, and, with respect to all
legal matters pertaining to this Agreement and the Other Documents and its
duties hereunder, upon advice of counsel selected by it. Agent may employ agents
and attorneys-in-fact and shall not be liable for the default or misconduct of
any such agents or attorneys-in-fact selected by Agent with reasonable care.

 

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14.6. Notice of Default. Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder or under the
Other Documents, unless Agent has received notice from a Lender or Borrowing
Agent referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a “notice of
default”. In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7. Indemnification. To the extent Agent is not reimbursed and indemnified by
Borrowers, each Lender will reimburse and indemnify Agent in proportion to its
respective portion of the Advances (or, if no Advances are outstanding,
according to its Commitment Percentage), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Agent in performing its duties
hereunder, or in any way relating to or arising out of this Agreement or any
Other Document; provided that, Lenders shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent’s gross (not mere)
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment).
14.8. Agent in its Individual Capacity. With respect to the obligation of Agent
to lend under this Agreement, the Advances made by it shall have the same rights
and powers hereunder as any other Lender and as if it were not performing the
duties as Agent specified herein; and the term “Lender” or any similar term
shall, unless the context clearly otherwise indicates, include Agent in its
individual capacity as a Lender. Agent may engage in business with any Borrower
as if it were not performing the duties specified herein, and may accept fees
and other consideration from any Borrower for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
14.9. Delivery of Documents. To the extent Agent receives financial statements
required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or Borrowing Base
Certificates from any Borrower pursuant to the terms of this Agreement which any
Borrower is not obligated to deliver to each Lender, Agent will promptly furnish
such documents and information to Lenders.
14.10. Borrowers’ Undertaking to Agent. Without prejudice to their respective
obligations to Lenders under the other provisions of this Agreement, each
Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy the relevant Borrower’s obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.

 

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14.11. No Reliance on Agent’s Customer Identification Program. Each Lender
acknowledges and agrees that neither such Lender, nor any of its Affiliates,
participants or assignees, may rely on the Agent to carry out such Lender’s,
Affiliate’s, participant’s or assignee’s customer identification program, or
other obligations required or imposed under or pursuant to the USA PATRIOT Act
or the regulations thereunder, including the regulations contained in 31 CFR
103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other
Anti-Terrorism Law, including any programs involving any of the following items
relating to or in connection with any Borrower or its agents, this Agreement,
the Other Documents or the transactions hereunder or contemplated hereby:
(1) any identity verification procedures, (2) any record-keeping,
(3) comparisons with government lists, (4) customer notices or (5) other
procedures required under the CIP Regulations or such other laws.
14.12. Other Agreements. Each of the Lenders agrees that it shall not, without
the express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to any Borrower or any deposit accounts of any
Borrower now or hereafter maintained with such Lender. Anything in this
Agreement to the contrary notwithstanding, each of the Lenders further agrees
that it shall not, unless specifically requested to do so by Agent, take any
action to protect or enforce its rights arising out of this Agreement or the
Other Documents, it being the intent of Lenders that any such action to protect
or enforce rights under this Agreement and the Other Documents shall be taken in
concert and at the direction or with the consent of Agent or Required Lenders.
XV. BORROWING AGENCY.
15.1. Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably designates Borrowing Agent to be its
attorney and agent and in such capacity to borrow, sign and endorse notes, and
execute and deliver all instruments, documents, writings and further assurances
now or hereafter required hereunder, on behalf of such Borrower or Borrowers,
and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing facility with a
borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to Borrowers and at their request. Neither Agent nor any Lender
shall incur liability to Borrowers as a result thereof. To induce Agent and
Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Agent or any Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by Agent or any Lender on any request or instruction
from Borrowing Agent or any other action taken by Agent or any Lender with
respect to this Section 15.1 except due to willful misconduct or gross (not
mere) negligence by the indemnified party (as determined by a court of competent
jurisdiction in a final and non-appealable judgment).

 

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(c) All Obligations shall be joint and several, and each Borrower shall make
payment upon the maturity of the Obligations by acceleration or otherwise, and
such obligation and liability on the part of each Borrower shall in no way be
affected by any extensions, renewals and forbearance granted to Agent or any
Lender to any Borrower, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to
pursue or preserve its rights against any Borrower, the release by Agent or any
Lender of any Collateral now or thereafter acquired from any Borrower, and such
agreement by each Borrower to pay upon any notice issued pursuant thereto is
unconditional and unaffected by prior recourse by Agent or any Lender to the
other Borrowers or any Collateral for such Borrower’s Obligations or the lack
thereof. Each Borrower waives all suretyship defenses.
15.2. Waiver of Subrogation. Each Borrower expressly waives any and all rights
of subrogation, reimbursement, indemnity, exoneration, contribution of any other
claim which such Borrower may now or hereafter have against the other Borrowers
or other Person directly or contingently liable for the Obligations hereunder,
or against or with respect to the other Borrowers’ property (including, without
limitation, any property which is Collateral for the Obligations), arising from
the existence or performance of this Agreement, until termination of this
Agreement and repayment in full of the Obligations.
XVI. MISCELLANEOUS
16.1. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applied to
contracts to be performed wholly within the Commonwealth of Pennsylvania. Any
judicial proceeding brought by or against any Borrower with respect to any of
the Obligations, this Agreement, the Other Documents or any related agreement
may be brought in any court of competent jurisdiction in the Commonwealth of
Pennsylvania, United States of America, and, by execution and delivery of this
Agreement, each Borrower accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Each Borrower hereby waives personal
service of any and all process upon it and consents that all such service of
process may be made by registered mail (return receipt requested) directed to
Borrowing Agent at its address set forth in Section 16.6 and service so made
shall be deemed completed five (5) days after the same shall have been so
deposited in the mails of the United States of America, or, at the Agent’s
option, by service upon Borrowing Agent which each Borrower irrevocably appoints
as such Borrower’s Agent for the purpose of accepting service within the
Commonwealth of Pennsylvania. Nothing herein shall affect the right to serve
process in any manner permitted by law or shall limit the right of Agent or any
Lender to bring proceedings against any Borrower in the courts of any other
jurisdiction. Each Borrower waives any objection to jurisdiction and venue of
any action instituted hereunder and shall not assert any defense based on lack
of jurisdiction or venue or based upon forum non conveniens. Each Borrower
waives the right to remove any judicial proceeding brought against such Borrower
in any state court to any federal court. Any judicial proceeding by any Borrower
against Agent or any Lender involving, directly or indirectly, any matter or
claim in any way arising out of, related to or connected with this Agreement or
any related agreement, shall be brought only in a federal or state court located
in the County of Philadelphia, Commonwealth of Pennsylvania.

 

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16.2. Entire Understanding.
(a) This Agreement and the documents executed concurrently herewith contain the
entire understanding between each Borrower, Agent and each Lender and supersedes
all prior agreements and understandings, if any, relating to the subject matter
hereof. Any promises, representations, warranties or guarantees not herein
contained and hereinafter made shall have no force and effect unless in writing,
signed by each Borrower’s, Agent’s and each Lender’s respective officers.
Neither this Agreement nor any portion or provisions hereof may be changed,
modified, amended, waived, supplemented, discharged, cancelled or terminated
orally or by any course of dealing, or in any manner other than by an agreement
in writing, signed by the party to be charged. Each Borrower acknowledges that
it has been advised by counsel in connection with the execution of this
Agreement and Other Documents and is not relying upon oral representations or
statements inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of the Required
Lenders, and Borrowers may, subject to the provisions of this Section 16.2 (b),
from time to time enter into written supplemental agreements to this Agreement
or the Other Documents executed by Borrowers, for the purpose of adding or
deleting any provisions or otherwise changing, varying or waiving in any manner
the rights of Lenders, Agent or Borrowers thereunder or the conditions,
provisions or terms thereof or waiving any Event of Default thereunder, but only
to the extent specified in such written agreements; provided, however, that no
such supplemental agreement shall, without the consent of all Lenders:
(i) increase the Commitment Percentage, the maximum dollar commitment of any
Lender or the Maximum Revolving Advance Amount;
(ii) extend the maturity of any Note or the due date for any amount payable
hereunder, or decrease the rate of interest or reduce any fee payable by
Borrowers to Lenders pursuant to this Agreement;
(iii) alter the definition of the term Required Lenders or alter, amend or
modify this Section 16.2(b);
(iv) release any Collateral during any calendar year (other than in accordance
with the provisions of this Agreement) having an aggregate value in excess of
$1,000,000;
(v) change the rights and duties of Agent;
(vi) permit any Revolving Advance to be made if after giving effect thereto the
total of Revolving Advances outstanding hereunder would exceed the Formula
Amount for more than sixty (60) consecutive Business Days or exceed one hundred
and ten percent (110%) of the Formula Amount;

 

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(vii) increase the Receivables Advance Rate above the Receivables Advance Rate
in effect on the Closing Date; or
(viii) release any Guarantor.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrowers, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
In the event that Agent requests the consent of a Lender pursuant to this
Section 16.2 and such consent is denied, then PNC may, at its option, require
such Lender to assign its interest in the Advances to PNC or to another Lender
or to any other Person designated by the Agent (the “Designated Lender”), for a
price equal to (i) the then outstanding principal amount thereof plus
(ii) accrued and unpaid interest and fees due such Lender, which interest and
fees shall be paid when collected from Borrowers. In the event PNC elects to
require any Lender to assign its interest to PNC or to the Designated Lender,
PNC will so notify such Lender in writing within forty five (45) days following
such Lender’s denial, and such Lender will assign its interest to PNC or the
Designated Lender no later than five (5) days following receipt of such notice
pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or the
Designated Lender, as appropriate, and Agent.
Notwithstanding (a) the existence of a Default or an Event of Default, (b) that
any of the other applicable conditions precedent set forth in Section 8.2 hereof
have not been satisfied or (c) any other provision of this Agreement, Agent may
at its discretion and without the consent of the Required Lenders, voluntarily
permit the outstanding Revolving Advances at any time to exceed an amount equal
to the Formula Amount hereof at such time by up to ten percent (10%) of the
Formula Amount for up to sixty (60) consecutive Business Days (the
“Out-of-Formula Loans”); provided, that, such outstanding Revolving Advances do
not exceed the Maximum Revolving Advance Amount. If Agent is willing in its sole
and absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula
Loans shall be payable on demand and shall bear interest at the Default Rate for
Revolving Advances consisting of Domestic Rate Loans; provided that, if Lenders
do make Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby
to have changed the limits of Section 2.1(a). For purposes of this paragraph,
the discretion granted to Agent hereunder shall not preclude involuntary
overadvances that may result from time to time due to the fact that the Formula
Amount was unintentionally exceeded for any reason, including, but not limited
to, Collateral previously deemed to be “Eligible Receivables” becomes
ineligible, collections of Receivables applied to reduce outstanding Revolving
Advances are thereafter returned for insufficient funds or overadvances are made
to protect or preserve the Collateral. In the event Agent involuntarily permits
the outstanding Revolving Advances to exceed the Formula Amount by more than ten
percent (10%), Agent shall use its efforts to have Borrowers decrease such
excess in as expeditious a manner as is practicable under the circumstances and
not inconsistent with the reason for such excess. Revolving Advances made after
Agent has determined the existence of involuntary overadvances shall be deemed
to be involuntary overadvances and shall be decreased in accordance with the
preceding sentence.

 

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In addition to (and not in substitution of) the discretionary Revolving Advances
permitted above in this Section 16.2, Agent is hereby authorized by Borrowers
and the Lenders, from time to time in Agent’s sole discretion, (A) after the
occurrence and during the continuation of a Default or an Event of Default, or
(B) at any time that any of the other applicable conditions precedent set forth
in Section 8.2 hereof have not been satisfied, to make Revolving Advances to
Borrowers on behalf of Lenders which Agent, in its reasonable business judgment,
deems necessary or desirable (a) to preserve or protect the Collateral, or any
portion thereof, (b) to enhance the likelihood of, or maximize the amount of,
repayment of the Advances and other Obligations, or (c) to pay any other amount
chargeable to Borrowers pursuant to the terms of this Agreement; provided, that
at any time after giving effect to any such Revolving Advances the outstanding
Revolving Advances do not exceed one hundred and ten percent (110%) of the
Formula Amount.
16.3. Successors and Assigns; Participations; New Lenders.
(a) This Agreement shall be binding upon and inure to the benefit of Borrowers,
Agent, each Lender, all future holders of the Obligations and their respective
successors and permitted assigns, except that no Borrower may assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of Agent and each Lender.
(b) Each Borrower acknowledges that in the regular course of commercial banking
business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other financial institutions (each
such transferee or purchaser of a participating interest, a “Participant”). Each
Participant may exercise all rights of payment (including rights of set-off)
with respect to the portion of such Advances held by it or other Obligations
payable hereunder as fully as if such Participant were the direct holder thereof
provided that Borrowers shall not be required to pay to any Participant more
than the amount which it would have been required to pay to Lender which granted
an interest in its Advances or other Obligations payable hereunder to such
Participant had such Lender retained such interest in the Advances hereunder or
other Obligations payable hereunder and in no event shall Borrowers be required
to pay any such amount arising from the same circumstances and with respect to
the same Advances or other Obligations payable hereunder to both such Lender and
such Participant. Each Borrower hereby grants to any Participant a continuing
security interest in any deposits, moneys or other property actually or
constructively held by such Participant as security for the Participant’s
interest in the Advances.

 

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(c) Any Lender, with the consent of Agent (and absent the occurrence and
continuance of any Event of Default, the Borrowing Agent), which shall not be
unreasonably withheld or delayed, may sell, assign or transfer all or any part
of its rights and obligations under or relating to Revolving Advances under this
Agreement and the Other Documents to one or more additional banks or financial
institutions and one or more additional banks or financial institutions may
commit to make Advances hereunder (each a “Purchasing Lender”), in minimum
amounts of not less than $5,000,000, pursuant to a Commitment Transfer
Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent
and delivered to Agent for recording. Upon such execution, delivery, acceptance
and recording, from and after the transfer effective date determined pursuant to
such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender thereunder with a Commitment
Percentage as set forth therein, and (ii) the transferor Lender thereunder
shall, to the extent provided in such Commitment Transfer Supplement, be
released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose. Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Commitment Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents. Each Borrower
hereby consents (subject to the first sentence of this clause (c)) to the
addition of such Purchasing Lender in accordance herewith and the resulting
adjustment of the Commitment Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents. Borrowers shall
execute and deliver such further documents and do such further acts and things
in order to effectuate the foregoing.
(d) Any Lender, with the consent of Agent (and absent the occurrence and
continuance of any Event of Default, the Borrowing Agent), which shall not be
unreasonably withheld or delayed, may directly or indirectly sell, assign or
transfer all or any portion of its rights and obligations under or relating to
Revolving Advances under this Agreement and the Other Documents to an entity,
whether a corporation, partnership, trust, limited liability company or other
entity that (i) is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and (ii) is administered, serviced or managed by the assigning Lender
or an Affiliate of such Lender (a “Purchasing CLO” and together with each
Participant and Purchasing Lender, each a “Transferee” and collectively the
“Transferees”), pursuant to a Commitment Transfer Supplement modified as
appropriate to reflect the interest being assigned (“Modified Commitment
Transfer Supplement”), executed by any intermediate purchaser, the Purchasing
CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for
recording. Upon such execution and delivery, from and after the transfer
effective date determined pursuant to such Modified Commitment Transfer
Supplement, (i) Purchasing CLO thereunder shall be a party hereto and, to the
extent provided in such Modified Commitment Transfer Supplement, have the rights
and obligations of a Lender thereunder and (ii) the transferor Lender thereunder
shall, to the extent provided in such Modified Commitment Transfer Supplement,
be released from its obligations under this Agreement, the Modified Commitment
Transfer Supplement creating a novation for that purpose. Such Modified
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing CLO. Each Borrower hereby consents (subject to the first sentence of
this clause (d)) to the addition of such Purchasing CLO in accordance herewith.
Borrowers shall execute and deliver such further documents and do such further
acts and things in order to effectuate the foregoing.

 

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(e) Agent shall maintain at its address a copy of each Commitment Transfer
Supplement and Modified Commitment Transfer Supplement delivered to it and a
register (the “Register”) for the recordation of the names and addresses of each
Lender and the outstanding principal, accrued and unpaid interest and other fees
due hereunder. The entries in the Register shall be conclusive, in the absence
of manifest error, and each Borrower, Agent and Lenders may treat each Person
whose name is recorded in the Register as the owner of the Advance recorded
therein for the purposes of this Agreement. The Register shall be available for
inspection by Borrowing Agent or any Lender at any reasonable time and from time
to time upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon
the effective date of each transfer or assignment (other than to an intermediate
purchaser) to such Purchasing Lender and/or Purchasing CLO.
(f) Each Borrower authorizes each Lender to disclose to any Transferee and any
prospective Transferee any and all financial information in such Lender’s
possession concerning such Borrower which has been delivered to such Lender by
or on behalf of such Borrower pursuant to this Agreement or in connection with
such Lender’s credit evaluation of such Borrower.
16.4. Application of Payments. Agent shall have the continuing and exclusive
right to apply or reverse and re-apply any payment and any and all proceeds of
Collateral to any portion of the Obligations. To the extent that any Borrower
makes a payment or Agent or any Lender receives any payment or proceeds of the
Collateral for any Borrower’s benefit, which are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party under
any bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.
16.5. Indemnity. Each Borrower shall indemnify Agent, each Lender and each of
their respective officers, directors, Affiliates, attorneys, employees and
agents from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including fees and disbursements of counsel) which
may be imposed on, incurred by, or asserted against Agent or any Lender in any
claim, litigation, proceeding or investigation instituted or conducted by any
Governmental Body or instrumentality or any other Person with respect to any
aspect of, or any transaction contemplated by, or referred to in, or any matter
related to, this Agreement or the Other Documents, whether or not Agent or any
Lender is a party thereto, except to the extent that any of the foregoing arises
out of the gross negligence or willful misconduct of the party being indemnified
(as determined by a court of competent jurisdiction in a final and
non-appealable judgment). Without limiting the generality of the foregoing, this
indemnity shall extend to any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever (including fees and disbursements of counsel) asserted
against or incurred by any of the indemnitees described above in this
Section 16.5 by any Person under any Environmental Laws or similar laws by
reason of any Borrower’s or any other Person’s failure to comply with laws
applicable to solid or hazardous waste materials, including Hazardous Substances
and Hazardous Waste, or other Toxic Substances. A Person seeking to be
indemnified under this Section 16.5 shall notify Borrowing

 

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Agent of any event requiring indemnification within ten Business Days following
such Person’s receipt of notice of commencement of any action or proceeding, or
such Person’s obtaining knowledge of the occurrence of any other event, giving
rise to a claim for indemnification hereunder, provided that any failure to so
notify shall not relieve Borrowers from the obligation to indemnify hereunder.
Borrowers will be entitled (but not obligated) to assume the defense or
settlement of any such action or proceeding or to participate in any
negotiations to settle or otherwise resolve any claim using counsel of its
choice. If Borrowers elect to assume the defense or settlement of any such
action or proceeding, the Person to be indemnified (and its counsel) may
continue to participate at its own expense in such action or proceeding.
Additionally, if any taxes (excluding taxes imposed upon or measured solely by
the net income of Agent and Lenders, but including any intangibles taxes, stamp
tax, recording tax or franchise tax) shall be payable by Agent, Lenders or
Borrowers on account of the execution or delivery of this Agreement, or the
execution, delivery, issuance or recording of any of the Other Documents, or the
creation or repayment of any of the Obligations hereunder, by reason of any
Applicable Law now or hereafter in effect, Borrowers will pay (or will promptly
reimburse Agent and Lenders for payment of) all such taxes, including interest
and penalties thereon, and will indemnify and hold the indemnitees described
above in this Section 16.5 harmless from and against all liability in connection
therewith.
16.6. Notice. Any notice or request hereunder may be given to Borrowing Agent or
any Borrower or to Agent or any Lender at their respective addresses set forth
below or at such other address as may hereafter be specified in a notice
designated as a notice of change of address under this Section. Any notice,
request, demand, direction or other communication (for purposes of this
Section 16.6 only, a “Notice”) to be given to or made upon any party hereto
under any provision of this Loan Agreement shall be given or made by telephone
or in writing (which includes by means of electronic transmission (i.e.,
“e-mail”) or facsimile transmission or by setting forth such Notice on a site on
the World Wide Web (a “Website Posting”) if Notice of such Website Posting
(including the information necessary to access such site) has previously been
delivered to the applicable parties hereto by another means set forth in this
Section 16.6) in accordance with this Section 16.6. Any such Notice must be
delivered to the applicable parties hereto at the addresses and numbers set
forth under their respective names on Section 16.6 hereof or in accordance with
any subsequent unrevoked Notice from any such party that is given in accordance
with this Section 16.6. Any Notice shall be effective:
(a) In the case of hand-delivery, when delivered;
(b) If given by mail, four days after such Notice is deposited with the United
States Postal Service, with first-class postage prepaid, return receipt
requested;
(c) In the case of a telephonic Notice, when a party is contacted by telephone,
if delivery of such telephonic Notice is confirmed no later than the next
Business Day by hand delivery, a facsimile or electronic transmission, a Website
Posting or an overnight courier delivery of a confirmatory Notice (received at
or before noon on such next Business Day);
(d) In the case of a facsimile transmission, when sent to the applicable party’s
facsimile machine’s telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile machine;

 

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(e) In the case of electronic transmission, when actually received;
(f) In the case of a Website Posting, upon delivery of a Notice of such posting
(including the information necessary to access such site) by another means set
forth in this Section 16.6; and
(g) If given by any other means (including by overnight courier), when actually
received.
Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently
send a copy thereof to the Agent, and the Agent shall promptly notify the other
Lenders of its receipt of such Notice.
(A) If to Agent or PNC at:

     
 
  PNC Bank, National Association
 
  1600 Market Street
 
  Philadelphia, PA 19103
 
  Attention: Craig T. Sheetz
 
  Telephone: 215-585-5231
 
  Facsimile: 215-585-4771
 
   
 
  with a copy to:
 
   
 
  PNC Bank, National Association
 
  PNC Agency Services
 
  PNC Firstside Center
 
  500 First Avenue, 4th Floor
 
  Pittsburgh, Pennsylvania 15219
 
  Attention: Lisa Pierce
 
  Telephone: (412) 762-6442
 
  Facsimile: (412) 762-8672
 
   
 
  with an additional copy to:
 
   
 
  Ballard Spahr LLP
 
  1735 Market Street, 51st Floor
 
  Philadelphia, Pennsylvania 19103
 
  Attention: Steven M. Miller
 
  Telephone: (215) 864-8310
 
  Facsimile: (215) 933-3970

(B) If to a Lender other than Agent, as specified on the signature pages hereof.

 

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(C) If to Borrowing Agent or any Borrower:

     
 
  Osteotech, Inc.
 
  51 James Way
 
  Eatontown, New Jersey 07724
 
  Attention: Chief Financial Officer
 
  Telephone: 732-542-2800
 
  Facsimile: 732-935-0626
 
   
 
  with a copy to:
 
   
 
  Dorsey & Whitney LLP
 
  50 South Sixth Street, Suite 1500
 
  Minneapolis, Minnesota 55402
 
  Attention: L. Joseph Genereux
 
  Telephone: 612-340-2600
 
  Facsimile: 612-340-2643

16.7. Survival. The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8,
3.9, 4.19(h), and 16.5 and the obligations of Lenders under Section 14.7, shall
survive termination of this Agreement and the Other Documents and payment in
full of the Obligations.
16.8. Severability. If any part of this Agreement is contrary to, prohibited by,
or deemed invalid under Applicable Laws, such provision shall be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible.
16.9. Expenses. All costs and expenses including reasonable attorneys’ fees
(including the allocated costs of in house counsel) and disbursements incurred
by Agent on its behalf or on behalf of Lenders (a) in all efforts made to
enforce payment of any Obligation or effect collection of any Collateral, or
(b) in connection with the entering into, modification, amendment,
administration and enforcement of this Agreement or any consents or waivers
hereunder and all related agreements, documents and instruments, or (c) in
instituting, maintaining, preserving, enforcing and foreclosing on Agent’s
security interest in or Lien on any of the Collateral, or maintaining,
preserving or enforcing any of Agent’s or any Lender’s rights hereunder and
under all related agreements, documents and instruments, whether through
judicial proceedings or otherwise, or (d) in defending or prosecuting any
actions or proceedings arising out of or relating to Agent’s or any Lender’s
transactions with any Borrower, or (e) in connection with any advice given to
Agent or any Lender with respect to its rights and obligations under this
Agreement and all related agreements, documents and instruments, may be charged
to Borrowers’ Account and shall be part of the Obligations.
16.10. Injunctive Relief. Each Borrower recognizes that, in the event any
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, or threatens to fail to perform, observe or
discharge such obligations or liabilities, any remedy at law may prove to be
inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving that actual damages are not an adequate remedy.

 

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16.11. Consequential Damages. Neither Agent nor any Lender, nor any agent or
attorney for any of them, shall be liable to any Borrower (or any Affiliate of
any such Person) for indirect, punitive, exemplary or consequential damages
arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations or as a result of
any transaction contemplated under this Agreement or any Other Document.
16.12. Captions. The captions at various places in this Agreement are intended
for convenience only and do not constitute and shall not be interpreted as part
of this Agreement.
16.13. Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of and by different parties hereto on separate counterparts, all of
which, when so executed, shall be deemed an original, but all such counterparts
shall constitute one and the same agreement. Any signature delivered by a party
by facsimile transmission shall be deemed to be an original signature hereto.
16.14. Construction. The parties acknowledge that each party and its counsel
have reviewed this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
16.15. Confidentiality; Sharing Information. Agent, each Lender and each
Transferee shall hold all non-public information obtained by Agent, such Lender
or such Transferee pursuant to the requirements of this Agreement in accordance
with Agent’s, such Lender’s and such Transferee’s customary procedures for
handling confidential information of this nature; provided, however, Agent, each
Lender and each Transferee may disclose such confidential information (a) to its
examiners, Affiliates, outside auditors, counsel and other professional
advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as
required or requested by any Governmental Body or representative thereof or
pursuant to legal process; provided, further that (i) unless specifically
prohibited by Applicable Law, Agent, each Lender and each Transferee shall use
its reasonable best efforts prior to disclosure thereof, to notify the
applicable Borrower of the applicable request for disclosure of such non-public
information (A) by a Governmental Body or representative thereof (other than any
such request in connection with an examination of the financial condition of a
Lender or a Transferee by such Governmental Body) or (B) pursuant to legal
process and (ii) in no event shall Agent, any Lender or any Transferee be
obligated to return any materials furnished by any Borrower other than those
documents and instruments in possession of Agent or any Lender in order to
perfect its Lien on the Collateral once the Obligations have been paid in full
and this Agreement has been terminated. Each Borrower acknowledges that from
time to time financial advisory, investment banking and other services may be
offered or provided to such Borrower (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and each Borrower hereby authorizes each Lender to share any information
delivered to such Lender by such Borrower 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 of such Lender, it being
understood that any such Subsidiary or Affiliate of any Lender receiving such
information shall be bound by the provisions of this Section 16.15 as if it were
a Lender hereunder. Such authorization shall survive the repayment of the other
Obligations and the termination of this Agreement.

 

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16.16. Publicity. With the prior written consent of the applicable Borrower, not
to be unreasonably withheld, each Borrower and each Lender hereby authorizes
Agent to make appropriate announcements of the financial arrangement entered
into among Borrowers, Agent and Lenders, including announcements which are
commonly known as tombstones, in such publications and to such selected parties
as Agent shall in its sole and absolute discretion deem appropriate.
16.17. Certifications From Banks and Participants; US PATRIOT Act. Each Lender
or assignee or participant of a Lender that is not incorporated under the Laws
of the United States of America or a state thereof (and is not excepted from the
certification requirement contained in Section 313 of the USA PATRIOT Act and
the applicable regulations because it is both (i) an affiliate of a depository
institution or foreign bank that maintains a physical presence in the United
States or foreign country, and (ii) subject to supervision by a banking
authority regulating such affiliated depository institution or foreign bank)
shall deliver to the Agent the certification, or, if applicable,
recertification, certifying that such Lender is not a “shell” and certifying to
other matters as required by Section 313 of the USA PATRIOT Act and the
applicable regulations: (1) within 10 days after the Closing Date, and (2) as
such other times as are required under the USA PATRIOT Act.

 

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Each of the parties has signed this Agreement as of the day and year first above
written.

            OSTEOTECH, INC.
      By:   /s/ Mark H. Burroughs         Name:   Mark H. Burroughs       
Title:   Executive Vice President        PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
      By:   /s/ Daniel R. Stella         Name:   Daniel R. Stella       
Title:   Senior Vice President        1600 Market Street
Philadelphia, PA 19103
      Commitment Percentage: 100%