Exhibit 10.2

 

Execution Version

 

 

 

REVOLVING CREDIT AND SECURITY AGREEMENT

 

dated as of December 7, 2015

 

by and among

 

THE SPECTRANETICS CORPORATION

ANGIOSCORE INC.

 

and any additional borrower that hereafter becomes party hereto, each as
Borrower, and collectively as Borrowers,

 

and

 

MIDCAP FINANCIAL TRUST,

 

as Agent and as a Lender,

 

and

 

THE ADDITIONAL LENDERS

 

FROM TIME TO TIME PARTY HERETO

 

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CREDIT AND SECURITY AGREEMENT

 

THIS CREDIT AND SECURITY AGREEMENT (as the same may be amended, supplemented,
restated or otherwise modified from time to time, the “Agreement”) is dated as
of December 7, 2015 by and among THE SPECTRANETICS CORPORATION, a Delaware
corporation (the “Parent”), ANGIOSCORE INC., a Delaware corporation, and any
additional borrower that may hereafter be added to this Agreement (each
individually as a “Borrower”, and collectively with any entities that become
party hereto as Borrower and each of their successors and permitted assigns, the
“Borrowers”), MIDCAP FINANCIAL TRUST, a Delaware statutory trust, individually
as a Lender, and as Agent, and the financial institutions or other entities from
time to time parties hereto, each as a Lender.

 

RECITALS

 

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

 

AGREEMENT

 

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

 

ARTICLE 1 - DEFINITIONS

 

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

 

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

 

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

 

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

 

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derived by any Borrower or to which any Borrower is entitled in respect of or
related to the foregoing, and (e) all proceeds of any of the foregoing.

 

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of fifty percent (50%) of the
equity interests of any Person or otherwise causing any Person to become a
Subsidiary of a Borrower, (c) a merger or consolidation or any other combination
with another Person or (d) the acquisition (including through licensing) of any
Product or Intellectual Property of or from any other Person.

 

“Additional Tranche” means an additional amount of Revolving Loan Commitment to
the extent provided for in Section 2.1(c) and in no event to exceed an amount
equal to $20,000,000.

 

“Affiliate” means, with respect to any Person, (a) any Person that directly or
indirectly controls such Person, (b) any Person which is controlled by or is
under common control with such controlling Person, and (c) each of such Person’s
(other than, with respect to any Lender, any Lender’s) officers or directors (or
Persons functioning in substantially similar roles) and the spouses, parents,
descendants and siblings of such officers, directors or other Persons.  As used
in this definition, the term “control” of a Person means the possession,
directly or indirectly, of the power to vote twenty percent (20%) or more of any
class of voting securities of such Person or to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

 

“Affiliated Credit Agreement” that certain Credit and Security Agreement (as the
same may be amended, restated, supplemented or otherwise modified from time to
time), among MCF, as Agent and a lender, the other lenders party thereto and the
Borrowers pursuant to which such Agent and lenders have extended a term credit
facility to the Borrowers.

 

“Affiliated Financing Agent” means the “Agent” under and as defined in the
Affiliated Credit Agreement.

 

“Affiliated Financing Documents” means the “Financing Documents” as defined in
the Affiliated Credit Agreement.

 

“Affiliated Obligations” means all “Obligations”, as such term is defined in the
Affiliated Financing Documents.

 

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

 

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

 

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“Applicable Margin” means four and forty-five one hundredths percent (4.45%).

 

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

 

“Bank Services”  are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by any Lender or any Affiliate of a Lender, including, without
limitation, any letters of credit, cash management services (including, without
limitation, merchant services, direct deposit of payroll, business credit cards,
and check cashing services), interest rate swap arrangements, and foreign
exchange services as any such products or services may be identified in such
Lender’s various agreements related thereto (each, a “Bank Services Agreement”).

 

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

 

“Base LIBOR Rate” means, for each Interest Period, the rate per annum,
determined by Agent in accordance with its customary procedures, and utilizing
such electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/100%), to be the rate at which Dollar
deposits (for delivery on the first day of such Interest Period or, if such day
is not a Business Day on the preceding Business Day) in the amount of $1,000,000
are offered to major banks in the London interbank market on or about
11:00 a.m. (Eastern time) two (2) Business Days prior to the commencement of
such Interest Period, for a term comparable to such Interest Period, which
determination shall be conclusive in the absence of manifest error.

 

“Base Rate” means a per annum rate of interest equal to the greater of (a) one
half percent (0.5%) per annum and (b) the rate of interest announced, from time
to time, within Wells Fargo Bank, National Association (“Wells Fargo”) at its
principal office in San Francisco as its “prime rate,” with the understanding
that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the
lowest of such rates) and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto and is
evidenced by the recording thereof after its announcement in such internal
publications as Wells Fargo may designate; provided, however, that Agent may,
upon prior written notice to Borrower, choose a reasonably comparable index or
source to use as the basis for the Base Rate.

 

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

 

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“Borrower” and “Borrowers” has the meaning set forth in the introductory
paragraph hereto.

 

“Borrower Representative” means the Parent, in its capacity as Borrower
Representative pursuant to the provisions of Section 2.9, or any successor
Borrower Representative selected by Borrowers and approved by Agent.

 

“Borrowing Base” means:

 

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

 

plus

 

(b)                                 fifty percent (50%) multiplied by the value
of the Eligible Domestic Inventory valued at the lower of first-in-first-out
cost or market value, after factoring in all rebates, discounts and other
incentives or rewards associated with the purchase of the applicable Eligible
Domestic Inventory;

 

minus

 

(c)                                  the amount of any reserves and/or
adjustments provided for in this Agreement;

 

provided, that the Borrowing Base will be adjusted down if necessary, such that
availability from Eligible Domestic Inventory shall never exceed twenty percent
(20%) of the total Borrowing Base.

 

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

 

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

 

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

 

“Change in Control” means any of the following events:  (a) any Person or two or
more Persons acting in concert shall have acquired beneficial ownership,
directly or indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of or control over, voting stock of any
Borrower (or other securities convertible into such voting stock) representing
more than 50% of the combined voting power of all voting stock of any Borrower
or (b) the Parent ceases to own, directly or indirectly, 100% of the capital
stock of any of its Subsidiaries (or such lesser portion as may be owned by the
Parent as of the date hereof or on the date such Subsidiary

 

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became a Subsidiary of the Parent); or (c) the occurrence of any “Change of
Control”, “Change in Control”, “Fundamental Change” or terms of similar import
under any document or instrument governing or relating to Debt of or equity in
such Person, including under the Convertible Note Documents.  As used herein,
“beneficial ownership” shall have the meaning provided in Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934.

 

“Closing Date” means the date of this Agreement.

 

“Closing Date Real Property” means the real property located at 3305 N. Cascade
Ave., Colorado Springs, CO 80907.

 

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

 

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

 

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

 

“Commitment Annex” means Annex A to this Agreement.

 

“Commitment Expiry Date” means December 7, 2020.

 

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

 

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

 

“Contingent Obligation” means, with respect to any Person, any direct or
indirect liability of such Person:  (a) with respect to any Debt of another
Person (a “Third Party Obligation”) if the purpose or intent of such Person
incurring such liability, or the effect thereof, is to provide assurance to the
obligee of such Third Party Obligation that such Third Party Obligation will be
paid or discharged, or that any agreement relating thereto will be complied
with, or that any holder of such Third Party Obligation will be protected, in
whole or in part, against loss with respect thereto; (b) with respect to any
undrawn portion of any letter of credit issued for the account of such Person or
as to which such Person is otherwise liable for the reimbursement of any
drawing; (c)  under any Swap Contract, to the extent not yet due and payable;
(d) to make take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement; or (e) for any
obligations of another Person pursuant to any Guarantee or pursuant to any
agreement to purchase, repurchase or otherwise

 

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

 

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

 

“Convertible Notes” means $230,000,000 2.625% Convertible Senior Notes due 2034
of the Parent issued pursuant to that certain Indenture Agreement between Parent
and Wells Fargo Bank, National Association, dated as of June 3, 2014 (as
amended, supplemented or otherwise modified from time to time prior to the date
hereof, the “Convertible Note Indenture”).

 

“Convertible Note Documents” means the Convertible Notes, the Convertible Note
Indenture and each other document or agreement from time to entered into in
connection with the foregoing.

 

“Correction” means repair, modification, adjustment, relabeling, destruction or
inspection (including patient monitoring) of a product without its physical
removal to some other location.

 

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

 

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

 

“DEA” means the Drug Enforcement Administration of the United States of America,
any comparable state or local Governmental Authority, any comparable
Governmental Authority in any non-United States jurisdiction, and any successor
agency of any of the foregoing.

 

“Debt” of a Person means at any date, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of property or services, except
trade accounts payable arising and paid on a timely basis and in the Ordinary
Course of Business, (d) all capital leases of such Person, (e) all non-

 

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contingent obligations of such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit, banker’s acceptance or similar
instrument, (f) all equity securities of such Person subject to repurchase or
redemption other than at the sole option of such Person, (g) all obligations
secured by a Lien on any asset of such Person, whether or not such obligation is
otherwise an obligation of such Person, (h) “earnouts”, purchase price
adjustments, profit sharing arrangements, deferred purchase money amounts and
similar payment obligations or continuing obligations of any nature of such
Person arising out of purchase and sale contracts, (i) all Debt of others
Guaranteed by such Person, (j) off-balance sheet liabilities and/or Pension Plan
or Multiemployer Plan liabilities of such Person, (k) obligations arising under
non-compete agreements, and (l) obligations arising under bonus, deferred
compensation, incentive compensation or similar arrangements, other than those
arising in the Ordinary Course of Business.  Without duplication of any of the
foregoing, Debt of Borrowers shall include any and all Loans.

 

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

 

“Defined Period” has the meaning set forth in Section 6.1.

 

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

 

“Deposit Account Control Agreement” means an agreement, in form and substance
satisfactory to Agent, among Agent, any Borrower and each financial institution
in which such Borrower maintains a Deposit Account, which agreement provides
that (a) such financial institution shall comply with instructions originated by
Agent directing disposition of the funds in such Deposit Account without further
consent by the applicable Borrower, and (b) such financial institution shall
agree that it shall have no Lien on, or right of setoff or recoupment against,
such Deposit Account or the contents thereof, other than in respect of usual and
customary service fees and returned items for which Agent has been given value,
in each such case expressly consented to by Agent, and containing such other
terms and conditions as Agent may require, including as to any such agreement
pertaining to any Lockbox Account, providing that such financial institution
shall wire, or otherwise transfer, in immediately available funds, on a daily
basis to the Payment Account all funds received or deposited into such Lockbox
or Lockbox Account.

 

“Distribution” means as to any Person (a) any dividend or other distribution
(whether in cash, securities or other property) on any equity interest in such
Person (except those payable solely in its equity interests of the same class),
or (b) any payment by such Person on account of (i) the purchase, redemption,
retirement, defeasance, surrender, cancellation, termination or acquisition of
any equity interests in such Person or any claim respecting the purchase or sale
of any equity interest in such Person, or (ii) any option, warrant or other
right to acquire any equity interests in such Person.

 

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

 

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“Drug Application” means a new drug application, an abbreviated drug
application, or a product license application for any Product, as appropriate,
as those terms are defined in the FDCA.

 

“Eligible Accounts” means the sum of Eligible Domestic Accounts and Eligible
Foreign Accounts, provided, that, Eligible Accounts will be adjusted down if
necessary, such that availability from Eligible Foreign Accounts shall never
exceed twenty-five percent (25%) of Eligible Accounts.

 

“Eligible Domestic Account” means, subject to the criteria below, an account
receivable of a Borrower, which was generated in the Ordinary Course of
Business, which was generated originally in the name of a Borrower and not
acquired via assignment or otherwise, and which Agent, in its good faith credit
judgment and discretion, deems to be an Eligible Domestic Account.  The net
amount of an Eligible Domestic Account at any time shall be (a) the face amount
of such Eligible Domestic Account as originally billed minus all cash
collections and other proceeds of such Account received from or on behalf of the
Account Debtor thereunder as of such date and any and all returns, rebates,
discounts (which may, at Agent’s option, be calculated on shortest terms),
credits, allowances or excise taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in connection with
such Accounts at such time, and (b) adjusted by applying percentages (known as
“Domestic Account liquidity factors”) by payor and/or payor class based upon the
applicable Borrower’s actual recent collection history for each such payor
and/or payor class in a manner consistent with Agent’s underwriting practices
and procedures.  Such Domestic Account liquidity factors may be adjusted by
Agent from time to time as warranted by Agent’s underwriting practices and
procedures and using Agent’s good faith credit judgment.  Without limiting the
generality of the foregoing, no Account shall be an Eligible Domestic Account
if:

 

(a)                                 the Account remains unpaid more than one
hundred twenty (120) days after the applicable goods or services have been
rendered or delivered;

 

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

 

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

 

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

 

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

 

(f)                                   the Account is subject to a Lien (other
than Liens in favor of the Agent or Liens that have been expressly subordinated
to the Liens of Agent), or Agent does not have a first priority, perfected Lien
on such Account;

 

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

 

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

 

(i)                                     more than fifty percent (50%) of the
aggregate balance of all Accounts owing from the Account Debtor obligated on the
Account are ineligible under subclause (a) above (in which case all Accounts
from such Account Debtor shall be ineligible);

 

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

 

(k)                                 the total unpaid Accounts of the Account
Debtor obligated on the Account exceed twenty percent (20%) of the net amount of
all Eligible Domestic Accounts owing from all Account Debtors (but only the
amount of the Accounts of such Account Debtor exceeding such twenty percent
(20%) limitation shall be considered ineligible);

 

(l)                                     any covenant, representation or warranty
contained in the Financing Documents with respect to such Account has been
breached in any material respect;

 

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

 

(n)                                 the Account is an obligation of an Account
Debtor that is the federal, state, or local government or any political
subdivision thereof, unless Agent has agreed to the contrary in writing and
Agent has received from the Account Debtor the acknowledgement of Agent’s notice
of assignment of such obligation pursuant to this Agreement;

 

(o)                                 the Account is an obligation of an Account
Debtor that has suspended business, made a general assignment for the benefit of
creditors, is unable to pay its debts as they become due or as to which a
petition has been filed (voluntary or involuntary) under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors;

 

(p)                                 the Account Debtor has its principal place
of business or executive office outside the United States;

 

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

 

(r)                                    the Account Debtor is an individual;

 

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

 

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

 

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

 

(v)                                 the Account or Account Debtor fails to meet
such other specifications and requirements which may from time to time be
established by Agent in its good faith credit judgment and discretion.

 

“Eligible Domestic Inventory” means Inventory owned by a Borrower and acquired
and dispensed by such Borrower in the Ordinary Course of Business that Agent, in
its good faith credit judgment and discretion, deems to be Eligible Domestic
Inventory.  Without limiting the generality of the foregoing, no Inventory shall
be Eligible Domestic Inventory if:

 

(a)                              such Inventory is not owned by a Borrower free
and clear of all Liens and rights of any other Person (including the rights of a
purchaser that has made progress payments and the rights of a surety that has
issued a bond to assure such Borrower’s performance with respect to that
Inventory);

 

(b)                                 such Inventory is placed on consignment or
is in transit;

 

(c)                                  such Inventory is covered by a negotiable
document of title, unless such document has been delivered to Agent with all
necessary endorsements, free and clear of all Liens except those in favor of
Agent;

 

(d)                                 such Inventory is excess, obsolete,
unsalable, shopworn, seconds, damaged, unfit for sale, unfit for further
processing, is of substandard quality or is not of good and merchantable
quality, free from any defects;

 

(e)                                  such Inventory consists of marketing
materials, display items or packing or shipping materials, manufacturing
supplies or Work-In-Process;

 

(f)                                   such Inventory is not subject to a first
priority Lien in favor of Agent;

 

(g)                                  such Inventory consists of goods that can
be transported or sold only with licenses that are not readily available or of
any substances defined or designated as hazardous or toxic waste, hazardous or
toxic material, hazardous or toxic substance, or similar term, by any
environmental law or any Governmental Authority applicable to Borrowers or their
business, operations or assets;

 

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(h)                                 such Inventory is not covered by casualty
insurance acceptable to Agent;

 

(i)                                     any covenant, representation or warranty
contained in the Financing Documents with respect to such Inventory has been
breached in any material respect;

 

(j)                                    such Inventory is located outside of the
continental United States;

 

(k)                                 such Inventory is located on premises (other
than premises owned by a Credit Party) with respect to which Agent has not
received a landlord, warehouseman, bailee or mortgagee letter acceptable in form
and substance to Agent;

 

(l)                                     such Inventory consists of
(A) discontinued items or (B) used items held for resale;

 

(m)                             such Inventory does not consist of finished
goods or raw materials;

 

(n)                                 such Inventory does not meet all standards
imposed by any Governmental Authority, including with respect to its production,
acquisition or importation (as the case may be);

 

(o)                                 such Inventory has an expiration date within
the next six (6) months;

 

(p)                                 such Inventory is held for rental or lease
by or on behalf of Borrowers;

 

(q)                                 such Inventory is subject to any licensing,
patent, royalty, trademark, trade name or copyright agreement with any third
parties, which agreement restricts the ability of Agent or any Lender to sell or
otherwise dispose of such Inventory; or

 

(r)                                    such Inventory fails to meet such other
specifications and requirements which may from time to time be established by
Agent in its good faith credit judgment.

 

Notwithstanding the foregoing, the valuation of Inventory shall be subject to
any legal limitations on sale and transfer of such Inventory.

 

“Eligible Foreign Account” means, subject to the criteria below, an Account of
any Borrower which (i) was generated in the Ordinary Course of Business,
(ii) was generated originally in the name of such Borrower and not acquired via
assignment or otherwise, (iii) is not a Eligible Domestic Account, and
(iv) Agent, in its good faith credit judgment and discretion, deems to be a
Eligible Foreign Account.  Accounts denominated in foreign currencies shall be
converted to US Dollars upon delivery by Borrowers of the current Borrowing Base
Certificate at the then-current rate used by Agent in accordance with its
standard policies.  The net amount of an Eligible Foreign Account at any time
shall be (a) the face amount of such Account as originally billed minus all cash
collections and other proceeds of such Account received from or on behalf of the
Account Debtor thereunder as of such date and any and all returns, rebates,
discounts (which may, at Agent’s option, be calculated on shortest terms),
credits, allowances or excise taxes of any nature at any time issued, owing,
claimed by Account Debtors, granted, outstanding or payable in connection with
such Accounts at such time, and (b) adjusted by applying percentages (known as
“Foreign Account liquidity factors”) by payor and/or payor

 

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

 

(a)                                 the Account remains unpaid more than one
hundred twenty (120) days after the applicable goods or services have been
rendered or delivered;

 

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

 

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

 

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

 

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

 

(f)                                   the Account is subject to a Lien (other
than Liens in favor of the Agent or Liens that have been expressly subordinated
to the Liens of Agent), or Agent does not have a first priority, perfected Lien
on such Account;

 

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

 

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

 

(i)                                     more than fifty percent (50%) of the
aggregate balance of all Accounts owing from the Account Debtor obligated on the
Account are ineligible under subclause (a) above (in which case all Accounts
from such Account Debtor shall be ineligible);

 

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

 

(k)                                 the total unpaid Accounts of the Account
Debtor obligated on the Account exceed twenty percent (20%) of the net amount of
all Eligible Foreign Accounts owing from all Account Debtors (but only the
amount of the Accounts of such Account Debtor exceeding such twenty percent
(20%) limitation shall be considered ineligible);

 

(l)                                     any covenant, representation or warranty
contained in the Financing Documents with respect to such Account has been
breached in any material respect;

 

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

 

(n)                                 the Account is an obligation of an Account
Debtor that is the federal, state, or local government or any political
subdivision thereof, unless Agent has agreed to the contrary in writing and
Agent has received from the Account Debtor the acknowledgement of Agent’s notice
of assignment of such obligation pursuant to this Agreement;

 

(o)                                 the Account is an obligation of an Account
Debtor that has suspended business, made a general assignment for the benefit of
creditors, is unable to pay its debts as they become due or as to which a
petition has been filed (voluntary or involuntary) under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors;

 

(p)                                 [Reserved];

 

(q)                                 [Reserved];

 

(r)                                    the Account Debtor is an individual;

 

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

 

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

 

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

 

(v)                                 the Account or Account Debtor fails to meet
such other specifications and requirements which may from time to time be
established by Agent in its good faith credit judgment and discretion.

 

“Environmental Laws” means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations, standards, policies and other
governmental directives or requirements, as well as common law, pertaining to
the environment, natural resources,

 

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

 

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

 

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

 

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

 

“FDA” means the Food and Drug Administration of the United States of America,
any comparable state or local Governmental Authority, any comparable
Governmental Authority in any non-United States jurisdiction, and any successor
agency of any of the foregoing.

 

“FDCA” means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C.
Section 301 et seq., and all regulations promulgated thereunder.

 

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

 

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

 

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

 

“Good Manufacturing Practices” means current good manufacturing practices, as
set forth in 21 C.F.R. Parts 210 and 211.

 

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

 

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

 

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

 

“Hazardous Materials” means petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives, flammable
materials; radioactive materials; polychlorinated biphenyls and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials; underground or above-ground storage tanks, whether empty or
containing any substance; any substance the presence of which is prohibited by
any Environmental Laws; toxic mold, any substance that requires special
handling; and any other material or substance now or in the future defined as a
“hazardous substance,” “hazardous material,” “hazardous waste,” “toxic
substance,” “toxic pollutant,” “contaminant,” “pollutant” or other words of
similar import within the meaning of any Environmental Law,

 

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including:  (a) any “hazardous substance” defined as such in (or for purposes
of) CERCLA, or any so-called “superfund” or “superlien” Law, including the
judicial interpretation thereof; (b) any “pollutant or contaminant” as defined
in 42 U.S.C.A. § 9601(33); (c) any material now defined as “hazardous waste”
pursuant to 40 C.F.R. Part 260; (d) any petroleum or petroleum by-products,
including crude oil or any fraction thereof; (e) natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel; (f) any
“hazardous chemical” as defined pursuant to 29 C.F.R. Part 1910; (g) any toxic
or harmful substances, wastes, materials, pollutants or contaminants (including,
without limitation, asbestos, polychlorinated biphenyls (“PCB’s”), flammable
explosives, radioactive materials, infectious substances, materials containing
lead-based paint or raw materials which include hazardous constituents); and
(h) any other toxic substance or contaminant that is subject to any
Environmental Laws or other past or present requirement of any Governmental
Authority.

 

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

 

“Healthcare Laws” means all applicable Laws relating to the procurement,
development, provision, clinical and non-clinical evaluation or investigation,
product approval or clearance, manufacture, production, analysis, distribution,
dispensing, importation, exportation, use, handling, quality, reimbursement,
sale, labeling, advertising, promotion, or postmarket requirements of any drug,
medical device, clinical laboratory service, food, dietary supplement, or other
product (including, without limitation, any ingredient or component of, or
accessory to, the foregoing products) subject to regulation under the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. et seq.), Clinical Laboratory
Improvement Amendments of 1988 (42 U.S.C. §263a et seq) and its implementing
regulations (42 C.F.R. Part 493) and similar state or foreign laws, controlled
substances laws, pharmacy laws, consumer product safety laws, Medicare,
Medicaid, and all laws, policies, procedures, requirements and regulations
pursuant to which Regulatory Required Permits are issued, in each case, as the
same may be amended from time to time.

 

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

 

“Intellectual Property” means all copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any patents, patent
applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, trade names, service marks, mask works, rights of use of any
name, domain names, or any other similar rights, any applications therefor,
whether registered or not, know-how, operating manuals, trade secret rights,
clinical and non-clinical data, rights to unpatented inventions, and any claims
for damage by way of any past, present, or future infringement of any of the
foregoing.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of
the date hereof between Agent and the Affiliated Financing Agent, as the same
may be amended, restated, supplemented or otherwise modified from time to time.

 

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

 

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

 

“Investment” means, with respect to any Person, directly or indirectly, (a) to
purchase or acquire any stock or stock equivalents, or any obligations or other
securities of, or any interest in, any Person, including the establishment or
creation of a Subsidiary, (b) to make or commit to make any acquisition
(including through licensing) of (i) of all or substantially all of the assets
of another Person, or (ii) any business, Product, business line or product line,
division or other unit operation of any Person or (c) make or purchase any
advance, loan, extension of credit or capital contribution to, or any other
investment in, any Person.

 

“Joinder Requirements” has the meaning set forth in Section 4.11(e).

 

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

 

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

 

“LIBOR Rate” means, for each Loan, a per annum rate of interest equal to the
greater of (a) one half percent (0.5%) and (b) the rate determined by Agent
(rounded upwards, if necessary, to the next 1/100th%) by dividing (i) the Base
LIBOR Rate for the Interest Period, by (ii) the sum of one minus the daily
average during such Interest Period of the aggregate maximum reserve requirement
(expressed as a decimal) then imposed under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor thereto) for
“Eurocurrency Liabilities” (as defined therein).

 

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

 

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

 

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

 

“Loan(s)” means the Revolving Loans.

 

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

 

“Lockbox Account” means an account or accounts maintained at the Lockbox Bank
into which collections of Accounts are paid, which account or accounts shall be,
if requested by Agent, opened in the name of Agent (or a nominee of Agent).

 

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

 

“Market Withdrawal” means a Person’s Removal or Correction of a distributed
product which involves a minor violation that would not be subject to legal
action by the FDA or which involves no violation, e.g., normal stock rotation
practices, routine equipment adjustments and repairs, etc.

 

“Material Adverse Effect” means with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (i) the condition
(financial or otherwise), operations, business, properties or prospects of any
of the Credit Parties, (ii) the rights and remedies of Agent or Lenders under
any Financing Document, or the ability of any Credit Party to perform any of its
obligations under any Financing Document to which it is a party, (iii) the
legality, validity or enforceability of any Financing Document, (iv) the
existence, perfection or priority of any security interest granted in any
Financing Document, (v) the value of a material portion of the Collateral, or
(vi) a material impairment of the prospect of repayment of any material portion
of the Obligations.

 

“Material Contracts” means (1) the Operative Documents, (2) the Convertible Note
Documents and (3) any other agreement or contract to which any Credit Party or
any of its Subsidiaries is a party, the termination of which could reasonably be
expected to result in a Material Adverse Effect.

 

“Material Intangible Assets” means all of (i) Borrower’s Intellectual Property
and (ii) license or sublicense agreements or other agreements with respect to
rights in Intellectual Property, in each case that are material to the condition
(financial or other), business or operations of Borrower, as determined by
Agent.

 

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

 

“MCF” means MidCap Financial Trust, a Delaware statutory trust, and its
successors and assigns.

 

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

 

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

 

“Minimum Balance” means, at any time, an amount that equals the product of:
(a) the average Borrowing Base (or, if less on any given day, the Revolving Loan
Commitment) during the immediately preceding month, multiplied by (b) the
Minimum Balance Percentage for such month.

 

“Minimum Balance Percentage” means (i) from the Closing Date until the first
anniversary of the Closing Date, thirty five percent (35%) and (ii) thereafter,
fifty percent (50.0%).

 

“Minimum Cash Amount” has the meaning set forth in Section 6.2.

 

“Monthly Cash Burn Amount” means, with respect to Borrower, an amount equal to
Borrower’s change in cash and cash equivalents, without giving effect to any
increase resulting from contributions or proceeds of financings, for either
(a) the immediately preceding eighteen (18) month period as determined as of the
last day of the month immediately preceding the proposed consummation of the
Permitted Acquisition and based upon the financial statements delivered to Agent
in accordance with this Agreement for such period or (b) the immediately
succeeding eighteen (18) month period based upon the Transaction Projections,
using whichever calculation as between clause (a) and clause (b) demonstrates a
higher burn rate (or, in other words, more cash used), in either case, divided
by eighteen (18).

 

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

 

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

 

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

 

“Obligations” means all obligations, liabilities and indebtedness (monetary
(including, without limitation, the payment of interest and other amounts
arising after the commencement of any case with respect to any Credit Party
under the Bankruptcy Code or any similar statute which would accrue and become
due but for the commencement of such case, whether or not such amounts are
allowed or allowable in whole or in part in such case) or otherwise) of each
Credit Party under this Agreement or any other Financing Document or any Bank
Services Agreement, in each case howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due.

 

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

 

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

 

“Operative Documents” means the Financing Documents and Subordinated Debt
Documents.

 

“Ordinary Course of Business” means, in respect of any transaction involving any
Credit Party, the ordinary course of business of such Credit Party, and
undertaken by such Person in good faith and not for purposes of evading any
covenant or restriction in any Financing Document.

 

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

 

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

 

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

 

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

 

“Perfection Certificate” means the Perfection Certificate delivered to Agent as
of the Closing Date, together with any amendments thereto required under this
Agreement.

 

“Permit” means all licenses, certificates, accreditations, product clearances or
approvals, provider numbers or provider authorizations, supplier numbers,
marketing authorizations, drug or device authorizations and approvals, other
authorizations, franchises, qualifications, accreditations, registrations,
permits, consents and approvals of a Credit Party issued or required under Laws
applicable to the business of Borrower or any of its Subsidiaries or necessary
in the manufacturing, importing, exporting, possession, ownership, warehousing,
marketing, promoting, sale, labeling, furnishing, distribution or delivery of
goods or services under Laws applicable to the business of Borrower or any of
its Subsidiaries.  Without limiting the generality of the foregoing, “Permit”
includes any Regulatory Required Permit.

 

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“Permitted Acquisition” means any Acquisition by a Borrower, in each case, to
the extent that each of the following conditions shall have been satisfied:

 

(a)         the Borrower Representative shall have delivered to Agent at least
ten (10) Business Days prior to the closing of the proposed Acquisition: (i) a
description of the proposed Acquisition; (ii) to the extent available, a due
diligence package (including, to the extent available, a quality of earnings
report); and (iii) executed counterparts of the respective agreements, documents
or instruments pursuant to which such Acquisition is to be consummated, any
schedules to such agreements, documents or instruments and all other material
ancillary agreements, instruments and documents to be executed or delivered in
connection therewith, and to the extent required under the related acquisition
agreement, all required regulatory and third party approvals and copies of any
environmental assessments;

 

(b)         the Credit Parties (including any new Subsidiary to the extent
required by Section 4.11) shall execute and deliver the agreements, instruments
and other documents to the extent required by Section 4.11;

 

(c)          no Event of Default has occurred and is continuing, or would exist
after giving pro forma effect to, the proposed Acquisition;

 

(d)         all transactions in connection with such Acquisition shall be
consummated, in all material respects, in accordance with applicable laws;

 

(e)          the assets acquired in such Acquisition are for use in the same
line of business as the Credit Parties are currently engaged or a line of
business reasonably related thereto;

 

(f)           such Acquisition shall not be hostile and, if applicable, shall
have been approved by the board of directors (or other similar body) and/or the
stockholders or other equity holders of any Person being acquired in such
Acquisition;

 

(g)          no Debt or Liens are assumed or created (other than Permitted Liens
and Permitted Debt) in connection with such Acquisition;

 

(h)         Agent shall have received a certificate of a Responsible Officer of
the Borrower Representative demonstrating, on a pro forma basis after giving
effect to the consummation of such Acquisition, that Borrowers are in compliance
with the financial covenants set forth in Article 6; and

 

(i)             the total consideration paid or payable (including without
limitation, costs and expenses, deferred purchase price, seller notes and other
liabilities incurred, assumed or to be reflected on a consolidated balance sheet
of the Credit Parties and their Subsidiaries after giving effect to such
Acquisition) (such amounts, collectively, the “Acquisition Consideration”) shall
be in cash, in an amount not to exceed $15,000,000 in the aggregate for all such
Acquisitions during the term of this agreement, or capital stock of the Parent;
provided, however, that, in the case of each Acquisition, Agent has received
prior to the consummation of such Acquisition

 

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updated financial projections, in form and substance reasonably satisfactory to
Agent, for the immediately succeeding eighteen (18) months following the
proposed consummation of the Acquisition beginning with the month during which
the Acquisition is to be consummated (the “Transaction Projections”) and
evidence satisfactory to Agent that Borrower has, immediately before and
immediately after giving effect to the consummation of such Acquisition,
unrestricted cash in one or more Deposit Accounts subject to a Deposit Account
Control Agreement in an aggregate amount equal to or greater than the sum of
(A) the positive value of the product of (x) eighteen (18) multiplied by (y) the
Monthly Cash Burn Amount, as determined as of the last day of the month
immediately preceding such Acquisition plus (B) the Minimum Cash Amount.

 

Notwithstanding the foregoing, no Accounts or Inventory acquired by a Credit
Party in a Permitted Acquisition shall be included as Eligible Accounts or
Eligible Domestic Inventory until a field examination (and, if required by
Agent, an Inventory appraisal) with respect thereto has been completed to the
satisfaction of Agent, including the establishment of reserves required in
Agent’s sole discretion; provided that field examinations and appraisals in
connection with Permitted Acquisitions shall not count against the limited
number of field examinations or appraisals for which expense reimbursement may
be sought.

 

“Permitted Asset Dispositions” means the following Asset Dispositions, provided,
however, that at the time of such Asset Disposition, no Default or Event of
Default exists or would result from such Asset Disposition:  (a) dispositions of
Inventory in the Ordinary Course of Business and not pursuant to any bulk sale,
(b) dispositions of furniture, fixtures and equipment in the Ordinary Course of
Business that the applicable Borrower or Subsidiary determines in good faith is
no longer used or useful in the business of such Borrower and its Subsidiaries,
(c) disposals of obsolete, worn out or surplus tangible personal property,
(d) Permitted Licenses, (e) abandonment of Intellectual Property that is not
material to the Credit Parties’ business and the cost of maintaining such
Intellectual Property would outweigh the benefit to Credit Parties of so
maintaining it, (f) Permitted Investments, and (g) dispositions approved by
Agent.

 

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

 

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the status of such contest by Borrowers and/or confirmation of the continuing
satisfaction of this definition; and (f) upon a final determination of such
contest, Borrowers and its Subsidiaries shall promptly comply with the
requirements thereof.

 

“Permitted Contingent Obligations” means (a) Contingent Obligations arising in
respect of the Debt under the Financing Documents; (b) Contingent Obligations
resulting from endorsements for collection or deposit in the Ordinary Course of
Business; (c) Contingent Obligations outstanding on the date of this Agreement
and set forth on Schedule 5.1 (but not including any refinancings, extensions,
increases or amendments to the indebtedness underlying such Contingent
Obligations other than extensions of the maturity thereof without any other
material change in terms adverse to the Lenders); (d) Contingent Obligations
incurred in the Ordinary Course of Business with respect to surety and appeal
bonds, performance bonds and other similar obligations not to exceed $2,000,000
in the aggregate at any time outstanding; (e) Contingent Obligations arising
under indemnity agreements with title insurers to cause such title insurers to
issue to Agent mortgagee title insurance policies; (f) Contingent Obligations
arising with respect to customary indemnification obligations in favor of
purchasers in connection with dispositions of personal property assets permitted
under Section 5.6; (g) so long as there exists no Event of Default both
immediately before and immediately after giving effect to any such transaction,
Contingent Obligations existing or arising under any Swap Contract, provided,
however, that such obligations are (or were) entered into by Borrower or an
Affiliate in the Ordinary Course of Business for the purpose of directly
mitigating risks associated with liabilities, commitments, investments, assets,
or property held or reasonably anticipated by such Person and not for purposes
of speculation; and (h) other Contingent Obligations not permitted by clauses
(a) through (h) above, not to exceed $1,000,000 in the aggregate at any time
outstanding.

 

“Permitted Debt” means:  (a) Borrowers’ and its Subsidiaries’ Debt to Agent and
each Lender under this Agreement and the other Financing Documents; (b) Debt
incurred as a result of endorsing negotiable instruments received in the
Ordinary Course of Business; (c) capital leases and purchase money Debt not to
exceed $5,000,000 at any time (whether in the form of a loan or a lease) used
solely to acquire equipment used in the Ordinary Course of Business and secured
only by such equipment; (d) the Convertible Notes, outstanding on the Closing
Date, and other Debt existing on the date of this Agreement and described on
Schedule 5.1 (but not including any refinancings, extensions, increases or
amendments to such Debt other than extensions of the maturity thereof without
any other material change in terms adverse to Lenders); (e) Debt in the form of
insurance premiums financed through the applicable insurance company; (f) trade
accounts payable arising and paid on a timely basis and in the Ordinary Course
of Business; (g) Subordinated Debt; (h) Contingent Obligations; (i) Debt in
respect of netting services, overdraft protections and otherwise in connection
with deposit accounts; (j) indebtedness related to commercial credit cards that,
in the aggregate outstanding at any one time, does not exceed $4,000,000, which
indebtedness may be secured by a letter of credit; and (k) unsecured Debt not
included in (a) through (k) above that, in the aggregate outstanding at any one
time with Debt incurred pursuant to (c) above, does not exceed $1,000,000.

 

“Permitted Distributions” means the following Distributions:  (a) dividends by
any Subsidiary of any Borrower to such parent Borrower; (b) dividends payable
solely in common stock; and (c) repurchases of stock of former employees,
directors or consultants pursuant to

 

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stock purchase agreements so long as an Event of Default does not exist at the
time of such repurchase and would not exist after giving effect to such
repurchase, provided, however, that such repurchase does not exceed $500,000 in
the aggregate per fiscal year.

 

“Permitted Investments” means:  (a) Investments shown on Schedule 5.7 and
existing on the Closing Date; (b) cash and cash equivalents; (c) Investments
consisting of the endorsement of negotiable instruments for deposit or
collection or similar transactions in the Ordinary Course of Business;
(d) Investments consisting of (i) travel advances and employee relocation loans
and other employee loans and advances in the Ordinary Course of Business, and
(ii) loans to employees, officers or directors relating to the purchase of
equity securities of Borrowers or their Subsidiaries pursuant to employee stock
purchase plans or agreements approved by Borrowers’ Board of Directors (or other
governing body), but the aggregate of all such loans outstanding may not exceed
$500,000 at any time; (e) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the Ordinary Course of Business; (f) Investments
consisting of notes receivable of, or prepaid royalties and other credit
extensions, to customers and suppliers who are not Affiliates, in the Ordinary
Course of Business, provided, however, that this subpart (f) shall not apply to
Investments of Borrowers in any Subsidiary; (g) Investments consisting of
deposit accounts in which Agent has received a Deposit Account Control
Agreement; (h) Investments by any Borrower in any Subsidiary now owned or
hereafter created by such Borrower, which Subsidiary is organized under the laws
of the United States, a state thereof, or the District of Columbia, which
Subsidiary is a Borrower or has provided a Guarantee of the Obligations of the
Borrowers which Guarantee is secured by a Lien granted by such Subsidiary to
Agent in all or substantially all of its property of the type described in
Schedule 9.1 and otherwise made in compliance with Section 4.11(e);
(i) Investments of cash and cash equivalents in a Restricted Foreign Subsidiary
but solely to that the aggregate amount of such Investments with respect to all
Restricted Foreign Subsidiaries do not exceed $2,000,000 in the aggregate in any
12 month period; (j) Permitted Acquisitions; (k) so long as no Default or Event
of Default shall have occurred and be continuing at the time thereof or would
result therefrom, Investments of cash and cash equivalents by a Credit Party or
its Subsidiaries in a joint venture in an aggregate amount not to exceed
$1,000,00 in any 12 month period; and (l) other Investments in an amount not
exceeding $2,500,000 in the aggregate during the term of this Agreement.

 

“Permitted License” means any non-exclusive license of patent rights of Borrower
or its Subsidiaries so long as all such Permitted Licenses are granted to third
parties in the Ordinary Course of Business, do not result in a legal transfer of
title to the licensed property, and have been granted in exchange for fair
consideration.

 

“Permitted Liens” means:  (a) deposits or pledges of cash to secure obligations
under workmen’s compensation, social security or similar laws, or under
unemployment insurance (but excluding Liens arising under ERISA or, with respect
to any Pension Plan or Multiemployer Plan, the Code) pertaining to a Borrower’s
or its Subsidiary’s employees, if any; (b) deposits or pledges of cash to secure
bids, tenders, contracts (other than contracts for the payment of money or the
deferred purchase price of property or services), leases, statutory obligations,
surety and appeal bonds and other obligations of like nature arising in the
Ordinary Course of Business; (c) carrier’s, warehousemen’s, mechanic’s,
workmen’s, materialmen’s or other like Liens on

 

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Collateral, other than any Collateral which is part of the Borrowing Base,
arising in the Ordinary Course of Business with respect to obligations which are
not due, or which are being contested pursuant to a Permitted Contest;
(d) Liens, other than on Collateral that is part of the Borrowing Base, for
taxes or other governmental charges not at the time delinquent or thereafter
payable without penalty or the subject of a Permitted Contest; (e) attachments,
appeal bonds, judgments and other similar Liens on Collateral, other than on
Collateral that is part of the Borrowing Base, for sums not exceeding
(i) $2,500,000, in the aggregate, with respect to the litigation disclosed on
Schedule 3.6 as of the Closing Date or (ii) $500,000, in the aggregate, with
respect to all other such Liens; provided, however, that, in each case, the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are the subject of a Permitted Contest; (f) with respect
to real estate, easements, rights of way, restrictions, minor defects or
irregularities of title, none of which, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by the Security Documents, materially affect the value or marketability of the
Collateral, impair the use or operation of the Collateral for the use currently
being made thereof or impair Borrowers’ ability to pay the Obligations in a
timely manner or impair the use of the Collateral or the ordinary conduct of the
business of any Borrower or any Subsidiary and which, in the case of any real
estate that is part of the Collateral, are set forth as exceptions to or
subordinate matters in the title insurance policy accepted by Agent insuring the
lien of the Security Documents; (g) Liens and encumbrances in favor of Agent
under the Financing Documents; (h) Liens, other than on Collateral that is part
of the Borrowing Base, existing on the date hereof and set forth on
Schedule 5.2; (i) any Lien on any equipment securing Debt permitted under
subpart (c) of the definition of Permitted Debt, provided, however, that such
Lien attaches concurrently with or within twenty (20) days after the acquisition
thereof; and (j) Liens and encumbrances in favor of the holders of the
Affiliated Financing Documents.

 

“Permitted Modifications” means (a) such amendments or other modifications to a
Borrower’s or Subsidiary’s Organizational Documents as are required under this
Agreement or by applicable Law and fully disclosed to Agent within thirty (30)
days after such amendments or modifications have become effective, and (b) such
amendments or modifications to a Borrower’s or Subsidiary’s Organizational
Documents (other than those involving a change in the name of a Borrower or
Subsidiary or involving a reorganization of a Borrower or Subsidiary under the
laws of a different jurisdiction) that would not adversely affect the rights and
interests of the Agent or Lenders and fully disclosed to Agent within thirty
(30) days after such amendments or modifications have become effective.

 

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

 

“Products” means, from time to time, any products currently manufactured, sold,
developed, tested or marketed by any Borrower or any of its Subsidiaries.

 

“Pro Rata Share” means (a) with respect to a Lender’s obligation to make
Revolving Loans, the Revolving Loan Commitment Percentage of such Lender,
(b) with respect to a Lender’s right to receive payments of principal and
interest with respect to Revolving Loans,

 

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such Lender’s Revolving Loan Exposure with respect thereto; and (c) for all
other purposes (including, without limitation, the indemnification obligations
arising under Section 11.6) with respect to any Lender, the percentage obtained
by dividing (i) the Revolving Loan Commitment Amount of such Lender (or, in the
event the Revolving Loan Commitment shall have been terminated, such Lender’s
then existing Revolving Loan Outstandings), by (ii) the sum of the Revolving
Loan Commitment (or, in the event the Revolving Loan Commitment shall have been
terminated, the then existing Revolving Loan Outstandings) of all Lenders.

 

“Recall” means a Person’s Removal or Correction of a marketed product that the
FDA considers to be in violation of the laws it administers and against which
the FDA would initial legal action, e.g., seizure.

 

“Registered Intellectual Property” means any patent, registered trademark or
servicemark, registered copyright, registered mask work, or any pending
application for any of the foregoing.

 

“Regulatory Reporting Event” has the meaning set forth in Section 4.17.

 

“Regulatory Required Permit” means any and all licenses, approvals and permits
issued by the FDA, DEA or any other applicable Governmental Authority, including
without limitation Drug Applications, necessary for the testing, manufacture,
marketing or sale of any Product by any applicable Borrower(s) and its
Subsidiaries as such activities are being conducted by such Borrower and its
Subsidiaries with respect to such Product at such time and any drug listings and
drug establishment registrations under 21 U.S.C. Section 510, registrations
issued by DEA under 21 U.S.C. Section 823 (if applicable to any Product), and
those issued by State governments for the conduct of Borrower’s or any
Subsidiary’s business.

 

“Required Lenders” means at any time Lenders holding (a) sixty percent (60%) or
more of the sum of the Revolving Loan Commitment (taken as a whole), or (b) if
the Revolving Loan Commitment has been terminated, sixty percent (60%) or more
of the then aggregate outstanding principal balance of the Loans; provided,
however, that so long as a party that is a Lender hereunder on the Closing Date
does not assign any portion of its Revolving Loan Commitment or Revolving Loans
to any Person other than an Affiliate of such Lender, the term “Required
Lenders” shall include such Lender (and any Affiliate to which it assigns its
interests).  For purposes of this definition only, a Lender shall be deemed to
include itself, and any Lender that is an Affiliate or Approved Fund of such
Lender.

 

“Responsible Officer” means any of the Chief Executive Officer, Chief Financial
Officer, General Counsel, any Vice President, the Controller, or any other
officer of the applicable Borrower acceptable to Agent; provided that, for
purposes of Section 4.1 Responsible Officer shall be limited to the Chief
Executive Officer or Chief Financial Officer.

 

“Restricted Foreign Subsidiary” means each Subsidiary on Schedule 3.1 that is
organized outside of the U.S.

 

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“Revolving Lender” means each Lender having a Revolving Loan Commitment Amount
in excess of $0 (or, in the event the Revolving Loan Commitment shall have been
terminated at any time, each Lender at such time having Revolving Loan
Outstandings in excess of $0).

 

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

 

“Revolving Loan Commitment Amount” means, as to any Lender, the dollar amount
set forth opposite such Lender’s name on the Commitment Annex under the column
“Revolving Loan Commitment Amount” (if such Lender’s name is not so set forth
thereon, then the dollar amount on the Commitment Annex for the Revolving Loan
Commitment Amount for such Lender shall be deemed to be $0), as such amount may
be adjusted from time to time by (a) any amounts assigned (with respect to such
Lender’s portion of Revolving Loans outstanding and its commitment to make
Revolving Loans) pursuant to the terms of any and all effective assignment
agreements to which such Lender is a party, and (b) the Additional Tranche(s) if
activated by Borrowers.  For the avoidance of doubt, the aggregate Revolving
Loan Commitment Amount of all Lenders on the Closing Date shall be $50,000,000
and if the Additional Tranche is activated by Borrowers pursuant to the terms of
the Agreement such amount shall increase up to $70,000,000.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Solvent” means, with respect to any Person, that such Person (a) owns and will
own assets the fair saleable value of which are (i) greater than the total
amount of its liabilities (including Contingent Obligations), and (ii) greater
than the amount that will be required to pay the probable liabilities of its
then existing debts as they become absolute and matured considering all
financing alternatives and potential asset sales reasonably available to it;
(b) has capital that is not unreasonably small in relation to its business as
presently conducted or after giving effect to any contemplated transaction; and
(c) does not intend to incur and does not believe that it will incur debts
beyond its ability to pay such debts as they become due.

 

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

 

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

 

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

 

“Subsidiary” means, with respect to any Person, (a) any corporation of which an
aggregate of more than fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of

 

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

 

“SVB” means Silicon Valley Bank.

 

“Swap Contract” means any “swap agreement”, as defined in Section 101 of the
Bankruptcy Code, or similar agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

“United States” means the United States of America.

 

“Wells Accounts” means Borrower Representative’s Account #4124510710 and Account
#4124510686 at Wells Fargo Bank, N.A.

 

“Work-In-Process” means Inventory that is not a product that is finished and
approved by a Borrower in accordance with applicable Laws and such Borrower’s
normal business practices for release and delivery to customers.

 

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

 

Section 1.3                                   Other Definitional and
Interpretive Provisions.  References in this Agreement to “Articles”,
“Sections”, “Annexes”, “Exhibits”, or “Schedules” shall be to Articles,
Sections, Annexes, Exhibits or Schedules of or to this Agreement unless
otherwise specifically provided.  Any term defined herein may be used in the
singular or plural.  “Include”, “includes” and “including” shall be deemed to be
followed by “without limitation”.  Except as otherwise specified or limited
herein, references to any Person include the successors and assigns of such
Person.  References “from” or “through” any date mean, unless otherwise
specified, “from and including” or “through and including”, respectively. 
Unless otherwise specified herein, the settlement of all payments and fundings
hereunder between or among the parties hereto shall be made in lawful money of
the United States and in immediately available funds.  References to any statute
or act shall include all related current regulations and all amendments and any
successor statutes, acts and regulations.  All amounts used for purposes of
financial calculations required to be made herein shall be without duplication. 
References to any statute or act, without additional reference, shall be deemed
to refer to federal statutes and acts of the United States.  References to any
agreement, instrument or document shall include all schedules, exhibits, annexes
and other attachments thereto.  As used in this Agreement, the meaning of the
term “material” or the phrase “in all material respects” is intended to refer to
an act, omission, violation or condition which reflects or could reasonably be
expected to result in a Material Adverse Effect. References to capitalized terms
that are not defined herein, but are defined in the UCC, shall have the meanings
given them in the UCC.  All references herein to times of day shall be
references to daylight or standard time, as applicable.

 

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

 

ARTICLE 2 - LOANS

 

Section 2.1                                   Loans.

 

(a)                                 Reserved.

 

(b)                                 Revolving Loans.

 

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

 

(ii)                                  Mandatory Revolving Loan Repayments and
Prepayments.

 

(A)                               The Revolving Loan Commitment shall terminate
on the Termination Date.  On such Termination Date, there shall become due, and
Borrowers shall pay, the entire outstanding principal amount of each Revolving
Loan, together with accrued and unpaid Obligations pertaining thereto incurred
to, but excluding the Termination Date; provided, however, that such payment is
made not later than 12:00 Noon (Eastern time) on the Termination Date.

 

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

 

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

 

(iii)                               Optional Prepayments.  Borrowers may from
time to time prepay the Revolving Loans in whole or in part; provided, however,
that any such partial prepayment shall be in an amount equal to $100,000 or a
higher integral multiple of $25,000.  For the avoidance of doubt, nothing in
this clause shall permit termination of the Revolving Loan Commitment by
Borrower other than in accordance with Section 2.12(b).

 

(iv)                              LIBOR Rate.

 

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

 

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

 

(C)                               In the event that any change in market
conditions or any law, regulation, treaty, or directive, or any change therein
or in the interpretation of application thereof, shall at any time after the
date hereof, in the reasonable

 

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

 

(D)                               Anything to the contrary contained herein
notwithstanding, neither Agent nor any Lender is required actually to acquire
eurodollar deposits to fund or otherwise match fund any Obligation as to which
interest accrues based on the LIBOR Rate.

 

(v)                                 Restriction on Termination.  Notwithstanding
any prepayment of the Revolving Loan Outstandings or any other termination of
Lenders’ Credit Exposure under this Agreement, Agents and Lenders shall have no
obligation to release any of the Collateral securing the Obligations under this
Agreement while any portion of the Affiliated Obligations shall remain
outstanding.

 

(c)                                  Additional Revolving Tranche.  At any time
after the Closing Date, so long as no Default or Event of Default exists and
subject to the terms of this Agreement, with the prior written consent of Agent
and all Lenders in their sole discretion, the Revolving Loan Commitment may be
increased by $20,000,000 (to a total of $70,000,000 in the aggregate) upon the
written request of Borrower Representative (which such request shall be made at
least thirty (30) days prior to the proposed effective date of such Additional
Tranche) to Agent to activate the Additional Tranche; provided, however, that
Agent and Lenders shall have no obligation to consent to any requested
activation of the Additional Tranche and the written consent of Agent and all
Lenders shall be required in order to activate the Additional Tranche. Upon
activating the Additional Tranche, each Lender’s Revolving Loan Commitment shall
increase by a proportionate amount so as to maintain the same Pro Rata Share of
the Revolving Loan Commitment as such Lender held immediately prior to such
activation.

 

Section 2.2                                   Interest, Interest Calculations
and Certain Fees.

 

(a)                                 Interest.  From and following the Closing
Date, except as expressly set forth in this Agreement, Loans and the other
Obligations shall bear interest at the sum of the LIBOR Rate plus the Applicable
Margin.  Interest on the Loans shall be paid in arrears on the first (1st) day
of each month and on the maturity of such Loans, whether by acceleration or
otherwise.  Interest on all other Obligations shall be payable upon demand.  For
purposes of calculating interest, all funds transferred to the Payment Account
for application to any Revolving Loan shall be subject to a five (5) Business
Day clearance period and all interest

 

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accruing on such funds during such clearance period shall accrue for the benefit
of Agent, and not for the benefit of the Lenders.

 

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

 

(c)                                  Minimum Balance Fee.  From and following
the Closing Date, Borrowers shall pay Agent, for the benefit of all Lenders
committed to make Revolving Loans, in accordance with their respective Pro Rata
Shares, a fee in an amount equal to (a) the positive difference, if any, of
(i) the Minimum Balance minus (ii) the average end-of-day principal balance of
Revolving Loan Outstandings during the immediately preceding month (without
giving effect to the clearance day calculations referenced in Section 2.2(a) of
the Credit Agreement), multiplied by (b) the average interest rate applicable to
the Revolving Loans during such month (or, during the existence of an Event of
Default, the default rate of interest set forth in Section 10.5(a)).  Such fee
is to be paid monthly in arrears on the first day of each month.

 

(d)                                 Reserved.

 

(e)                                  Collateral Management Fee. From and
following the Closing Date, Borrowers shall pay Agent, for the benefit of all
Lenders committed to make Revolving Loan, a fee in an amount equal to the
product obtained by multiplying the average end-of-day principal balance of
Revolving Loans outstanding during the immediately preceding month, by
(ii) 0.30% per annum.  For purposes of calculating the average end-of-day
principal balance of Revolving Loans, all funds paid into the Payment Account
(or which were required to be paid into the Payment Account hereunder) or
otherwise received by Agent for the account of Borrowers shall be subject to a
five (5) Business Day clearance period.  The collateral management fee shall be
deemed fully earned when due and payable and, once paid, shall be
non-refundable.

 

(f)                                   Origination Fee.  Contemporaneous with
Borrowers’ execution of this Agreement, Borrowers shall pay Agent, for the
benefit of all Lenders committed to make Revolving Loans on the Closing Date, in
accordance with their respective Pro Rata Shares, a fee in an amount equal to
$150,000.  All fees payable pursuant to this paragraph shall be due and payable
on the Closing Date and, once paid, shall be non-refundable.

 

(g)                                  Deferred Revolving Loan Origination Fee. 
If Lenders’ funding obligations in respect of the Revolving Loan Commitment
under this Agreement terminate or are permanently reduced for any reason
(whether by voluntary termination by Borrowers, by reason of the occurrence of
an Event of Default or otherwise) other than as a result of a refinancing of the
Loans by the Agent and the Lenders prior to the Commitment Expiry Date,
Borrowers shall pay to Agent on the date of such reduction, for the benefit of
all Lenders committed to make Revolving Loans on the Closing Date, a fee as
compensation for the costs of such Lenders being prepared to make funds
available to Borrowers under this Agreement, equal to an amount determined by
multiplying the Revolving Loan Limit on the date such payment is due by the

 

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following applicable percentage amount:  3.0% for the first year following the
Closing Date, and 2.0% thereafter. All fees payable pursuant to this paragraph
shall be deemed fully earned and non-refundable as of the Closing Date.

 

(h)                                 Reserved.

 

(i)                                     Reserved.

 

(j)                                    Audit Fees.  Borrowers shall pay to
Agent, for its own account and not for the benefit of any other Lenders, all
reasonable fees and expenses in connection with audits and inspections of
Borrowers’ books and records, audits, valuations or appraisals of the
Collateral, audits of Borrowers’ compliance with applicable Laws and such other
matters as Agent shall deem appropriate, which shall be due and payable on the
first Business Day of the month following the date of issuance by Agent of a
written request for payment thereof to Borrowers.

 

(k)                                 Wire Fees.  Borrowers shall pay to Agent,
for its own account and not for the account of any other Lenders, on written
demand, fees for incoming and outgoing wires made for the account of Borrowers,
such fees to be based on Agent’s then current wire fee schedule (available upon
written request of the Borrowers).

 

(l)                                     Late Charges.  If payments of principal
(other than a final installment of principal upon the Termination Date),
interest due on the Obligations, or any other amounts due hereunder or under the
other Financing Documents are not timely made and remain overdue for a period of
five (5) days, Borrowers, without notice or demand by Agent, promptly shall pay
to Agent, for its own account and not for the benefit of any other Lenders, as
additional compensation to Agent in administering the Obligations, an amount
equal to five percent (5.0%) of each delinquent payment.

 

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

 

(n)                                 Automated Clearing House Payments.  If Agent
so elects, monthly payments of principal, interest, fees, expenses or any other
amounts due and owing from Borrower to Agent hereunder shall be paid to Agent by
Automated Clearing House debit of immediately available funds from the financial
institution account designated by Borrower Representative in the Automated
Clearing House debit authorization executed by Borrowers or Borrower
Representative in connection with this Agreement, and shall be effective upon
receipt.  Borrowers shall execute any and all forms and documentation necessary
from time to time to effectuate such automatic debiting.  In no event shall any
such payments be refunded to Borrowers.

 

Section 2.3                                   Notes.  The portion of the Loans
made by each Lender shall be evidenced, if so requested by such Lender, by one
or more promissory notes executed by Borrowers on a joint and several basis
(each, a “Note”) in an original principal amount equal to such Lender’s

 

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Revolving Loan Commitment Amount.  Upon activation of the Additional Tranche in
accordance with Section 2.1(c) hereof, Borrowers shall deliver to each Lender to
whom Borrowers previously delivered a Note, a restated Note evidencing such
Lender’s Revolving Loan Commitment Amount.

 

Section 2.4                                   [Reserved].

 

Section 2.5                                   [Reserved].

 

Section 2.6                                   General Provisions Regarding
Payment; Loan Account.

 

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

 

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

 

Section 2.7                                   Maximum Interest.  In no event
shall the interest charged with respect to the Loans or any other Obligations of
any Borrower under any Financing Document exceed the maximum amount permitted
under the laws of the State of New York or of any other applicable
jurisdiction.  Notwithstanding anything to the contrary herein or elsewhere, if
at any time the rate of interest payable hereunder or under any Note or other
Financing Document (the “Stated Rate”) would exceed the highest rate of interest
permitted under any applicable law to be

 

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

 

Section 2.8                                   Taxes; Capital Adequacy.

 

(a)                                 All payments of principal and interest on
the Loans and all other amounts payable hereunder shall be made free and clear
of and without deduction for any present or future income, excise, stamp,
documentary, payroll, employment, property or franchise taxes and other taxes,
fees, duties, levies, assessments, withholdings or other charges of any nature
whatsoever (including interest and penalties thereon) imposed by any taxing
authority, excluding taxes imposed on or measured by Agent’s or any Lender’s net
income by the jurisdictions under which Agent or such Lender is organized or
conducts business (other than solely as the result of entering into any of the
Financing Documents or taking any action thereunder) (all non-excluded items
being called “Taxes”).  If any withholding or deduction from any payment to be
made by any Borrower hereunder is required in respect of any Taxes pursuant to
any applicable Law, then Borrowers will: (i) pay directly to the relevant
authority the full amount required to be so withheld or deducted; (ii) promptly
forward to Agent an official receipt or other documentation satisfactory to
Agent evidencing such payment to such authority; and (iii) pay to Agent for the
account of Agent and Lenders such additional amount or amounts as is necessary
to ensure that the net amount actually received by Agent and each Lender will
equal the full amount Agent and such Lender would have received had no such
withholding or deduction been required.  If any Taxes are directly asserted
against Agent or any Lender with respect to any payment received by Agent or
such Lender hereunder, Agent or such Lender may pay such Taxes and Borrowers
will promptly pay such additional amounts (including any penalty, interest or
expense) as is necessary in order that the net amount received by such Person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such Person would have received had such Taxes not been
asserted so long as such amounts have accrued on or after the day which is two
hundred seventy (270) days prior to the date on which Agent or such Lender first
made written demand therefor.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                 Borrowers are defined collectively to
include all Persons named as one of the Borrowers herein; provided, however,
that any references herein to “any Borrower”, “each

 

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

 

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

 

(c)                                  Agent is hereby authorized, without notice
or demand (except as otherwise specifically required under this Agreement) and
without affecting the liability of any Borrower hereunder, at any time and from
time to time, to (i) renew, extend or otherwise increase the time for payment of
the Obligations; (ii) with the written agreement of any Borrower, change the
terms relating to the Obligations or otherwise modify, amend or change the terms
of any Note or other agreement, document or instrument now or hereafter executed
by any Borrower and delivered to Agent for any Lender; (iii) accept partial
payments of the Obligations; (iv) take and hold any Collateral for the payment
of the Obligations or for the payment of any guaranties of the Obligations and
exchange, enforce, waive and release any such Collateral; (v) apply any such

 

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Collateral and direct the order or manner of sale thereof as Agent, in its sole
discretion, may determine; and (vi) settle, release, compromise, collect or
otherwise liquidate the Obligations and any Collateral therefor in any manner,
all guarantor and surety defenses being hereby waived by each Borrower.  Without
limitations of the foregoing, with respect to the Obligations, each Borrower
hereby makes and adopts each of the agreements and waivers set forth in each
Guarantee, the same being incorporated hereby by reference.  Except as
specifically provided in this Agreement or any of the other Financing Documents,
Agent shall have the exclusive right to determine the time and manner of
application of any payments or credits, whether received from any Borrower or
any other source, and such determination shall be binding on all Borrowers.  All
such payments and credits may be applied, reversed and reapplied, in whole or in
part, to any of the Obligations that Agent shall determine, in its sole
discretion, without affecting the validity or enforceability of the Obligations
of the other Borrower.

 

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

 

(e)                                  The Borrowers hereby agree, as between
themselves, that to the extent that Agent, on behalf of Lenders, shall have
received from any Borrower any Recovery Amount (as defined below), then the
paying Borrower shall have a right of contribution against each other Borrower
in an amount equal to such other Borrower’s contributive share of such Recovery
Amount; provided, however, that in the event any Borrower suffers a Deficiency
Amount (as defined below), then the Borrower suffering the Deficiency Amount
shall be entitled to seek and receive contribution from and against the other
Borrowers in an amount equal to the Deficiency Amount; and provided, further,
that in no event shall the aggregate amounts so reimbursed by reason of the
contribution of any Borrower equal or exceed an amount that would, if paid,
constitute or result in Fraudulent Conveyance.  Until all Obligations have been
paid and satisfied in full, no payment made by or for the account of a Borrower
including, without limitation, (i) a payment made by such Borrower on behalf of
the liabilities of any other Borrower, or (ii) a payment made by any other
Guarantor under any Guarantee, shall entitle such Borrower, by subrogation or
otherwise, to any payment from such other Borrower or from or out of such other
Borrower’s property.  The right of each Borrower to receive any contribution
under this Section 2.10(e) or by subrogation or otherwise from any other
Borrower shall be subordinate in right of payment to the Obligations and such
Borrower shall not exercise any right or remedy

 

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against such other Borrower or any property of such other Borrower by reason of
any performance of such Borrower of its joint and several obligations hereunder,
until the Obligations have been indefeasibly paid and satisfied in full, and no
Borrower shall exercise any right or remedy with respect to this
Section 2.10(e) until the Obligations have been indefeasibly paid and satisfied
in full.  As used in this Section 2.10(e), the term “Recovery Amount” means the
amount of proceeds received by or credited to Agent from the exercise of any
remedy of the Lenders under this Agreement or the other Financing Documents,
including, without limitation, the sale of any Collateral.  As used in this
Section 2.10(e), the term “Deficiency Amount” means any amount that is less than
the entire amount a Borrower is entitled to receive by way of contribution or
subrogation from, but that has not been paid by, the other Borrowers in respect
of any Recovery Amount attributable to the Borrower entitled to contribution,
until the Deficiency Amount has been reduced to $0 through contributions and
reimbursements made under the terms of this Section 2.10(e) or otherwise.

 

Section 2.11                            Collections and Lockbox Account.

 

(a)                                 Borrowers shall maintain a lockbox (the
“Lockbox”) with a United States depository institution designated from time to
time by Agent (the “Lockbox Bank”), subject to the provisions of this Agreement,
and shall execute with the Lockbox Bank a Deposit Account Control Agreement and
such other agreements related to such Lockbox as Agent may require.  Borrowers
shall ensure that all collections of Accounts are paid directly from Account
Debtors (i) into the Lockbox for deposit into the Lockbox Account and/or
(ii) directly into the Lockbox Account; provided, however, unless Agent shall
otherwise direct by written notice to Borrowers, Borrowers shall be permitted to
cause Account Debtors who are individuals to pay Accounts directly to Borrowers,
which Borrowers shall then administer and apply in the manner required below.
All funds deposited into a Lockbox Account shall be transferred into the Payment
Account by the close of each Business Day.

 

(b)                                 [Reserved]

 

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

 

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

 

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

 

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

 

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

 

(h)                                 If any Borrower breaches its obligation to
direct payments of the proceeds of the Collateral to the Lockbox Account and
such breach is not cured within five (5) Business Days of the occurrence thereof
(unless an Event of Default has occurred and is continuing, in which case no
such cure period shall apply), Agent, as the irrevocably made, constituted and
appointed true and lawful attorney for Borrowers, may, by the signature or other
act of any of Agent’s authorized representatives (without requiring any of them
to do so), direct any Account Debtor to pay proceeds of the Collateral to
Borrowers by directing payment to the Lockbox Account.

 

(i)                                     Except for the Wells Account prior to
the time such Account is required to be closed in accordance with Section 7.4,
Borrowers shall maintain all of their depository,

 

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operating and securities accounts with SVB, so long as it remains a Lender under
this Agreement.

 

Section 2.12                            Termination; Restriction on Termination.

 

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

 

(b)                                 Termination by Borrowers.  Upon at least
thirty (30) days’ prior written notice and pursuant to payoff documentation in
form and substance satisfactory to Agent and Lenders, Borrowers may, at its
option, terminate this Agreement; provided, however, that no such termination
shall be effective until Borrowers have complied with Section 2.2 and paid in
full all of the Affiliated Obligations in immediately available funds and
terminated the Affiliated Financing Documents. Any notice of termination given
by Borrowers shall be irrevocable unless all Lenders otherwise agree in writing
and no Lender shall have any obligation to make any Loans on or after the
termination date stated in such notice.  Borrowers may elect to terminate this
Agreement in its entirety only.  No section of this Agreement or type of Loan
available hereunder may be terminated singly.

 

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

 

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

 

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

 

Section 3.1                                   Existence and Power.  Each Credit
Party is an entity as specified on Schedule 3.1, is duly organized, validly
existing and in good standing under the laws of the jurisdiction specified on
Schedule 3.1 and no other jurisdiction, has the same legal name as it

 

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

 

Section 3.2                                   Organization and Governmental
Authorization; No Contravention.  The execution, delivery and performance by
each Credit Party of the Operative Documents to which it is a party are within
its powers, have been duly authorized by all necessary action pursuant to its
Organizational Documents, require no further action by or in respect of, or
filing with, any Governmental Authority and do not violate, conflict with or
cause a breach or a default under (a) any Law applicable to any Credit Party or
any of the Organizational Documents of any Credit Party, or (b) any agreement or
instrument binding upon it.

 

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

 

Section 3.4                                   Capitalization.  The authorized
equity securities of each of the Credit Parties as of the Closing Date are as
set forth on Schedule 3.4.  All issued and outstanding equity securities of each
of the Credit Parties are duly authorized and validly issued, fully paid and
nonassessable, and such equity securities were issued in compliance with all
applicable Laws.  All issued and outstanding equity securities of each of the
Credit Parties other than the Parent are free and clear of all Liens other than
those in favor of Agent for the benefit of Agent and Lenders.  The identity of
the holders of the equity securities of each of the Credit Parties other than
the Parent and the percentage of their fully-diluted ownership of the equity
securities of each of the Credit Parties other than the Parent as of the Closing
Date is set forth on Schedule 3.4.  No shares of the capital stock or other
equity securities of such Credit Parties, other than those described above, are
issued and outstanding as of the Closing Date.  Except as set forth on
Schedule 3.4, as of the Closing Date there are no preemptive or other
outstanding rights, options, warrants, conversion rights or similar agreements
or understandings for the purchase or acquisition from any Credit Party other
than the Parent of any equity securities of any such entity.

 

Section 3.5                                   Financial Information.  All
information delivered to Agent and pertaining to the financial condition of any
Credit Party fairly presents the financial position of such Credit Party as of
such date in conformity with GAAP (and as to unaudited financial statements,
subject to normal year-end adjustments and the absence of footnote
disclosures).  Since September 30,

 

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2015, there has been no material adverse change in the business, operations,
properties, prospects or condition (financial or otherwise) of any Credit Party.

 

Section 3.6                                   Litigation.  Except as set forth
on Schedule 3.6 as of the Closing Date, and except as hereafter disclosed to
Agent in writing, there is no Litigation pending against, or to such Borrower’s
knowledge threatened against, any Credit Party and which involves any reasonably
likelihood of any judgment or liability of more than Five Hundred Thousand
Dollars ($500,000) or that could result in a Material Adverse Effect.  Except as
set forth on Schedule 3.6 as of the Closing Date, there is no Litigation pending
which could reasonably be expected to have a Material Adverse Effect or which in
any manner draws into question the validity of any of the Operative Documents.

 

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

 

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

 

Section 3.9                                   Labor Matters.  As of the Closing
Date, there are no strikes or other labor disputes pending or, to any Borrower’s
knowledge, threatened against any Credit Party.  Hours worked and payments made
to the employees of the Credit Parties have not been in material violation of
the Fair Labor Standards Act or any other applicable Law dealing with such
matters.  All payments due from the Credit Parties, or for which any claim may
be made against any of them, on account of wages and employee and retiree health
and welfare insurance and other benefits have been paid or accrued as a
liability on their books, as the case may be.  The consummation of the
transactions contemplated by the Financing Documents will not give rise to a
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which it is a party or by which it is
bound.

 

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

 

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

 

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Section 3.12                            Compliance With Laws; Anti-Terrorism
Laws.

 

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

 

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

 

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

 

Section 3.14                            Compliance with ERISA.

 

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

 

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(b)                                 Except as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, each
Borrower and each Subsidiary is in compliance with the applicable provisions of
ERISA and the provision of the Code relating to ERISA Plans and the regulations
and published interpretations therein.  During the thirty-six (36) month period
prior to the Closing Date or the making of any Loan (i) no steps have been taken
to terminate any Pension Plan, and (ii) no contribution failure has occurred
with respect to any Pension Plan sufficient to give rise to a Lien under
Section 303(k) of ERISA or Section 430(k) of the Code and no event has occurred
that would give rise to a Lien under Section 4068 of ERISA.  No condition exists
or event or transaction has occurred with respect to any Pension Plan which
could result in the incurrence by any Credit Party of any material liability,
fine or penalty.  No Credit Party has incurred liability to the PBGC (other than
for current premiums) with respect to any employee Pension Plan.  All
contributions (if any) have been made on a timely basis to any Multiemployer
Plan that are required to be made by any Credit Party or any other member of the
Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable Law; no Credit Party nor any member of the Controlled
Group has withdrawn or partially withdrawn from any Multiemployer Plan, incurred
any withdrawal liability with respect to any such plan or received notice of any
claim or demand for withdrawal liability or partial withdrawal liability from
any such plan, and no condition has occurred which, if continued, could result
in a withdrawal or partial withdrawal from any such plan, and no Credit Party
nor any member of the Controlled Group has received any notice that any
Multiemployer Plan is in reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of any excise
tax, that any such plan is or has been funded at a rate less than that required
under Section 412 of the Code, that any such plan is or may be terminated, or
that any such plan is or may become insolvent.

 

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

 

Section 3.16                            Reserved.

 

Section 3.17                            Material Contracts.  Schedule 3.17 sets
forth, with respect to each real estate lease agreement to which any Borrower is
a party (as a lessee), the address of the subject property and each other
Material Contract as of the Closing Date.  The consummation of the transactions
contemplated by the Financing Documents will not give rise to a right of
termination in favor of any party to any Material Contract (other than any
Credit Party).

 

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

 

(a)                                 no notice, notification, demand, request for
information, citation, summons, complaint or order has been issued, no complaint
has been filed, no penalty has been assessed and no investigation or review is
pending, or to such Borrower’s knowledge, threatened by any Governmental
Authority or other Person with respect to any (i) alleged violation by any
Credit Party of any Environmental Law, (ii) alleged failure by any Credit Party
to have any

 

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Permits required in connection with the conduct of its business or to comply
with the terms and conditions thereof, (iii) any generation, treatment, storage,
recycling, transportation or disposal of any Hazardous Materials, or
(iv) release of Hazardous Materials, in any case that could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect;
and

 

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

 

For purposes of this Section 3.18, each Credit Party shall be deemed to include
any business or business entity (including a corporation) that is, in whole or
in part, a predecessor of such Credit Party.

 

Section 3.19                            Intellectual Property and License
Agreements.  A list of all Registered Intellectual Property of each Credit Party
and all material in-bound license or sublicense agreements, exclusive out-bound
license or sublicense agreements, or other rights of any Credit Party to use any
Material Intangible Asset (but excluding in-bound licenses of over-the-counter
software that is commercially available to the public), as of the Closing Date
and, as updated pursuant to Section 4.15, is set forth on Schedule 3.19. 
Schedule 3.19 shall be prepared by Borrower in the form provided by Agent and
contain all information required in such form.  Except for Permitted Licenses,
each Credit Party is the sole owner of its Intellectual Property free and clear
of any Liens.  Each patent constituting a Material Intangible Asset is valid and
enforceable and no part of the Material Intangible Assets has been judged
invalid or unenforceable, in whole or in part, and to the best of Borrower’s
knowledge, no claim has been made that any part of the Intellectual Property
constituting a Material Intangible Asset violates the rights of any third party.

 

Section 3.20                            Solvency.  After giving effect to the
Loan advance and the liabilities and obligations of each Borrower under the
Operative Documents, the Parent is and the Borrowers (taken on a consolidated
basis) and the Credit Parties (taken on a consolidated basis) are, Solvent.

 

Section 3.21                            Full Disclosure.  None of the written
information (financial or otherwise) furnished by or on behalf of any Credit
Party to Agent or any Lender in connection with the consummation of the
transactions contemplated by the Operative Documents, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading in light of the
circumstances under which such statements were made.  All financial projections
delivered to Agent and the Lenders by Borrowers (or their agents) have been
prepared on the basis of the assumptions stated therein.  Such projections
represent each Borrower’s best estimate of such Borrower’s future financial
performance and such assumptions are believed by such Borrower to be fair and
reasonable in

 

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light of current business conditions; provided, however, that Borrowers can give
no assurance that such projections will be attained.

 

Section 3.22                            Interest Rate.  The rate of interest
paid under the Notes and the method and manner of the calculation thereof do not
violate any usury or other law or applicable Laws, any of the Organizational
Documents, or any of the Operative Documents.

 

Section 3.23                            Subsidiaries.  Borrowers do not own any
stock, partnership interests, limited liability company interests or other
equity securities or Subsidiaries except for Permitted Investments.

 

Section 3.24                            Reserved.

 

Section 3.25                            Accuracy of Schedules.  All information
set forth in the Schedules to this Agreement (including Schedule 3.19) is true,
accurate and complete as of the Closing Date, the date of delivery of the last
Compliance Certificate and any other subsequent date in which Borrower is
requested to update such Schedules.  All information set forth in the Perfection
Certificate is true, accurate and complete as of the Closing Date and any other
subsequent date in which Borrower is requested to update such certificate.

 

ARTICLE 4 - AFFIRMATIVE COVENANTS

 

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

 

Section 4.1                                   Financial Statements and Other
Reports.  Each Borrower will deliver to Agent:  (a) as soon as available, but no
later than forty-five (45) days after the last day of each of the first three
calendar quarters, a company prepared consolidated and consolidating balance
sheet, cash flow and income statement covering Borrowers’ and its Consolidated
Subsidiaries’ consolidated operations during the period, prepared under GAAP,
consistently applied, certified by a Responsible Officer and in a form
acceptable to Agent; (b) as soon as available, but no later than sixty-five (65)
days after the last day of Borrower’s fiscal year, audited consolidated and
consolidating financial statements prepared under GAAP, consistently applied,
together with an opinion on the financial statements an independent certified
public accounting firm of recognized national standing selected by the Borrower
and acceptable to Agent in its reasonable discretion; provided that such opinion
shall not contain a “going concern” or like qualification or exception or a
qualification arising out of the scope of the audit; (c) within five (5) days of
delivery or filing thereof, copies of all statements, reports and notices made
available to Borrower’s security holders or to any holders of Subordinated Debt
and copies of all reports and other filings made by Borrower with any stock
exchange on which any securities of any Borrower are traded and/or the SEC;
(d) within 60 days after the start of each fiscal year, projections for the
forthcoming two fiscal years, on a quarterly basis for the current year and on
an annual basis for the subsequent year; and (e) promptly (and in any event
within ten (10) Business Days of any request therefor) such readily available
budgets, sales projections, operating plans and other financial information and
information, reports or statements regarding the Borrowers, their business and
the Collateral as Agent may from time to time reasonably request; provided,
however, that reporting related to Regulatory Required Permits and/or Regulatory
Reporting Events shall be governed by Section 4.17.  If the Parent publicly
files with the SEC reports on Form 10-K or Form 10-Q for the

 

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applicable periods or any other periodic reports containing the information
required by clauses (a) through (c) above, the Parent may satisfy such
requirements by such filing.  Each Borrower will, within thirty (30) days after
the last day of each month, deliver to Agent a duly completed Compliance
Certificate, together with such other information as required pursuant to
Section 6.3, signed by a Responsible Officer setting forth calculations showing
compliance with the financial covenants set forth in this Agreement.  Each
Borrower will, within ten (10) days after the last day of each month, deliver to
Agent a duly completed Borrowing Base Certificate signed by a Responsible
Officer, with aged listings of accounts receivable and accounts payable (by
invoice date) and a summary of Inventory by location and type with a supporting
perpetual Inventory report, in each case accompanied by such supporting detail
and documentation as shall be requested by Agent in its reasonable discretion.
Borrowers shall, every ninety (90) days on a schedule to be designated by Agent,
and at such other times as Agent shall request, deliver to Agent a schedule of
Eligible Accounts denoting, for the thirty (30) largest Account Debtors during
such quarter, such Account Debtor’s credit rating(s), if any, as rated by
A.M. Best Company, Standard & Poor’s Corporation, Moody’s Investors
Service, Inc., FITCH, Inc. or other applicable rating agent.

 

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

 

Section 4.3                                   Maintenance of Existence.  Subject
to Section 5.6(a), each Borrower will preserve, renew and keep in full force and
effect and in good standing, and will cause each Subsidiary to preserve, renew
and keep in full force and effect and in good standing, (a) their respective
existence and (b) their respective rights, privileges and franchises necessary
or desirable in the normal conduct of business, except, in case of this clause
(b) where a failure to do so could not reasonably be expected to result in a
Material Adverse Effect.

 

Section 4.4                                   Maintenance of Property;
Insurance.

 

(a)                                 Each Borrower will keep, and will cause each
Subsidiary to keep, all material tangible property useful and necessary in its
business in good working order and condition, ordinary wear and tear and
casualty events excepted; and make all necessary repairs and/or restore the
affected property in a good and workmanlike manner, regardless of whether Agent
agrees to disburse insurance proceeds or other sums to pay costs of the work of
repair or

 

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reconstruction, except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.

 

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

 

(c)                                  Each Borrower will maintain (i) casualty
insurance on all real and personal property on an all risks basis (including the
perils of flood, windstorm and quake), covering the repair and replacement cost
of all such property and coverage, business interruption and rent loss coverages
with extended period of indemnity (for the period required by Agent from time to
time) and indemnity for extra expense, in each case without application of
coinsurance and with agreed amount endorsements, (ii) general and professional
liability insurance (including products/completed operations liability
coverage), and (iii) such other insurance coverage, in each case against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.  All such insurance
shall be provided by insurers having an A.M. Best policyholders rating
reasonably acceptable to Agent.

 

(d)                                 On or prior to the Closing Date, and at all
times thereafter, each Borrower will cause Agent to be named as an additional
insured, assignee and lender loss payee (which shall include, as applicable,
identification as mortgagee), as applicable, on each insurance policy required
to be maintained pursuant to this Section 4.4 pursuant to endorsements in form
and substance acceptable to Agent.  Borrowers shall deliver to Agent and the
Lenders (i) on the Closing Date, a certificate from Borrowers’ insurance broker
dated such date showing the amount of coverage as of such date, and that such
policies will include effective waivers (whether under the terms of any such
policy or otherwise) by the insurer of all claims for insurance premiums against
all loss payees and additional insureds and all rights of subrogation against
all loss payees and additional insureds, and that if all or any part of such
policy is canceled, terminated or expires, the insurer will forthwith give
notice thereof to each additional insured, assignee and loss payee and that no
cancellation, reduction in amount or material change in coverage thereof shall
be effective until at least thirty (30) days after receipt by each additional
insured, assignee and loss payee of written notice thereof, (ii) on an annual
basis, and upon the request of any Lender through Agent from time to time full
information as to the insurance carried, (iii) within five (5) days of receipt
of notice from any insurer, a copy of any notice of cancellation, nonrenewal or
material change in coverage from that existing on the date of this Agreement,
(iv) forthwith, notice of any cancellation or nonrenewal of coverage by any
Borrower, and (v) at least sixty (60) days prior to expiration of any policy of
insurance, evidence of renewal of such insurance upon the terms and conditions
herein required.

 

(e)                                  In the event any Borrower fails to provide
Agent with evidence of the insurance coverage required by this Agreement within
five (5) Business Days of such request (unless an Event of Default has occurred
and is continuing, in which case no such waiting period shall apply), Agent may
purchase insurance at Borrowers’ expense to protect Agent’s interests in the
Collateral.  This insurance may, but need not, protect such Borrower’s
interests.  The coverage purchased by Agent may not pay any claim made by such
Borrower or any claim that is

 

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made against such Borrower in connection with the Collateral.  Such Borrower may
later cancel any insurance purchased by Agent, but only after providing Agent
with evidence that such Borrower has obtained insurance as required by this
Agreement.  If Agent purchases insurance for the Collateral, Borrowers will be
responsible for the costs of that insurance to the fullest extent provided by
law, including interest and other charges imposed by Agent in connection with
the placement of the insurance, until the effective date of the cancellation or
expiration of the insurance.  The costs of the insurance may be added to the
Obligations.  The costs of the insurance may be more than the cost of insurance
such Borrower is able to obtain on its own.

 

Section 4.5                                   Compliance with Laws and Material
Contracts.  Each Borrower will comply, and cause each Subsidiary to comply, with
the requirements of all applicable Laws and Material Contracts, except to the
extent that failure to so comply could not reasonably be expected to (a) have a
Material Adverse Effect, or (b) result in any Lien upon either (i) a material
portion of the assets of any such Person in favor of any Governmental Authority,
or (ii) any Collateral which is part of the Borrowing Base.

 

Section 4.6                                   Inspection of Property, Books and
Records.  Each Borrower will keep, and will cause each Subsidiary to keep,
proper books of record substantially in accordance with GAAP in which full, true
and correct entries shall be made of all dealings and transactions in relation
to its business and activities; and will permit, and will cause each Subsidiary
to permit, at the sole cost of the applicable Borrower or any applicable
Subsidiary, representatives of Agent and of any Lender to visit and inspect any
of their respective properties, to examine and make abstracts or copies from any
of their respective books and records, to conduct a collateral audit and
analysis of their respective operations and the Collateral, to verify the amount
and age of the Accounts, the identity and credit of the respective Account
Debtors, to review the billing practices of Borrowers and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants; provided that, in the absence of a
Default or an Event of Default, such rights pursuant to this Section 4.6 may be
exercised (a) during reasonable business hours, (b) on at least two (2) Business
Days advance written notice and (c) not more than twice per calendar year at the
Borrowers’ expense; provided further that the restrictions set forth in clause
(a) through (c) shall not apply during the existence and continuance of any
Default or any time during which Agent reasonably believes a Default exists.

 

Section 4.7                                   Use of Proceeds.  Borrowers shall
use the proceeds of Loans solely for working capital needs of Borrowers and
their Subsidiaries.  No portion of the proceeds of the Loans will be used for
family, personal, agricultural or household use.

 

Section 4.8                                   Estoppel Certificates.  After
written request by Agent which, so long as no Event of Default has occurred and
is continuing, shall be limited to one (1) such request per fiscal year of
Borrowers, Borrowers, within fifteen (15) days and at their expense, will
furnish Agent with a statement, duly acknowledged and certified, setting forth
(a) the amount of the original principal amount of the Notes, and the unpaid
principal amount of the Notes, (b) the rate of interest of the Notes, (c) the
date payments of interest and/or principal were last paid, (d) any offsets or
defenses to the payment of the Obligations, and if any are alleged, the nature
thereof, (e) that the Notes and this Agreement have not been modified or if
modified, giving particulars of such modification, and (f) that there has
occurred and is then continuing no Default or if such Default exists, the nature
thereof, the period of time it has existed, and the action being taken to

 

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remedy such Default.  After written request by Agent, which, so long as no Event
of Default has occurred and is continuing, shall be limited to one (1) such
request per fiscal year of Borrowers, Borrowers, within fifteen (15) days and at
their expense, will furnish Agent with a certificate, signed by a Responsible
Officer of Borrowers, updating all of the representations and warranties
contained in this Agreement and the other Financing Documents and certifying
that all of the representations and warranties contained in this Agreement and
the other Financing Documents, as updated pursuant to such certificate, are
true, accurate and complete in all material respects as of the date of such
certificate.

 

Section 4.9                                   Notices of Material Contracts,
Litigation and Defaults.

 

(a)                                 Borrower shall provide four (4) Business
Days (i) written notice to Agent of Borrower (1) executing and delivering any
amendment, consent, waiver or other modification to any Material Contract which
is material and adverse to such Material Contract or which could reasonably be
expected to have a Material Adverse Effect or (2)  receiving or delivering any
notice of termination or default or similar notice in connection with any
Material Contract and (ii) together with delivery of the next Compliance
Certificate (included as an update to the such any schedule delivered therewith)
the execution of any new Material Contract and/or any new material amendment,
consent, waiver or other modification to any Material Contract not previously
disclosed.

 

(b)                                 Borrowers will give prompt written notice to
Agent (i) of any litigation or governmental proceedings pending or threatened
(in writing) against Borrowers or other Credit Party which would reasonably be
expected to have a Material Adverse Effect with respect to Borrowers or any
other Credit Party or which in any manner calls into question the validity or
enforceability of any Financing Document, (ii) upon any Borrower becoming aware
of the existence of any Default or Event of Default, (iii) of any strikes or
other labor disputes pending or, to any Borrower’s knowledge, threatened against
any Credit Party, (iv) if there is any infringement or written claim of
infringement by any other Person with respect to any Intellectual Property
rights of any Credit Party that could reasonably be expected to have a Material
Adverse Effect, (v) if there is any written claim by any other Person that any
Credit Party in the conduct of its business is infringing on the Intellectual
Property rights of others and an adverse resolution of such claim could
reasonably be expected to have a Material Adverse Effect, and (vi) of all
returns, recoveries, disputes and claims that involve more than $1,000,000.
 Borrowers represent and warrant that Schedule 4.9 sets forth a complete list of
all matters existing as of the Closing Date for which notice could be required
under this Section and all litigation or governmental proceedings pending or
threatened (in writing) against Borrowers or other Credit Party as of the
Closing Date.

 

(c)                                  Borrower shall, and shall cause each Credit
Party, to provide such further information (including copies of such
documentation) as Agent or any Lender shall reasonably request with respect to
any of the events or notices described in clauses (a) and (b) above.  From the
date hereof and continuing through the termination of this Agreement, Borrower
shall, and shall cause each Credit Party to, make available to Agent and each
Lender, without expense to Agent or any Lender, each Credit Party’s officers,
employees and agents and books, to the extent that Agent or any Lender may deem
them reasonably necessary to prosecute or defend any third-

 

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party suit or proceeding instituted by or against Agent or any Lender with
respect to any Collateral or relating to a Credit Party.

 

Section 4.10                            Hazardous Materials; Remediation.

 

(a)                                 If any release or disposal of Hazardous
Materials shall occur or shall have occurred on any real property or any other
assets of any Borrower or any other Credit Party, such Borrower will cause, or
direct the applicable Credit Party to cause, the prompt containment and removal
of such Hazardous Materials and the remediation of such real property or other
assets as is necessary to comply with all Environmental Laws and Healthcare Laws
and to preserve the value of such real property or other assets.  Without
limiting the generality of the foregoing, each Borrower shall, and shall cause
each other Credit Party to, comply with each Environmental Law and Healthcare
Law requiring the performance at any real property by any Borrower or any other
Credit Party of activities in response to the release or threatened release of a
Hazardous Material.

 

(b)                                 Borrowers will provide Agent within thirty
(30) days after written demand therefor with a bond, letter of credit or similar
financial assurance evidencing to the reasonable satisfaction of Agent that
sufficient funds are available to pay the cost of removing, treating and
disposing of any Hazardous Materials or Hazardous Materials Contamination and
discharging any assessment which may be established on any property as a result
thereof, such demand to be made, if at all, upon Agent’s reasonable business
determination that the failure to remove, treat or dispose of any Hazardous
Materials or Hazardous Materials Contamination, or the failure to discharge any
such assessment could reasonably be expected to have a Material Adverse Effect.

 

Section 4.11                            Further Assurances.

 

(a)                                 Each Borrower will, and will cause each
Subsidiary to, at its own cost and expense, promptly and duly take, execute,
acknowledge and deliver all such further acts, documents and assurances as may
from time to time be necessary or as Agent or the Required Lenders may from time
to time reasonably request in order to carry out the intent and purposes of the
Financing Documents and the transactions contemplated thereby, including all
such actions to (i) establish, create, preserve, protect and perfect a first
priority Lien (subject only to the Intercreditor Agreement and to Permitted
Liens) in favor of Agent for itself and for the benefit of the Lenders on the
Collateral (including Collateral acquired after the date hereof), and
(ii) unless Agent shall agree otherwise in writing, cause all Subsidiaries of
Borrowers (other than Restricted Foreign Subsidiaries) to be jointly and
severally obligated with the other Borrowers under all covenants and obligations
under this Agreement, including the obligation to repay the Obligations.

 

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

 

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(c)                                  Upon request of Agent, with respect to any
real property owned by a Credit Party, including the Closing Date Real Property,
the Credit Parties shall execute and/or deliver, or cause to be executed and/or
delivered, to Agent, a fully executed mortgage, in form and substance reasonably
satisfactory to Agent, together with such other documents and legal opinions or
to take such other actions as may be requested by the Agent, in each case, in
form and substance satisfactory to the Agent.

 

(d)                                 Upon the request of Agent, Borrowers shall
obtain a landlord’s agreement or mortgagee agreement, as applicable, from the
lessor of each leased property or mortgagee of owned property with respect to
any business location where any portion of the Collateral included in or
proposed to be included in the Borrowing Base, or the records relating to such
Collateral and/or software and equipment relating to such records or Collateral,
is stored or located, which agreement or letter shall be reasonably satisfactory
in form and substance to Agent.  Borrowers shall timely and fully pay and
perform its obligations under all leases and other agreements with respect to
each leased location where any Collateral, or any records related thereto, is or
may be located unless such a failure to perform would not give a third party
party to such lease a right to terminate such lease or agreement prior to the
expiration thereof.

 

(e)                                  Borrower shall provide Agent with at least
ten (10) Business Days (or such shorter period as Agent may accept in its sole
discretion) prior written notice of its intention to create (or to the extent
permitted under this Agreement, acquire) a new Subsidiary.  Upon the formation
(or to the extent permitted under this Agreement, acquisition) of a new
Subsidiary, Borrowers shall (i) pledge, have pledged or cause or have caused to
be pledged to the Agent pursuant to a pledge agreement in form and substance
satisfactory to the Agent, all (with respect to a U.S. Subsidiary) or 65% (with
respect to a non-U.S. Subsidiary) of the outstanding shares of equity interests
or other equity interests of such new Subsidiary owned directly or indirectly by
any Borrower, along with undated stock or equivalent powers for such
certificates, executed in blank; (ii) unless Agent and Required Lenders shall
agree otherwise in writing, cause the new Subsidiary to take such other actions
(including entering into or joining any Security Documents) as are necessary or
advisable in the reasonable opinion of the Agent in order to grant the Agent,
acting on behalf of the Lenders, a first priority Lien (subject to the
Intercreditor Agreement) on all real and personal property of such Subsidiary in
existence as of such date and in all after acquired property, which first
priority Liens are required to be granted pursuant to this Agreement;
(iii) unless Agent shall agree otherwise in writing, cause such new Subsidiary
to either (at the election of Agent) become a Borrower hereunder with joint and
several liability for all obligations of Borrowers hereunder and under the other
Financing Documents pursuant to a joinder agreement or other similar agreement
in form and substance satisfactory to Agent or to become a Guarantor of the
obligations of Borrowers hereunder and under the other Financing Documents
pursuant to a guaranty and suretyship agreement in form and substance
satisfactory to Agent; and (iv) cause the new Subsidiary to deliver certified
copies of such Subsidiary’s certificate or articles of incorporation, together
with good standing certificates, by-laws (or other operating agreement or
governing documents), resolutions of the Board of Directors or other governing
body, approving and authorize the execution and delivery of the Security
Documents, incumbency certificates and to execute and/or deliver such other
documents and legal opinions or to take such other actions as may be requested
by the Agent, in each case, in form and substance satisfactory to the Agent
(clauses (i)-(iv), collectively, the “Joinder Requirements”).

 

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(f)                                   Borrower further agree to comply, and
cause its Subsidiaries and each Credit Party to comply with the requirement that
the total amount of cash and cash equivalents held by the Restricted Foreign
Subsidiaries in Accounts other than a Collateral Accounts, in aggregate for all
such Accounts, shall not, at any time, exceed $4,000,000.

 

(g)                                  Following (a) the occurrence and
continuation of an Event of Default and (b) the exercise by Agent of any right,
option or remedy provided for hereunder, under any Financing Document or at law
or in equity, Credit Parties shall cause each Restricted Foreign Subsidiary to
declare and pay to the applicable Credit Party the maximum amount of dividends
and other distributions in respect of its capital stock or other equity interest
legally permitted to be paid by each such Restricted Foreign Subsidiary;
provided that such Restricted Foreign Subsidiary shall be able to retain for
working capital purposes such other amounts used by such Restricted Foreign
Subsidiaries in the Ordinary Course of Business and as are reasonable necessary
for its operations based on its current projections, as provided to the Agent
pursuant to Section 4.1.

 

Section 4.12                            Reserved.

 

Section 4.13                            Power of Attorney.  Each of the
authorized representatives of Agent is hereby irrevocably made, constituted and
appointed the true and lawful attorney for Borrowers (without requiring any of
them to act as such) with full power of substitution to do the following: 
(a) endorse the name of Borrowers upon any and all checks, drafts, money orders,
and other instruments for the payment of money that are payable to Borrowers and
constitute collections on Borrowers’ Accounts; (b) so long as Agent has provided
not less than three (3) Business Days’ prior written notice to Borrower to
perform the same and Borrower has failed to take such action, execute in the
name of Borrowers any schedules, assignments, instruments, documents, and
statements that Borrowers are obligated to give Agent under this Agreement;
(c) after the occurrence and during the continuance of an Event of Default, take
any action Borrowers are required to take under this Agreement; (d) so long as
Agent has provided not less than three (3) Business Days’ prior written notice
to Borrower to perform the same and Borrower has failed to take such action, do
such other and further acts and deeds in the name of Borrowers that Agent may
deem necessary or desirable to enforce any Account or other Collateral or
perfect Agent’s security interest or Lien in any Collateral; and (e) after the
occurrence and during the continuance of an Event of Default, do such other and
further acts and deeds in the name of Borrowers that Agent may deem necessary or
desirable to enforce its rights with regard to any Account or other Collateral. 
This power of attorney shall be irrevocable and coupled with an interest.

 

Section 4.14                            Borrowing Base Collateral
Administration.

 

(a)                                 All data and other information relating to
Accounts or other intangible Collateral shall at all times be kept by Borrowers,
at their respective principal offices and shall not be moved from such locations
(i) to any location for which a landlord, bailee or other access agreement has
not been entered into in accordance with the terms of this Agreement and
(ii) without providing prior written notice to Agent.

 

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(b)                                 Borrowers shall provide prompt written
notice to each Person who either is currently an Account Debtor or becomes an
Account Debtor at any time following the date of this Agreement that directs
each Account Debtor to make payments into the Lockbox, and hereby authorizes
Agent, upon Borrowers’ failure to send such notices within thirty (30) days
after the date of this Agreement (or thirty (30) days after the Person becomes
an Account Debtor), to send any and all similar notices to such Person.  Agent
reserves the right to notify Account Debtors that Agent has been granted a Lien
upon all Accounts.

 

(c)                                  Borrowers will conduct a physical count of
the Inventory at least once per year, and Borrowers shall provide to Agent a
written accounting of such physical count in form and substance satisfactory to
Agent.  Each Borrower will use commercially reasonable efforts to at all times
keep its Inventory in good and marketable condition.  In addition to the
foregoing, no more than once per calendar year, Agent may require Borrowers to
obtain and deliver to Agent appraisal reports in form and substance and from
appraisers reasonably satisfactory to Agent stating the then current fair market
values of all or any portion of Inventory owned by each Borrower or any
Subsidiaries.

 

(d)                                 In addition to the foregoing, from time to
time, Agent may require Borrowers to obtain and deliver to Agent appraisal
reports in form and substance and from appraisers reasonably satisfactory to
Agent stating the then current fair market values of all or any portion of the
Collateral; provided, however, that, so long as no Event of Default has occurred
and is continuing, Borrowers shall not be required deliver more than two
(2) appraisal reports to Agent per fiscal year.

 

Section 4.15                            Schedule Updates.  Borrower shall, in
the event of any information in the Schedules becoming outdated, inaccurate,
incomplete or misleading, deliver to Agent, together with the next Compliance
Certificate required to be delivered under this Agreement after such event a
proposed update to such Schedule correcting all outdated, inaccurate, incomplete
or misleading information; provided, however, (i) with respect to any proposed
updates to the Schedules involving Permitted Liens, Permitted Debt or Permitted
Investments, Agent will replace the respective Schedule attached hereto with
such proposed update only if such updated information is consistent with the
definitions of and limitations herein pertaining to Permitted Liens, Permitted
Debt or Permitted Investments and (ii) with respect to any proposed updates to
such Schedule involving other matters, Agent will replace the applicable portion
of such Schedule attached hereto with such proposed update upon Agent’s approval
thereof.

 

Section 4.16                            Intellectual Property and Licensing.

 

(a)                                 Together with each Compliance Certificate
required to be delivered pursuant to Section 4.1 to the extent (A) Borrower
acquires and/or develops any new Registered Intellectual Property, or
(B) Borrower enters into or becomes bound by any additional in-bound license or
sublicense agreement, any additional exclusive out-bound license or sublicense
agreement or other agreement with respect to rights in Intellectual Property
constituting a Material Intangible Asset (other than over-the-counter software
that is commercially available to the public), or (C) there occurs any other
change in Borrower’s Registered Intellectual Property, in-bound licenses or
sublicenses or exclusive out-bound licenses or sublicenses from that listed

 

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on Schedule 3.19 that could reasonably be expected to result in a Material
Adverse Effect, deliver to Agent an updated Schedule 3.19 reflecting such
updated information.

 

(b)                                 If Borrower obtains any Registered
Intellectual Property (other than copyrights, mask works and related
applications, which are addressed below), Borrower shall promptly (and in any
event within thirty (30) days of obtaining same) notify Agent and execute such
documents and provide such other information (including, without limitation,
copies of applications) and take such other actions as Agent shall request in
its good faith business judgment to perfect and maintain a first priority
perfected security interest in favor of Agent, for the ratable benefit of
Lenders, in such Registered Intellectual Property.

 

(c)                                  Upon Agent’s reasonable request, Borrower
shall use commercially reasonable efforts to obtain the consent of, or waiver
by, any person whose consent or waiver is necessary for (x) all licenses or
agreements to be deemed “Collateral” and for Agent to have a security interest
in it that might otherwise be restricted or prohibited by Law or by the terms of
any such license or agreement, whether now existing or entered into in the
future, and (y) Agent to have the ability in the event of a liquidation of any
Collateral to dispose of such Collateral in accordance with Agent’s rights and
remedies under this Agreement and the other Financing Documents.

 

(d)                                 Borrower shall own, or be licensed to use or
otherwise have the right to use, all Material Intangible Assets.  Borrower shall
cause all Registered Intellectual Property to be duly and properly registered,
filed or issued in the appropriate office and jurisdictions for such
registrations, filings or issuances, except where the failure to do so would not
reasonably be expected to result in a Material Adverse Effect.  Borrower shall
at all times conduct its business without infringement of any Intellectual
Property rights of others, except where the failure to do so would not
reasonably be expected to result in a Material Adverse Effect.  Borrower shall
(i) protect, defend and maintain the validity and enforceability of its Material
Intangible Assets (ii) promptly advise Agent in writing of material
infringements of its Material Intangible Assets, or of a claim of infringement
by Borrower on the Intellectual Property rights of others which could reasonably
be expected to result in a Material Adverse Effect; and (iii) not allow any of
Borrower’s Material Intangible Assets to be abandoned, invalidated, forfeited or
dedicated to the public or to become unenforceable.  Borrower shall not become a
party to, nor become bound by, any material license or other agreement (other
than the Financing Documents and the Affiliated Financing Documents) with
respect to which Borrower is the licensee that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such
license or agreement or other property.

 

Section 4.17                            Regulatory Reporting and Covenants.

 

(a)                                 Borrower shall notify Agent and each Lender
promptly (and in any event within five (5) Business Days of receiving, becoming
aware of or determining that (each, a “Regulatory Reporting Event” and
collectively, the “Regulatory Reporting Events”):  (i) any Governmental
Authority, specifically including the FDA is conducting or has conducted (A) if
applicable, any of Borrower’s or its Subsidiaries’ manufacturing facilities and
processes for any Product which investigation has disclosed any material
deficiencies or violations of Laws and/or the Regulatory Required Permits or
(B) an investigation or review of any Regulatory Required

 

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Permit (other than routine reviews in the Ordinary Course of Business associated
with the renewal of a Regulatory Required Permit and which could not reasonably
be expected to result in a Material Adverse Effect), (ii) development, testing,
and/or manufacturing of any Product or provision of any service that is material
to the business of Borrower or its Subsidiaries should cease, (iii) if a Product
that is material to the business of the Borrower or its Subsidiaries has been
approved for marketing and sale, any marketing or sales of such Product should
cease or such Product should be withdrawn from the marketplace, (iv) adverse
clinical test results with respect to any Product which have or could reasonably
be expected to result in a Material Adverse Effect, (v) any Product recalls or
voluntary Product withdrawals from any market which have or could reasonably be
expected to result in a Material Adverse Effect or (vi) any significant failures
in the manufacturing of any Product such that the amount of such Product
successfully manufactured in accordance with all specifications thereof and the
required payments to be made to Borrower therefor in any month shall decrease
significantly with respect to the quantities of such Product and payments
produced in the prior month, in each case, which could reasonably be expected to
result in a Material Adverse Effect.  Borrower shall provide to Agent or any
Lender such further information (including copies of such documentation) as
Agent or any Lender shall reasonably request with respect to any such Regulatory
Reporting Event.

 

(b)                                 Borrower shall, and shall cause each Credit
Party to, obtain all Regulatory Required Permits necessary for compliance in all
material respects with Laws with respect to testing, manufacturing, developing,
selling or marketing of Products and shall, and shall cause each Credit Party
to, maintain and comply fully and completely in all respects with all such
Regulatory Required Permits, the noncompliance with which could have a Material
Adverse Effect.

 

ARTICLE 5 - NEGATIVE COVENANTS

 

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

 

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

 

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

 

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

 

Section 5.4                                   Restrictive Agreements.  No
Borrower will, or will permit any Subsidiary to, directly or indirectly
(a) enter into or assume any agreement (other than the Financing Documents and
any agreements for purchase money debt permitted under clause (c) of the
definition of Permitted Debt) prohibiting the creation or assumption of any Lien
upon its

 

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properties or assets, whether now owned or hereafter acquired, or (b) create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind (except as provided by the Financing
Documents and the Affiliated Financing Documents) on the ability of any
Subsidiary to: (i) pay or make Distributions to any Borrower or any Subsidiary;
(ii) pay any Debt owed to any Borrower or any Subsidiary; (iii) make loans or
advances to any Borrower or any Subsidiary; or (iv) transfer any of its property
or assets to any Borrower or any Subsidiary.

 

Section 5.5                                   Payments and Modifications of
Subordinated Debt.  No Borrower will, or will permit any Subsidiary to, directly
or indirectly (a) declare, pay, make or set aside any amount for payment in
respect of Subordinated Debt, except for payments made in full compliance with
and expressly permitted under the Subordination Agreement, (b) amend or
otherwise modify the terms of any Subordinated Debt, except for amendments or
modifications made in full compliance with the Subordination Agreement,
(c) declare, pay, make or set aside any amount for payment in respect of the
Convertible Notes, except for regularly scheduled payments of interest as set
forth in the Convertible Note Documents in effect on the Closing Date,
(d) declare, pay, make or set aside any amount for payment in respect of any
Debt hereinafter incurred that, by its terms, or by separate agreement, is
subordinated to the Obligations, except for payments made in full compliance
with and expressly permitted under the subordination provisions applicable
thereto, or (e) amend or otherwise modify the terms of any such Debt if the
effect of such amendment or modification is to (i) increase the interest rate or
fees on, or change the manner or timing of payment of, such Debt,
(ii) accelerate or shorten the dates upon which payments of principal or
interest are due on, or the principal amount of, such Debt, (iii) change in a
manner adverse to any Credit Party or Agent any event of default or add or make
more restrictive any covenant with respect to such Debt, (iv) change the
prepayment provisions of such Debt or any of the defined terms related thereto,
(v) change the subordination provisions thereof (or the subordination terms of
any guaranty thereof), or (vi) change or amend any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights on the holder of such Debt in a manner adverse to
Borrowers, any Subsidiaries, Agents or Lenders.  Borrowers shall, prior to
entering into any such amendment or modification, deliver to Agent reasonably in
advance of the execution thereof, any final or execution form copy thereof.

 

Section 5.6                                   Consolidations, Mergers and Sales
of Assets; Change in Control.

 

(a)                                 No Borrower will, or will permit any
Subsidiary to, directly or indirectly consolidate or merge or amalgamate with or
into any other Person other than (i) consolidations or mergers among Borrowers
where a Borrower is a the surviving entity, (ii) consolidations or mergers among
a Guarantor and a Borrower so long as the Borrower is the surviving entity,
(iii) consolidations or mergers among Guarantors where the Guarantor is the
surviving entity and (iv) consolidations or mergers among Restricted Foreign
Subsidiaries.

 

(b)                                 No Borrower will, or will permit any
Subsidiary to, directly or indirectly consummate any Asset Dispositions other
than Permitted Asset Dispositions.

 

(c)                                  No Borrower will suffer or permit to occur
any Change in Control with respect to itself, any Subsidiary or any Guarantor.

 

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Section 5.7                                   Purchase of Assets, Investments. 
No Borrower will, or will permit any Subsidiary to, directly or indirectly:

 

(a)                                 except as otherwise permitted pursuant to
clause (k) of the definition of Permitted Investments, engage or enter into any
agreement to engage in any joint venture or partnership with any other Person;

 

(b)                                 make or enter into any agreement to make an
Acquisition other than Permitted Acquisitions;

 

(c)                                  without limiting the foregoing with respect
to Acquisitions, acquire or enter into any agreement to acquire any other assets
other than in the Ordinary Course of Business or as otherwise permitted under
the definition of Permitted Investments; or

 

(d)                                 acquire or own or enter into any agreement
to acquire or own any Investment in any Person other than Permitted Investments.

 

Section 5.8                                   Transactions with Affiliates. 
Except as otherwise disclosed on Schedule 5.8, and except for transactions that
are disclosed to Agent in advance of being entered into and which contain terms
that are no less favorable to the applicable Borrower or any Subsidiary, as the
case may be, than those which might be obtained from a third party not an
Affiliate of any Credit Party, no Borrower will, or will permit any Subsidiary
to, directly or indirectly, enter into or permit to exist any transaction
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of any Borrower that is not a
Borrower or a Guarantor.

 

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

 

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

 

Section 5.11                            Conduct of Business.  No Borrower will,
or will permit any Subsidiary to, directly or indirectly, engage in any line of
business other than those businesses engaged in on the Closing Date and
described on Schedule 5.11 and businesses reasonably related thereto.  No
Borrower will, or will permit any Subsidiary to, other than in the Ordinary
Course of Business, change its normal billing, payment and reimbursement
policies and procedures with respect to its

 

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Accounts (including, without limitation, the amount and timing of finance
charges, fees and write-offs).

 

Section 5.12                            Reserved.

 

Section 5.13                            Limitation on Sale and Leaseback
Transactions.  No Borrower will, or will permit any Subsidiary to, directly or
indirectly, enter into any arrangement with any Person whereby, in a
substantially contemporaneous transaction, any Borrower or any Subsidiaries
sells or transfers all or substantially all of its right, title and interest in
an asset and, in connection therewith, acquires or leases back the right to use
such asset, other than any sale and leaseback of the Closing Date Real Property.

 

Section 5.14                            Deposit Accounts and Securities
Accounts; Payroll and Benefits Accounts.  No Borrower will, or will permit any
U.S. Subsidiary to, directly or indirectly, establish any new Deposit Account or
Securities Account without prior written notice to Agent, and unless Agent, such
Borrower or such U.S. Subsidiary and the bank, financial institution or
securities intermediary at which the account is to be opened enter into a
Deposit Account Control Agreement or Securities Account Control Agreement prior
to or concurrently with the establishment of such Deposit Account or Securities
Account.  Borrowers represent and warrant that Schedule 5.14 lists all of the
Deposit Accounts and Securities Accounts of each Borrower.  The provisions of
this Section requiring Deposit Account Control Agreements shall not apply to
(a) Deposit Accounts exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of Borrowers’ employees
and identified to Agent by Borrowers as such or (b) such other petty cash
Deposit Accounts, amounts on deposit in which do not exceed $25,000 in the
aggregate at any one time; provided, however, that at all times that any
Obligations or Affiliated Obligations remain outstanding, Borrower shall
maintain one or more separate Deposit Accounts to hold any and all amounts to be
used for payroll, payroll taxes and other employee wage and benefit payments,
and shall not commingle any monies allocated for such purposes with funds in any
other Deposit Account.

 

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

 

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property blocked pursuant to Executive Order No. 13224, any similar executive
order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in Executive
Order No. 13224 or other Anti-Terrorism Law.

 

ARTICLE 6 - - FINANCIAL COVENANTS

 

Section 6.1                                   Additional Defined Terms.  The
following additional definitions are hereby appended to Section 1.1 of this
Agreement:

 

“Defined Period” means, for purposes of calculating the minimum Net Revenue for
purposes of Section 6.3 for any given calendar month, the twelve (12) month
period immediately preceding any such calendar month.

 

“Net Revenue” means, for any period, Borrowers’ and their Subsidiaries’
consolidated (a) gross revenues during such period, less (b)(i) trade, quantity
and cash discounts, (ii) discounts, refunds, rebates, charge backs, retroactive
price adjustments and any other allowances which effectively reduce net selling
price, (iii) product returns and allowances, (iv) allowances for shipping or
other distribution expenses, (v) set-offs and counterclaims, and (vi) any other
similar and customary deductions used by Borrowers and their Subsidiaries on a
consolidated basis in determining net revenues, all, in respect of (a) and (b),
as determined in accordance with GAAP and in the Ordinary Course of Business.

 

“Net Revenue Threshold” means, for any Defined Period, the minimum amount of Net
Revenue the Borrowers are required to maintain for such Defined Period.

 

Section 6.2                                   Minimum Cash.  Borrowers and
Guarantors shall maintain, at all times, unrestricted cash and cash equivalents
on a consolidated basis in an amount not less than $10,000,000 (the “Minimum
Cash Amount”), which cash and cash equivalents shall (x) be subject to a first
priority perfected lien in favor of Agent for the benefit of Lenders, (y) held
in a Deposit Account that is subject to a Deposit Account Control Agreement and
(z) not include any drawn or committed but unpaid drafts, ACH or EFT
transactions.

 

Section 6.3                                   Minimum Net Revenue.  Net Revenue
for any Defined Period, as tested monthly, shall not be less than (a) from the
Closing Date through the month ending December 31, 2017, the minimum amount set
forth on Schedule 6.3 opposite such month and (b) for the month ending
January 31, 2018 and each month thereafter, an amount equal to the greater of
(i) eighty-five percent (85%) of the projected revenues for such Defined Period,
calculated based on the projections provided to the Agent pursuant to
Section 4.1(g) hereof and (ii) one hundred five percent (105%) of the Net
Revenue Threshold for the Defined Period ending twelve (12) months prior to such
Defined Period.

 

Section 6.4                                   Evidence of Compliance.  Borrower
shall furnish to Agent, together with the monthly financial reporting required
of Borrower in this Agreement, a Compliance Certificate as evidence of its
compliance with the covenants in this Article 6. The Compliance Certificate
shall include, without limitation, (a) a statement and report, on a form
approved by Agent, detailing Borrower’s calculations, (b) bank statements and
(c) if requested by Agent,

 

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back-up documentation (including, without limitation, invoices, receipts and
other evidence of costs incurred during such quarter as Agent shall reasonably
require) evidencing the propriety of the calculations.

 

ARTICLE 7 - CONDITIONS

 

Section 7.1                                   Conditions to Closing.  The
obligation of each Lender to make the initial Loans on the Closing Date shall be
subject to the receipt by Agent of each agreement, document and instrument set
forth on the closing checklist attached hereto as Exhibit F, each in form and
substance satisfactory to Agent, and such other closing deliverables reasonably
requested by Agent and Lenders, and to the satisfaction of the following
conditions precedent, each to the satisfaction of Agent and Lenders and their
respective counsel in their sole discretion:

 

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

 

(b)                                 since September 30, 2015, the absence of any
Material Adverse Effect; and

 

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

 

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

 

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

 

(a)                                 receipt by Agent of a Notice of Borrowing
(or telephonic notice if permitted by this Agreement) and updated Borrowing Base
Certificate;

 

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

 

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

 

(d)                                 for Loans made on the Closing Date, the fact
that the representations and warranties of each Credit Party contained in the
Financing Documents shall be true, correct and complete on and as of the Closing
Date, except to the extent that any such representation or warranty relates to a
specific date in which case such representation or warranty shall be true and
correct as of such earlier date;

 

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(e)                                  for Loans made after the Closing Date, the
fact that the representations and warranties of each Credit Party contained in
the Financing Documents shall be true, correct and complete in all material
respects on and as of the date of such borrowing or issuance, except to the
extent that any such representation or warranty relates to a specific date in
which case such representation or warranty shall be true and correct in all
material respects as of such earlier date; provided, however, in each case, such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof;

 

(f)                                   the fact that no adverse change in the
condition (financial or otherwise), properties, business, prospects, or
operations of Borrowers or any other Credit Party shall have occurred and be
continuing with respect to Borrowers or any Credit Party since the date of this
Agreement; and

 

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

 

Each giving of a Notice of Borrowing hereunder and each acceptance by any
Borrower of the proceeds of any Loan made hereunder shall be deemed to be (y) a
representation and warranty by each Borrower on the date of such notice or
acceptance as to the facts specified in this Section, and (z) a restatement by
each Borrower that each and every one of the representations made by it in any
of the Financing Documents is true and correct as of such date (except to the
extent that such representations and warranties expressly relate solely to an
earlier date).

 

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

 

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

 

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ARTICLE 8 - REGULATORY AND LIFE SCIENCES MATTERS

 

Section 8.1                                   Reserved.

 

Section 8.2                                   Representations and Warranties. 
To induce Agent and Lenders to enter into this Agreement and to make credit
accommodations contemplated hereby, Borrowers hereby represent and warrant that,
except as disclosed in Schedule 8.2(b), the following statements are true,
complete and correct as of the date hereof, and Borrowers hereby covenant and
agree to notify Agent within five (5) Business Days (but in any event prior to
Borrowers submitting any requests for advances of reserves or escrows or
fundings of credit facility proceeds under this Agreement) following the
occurrence of any facts, events or circumstances known to a Borrower, whether
threatened, existing or pending, that would make any of the following
representations and warranties untrue, incomplete or incorrect (together with
such supporting data and information as shall be necessary to fully explain to
Agent the scope and nature of the fact, event or circumstance), and shall
provide to Agent within five (5) Business Days of Agent’s request, such
additional information as Agent shall request regarding such disclosure:

 

(a)                                 Reserved.

 

(b)                                 Permits.  Borrowers have (i) each Permit and
other rights from, and have made all declarations and filings with, all
applicable Governmental Authorities, all self regulatory authorities and all
courts and other tribunals necessary to engage in the ownership, management and
operation of the business or the assets of any Borrower in all material
respects, and (ii) no knowledge that any Governmental Authority is considering
limiting, suspending or revoking any such Permit. Borrower has delivered to
Agent a copy of all Permits requested by Agent as of the date hereof or to the
extent requested by Agent pursuant to Section 4.17.  All such Permits are valid
and in full force and effect and Borrowers are in material compliance with the
terms and conditions of all such Permits, except where failure to be in such
compliance or for a Permit to be valid and in full force and effect would not
have a Material Adverse Effect.

 

(c)                                  Regulatory Required Permits.  With respect
to any Product, (i) Borrower and its Subsidiaries have received, and such
Product is the subject of, all Regulatory Required Permits needed in connection
with the testing, manufacture, marketing or sale of such Product, and have
provided Agent and each Lender with all notices and other information required
by Section 4.17, and no Borrower has received any notice from any applicable
Governmental Authority, specifically including the FDA, that such Governmental
Authority is conducting an investigation or review of any such Regulatory
Required Permit or approval or that any such Regulatory Required Permit has been
revoked or withdrawn, nor has any such Governmental Authority issued any order
or recommendation stating that such marketing or sales of such Product cease or
that such Product be withdrawn from the marketplace (ii) such Product is being
tested, manufactured, marketed or sold, as the case may be, in material
compliance with all applicable Laws and Regulatory Required Permits, and
Borrower has not received any notice from any applicable Governmental Authority,
specifically including the FDA, that such Governmental Authority is conducting
an investigation or review of (A) Borrower’s manufacturing facilities and
processes for such Product which have disclosed any material deficiencies or
violations of Laws (including Healthcare Laws) and/or the Regulatory Required
Permits related to the manufacture of such Product, or (B) any such Regulatory
Required Permit

 

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or that any such Regulatory Required Permit has been revoked or withdrawn, nor
has any such Governmental Authority issued any order or recommendation stating
that the development, testing and/or manufacturing of such Product by Borrower
should cease.

 

(d)                                 Healthcare and Regulatory Events.

 

(i)                                     None of the Borrowers are in violation
of any Healthcare Laws, except where any such violation would not have a
Material Adverse Effect.

 

(ii)                                  As of the Closing Date, there have been no
Regulatory Reporting Events.

 

(iii)                               No Borrower is participating in any Third
Party Payor Program.

 

(iv)                              None of the Borrower’s officers, directors,
employees, shareholders, their agents or affiliates has made an untrue statement
of material fact or fraudulent statement to the FDA or failed to disclose a
material fact required to be disclosed to the FDA, committed an act, made a
statement, or failed to make a statement that could reasonably be expected to
provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities,” set forth in 56
Fed. Regulation 46191 (September 10, 1991).

 

(v)                                 Borrower has not received any written notice
that any Governmental Authority, including without limitation the FDA, the DEA,
the Office of the Inspector General of HHS or the United States Department of
Justice has commenced or threatened to initiate any action against a Credit
Party, any action to enjoin a Credit Party, their officers, directors,
employees, shareholders or their agents and Affiliates, from conducting their
businesses at any facility owned or used by them or for any material civil
penalty, injunction, seizure or criminal action.

 

(vi)                              Borrower has not received from the FDA or the
DEA, a Warning Letter, Form FDA-483, “Untitled Letter,” other correspondence or
notice setting forth allegedly objectionable observations or alleged violations
of laws and regulations enforced by the FDA or the DEA, or any comparable
correspondence from any state or local authority responsible for regulating drug
products and establishments, or any comparable correspondence from any foreign
counterpart of the FDA or DEA, or any comparable correspondence from any foreign
counterpart of any state or local authority with regard to any Product or the
manufacture, processing, packing, or holding thereof.

 

(vii)                           Borrower has not engaged in any Recalls, Market
Withdrawals, or other forms of product retrieval from the marketplace of any
Products.

 

(viii)                        Each Product (a) is not adulterated or misbranded
within the meaning of the FDCA; (b) is not an article prohibited from
introduction into interstate commerce under the provisions of Sections 404, 505
or 512 of the FDCA; (c) each Product has been and/or shall be manufactured,
imported, possessed, owned, warehoused, marketed, promoted, sold, labeled,
furnished, distributed and marketed and each service

 

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has been conducted in accordance with all applicable Permits and Laws; and
(d) each Product has been and/or shall be manufactured in accordance with Good
Manufacturing Practices.

 

(e)                                  Proceedings.  No Borrower is subject to any
proceeding, suit or, to Borrowers’ knowledge, investigation by any federal,
state or local government or quasi-governmental body, agency, board or authority
or any other administrative or investigative body (including the Office of the
Inspector General of the United States Department of Health and Human Services):
(i) which may result in the imposition of a fine, alternative, interim or final
sanction, a lower reimbursement rate for services rendered to eligible patients
which has not been provided for on their respective financial statements, or
which would have a Material Adverse Effect on any Borrower; or (ii) which could
result in the revocation, transfer, surrender, suspension or other impairment of
the Permits of Borrower;

 

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

 

Section 8.3                                   Healthcare Operations.

 

(a)                                 Borrower will:

 

(i)                                     timely file or caused to be timely filed
(after giving effect to any extension duly obtained), all material
notifications, reports, submissions, Permit renewals and reports (other than
cost reports as provided in Section 8.3(a)(ii) below) of every kind whatsoever
required by Healthcare Laws (which reports will be materially accurate and
complete in all material respects and not misleading in any respect and shall
not remain open or unsettled); and

 

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

 

(b)                                 Borrower will maintain in full force and
effect, and free from restrictions, probations, conditions or known conflicts
which would materially impair the use or operation of Borrowers’ business and
assets, all Permits necessary under Healthcare Laws to carry on the business of
Borrowers as it is conducted in all material respects on the Closing Date.

 

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

 

(i)                                     any transfer of a Permit or rights
thereunder to any Person (other than Borrowers or Agent) which would have a
Material Adverse Effect;

 

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(ii)                                  any pledge or hypothecation of any Permit
as collateral security for any indebtedness other than Debt to Agent and each
Lender under this Agreement and the other Financing Documents and the Affiliated
Financing Documents; or

 

(iii)                               any rescission, withdrawal, revocation,
amendment or modification of or other alteration to the nature, tenor or scope
of any Permit which would have a Material Adverse Effect;

 

(d)                                 In connection with the development, testing,
manufacture, marketing or sale of each and any Product by any Borrower, Borrower
shall comply in all material respects with all Regulatory Required Permits at
all times issued by any Governmental Authority, specifically including the FDA,
with respect to such development, testing, manufacture, marketing or sales of
such Product by Borrower as such activities are at any such time being conducted
by Borrower.

 

ARTICLE 9 - SECURITY AGREEMENT

 

Section 9.1                                   Generally.  As security for the
payment and performance of the Obligations, and for the payment and performance
of all obligations under the Affiliated Financing Documents (if any) and without
limiting any other grant of a Lien and security interest in any Security
Document, Borrowers hereby assign and grant to Agent, for the benefit of itself
and Lenders, and subject to the Intercreditor Agreement, a continuing first
priority Lien on and security interest in, upon, and to the personal property
set forth on Schedule 9.1 attached hereto and made a part hereof; provided,
however, anything in this Agreement to the contrary notwithstanding,
“Collateral” shall not include

 

(a)                                 if and to the extent the inclusion of any
greater amount of securities of any Restricted Foreign Subsidiary in the
Collateral would result in material adverse tax consequences to Borrower or any
of its Subsidiaries under Section 956 of the IRC, the Collateral shall not
include (1) with respect to any first-tier Restricted Foreign Subsidiary, more
than 65% of its securities of that are entitled to vote (within the meaning of
Treasury Reg. Section 1.956-2(c)(2)) or (ii) with respect to any Restricted
Foreign Subsidiary that is not first-tier Restricted Foreign Subsidiary, any
stock or equity of such Restricted Foreign Subsidiary;

 

(b)                                 any lease, license, contract, property right
or agreement as to which, if and to the extent that, and only for so long as the
grant of a security interest therein shall (1) constitute or result in a breach,
termination or default under any such lease, license, contract, property right
or agreement or render it unenforceable, (2) be prohibited by any applicable law
or (3) require the consent of any third party that cannot be obtained after the
use of commercially reasonable efforts to obtain such consent (in each case of
clauses (1), (2) and (3), other than to the extent that any such breach,
termination, default, prohibition or requirement for consent would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC of any
relevant jurisdiction or any other applicable Law); provided that such security
interest shall attach immediately to each portion of such lease, license,
contract, property rights or agreement that does not result in any of the
consequences specified above;

 

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(c)                                  any “intent to use” trademark applications
for which a statement of use has not been filed (but only until such statement
is filed); or

 

(d)                                 any Deposit Account exclusively used for all
or any of payroll (the property described in (a)-(d), “Excluded Property”);
provided, however, “Excluded Property” shall not include any proceeds, products,
substitutions, receivables or replacements of Excluded Property (unless such
proceeds, products, substitutions, receivables or replacements would otherwise
constitute Excluded Property).

 

Section 9.2                                   Representations and Warranties and
Covenants Relating to Collateral.

 

(a)                                 Schedule 9.2 sets forth (i) each chief
executive office and principal place of business of each Borrower and each of
their respective Subsidiaries, and (ii) all of the addresses (including all
warehouses) at which any of the Collateral is located and/or books and records
of Borrowers regarding any Collateral or any of Borrower’s assets, liabilities,
business operations or financial condition are kept, which such Schedule 9.2
indicates in each case which Borrower(s) have Collateral and/or books located at
such address, and, in the case of any such address not owned by one or more of
the Borrowers(s), indicates the nature of such location (e.g., leased business
location operated by Borrower(s), third party warehouse, consignment location,
processor location, etc.) and the name and address of the third party owning
and/or operating such location.

 

(b)                                 Without limiting the generality of
Section 3.2, except as indicated on Schedule 3.19 with respect to any rights of
any Borrower as a licensee under any license of Intellectual Property owned by
another Person, and except for the filing of financing statements under the UCC,
no authorization, approval or other action by, and no notice to or filing with,
any Governmental Authority or consent of any other Person is required for the
grant by each Borrower to Agent of the security interests and Liens in the
Collateral provided for under this Agreement and the other Security Documents
(if any) and such grant of Liens in favor of Agent shall not violate or cause a
default under any agreement between any Borrower and any other Person relating
to any such Collateral, including any license to which a Borrower is a party,
whether as licensor or licensee, with respect to any Intellectual Property,
whether owned by such Borrower or any other Person.

 

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

 

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

 

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

 

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

 

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

 

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all the provisions of Section 5.14 with respect to the Deposit Accounts and
Securities Accounts of Borrowers.

 

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

 

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

 

(iv)                              Subject to Section 7.4 and except for Accounts
and Inventory in an aggregate amount of $500,000, no Accounts or Inventory or
other Collateral and no books and records and/or software and equipment of the
Borrowers regarding any of the Collateral or any of the Borrower’s assets,
liabilities, business operations or financial condition shall at any time be
located at any leased location or in the possession or control of any warehouse,
consignee, bailee or any of Borrowers’ agents or processors, without prior
written notice to Agent and the receipt by Agent, of warehouse receipts,
consignment agreements, landlord waivers, or bailee waivers (as applicable)
satisfactory to Agent prior to the commencement of such lease or of such
possession or control (as applicable).  Borrower has notified Agent that
Collateral and books and records are currently located at the locations set
forth on Schedule 9.2.  Borrowers shall, upon the request of Agent, notify any
such landlord, warehouse, consignee, bailee, agent or processor of the security
interests and Liens in favor of Agent created pursuant to this Agreement and the
Security Documents, instruct such Person to hold all such Collateral for Agent’s
account subject to Agent’s instructions and shall obtain an acknowledgement from
such Person that such Person holds the Collateral for Agent’s benefit.

 

(v)                                 Borrowers shall cause all equipment and
other tangible Personal Property other than Inventory to be maintained and
preserved in the same condition, repair and in working order as when new,
ordinary wear and tear excepted, and shall promptly make or cause to be made all
repairs, replacements and other improvements in connection therewith that are
necessary or desirable to such end.  Upon request of Agent, Borrowers shall
promptly deliver to Agent any and all certificates of title, applications for
title or similar evidence of ownership of all such tangible Personal Property
and shall cause Agent to be named as lienholder on any such certificate of title
or other evidence of

 

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ownership.  Borrowers shall not permit any such tangible Personal Property to
become fixtures to real estate unless such real estate is subject to a Lien in
favor of Agent.

 

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

 

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

 

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

 

(g)                                  Any obligation of any Credit Party in this
Agreement that requires (or any representation or warranty hereunder to the
extent that it would have the effect of requiring) delivery of Collateral
(including any endorsements related thereto) to, or the possession of Collateral
with, the Agent shall be deemed complied with and satisfied (or, in the case of
any representation or warranty hereunder, shall be deemed to be true) if such
delivery of Collateral is made to, or such possession of Collateral is with, the
Affiliated Financing Agent.

 

ARTICLE 10 - EVENTS OF DEFAULT

 

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

 

(a)                                 (i) any Borrower shall fail to pay when due
any principal, interest, premium or fee under any Financing Document or any
other amount payable under any

 

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Financing Document, or (ii) there shall occur any default in the performance of
or compliance with any of the following sections of this Agreement:
Section 2.11, Section 4.1, Section 4.2(b), Section 4.4(c), Section 4.6,
Section 4.17, Article 5 or Article 6;

 

(b)                                 any Credit Party defaults in the performance
of or compliance with any term contained in this Agreement or in any other
Financing Document (other than occurrences described in other provisions of this
Section 10.1 for which a different grace or cure period is specified or for
which no grace or cure period is specified and thereby constitute immediate
Events of Default) and such default is not remedied by the Credit Party or
waived by Agent and Required Lenders within thirty (30) days after the earlier
of (i) receipt by Borrower Representative of notice from Agent or Required
Lenders of such default, or (ii) actual knowledge of any Borrower or any other
Credit Party of such default;

 

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

 

(d)                                 (i) failure of any Credit Party to pay when
due or within any applicable grace period any principal, interest or other
amount on Debt (other than the Loans), or the occurrence of any breach, default,
condition or event with respect to any Debt (other than the Loans), if the
effect of such failure or occurrence is to cause or to permit the holder or
holders of any such Debt, or to cause, Debt or other liabilities having an
individual principal amount in excess of $3,000,000 or having an aggregate
principal amount in excess of $8,000,000 to become or be declared due prior to
its stated maturity, or (ii) the occurrence of any breach or default under any
terms or provisions of any Convertible Note Document or any Subordinated Debt
Document or under any agreement subordinating the Subordinated Debt to all or
any portion of the Obligations or the occurrence of any event requiring the
prepayment or mandatory redemption of any Convertible Note or any Subordinated
Debt;

 

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

 

(f)                                   an involuntary case or other proceeding
shall be commenced against any Credit Party or any Subsidiary of a Borrower
seeking liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of sixty (60) days; or an order for

 

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relief shall be entered against any Credit Party or any Subsidiary of a Borrower
under applicable federal bankruptcy, insolvency or other similar law in respect
of (i) bankruptcy, liquidation, winding-up, dissolution or suspension of general
operations, (ii) composition, rescheduling, reorganization, arrangement or
readjustment of, or other relief from, or stay of proceedings to enforce, some
or all of the debts or obligations, or (iii) possession, foreclosure, seizure or
retention, sale or other disposition of, or other proceedings to enforce
security over, all or any substantial part of the assets of such Credit Party or
Subsidiary;

 

(g)                                  (i) institution of any steps by any Person
to terminate a Pension Plan if as a result of such termination any Credit Party
or any member of the Controlled Group could be required to make a contribution
to such Pension Plan, or could incur a liability or obligation to such Pension
Plan, in excess of $1,000,000, (ii) a contribution failure occurs with respect
to any Pension Plan sufficient to give rise to a Lien under Section 303(k) of
ERISA or Section 430(k) of the Code or an event occurs that could reasonably be
expected to give rise to a Lien under Section 4068 of ERISA, or (iii) there
shall occur any withdrawal or partial withdrawal from a Multiemployer Plan and
the withdrawal liability (without unaccrued interest) to Multiemployer Plans as
a result of such withdrawal (including any outstanding withdrawal liability that
any Credit Party or any member of the Controlled Group have incurred on the date
of such withdrawal) exceeds $1,000,000;

 

(h)                                 one or more judgments or orders for the
payment of money (not paid or fully covered by insurance maintained in
accordance with the requirements of this Agreement and as to which the relevant
insurance company has acknowledged coverage) (i) aggregating in excess of
$2,500,000 with respect to the litigation disclosed on Schedule 3.6 as of the
Closing Date or (ii) aggregating in excess of $500,000 with respect to all other
judgments, in each case, shall be rendered against any or all Credit Parties and
either (i) enforcement proceedings shall have been commenced by any creditor
upon any such judgments or orders, or (ii) there shall be any period of twenty
(20) consecutive days during which a stay of enforcement of any such judgments
or orders, by reason of a pending appeal, bond or otherwise, shall not be in
effect;

 

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

 

(j)                                    the institution by any Governmental
Authority of criminal proceedings against any Credit Party;

 

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

 

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

 

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

 

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Borrower’s equity fails to remain registered with the SEC in good standing,
and/or such equity fails to remain publicly traded on and registered with a
public securities exchange;

 

(n)                                 the occurrence of any fact, event or
circumstance that could reasonably be expected to result in a Material Adverse
Effect;

 

(o)                                 (i) the voluntary withdrawal or institution
of any action or proceeding by the FDA or similar Governmental Authority to
order the withdrawal of any Product or Product category from the market or to
enjoin Borrower, its Subsidiaries or any representative of Borrower or its
Subsidiaries from manufacturing, marketing, selling or distributing any Product
or Product category that (A) has or could reasonably be expected to have a
Material Adverse Effect or (B) makes it reasonably likely that the Credit
Parties shall fail to comply with one or more financial covenants in this
Agreement during any financial reporting period occurring within a year
thereafter, (ii) the institution of any action or proceeding by any DEA, FDA, or
any other Governmental Authority to revoke, suspend, reject, withdraw, limit, or
restrict any Regulatory Required Permit held by Borrower, its Subsidiaries or
any representative of Borrower or its Subsidiaries, which, in each case, has or
could reasonably be expected to result in Material Adverse Effect,  (iii) the
commencement of any enforcement action against Borrower, its Subsidiaries or any
representative of Borrower or its Subsidiaries (with respect to the business of
Borrower or its Subsidiaries) by DEA, FDA, or any other Governmental Authority
which has or could reasonably be expected to result in a Material Adverse
Effect, or (iv) the occurrence of adverse test results in connection with a
Product which could result in Material Adverse Effect;

 

(p)                                 there shall occur any event of default under
the Affiliated Financing Documents;

 

(q)                                 any Credit Party defaults under or breaches
any Material Contract (after any applicable grace period contained therein), or
a Material Contract shall be terminated by a third party or parties party
thereto prior to the expiration thereof, or there is a loss of a material right
of a Credit Party under any Material Contract to which it is a party, in each
case which could reasonably be expected to result in a Material Adverse Effect;
or

 

(r)                                    the introduction of, or any change in,
any law or regulation governing or affecting the healthcare industry, including,
without limitation, any Healthcare Laws, that has or could reasonably be
expected to have a Material Adverse Effect.

 

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

 

Section 10.2                            Acceleration and Suspension or
Termination of Revolving Loan Commitment.  Upon the occurrence and during the
continuance of an Event of Default, Agent may, and shall if requested by
Required Lenders, (a) by notice to Borrower Representative suspend or terminate
the Revolving Loan Commitment and the obligations of Agent and the Lenders with
respect thereto, in whole or in part (and, if in part, each Lender’s Revolving
Loan Commitment shall be reduced in accordance with its Pro Rata Share), and/or
(b) by notice to Borrower Representative declare all or any portion of the
Obligations to be, and the Obligations shall thereupon become, immediately due
and payable, with accrued interest thereon, without

 

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presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Borrower and Borrowers will pay the same; provided,
however, that in the case of any of the Events of Default specified in
Section 10.1(e) or 10.1(f) above, without any notice to any Borrower or any
other act by Agent or the Lenders, the Revolving Loan Commitment and the
obligations of Agent and the Lenders with respect thereto shall thereupon
immediately and automatically terminate and all of the Obligations shall become
immediately and automatically due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Borrower and Borrowers will pay the same.

 

Section 10.3                            UCC Remedies.

 

(a)                                 Upon the occurrence of and during the
continuance of an Event of Default under this Agreement or the other Financing
Documents, Agent, in addition to all other rights, options, and remedies granted
to Agent under this Agreement or at law or in equity, may exercise, either
directly or through one or more assignees or designees, all rights and remedies
granted to it under all Financing Documents and under the UCC in effect in the
applicable jurisdiction(s) and under any other applicable law; including,
without limitation:

 

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

 

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

 

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

 

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

 

(v)                                 the right to enforce Borrowers’ rights
against Account Debtors and other obligors, including, without limitation,
(i) the right to collect Accounts directly in Agent’s own name (as agent for
Lenders) and to charge the collection costs and expenses,

 

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including attorneys’ fees, to Borrowers, and (ii) the right, in the name of
Agent or any designee of Agent or Borrowers, to verify the validity, amount or
any other matter relating to any Accounts by mail, telephone, telegraph or
otherwise, including, without limitation, verification of Borrowers’ compliance
with applicable Laws.  Borrowers shall cooperate fully with Agent in an effort
to facilitate and promptly conclude such verification process.  Such
verification may include contacts between Agent and applicable federal, state
and local regulatory authorities having jurisdiction over the Borrowers’
affairs, all of which contacts Borrowers hereby irrevocably authorize.

 

(b)                                 Each Borrower agrees that a notice received
by it at least ten (10) days before the time of any intended public sale, or the
time after which any private sale or other disposition of the Collateral is to
be made, shall be deemed to be reasonable notice of such sale or other
disposition.  If permitted by applicable law, any perishable Collateral which
threatens to speedily decline in value or which is sold on a recognized market
may be sold immediately by Agent without prior notice to Borrowers.  At any sale
or disposition of Collateral, Agent may (to the extent permitted by applicable
law) purchase all or any part of the Collateral, free from any right of
redemption by Borrowers, which right is hereby waived and released.  Each
Borrower covenants and agrees not to interfere with or impose any obstacle to
Agent’s exercise of its rights and remedies with respect to the Collateral. 
Agent shall have no obligation to clean-up or otherwise prepare the Collateral
for sale.  Agent may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral and compliance
will not be considered to adversely affect the commercial reasonableness of any
sale of the Collateral.  Agent may sell the Collateral without giving any
warranties as to the Collateral.  Agent may specifically disclaim any warranties
of title or the like.  This procedure will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.  If Agent sells any
of the Collateral upon credit, Borrowers will be credited only with payments
actually made by the purchaser, received by Agent and applied to the
indebtedness of the purchaser.  In the event the purchaser fails to pay for the
Collateral, Agent may resell the Collateral and Borrowers shall be credited with
the proceeds of the sale. Borrowers shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are insufficient to
pay all Obligations.

 

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

 

(d)                                 Agent and each Lender is hereby granted a
non-exclusive, royalty-free license or other right to use after the occurrence
and during the continuance of an Event of Default, without charge, Borrowers’
labels, mask works, rights of use of any name, any other

 

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Intellectual Property and advertising matter, and any similar property as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral and, in connection with Agent’s exercise of its
rights under this Article, Borrowers’ rights under all licenses (whether as
licensor or licensee) and all franchise agreements inure to Agent’s and each
Lender’s benefit.

 

Section 10.4                            [Reserved].

 

Section 10.5                            Default Rate of Interest.  At the
election of Agent or Required Lenders, after the occurrence of an Event of
Default and for so long as it continues, the Loans and other Obligations shall
bear interest at rates that are two percent (2.0%) per annum in excess of the
rates otherwise payable under this Agreement; provided, however, that in the
case of any Event of Default specified in Section 10.1(e) or 10.1(f) above, such
default rates shall apply immediately and automatically without the need for any
election or action of any kind on the part of Agent or any Lender.

 

Section 10.6                            Setoff Rights.  During the continuance
of any Event of Default, each Lender is hereby authorized by each Borrower at
any time or from time to time, with reasonably prompt subsequent notice to such
Borrower (any prior or contemporaneous notice being hereby expressly waived) to
set off and to appropriate and to apply any and all (a) balances held by such
Lender or any of such Lender’s Affiliates at any of its offices for the account
of such Borrower or any of its Subsidiaries (regardless of whether such balances
are then due to such Borrower or its Subsidiaries), and (b) other property at
any time held or owing by such Lender to or for the credit or for the account of
such Borrower or any of its Subsidiaries, against and on account of any of the
Obligations; except that no Lender shall exercise any such right without the
prior written consent of Agent.  Any Lender exercising a right to set off shall
purchase for cash (and the other Lenders shall sell) interests in each of such
other Lender’s Pro Rata Share of the Obligations as would be necessary to cause
all Lenders to share the amount so set off with each other Lender in accordance
with their respective Pro Rata Share of the Obligations.  Each Borrower agrees,
to the fullest extent permitted by law, that any Lender and any of such Lender’s
Affiliates may exercise its right to set off with respect to the Obligations as
provided in this Section 10.6.

 

Section 10.7                            Application of Proceeds.

 

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

 

(b)                                 Following the occurrence and continuance of
an Event of Default, but absent the occurrence and continuance of an
Acceleration Event, Agent shall apply any and all

 

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payments received by Agent in respect of the Obligations, and any and all
proceeds of Collateral received by Agent, in such order as Agent may from time
to time elect.

 

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

 

Section 10.8                            Waivers.

 

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

 

(b)                                 Each Borrower for itself and all its
successors and assigns, (i) agrees that its liability shall not be in any manner
affected by any indulgence, extension of time, renewal, waiver, or modification
granted or consented to by Lender; (ii) consents to any indulgences and all
extensions of time, renewals, waivers, or modifications that may be granted by
Agent or any Lender with respect to the payment or other provisions of the
Financing Documents, and to any substitution, exchange or release of the
Collateral, or any part thereof, with or without substitution, and agrees to the
addition or release of any Borrower, endorsers, guarantors, or sureties, or
whether primarily or secondarily liable, without notice to any other Borrower
and

 

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without affecting its liability hereunder; (iii) agrees that its liability shall
be unconditional and without regard to the liability of any other Borrower,
Agent or any Lender for any tax on the indebtedness; and (iv) to the fullest
extent permitted by law, expressly waives the benefit of any statute or rule of
law or equity now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the foregoing.

 

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

 

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

 

(e)                                  Nothing contained herein or in any other
Financing Document shall be construed as requiring Agent or any Lender to resort
to any part of the Collateral for the satisfaction of any of Borrowers’
obligations under the Financing Documents in preference or priority to any other
Collateral, and Agent may seek satisfaction out of all of the Collateral or any
part thereof, in its absolute discretion in respect of Borrowers’ obligations
under the Financing Documents.  In addition, Agent shall have the right from
time to time to partially foreclose upon any Collateral in any manner and for
any amounts secured by the Financing Documents then due and payable as
determined by Agent in its sole discretion, including, without limitation, the
following circumstances: (i) in the event any Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and/or interest, Agent may foreclose upon all or any part of the
Collateral to recover such

 

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delinquent payments, or (ii) in the event Agent elects to accelerate less than
the entire outstanding principal balance of the Loans, Agent may foreclose all
or any part of the Collateral to recover so much of the principal balance of the
Loans as Lender may accelerate and such other sums secured by one or more of the
Financing Documents as Agent may elect.  Notwithstanding one or more partial
foreclosures, any unforeclosed Collateral shall remain subject to the Financing
Documents to secure payment of sums secured by the Financing Documents and not
previously recovered.

 

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

 

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

 

Section 10.10                     Marshalling; Payments Set Aside.  Neither
Agent nor any Lender shall be under any obligation to marshal any assets in
payment of any or all of the Obligations.  To the extent that Borrower makes any
payment or Agent enforces its Liens or Agent or any Lender exercises its right
of set-off, and such payment or the proceeds of such enforcement or set-off is
subsequently invalidated, declared to be fraudulent or preferential, set aside,
or required to be repaid by anyone, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or set-off had
not occurred.

 

ARTICLE 11 - AGENT

 

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

 

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terms of Section 11.16 and to the terms of the other Financing Documents, Agent
is authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Financing Documents on behalf of Lenders.  The provisions
of this Article 11 are solely for the benefit of Agent and Lenders and neither
any Borrower nor any other Credit Party shall have any rights as a third party
beneficiary of any of the provisions hereof.  In performing its functions and
duties under this Agreement, Agent shall act solely as agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Borrower or any other Credit
Party.  Agent may perform any of its duties hereunder, or under the Financing
Documents, by or through its agents, servicers, trustees, investment managers or
employees.

 

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

 

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

 

Section 11.4                            Consultation with Experts.  Agent may
consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.

 

Section 11.5                            Liability of Agent.  Neither Agent nor
any of its directors, officers, agents, trustees, investment managers, servicers
or employees shall be liable to any Lender for any action taken or not taken by
it in connection with the Financing Documents, except that Agent shall be liable
with respect to its specific duties set forth hereunder but only to the extent
of its own gross negligence or willful misconduct in the discharge thereof as
determined by a final non-appealable judgment of a court of competent
jurisdiction.  Neither Agent nor any of its directors, officers, agents,
trustees, investment managers, servicers or employees shall be responsible for
or have any duty to ascertain, inquire into or verify (a) any statement,
warranty or representation made in connection with any Financing Document or any
borrowing hereunder; (b) the performance or observance of any of the covenants
or agreements specified in any Financing Document; (c) the satisfaction of any
condition specified in any Financing Document; (d) the validity, effectiveness,
sufficiency or genuineness of any Financing Document, any Lien purported to be
created or perfected thereby or any other instrument or writing furnished in
connection therewith; (e) the existence or non-existence of any Default or Event
of Default; or (f) the financial condition of any Credit Party.  Agent shall not
incur any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, facsimile or electronic
transmission or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.  Agent shall not be liable for any apportionment or

 

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distribution of payments made by it in good faith and if any such apportionment
or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them).

 

Section 11.6                            Indemnification.  Each Lender shall, in
accordance with its Pro Rata Share, indemnify Agent (to the extent not
reimbursed by Borrowers) upon demand against any cost, expense (including
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from Agent’s gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction) that Agent may suffer or incur in connection with the Financing
Documents or any action taken or omitted by Agent hereunder or thereunder.  If
any indemnity furnished to Agent for any purpose shall, in the opinion of Agent,
be insufficient or become impaired, Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against even if so directed
by Required Lenders until such additional indemnity is furnished.

 

Section 11.7                            Right to Request and Act on
Instructions.  Agent may at any time request instructions from Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the Financing Documents Agent is permitted or desires to take or to
grant, and if such instructions are promptly requested, Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the
Financing Documents until it shall have received such instructions from Required
Lenders or all or such other portion of the Lenders as shall be prescribed by
this Agreement.  Without limiting the foregoing, no Lender shall have any right
of action whatsoever against Agent as a result of Agent acting or refraining
from acting under this Agreement or any of the other Financing Documents in
accordance with the instructions of Required Lenders (or all or such other
portion of the Lenders as shall be prescribed by this Agreement) and,
notwithstanding the instructions of Required Lenders (or such other applicable
portion of the Lenders), Agent shall have no obligation to take any action if it
believes, in good faith, that such action would violate applicable Law or
exposes Agent to any liability for which it has not received satisfactory
indemnification in accordance with the provisions of Section 11.6.

 

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

 

Section 11.9                            Collateral Matters.  Lenders irrevocably
authorize Agent, at its option and in its discretion, to (a) release any Lien
granted to or held by Agent under any Security Document (i) upon termination of
the Revolving Loan Commitment and payment in full of all Obligations; or
(ii) constituting property sold or disposed of as part of or in connection with
any disposition permitted under any Financing Document (it being understood and
agreed that Agent

 

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may conclusively rely without further inquiry on a certificate of a Responsible
Officer as to the sale or other disposition of property being made in full
compliance with the provisions of the Financing Documents); and (b) subordinate
any Lien granted to or held by Agent under any Security Document to a Permitted
Lien that is allowed to have priority over the Liens granted to or held by Agent
pursuant to the definition of “Permitted Liens”.  Upon request by Agent at any
time, Lenders will confirm Agent’s authority to release and/or subordinate
particular types or items of Collateral pursuant to this Section 11.9.

 

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

 

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

 

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

 

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

 

(b)                                 Without limiting the rights of Agent to
designate an assignee pursuant to subsection (a) above, Agent may at any time
give notice of its resignation to the Lenders and Borrowers.  Upon receipt of
any such notice of resignation, Required Lenders shall have the

 

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right to appoint a successor Agent.  If no such successor shall have been so
appointed by Required Lenders and shall have accepted such appointment within
ten (10) Business Days after the retiring Agent gives notice of its resignation,
then the retiring Agent may on behalf of the Lenders, appoint a successor Agent;
provided, however, that if Agent shall notify Borrowers and the Lenders that no
Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice from Agent that no Person has
accepted such appointment and, from and following delivery of such notice,
(i) the retiring Agent shall be discharged from its duties and obligations
hereunder and under the other Financing Documents, and (ii) all payments,
communications and determinations provided to be made by, to or through Agent
shall instead be made by or to each Lender directly, until such time as Required
Lenders appoint a successor Agent as provided for above in this paragraph.

 

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

 

Section 11.13                     Payment and Sharing of Payment.

 

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

 

(i)                                     Agent shall have the right, on behalf of
Revolving Lenders to disburse funds to Borrowers for all Revolving Loans
requested or deemed requested by Borrowers pursuant to the terms of this
Agreement.  Agent shall be conclusively entitled to assume, for purposes of the
preceding sentence, that each Revolving Lender, other than any Non-Funding
Lenders, will fund its Pro Rata Share of all Revolving Loans requested by
Borrowers.  Each Revolving Lender shall reimburse Agent on demand, in accordance
with the provisions of the immediately following paragraph, for all funds
disbursed on its behalf by Agent pursuant to the first sentence of this
clause (i), or if Agent so requests, each Revolving Lender will remit to Agent
its Pro Rata Share of any Revolving Loan before Agent disburses the same to a
Borrower.  If Agent elects to require that each Revolving Lender make funds
available to Agent, prior to a disbursement by Agent to a Borrower, Agent shall
advise each Revolving Lender by telephone, facsimile or e-mail of the amount of
such Revolving Lender’s Pro Rata Share of the Revolving Loan requested by such
Borrower no later than noon (Eastern time) on the date of funding of such
Revolving Loan, and each such Revolving Lender shall pay Agent on such date such
Revolving Lender’s Pro Rata Share of such requested Revolving Loan, in same day
funds, by wire transfer to the Payment Account, or such other account as may be

 

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identified by Agent to Revolving Lenders from time to time.  If any Lender fails
to pay the amount of its Pro Rata Share of any funds advanced by Agent pursuant
to the first sentence of this clause (i) within one (1) Business Day after
Agent’s demand, Agent shall promptly notify Borrower Representative, and
Borrowers shall immediately repay such amount to Agent.  Any repayment required
by Borrowers pursuant to this Section 11.13 shall be accompanied by accrued
interest thereon from and including the date such amount is made available to a
Borrower to but excluding the date of payment at the rate of interest then
applicable to Revolving Loans.  Nothing in this Section 11.13 or elsewhere in
this Agreement or the other Financing Documents shall be deemed to require Agent
to advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its commitments hereunder or to prejudice any rights that
Agent or any Borrower may have against any Lender as a result of any default by
such Lender hereunder.

 

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

 

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

 

(iv)                              On the Closing Date, Agent, on behalf of
Lenders, may elect to advance to Borrowers the full amount of the initial Loans
to be made on the Closing Date prior to receiving funds from Lenders, in
reliance upon each Lender’s commitment to make its Pro Rata Share of such Loans
to Borrowers in a timely manner on such date.  If

 

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Agent elects to advance the initial Loans to Borrower in such manner, Agent
shall be entitled to receive all interest that accrues on the Closing Date on
each Lender’s Pro Rata Share of such Loans unless Agent receives such Lender’s
Pro Rata Share of such Loans before 3:00 p.m. (Eastern time) on the Closing
Date.

 

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

 

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

 

(b)                                 Reserved.

 

(c)                                  Return of Payments.

 

(i)                                     If Agent pays an amount to a Lender
under this Agreement in the belief or expectation that a related payment has
been or will be received by Agent from a Borrower and such related payment is
not received by Agent, then Agent will be entitled to recover such amount from
such Lender on demand without setoff, counterclaim or deduction of any kind,
together with interest accruing on a daily basis at the Federal Funds Rate.

 

(ii)                                  If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to any Borrower
or paid to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other
Financing Document, Agent will not be required to distribute any portion thereof
to any Lender.  In addition, each Lender will repay to Agent on demand any
portion of such amount that Agent has distributed to such Lender, together with
interest at such rate, if any, as Agent is required to pay to any Borrower or
such other Person, without setoff, counterclaim or deduction of any kind.

 

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

 

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

 

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

 

Section 11.15                     Reserved.

 

Section 11.16                     Amendments and Waivers.

 

(a)                                 No provision of this Agreement or any other
Financing Document may be materially amended, waived or otherwise modified
unless such amendment, waiver or other modification is in writing and is signed
or otherwise approved by Borrowers, the Required Lenders and any other Lender to
the extent required under Section 11.16(b).

 

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

 

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

 

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

 

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

 

Section 11.17                     Assignments and Participations.

 

(a)                                 Assignments.

 

(i)                                     Any Lender may at any time assign to one
or more Eligible Assignees all or any portion of such Lender’s Loan together
with all related obligations of such Lender hereunder.  Except as Agent may
otherwise agree, the amount of any such assignment (determined as of the date of
the applicable Assignment Agreement or, if a “Trade Date” is specified in such
Assignment Agreement, as of such Trade Date) shall be in a minimum aggregate
amount equal to $1,000,000 or, if less, the assignor’s entire interests in the
outstanding Loan; provided, however, that, in connection with simultaneous
assignments to two or more related Approved Funds, such Approved Funds shall be
treated as one assignee for purposes of determining compliance with the

 

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minimum assignment size referred to above.  Borrowers and Agent shall be
entitled to continue to deal solely and directly with such Lender in connection
with the interests so assigned to an Eligible Assignee until Agent shall have
received and accepted an effective Assignment Agreement executed, delivered and
fully completed by the applicable parties thereto and a processing fee of $3,500
to be paid by the assigning Lender; provided, however, that only one processing
fee shall be payable in connection with simultaneous assignments to two or more
related Approved Funds.

 

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

 

(iii)                               Agent, acting solely for this purpose as an
agent of Borrower, shall maintain at the office of its servicer located in
Bethesda, Maryland a copy of each Assignment Agreement delivered to it and a
register for the recordation of the names and addresses of each Lender, and the
commitments of, and principal amount of the Loan owing to, such Lender pursuant
to the terms hereof (the “Register”). The entries in such Register shall be
conclusive, absent manifest effort, and Borrower, Agent and Lenders may treat
each Person whose name is recorded therein pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. Such Register shall be available for inspection by Borrower and
any Lender, at any reasonable time upon reasonable prior notice to Agent. Each
Lender that sells a participation shall, acting solely for this purpose as an
agent of Borrower maintain a register on which it enters the name and address of
each participant and the principal amounts (and stated interest) of each
participant’s interest in the Obligations (each, a “Participant Register”). The
entries in the Participant Registers shall be conclusive, absent manifest error.
Each Participant Register shall be available for inspection by Borrower and the
Agent at any reasonable time upon reasonable prior notice to the applicable
Lender; provided, that no Lender shall have any obligation to disclose all or
any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any
commitments, loans, letters of credit or its other obligations under any
Financing Document) to any Person (including Borrower) except to the extent that
such disclosure is necessary to establish that such commitment, loan, letter of
credit or other obligation is in registered form under Section 

 

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5f.103-1(c) of the United States Treasury Regulations.  For the avoidance of
doubt, the Agent (in its capacity as Agent) shall have no responsibility for
maintaining a participant register.

 

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

 

(v)                                 Notwithstanding the foregoing provisions of
this Section 11.17(a) or any other provision of this Agreement, Agent has the
right, but not the obligation, to effectuate assignments of Loan via an
electronic settlement system acceptable to Agent as designated in writing from
time to time to the Lenders by Agent (the “Settlement Service”).  At any time
when the Agent elects, in its sole discretion, to implement such Settlement
Service, each such assignment shall be effected by the assigning Lender and
proposed assignee pursuant to the procedures then in effect under the Settlement
Service, which procedures shall be consistent with the other provisions of this
Section 11.17(a).  Each assigning Lender and proposed Eligible Assignee shall
comply with the requirements of the Settlement Service in connection with
effecting any assignment of Loan pursuant to the Settlement Service.  With the
prior written approval of Agent, Agent’s approval of such Eligible Assignee
shall be deemed to have been automatically granted with respect to any transfer
effected through the Settlement Service.  Assignments and assumptions of the
Loan shall be effected by the provisions otherwise set forth herein until Agent
notifies Lenders of the Settlement Service as set forth herein.

 

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

 

(c)                                  Replacement of Lenders.  Within thirty (30)
days after: (i) receipt by Agent of notice and demand from any Lender for
payment of additional costs as provided in Section 2.8(d), which demand shall
not have been revoked, (ii) any Borrower is required to pay

 

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any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.8(a), (iii) any Lender is a
Defaulted Lender, and the circumstances causing such status shall not have been
cured or waived; or (iv) any failure by any Lender to consent to a requested
amendment, waiver or modification to any Financing Document in which Required
Lenders have already consented to such amendment, waiver or modification but the
consent of each Lender, or each Lender affected thereby, is required with
respect thereto (each relevant Lender in the foregoing clauses (i) through
(iv) being an “Affected Lender”) each of Borrower Representative and Agent may,
at its option, notify such Affected Lender and, in the case of Borrowers’
election, the Agent, of such Person’s intention to obtain, at Borrowers’
expense, a replacement Lender (“Replacement Lender”) for such Lender, which
Replacement Lender shall be an Eligible Assignee and, in the event the
Replacement Lender is to replace an Affected Lender described in the preceding
clause (iv), such Replacement Lender consents to the requested amendment, waiver
or modification making the replaced Lender an Affected Lender.  In the event
Borrowers or Agent, as applicable, obtains a Replacement Lender within ninety
(90) days following notice of its intention to do so, the Affected Lender shall
sell, at par, and assign all of its Loan and funding commitments hereunder to
such Replacement Lender in accordance with the procedures set forth in
Section 11.17(a); provided, however, that (A) Borrowers shall have reimbursed
such Lender for its increased costs and additional payments for which it is
entitled to reimbursement under Section 2.8(a) or Section 2.8(d), as applicable,
of this Agreement through the date of such sale and assignment, and
(B) Borrowers shall pay to Agent the $3,500 processing fee in respect of such
assignment.  In the event that a replaced Lender does not execute an Assignment
Agreement pursuant to Section 11.17(a) within five (5) Business Days after
receipt by such replaced Lender of notice of replacement pursuant to this
Section 11.17(c) and presentation to such replaced Lender of an Assignment
Agreement evidencing an assignment pursuant to this Section 11.17(c), such
replaced Lender shall be deemed to have consented to the terms of such
Assignment Agreement, and any such Assignment Agreement executed by Agent, the
Replacement Lender and, to the extent required pursuant to Section 11.17(a),
Borrowers, shall be effective for purposes of this Section 11.17(c) and
Section 11.17(a).  Upon any such assignment and payment, such replaced Lender
shall no longer constitute a “Lender” for purposes hereof, other than with
respect to such rights and obligations that survive termination as set forth in
Section 12.1.

 

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

 

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

 

So long as Agent has not waived the conditions to the funding of Loans set forth
in Section 7.2 or Section 2.1, any Lender may deliver a notice to Agent stating
that such Lender shall cease making Revolving Loans due to the non-satisfaction
of one or more conditions to funding Loans set forth in Section 7.2 or
Section 2.1, and specifying any such non-satisfied conditions.  Any Lender
delivering any such notice shall become a non-funding Lender (a “Non-Funding
Lender”) for purposes of this Agreement commencing on the Business Day following
receipt by Agent of such notice, and shall cease to be a Non-Funding Lender on
the date on which such Lender has either revoked the effectiveness of such
notice or acknowledged in

 

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writing to each of Agent the satisfaction of the condition(s) specified in such
notice, or Required Lenders waive the conditions to the funding of such Loans
giving rise to such notice by Non-Funding Lender.  Each Non-Funding Lender shall
remain a Lender for purposes of this Agreement to the extent that such
Non-Funding Lender has Revolving Loan Outstandings in excess of $0; provided,
however, that during any period of time that any Non-Funding Lender exists, and
notwithstanding any provision to the contrary set forth herein, the following
provisions shall apply:

 

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

 

(b)                                 Except as provided in clause (a) above, the
Revolving Loan Commitment Amount of each Non-Funding Lender shall be deemed to
be $0.

 

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

 

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

 

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

 

Section 11.19                     Reserved.

 

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

 

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

 

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

 

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

 

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by Agent; provided, however, that, notwithstanding the foregoing, (x) “Eligible
Assignee” shall not include (i) any Borrower or any of a Borrower’s Affiliates
or (ii) unless an Event of Default has occurred and is continuing, any direct
competitor of Credit Parties, in each case, as determined by Agent in its
reasonable discretion, and (y) no proposed assignee intending to assume all or
any portion of the Revolving Loan Commitment shall be an Eligible Assignee
unless such proposed assignee either already holds a portion of such Revolving
Loan Commitment or has been approved as an Eligible Assignee by Agent.

 

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

 

ARTICLE 12 - MISCELLANEOUS

 

Section 12.1                            Survival.  All agreements,
representations and warranties made herein and in every other Financing Document
shall survive the execution and delivery of this Agreement and the other
Financing Documents and the other Operative Documents.  The provisions of
Section 2.10 and Articles 11 and 12 shall survive the payment of the Obligations
(both with respect to any Lender and all Lenders collectively) and any
termination of this Agreement and any judgment with respect to any Obligations,
including any final foreclosure judgment with respect to any Security Document,
and no unpaid or unperformed, current or future, Obligations will merge into any
such judgment.

 

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

 

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Section 12.3                            Notices.

 

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

 

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

 

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

 

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

 

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

 

Section 12.6                            Confidentiality.

 

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

 

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

 

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

 

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damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Financing Documents or the transactions contemplated hereby or thereby.

 

Section 12.8                            GOVERNING LAW; SUBMISSION TO
JURISDICTION.

 

(a)                                 THIS AGREEMENT, EACH NOTE AND EACH OTHER
FINANCING DOCUMENT, AND ALL DISPUTES AND OTHER MATTERS RELATING HERETO OR
THERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR
OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

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

 

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

 

Section 12.9                            WAIVER OF JURY TRIAL.

 

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

 

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FUTURE DEALINGS.  EACH BORROWER, AGENT AND EACH LENDER WARRANTS AND REPRESENTS
THAT IT HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL
COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

(b)                                 In the event any such action or proceeding
is brought or filed in any United States federal court sitting in the State of
California or in any state court of the State of California, and the waiver of
jury trial set forth in Section 12.9(a) hereof is determined or held to be
ineffective or unenforceable, the parties agree that all actions or proceedings
shall be resolved by reference to a private judge sitting without a jury,
pursuant to California Code of Civil Procedure Section 638, before a mutually
acceptable referee or, if the parties cannot agree, a referee selected by the
Presiding Judge of the Los Angeles County, California.  Such proceeding shall be
conducted in Los Angeles County, California, with California rules of evidence
and discovery applicable to such proceeding.  In the event any actions or
proceedings are to be resolved by judicial reference, any party may seek from
any court having jurisdiction thereover any prejudgment order, writ or other
relief and have such prejudgment order, writ or other relief enforced to the
fullest extent permitted by Law notwithstanding that all actions or proceedings
are otherwise subject to resolution by judicial reference.

 

Section 12.10                     Publication; Advertisement.

 

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

 

(b)                                 Advertisement.  Each Lender and each Credit
Party hereby authorizes MCF and SVB to publish the name of such Lender and
Credit Party, the existence of the financing arrangements referenced under this
Agreement, the primary purpose and/or structure of those arrangements, the
amount of credit extended under each facility, the title and role of each party
to this Agreement, and the total amount of the financing evidenced hereby in any
“tombstone”, comparable advertisement or press release which MCF and SVB elects
to submit for publication; provided that MCF and SVB shall be entitled to review
and consent to (such consent not to be unreasonably withheld conditioned or
delayed) any such publication made by the other party.  In addition, each Lender
and each Credit Party agrees that MCF and SVB may provide lending industry trade
organizations with information necessary and customary for inclusion in league
table measurements after the Closing Date.  With respect to any of the
foregoing, MCF and SVB shall provide Borrowers with an opportunity to review and
confer with MCF regarding the contents of any such tombstone, advertisement or
information, as applicable, prior to its submission for publication and,
following such review period, MCF and SVB may, from time to time, publish such
information in any media form desired by MCF or SVB, until such time that
Borrowers shall have requested MCF or SVB (as applicable) cease any such further
publication.

 

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

 

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

 

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

 

Section 12.14                     Expenses; Indemnity.

 

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

 

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Borrowers further agree that the Obligations include reasonable charges for such
work commensurate with the fees that would otherwise be charged by outside legal
counsel selected by Agent or such Lender for the work performed.

 

(b)                                 Each Borrower hereby agrees to indemnify,
pay and hold harmless Agent and Lenders and the officers, directors, employees,
trustees, agents, investment advisors and investment managers, collateral
managers, servicers, and counsel of Agent and Lenders (collectively called the
“Indemnitees”) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnitee) in connection with any
investigative, response, remedial, administrative or judicial matter or
proceeding, whether or not such Indemnitee shall be designated a party thereto
and including any such proceeding initiated by or on behalf of a Credit Party,
and the reasonable expenses of investigation by engineers, environmental
consultants and similar technical personnel and any commission, fee or
compensation claimed by any broker (other than any broker retained by Agent or
Lenders) asserting any right to payment for the transactions contemplated
hereby, which may be imposed on, incurred by or asserted against such Indemnitee
as a result of or in connection with the transactions contemplated hereby or by
the other Operative Documents (including (i)(A) as a direct or indirect result
of the presence on or under, or escape, seepage, leakage, spillage, discharge,
emission or release from, any property now or previously owned, leased or
operated by Borrower, any Subsidiary or any other Person of any Hazardous
Materials, (B) arising out of or relating to the offsite disposal of any
materials generated or present on any such property, or (C) arising out of or
resulting from the environmental condition of any such property or the
applicability of any governmental requirements relating to Hazardous Materials,
whether or not occasioned wholly or in part by any condition, accident or event
caused by any act or omission of Borrower or any Subsidiary, and (ii) proposed
and actual extensions of credit under this Agreement) and the use or intended
use of the proceeds of the Loans, except that Borrower shall have no obligation
hereunder to an Indemnitee with respect to any liability resulting from the
gross negligence or willful misconduct of such Indemnitee, as determined by a
final non-appealable judgment of a court of competent jurisdiction.  To the
extent that the undertaking set forth in the immediately preceding sentence may
be unenforceable, Borrower shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable Law to the payment and
satisfaction of all such indemnified liabilities incurred by the Indemnitees or
any of them.

 

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

 

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

 

Section 12.15                     Confession of Judgment.  UPON THE OCCURRENCE
OF AN EVENT OF DEFAULT, EACH BORROWER AUTHORIZES ANY ATTORNEY ADMITTED TO
PRACTICE BEFORE ANY COURT OF RECORD IN THE UNITED STATES OR THE CLERK OF SUCH
COURT TO APPEAR ON BEHALF OF SUCH BORROWER IN ANY COURT IN ONE OR MORE
PROCEEDINGS, OR BEFORE ANY CLERK THEREOF OR PROTHONOTARY OR OTHER COURT
OFFICIAL, AND TO CONFESS JUDGMENT AGAINST BORROWER IN FAVOR OF AGENT (FOR THE
BENEFIT OF ALL LENDERS) IN THE FULL AMOUNT DUE ON THIS AGREEMENT (INCLUDING
PRINCIPAL, ACCRUED INTEREST AND ANY AND ALL CHARGES, FEES AND COSTS) PLUS
ATTORNEYS’ FEES EQUAL TO FIFTEEN PERCENT (15%) OF THE AMOUNT DUE (EXCEPT THAT
AGENT SHALL NOT SEEK TO COLLECT AN AMOUNT IN EXCESS OF ITS ACTUAL ATTORNEYS’
FEES), PLUS COURT COSTS, ALL WITHOUT PRIOR NOTICE OR OPPORTUNITY OF SUCH
BORROWER FOR PRIOR HEARING.  EACH BORROWER AGREES AND CONSENTS THAT VENUE AND
JURISDICTION SHALL BE PROPER IN THE CIRCUIT COURT LOCATED IN OF THE STATE OF NEW
YORK LOCATED IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK.  THE AUTHORITY AND
POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST A BORROWER SHALL NOT BE EXHAUSTED
BY ONE OR MORE EXERCISES THEREOF, OR BY ANY IMPERFECT EXERCISE THEREOF, AND
SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT ENTERED PURSUANT THERETO; SUCH
AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR MORE OCCASIONS FROM TIME TO
TIME, IN THE SAME OR DIFFERENT JURISDICTIONS, AS OFTEN AS AGENT SHALL DEEM
NECESSARY, CONVENIENT, OR PROPER.

 

Section 12.16                     Reinstatement.  This Agreement shall remain in
full force and effect and continue to be effective should any petition or other
proceeding be filed by or against any Credit Party for liquidation or
reorganization, should any Credit Party become insolvent or make an assignment
for the benefit of any creditor or creditors or should an interim receiver,
receiver, receiver and manager or trustee be appointed for all or any
significant part of any Credit Party’s assets, and shall continue to be
effective or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a fraudulent preference reviewable
transaction or otherwise, all as though such payment or performance had not been
made.  In the event that any payment, or any

 

103

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

 

part thereof, is rescinded, reduced, restored or returned, the Obligations shall
be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

 

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

 

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

 

Section 12.19                     Cross Default and Cross Collateralization.

 

(a)                                 Cross-Default.  As stated under Section 10.1
hereof, an Event of Default under any of the Affiliated Financing Documents
shall be an Event of Default under this Agreement.  In addition, a Default or
Event of Default under any of the Financing Documents shall be a Default under
the Affiliated Financing Documents.

 

(b)                                 Cross Collateralization.  Borrowers
acknowledge and agree that the Collateral securing this Loan, also secures the
Affiliated Obligations.

 

(c)                                  Consent.  Each Borrower authorizes Agent,
without giving notice to any Borrower or obtaining the consent of any Borrower
and without affecting the liability of any Borrower for the Affiliated
Obligations directly incurred by the Borrowers, from time to time to:

 

(i)                                     compromise, settle, renew, extend the
time for payment, change the manner or terms of payment, discharge the
performance of, decline to enforce, or release all or any of the Affiliated
Obligations; grant other indulgences to any Borrowers in respect thereof; or
modify in any manner any documents relating to the Affiliated Obligations;

 

(ii)                                  declare all Affiliated Obligations due and
payable upon the occurrence and during the continuance of an Event of Default;

 

(iii)                               take and hold security for the performance
of the Affiliated Obligations of any Borrowers and exchange, enforce, waive and
release any such security;

 

(iv)                              apply and reapply such security and direct the
order or manner of sale thereof as Agent, in its sole discretion, may determine;

 

(v)                                 release, surrender or exchange any deposits
or other property securing the Affiliated Obligations or on which Agent at any
time may have a Lien; release, substitute or add any one or more endorsers or
guarantors of the Affiliated Obligations of any Borrowers; or compromise,
settle, renew, extend the time for

 

104

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

 

payment, discharge the performance of, decline to enforce, or release all or any
obligations of any such endorser or guarantor or other Person who is now or may
hereafter be liable on any Affiliated Obligations or release, surrender or
exchange any deposits or other property of any such Person;

 

(vi)                              apply payments received by Lender from
Borrower to any Obligations or Affiliated Obligations, as permitted in
accordance with the terms of this Agreement and in such order as Lender shall
determine, in its sole discretion; and

 

(vii)                           assign the Affiliated Financing Documents in
whole or in part.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

105

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

 

IN WITNESS WHEREOF, intending to be legally bound, each of the parties have
caused this Agreement to be executed on the day and year first above mentioned.

 

BORROWER:

THE SPECTRANETICS CORPORATION, as Borrower and Borrower Representative

 

 

 

 

 

By:

/s/ Stacy McMahan

 

Name:

Stacy McMahan

 

Title:

Chief Financial Officer

 

 

 

ANGIOSCORE INC., as Borrower

 

 

 

 

 

By:

/s/ Shar Matin

 

Name:

Shar Matin

 

Title:

President

 

 

 

Address:

 

 

 

The Spectranetics Corporation

 

9965 Federal Drive

 

Colorado Springs, CO 80921

 

Attn:  Stacy P. McMahan

 

Facsimile: 719-633-4207

 

E-Mail:  stacy.mcmahan@spnc.com

 

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

 

AGENT:

 

 

MIDCAP FINANCIAL TRUST

 

 

 

By:

Apollo Capital Management, L.P.,

 

 

its investment manager

 

 

 

 

By:

Apollo Capital Management GP, LLC,

 

 

its general partner

 

 

 

 

 

 

By:

/s/ Michael Levin

 

 

Name: Michael Levin

 

 

Title:   Authorized Signatory

 

 

 

 

 

Address:

 

 

 

c/o MidCap Financial Services, LLC, as servicer

 

7255 Woodmont Avenue, Suite 200

 

Bethesda, Maryland 20814

 

Attn:  Account Manager for Spectranetics transaction

 

Facsimile:  301-941-1450

 

E-mail:  notices@midcapfinancial.com

 

 

 

with a copy to:

 

 

 

c/o MidCap Financial Services, LLC, as servicer

 

7255 Woodmont Avenue, Suite 200

 

Bethesda, Maryland 20814

 

Attn:  General Counsel

 

Facsimile:  301-941-1450

 

E-mail:  legalnotices@midcapfinancial.com

 

 

 

 

 

Payment Account Designation:

 

 

 

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

 

ABA #:  121-000-248

 

Account Name:  MidCap Funding IV Trust — Collections

 

Account #:  2000036282803

 

Attention:  The Spectranetics Corporation

 

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

 

LENDER:

 

 

MIDCAP FINANCIAL TRUST

 

 

 

By:

Apollo Capital Management, L.P.,

 

 

its investment manager

 

 

 

 

By:

Apollo Capital Management GP, LLC,

 

 

its general partner

 

 

 

 

 

 

By:

/s/ Michael Levin

 

 

Name: Michael Levin

 

 

Title:   Authorized Signatory

 

 

 

 

 

Address:

 

 

 

c/o MidCap Financial Services, LLC, as servicer

 

7255 Woodmont Avenue, Suite 200

 

Bethesda, Maryland 20814

 

Attn:  Account Manager for Spectranetics transaction

 

Facsimile:  301-941-1450

 

E-mail:  notices@midcapfinancial.com

 

 

 

with a copy to:

 

 

 

c/o MidCap Financial Services, LLC, as servicer

 

7255 Woodmont Avenue, Suite 200

 

Bethesda, Maryland 20814

 

Attn:  General Counsel

 

Facsimile:  301-941-1450

 

E-mail:  legalnotices@midcapfinancial.com

 

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

 

LENDER:

SILICON VALLEY BANK

 

 

 

By:

/s/ Tom Herzberg

 

Name:

Tom Herzberg

 

Title:

Director

 

 

 

 

 

Address:

 

 

 

380 Interlock Crescent

 

Suite 800

 

Broomfield, CO 80021

 

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

 

ANNEXES, EXHIBITS AND SCHEDULES

 

ANNEXES

 

Annex A

Commitment Annex

 

EXHIBITS

 

Exhibit A

[Reserved]

Exhibit B

Form of Compliance Certificate

Exhibit C

Borrowing Base Certificate

Exhibit D

Form of Notice of Borrowing

Exhibit E

[Reserved]

Exhibit F

Closing Checklist

 

SCHEDULES

 

Schedule 2.1

Reserved

Schedule 3.1

Existence, Organizational ID Numbers, Foreign Qualification, Prior Names

Schedule 3.4

Capitalization

Schedule 3.6

Litigation

Schedule 3.17

Material Contracts

Schedule 3.18

Environmental Compliance

Schedule 3.19

Intangible Assets

Schedule 4.9

Litigation, Governmental Proceedings and Other Notice Events

Schedule 5.1

Debt; Contingent Obligations

Schedule 5.2

Liens

Schedule 5.7

Permitted Investments

Schedule 5.8

Affiliate Transactions

Schedule 5.11

Business Description

Schedule 5.14

Deposit Accounts and Securities Accounts

Schedule 6.3

Minimum Net Revenue

Schedule 7.4

Post-Closing Obligations

Schedule 8.2(b)

Exceptions to Healthcare Representations and Warranties

Schedule 9.1

Collateral

Schedule 9.2

Location of Collateral

 

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

 

ANNEX A TO CREDIT AGREEMENT (COMMITMENT ANNEX)

 

(REVOLVER)

 

Lender

 

Revolving Loan
Commitment Amount

 

Revolving Loan
Commitment Percentage

 

MidCap Financial Trust

 

$

38,636,363.64

 

77.27

%

Silicon Valley Bank

 

$

11,363,636.36

 

22.73

%

TOTALS

 

$

50,000,000.00

 

100

%

 

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

 

EXHIBIT A TO CREDIT AGREEMENT (RESERVED)

 

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

 

EXHIBIT B TO CREDIT AGREEMENT (FORM OF COMPLIANCE CERTIFICATE)

 

COMPLIANCE CERTIFICATE

 

This Compliance Certificate is given by
                                        , a Responsible Officer of [The
Spectranetics Corporation] (the “Borrower Representative”), pursuant to that
certain Credit and Security Agreement dated as of                    , 2015
among the Borrower Representative, AngioScore Inc. and any additional Borrower
that may hereafter be added thereto (collectively, “Borrowers”), MidCap
Financial Trust, individually as a Lender and as Agent, and the financial
institutions or other entities from time to time parties hereto, each as a
Lender (as such agreement may have been amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”).  Capitalized
terms used herein without definition shall have the meanings set forth in the
Credit Agreement.

 

The undersigned Responsible Officer hereby certifies to Agent and Lenders that:

 

(a)           [the financial statements delivered with this certificate in
accordance with Section 4.1 of the Credit Agreement fairly present in all
material respects the results of operations and financial condition of Borrowers
and their Consolidated Subsidiaries as of the dates and the accounting period
covered by such financial statements;](1)

 

(b)           I have reviewed the terms of the Credit Agreement and have made,
or caused to be made under my supervision, a review in reasonable detail of the
transactions and conditions of Borrowers and their Consolidated Subsidiaries
during the accounting period covered by such financial statements and such
review has not disclosed the existence during or at the end of such accounting
period, and I have no knowledge of the existence as of the date hereof, of any
condition or event that constitutes a Default or an Event of Default, except as
set forth in Schedule 1 hereto, which includes a description of the nature and
period of existence of such Default or an Event of Default and what action
Borrowers have taken, are undertaking and propose to take with respect thereto;

 

(c)           except as noted on Schedule 2 attached hereto, the Credit
Agreement contains a complete and accurate list of all business locations of
Borrowers and Guarantors and all names under which Borrowers and Guarantors
currently conduct business; Schedule 2 specifically notes any changes in the
names under which any Borrower or Guarantor conduct business;

 

(d)           except as noted on Schedule 3 attached hereto, the undersigned has
no knowledge of (i) any federal or state tax liens having been filed against any
Borrower, Guarantor or any Collateral or (ii) any failure of any Borrower or
Guarantors to make required payments of withholding or other tax obligations of
any Borrower or Guarantors during the accounting period to which the attached
statements pertain or any subsequent period;

 

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

(1)  Use for quarterly and annual compliance certificates only.

 

1

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

 

(e)           Schedule 5.14 to the Credit Agreement contains a complete and
accurate statement of all deposit accounts and investment accounts maintained by
Borrowers and Guarantors;

 

(f)            except as noted on Schedule 5 attached hereto, Schedule 3.6 to
the Credit Agreement is true and correct in all material respects;

 

(g)           except as noted on Schedule 5 attached hereto, Schedule 3.19 to
the Credit Agreement is true and correct in all material respects;

 

(h)           except as noted on Schedule 6 attached hereto, no Borrower or
Guarantor has acquired, by purchase or otherwise, any Chattel Paper, letter of
credit rights, Instruments, documents or investment property that has not
previously been reported to Agent on any Schedule 6 to any previous Compliance
Certificate delivered by Borrower Representative to Agent;

 

(i)            except as noted on Schedule 7 attached hereto, no Borrower or
Guarantor is aware of any commercial tort claim that has not previously been
reported to Agent on any Schedule 7 to any previous Compliance Certificate
delivered by Borrower Representative to Agent;

 

(j)            Borrowers are in compliance with the covenants contained in
Article 6 of the Credit Agreement, as demonstrated by the calculation of such
covenants below, except as set forth below; in determining such compliance, the
following calculations have been made:

 

[insert calculations, as applicable]

 

Such calculations and the certifications contained therein are true, correct and
complete.

 

2

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

 

The foregoing certifications and computations are made as of                 ,
201   (end of month) and as of              , 201  .

 

 

Sincerely,

 

 

 

THE SPECTRANETICS CORPORATION

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

3

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

 

EXHIBIT C TO CREDIT AGREEMENT (BORROWING BASE CERTIFICATE)

 

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

 

EXHIBIT D TO CREDIT AGREEMENT (FORM OF NOTICE OF BORROWING)

 

NOTICE OF BORROWING

 

This Notice of Borrowing is given by                                    , a
Responsible Officer of The Spectranetics Corporation (the “Borrower
Representative”), pursuant to that certain Credit and Security Agreement dated
as of                      , 2015 among the Borrower Representative, AngioScore
Inc. and any additional Borrower that may hereafter be added thereto
(collectively, “Borrowers”), MidCap Financial Trust, individually as a Lender
and as Agent, and the financial institutions or other entities from time to time
parties hereto, each as a Lender (as such agreement may have been amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”).  Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.

 

The undersigned Responsible Officer hereby gives notice to Agent of Borrower
Representative’s request to borrow $                      of Revolving Loans on
                     , 201  .  Attached is a Borrowing Base Certificate
complying in all respects with the Credit Agreement and confirming that, after
giving effect to the requested advance, the Revolving Loan Outstandings will not
exceed the Revolving Loan Limit.

 

The undersigned officer hereby certifies that, both before and after giving
effect to the request above (a) each of the conditions precedent set forth in
Section 7.2 have been satisfied, (b) all of the representations and warranties
contained in the Credit Agreement and the other Financing Documents are true,
correct and complete in all material respects as of the date hereof, except to
the extent such representation or warranty relates to a specific date, in which
case such representation or warranty is true, correct and complete as of such
earlier date; provided, however, in each case, such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof, and (c) no Default or
Event of Default has occurred and is continuing on the date hereof.

 

IN WITNESS WHEREOF, the undersigned officer has executed and delivered this
Notice of Borrowing this         day of                 , 201  .

 

 

Sincerely,

 

 

 

[THE SPECTRANETICS CORPORATION]

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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

 

Exhibit E to Credit Agreement (Reserved)

 

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

 

Schedule 3.1 — Existence, Organizational ID Numbers, Foreign Qualification,
Prior Names

 

Borrower

 

Prior Names

 

Type of Entity /
State of
Formation

 

States
Qualified

 

State Org. ID
Number

 

Federal Tax
ID Number

 

Location of Borrower
(address)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Schedule 3.19

 

INTANGIBLE ASSETS SCHEDULE

 

INTELLECTUAL PROPERTY (REGISTRATIONS AND APPLICATIONS)

 

 

 

Borrower that
is Owner of IP

 

Name / Identifier of
IP

 

Type of IP
(e.g., patent,
TM, ©, mask
work)

 

Registration/Publication or
Application Number

 

Filing
Date/Expiration
Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTANGIBLE ASSETS SCHEDULE (CONTINUED)

 

LICENSE AND SIMILAR AGREEMENTS

 

INBOUND LICENSE # 1 [COMPLETE FOR EACH AGREEMENT]

Name and Date of License Agreement:

 

 

Borrower that is Licensee:

 

 

Name and address of Licensor:

 

 

Expiration Date of License

 

 

Exclusive License [Y/N]?

 

 

Restrictions on:

 

Right to Grant a Lien [Y/N]?

 

 

 

Right to Assign [Y/N]?

 

 

 

Right to Sublicense [Y/N]?

 

 

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

 

Does Default or Termination Affect Agent’s Ability to sell [Y/N]?

 

 

 

Describe Licensed Intellectual Property For This License

 

Name / Identifier of IP

 

Type of IP (e.g., patent,
TM, ©, mask work)

 

Registration/
Publication or Application Number

 

Filing Date/Expiration Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INBOUND LICENSE # 2 [COMPLETE FOR EACH AGREEMENT]

Name and Date of License Agreement:

 

 

Borrower that is Licensee:

 

 

Name and address of Licensor:

 

 

Expiration Date of License

 

 

Exclusive License [Y/N]?

 

 

Restrictions on:

 

Right to Grant a Lien [Y/N]?

 

 

 

Right to Assign [Y/N]?

 

 

 

Right to Sublicense [Y/N]?

 

Does Default or Termination Affect Agent’s Ability to sell [Y/N]?

 

 

 

Describe Licensed Intellectual Property For This License

 

Name / Identifier of IP

 

Type of IP (e.g., patent,
TM, ©, mask work)

 

Registration/
Publication or Application Number

 

Filing Date/Expiration Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[REPEAT ABOVE FOR EACH INBOUND LICENSE AGREEMENT]

 

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

 

OUTBOUND LICENSE # 1 [COMPLETE FOR EACH AGREEMENT]

Name and Date of License Agreement:

 

 

Borrower that is Licensor:

 

 

Name and address of Licensee:

 

 

Expiration Date of License

 

 

Exclusive License [Y/N]?

 

 

Restrictions on:

 

Right to Grant a Lien [Y/N]?

 

 

 

Right to Assign [Y/N]?

 

 

 

Right to Sublicense [Y/N]?

 

Does Default or Termination Affect Agent’s Ability to sell [Y/N]?

 

 

 

Describe Licensed Intellectual Property For This License

 

Name / Identifier of IP

 

Type of IP (e.g., patent,
TM, ©, mask work)

 

Registration/
Publication or Application Number

 

Filing Date/Expiration Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[REPEAT ABOVE FOR EACH OUTBOUND LICENSE AGREEMENT]

 

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

 

Schedule 6.3 — Minimum Net Revenue Schedule

 

Testing Date

 

Minimum Net Revenue

 

December 31, 2015

 

$

240,000

 

January 31, 2016

 

$

240,667

 

February 29, 2016

 

$

241,334

 

March 31, 2016

 

$

242,000

 

April 30, 2016

 

$

242,667

 

May 31, 2016

 

$

243,334

 

June 30, 2016

 

$

244,000

 

July 31, 2016

 

$

244,734

 

August 31, 2016

 

$

245,467

 

September 30, 2016

 

$

246,200

 

October 31, 2016

 

$

246,967

 

November 30, 2016

 

$

247,734

 

December 31, 2016

 

$

248,500

 

January 31, 2017

 

$

250,367

 

February 28, 2017

 

$

252,234

 

March 31, 2017

 

$

254,100

 

April 30, 2017

 

$

254,800

 

May 31, 2017

 

$

255,500

 

June 30, 2017

 

$

256,200

 

July 31, 2017

 

$

256,970

 

August 31, 2017

 

$

257,740

 

September 30, 2017

 

$

258,510

 

October 31, 2017

 

$

259,315

 

November 30, 2017

 

$

260,120

 

December 31, 2017

 

$

260,925

 

Thereafter

 

85% of BOD approved plan, but must include 5% same period YOY TTM growth

 

 

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

 

Schedule 7.4 — Post Closing Requirements

 

Borrowers shall satisfy and complete each of the following obligations, or
provide Agent each of the items listed below, as applicable, on or before the
date indicated below, all to the satisfaction of Agent in its sole and absolute
discretion:

 

1.                                      No later than sixty (60) days after the
Closing Date (or such later date as Agent may agree in writing), Borrowers shall
ensure that the Wells Account is closed and that all funds previously on deposit
therein have been transferred to a Deposit Account or Securities Account at SVB
that is subject to a Deposit Account Control Agreement or Securities Account
Control Agreement, as applicable.

 

2.                                      Borrowers shall, within five
(5) Business Days after the Closing Date (or such later date as Agent may agree
in writing), deliver a Deposit Account Control Agreement with SVB, in form and
substance acceptable to Agent, duly executed and delivered by the applicable
Borrower, Agent and SVB, for each SVB Deposit Account listed on Schedule 5.14 as
of the Closing Date.

 

3.                                      Borrowers shall, by the date that is
ninety (90) days following the Closing Date (or such later date as Agent may
agree in writing), provide Agent with landlord’s agreement, consignment
agreements, landlord waivers, and/or bailee waivers (as applicable), each of
which shall be reasonably satisfactory in form and substance to Agent, for each
of the following locations: (a) 5055 Brandin Court, Fremont, California 94538,
(b) 6655 Wedgwood Road North, Suite 105, Maple Grove, Minnesota 55311, and
(c) 6519 Dumbarton Circle, Fremont, California 94555.

 

4.                                      Borrowers shall, by the date that is ten
(10) Business Days following the Closing Date (or such later date as Agent may
agree in writing), provide Agent with a landlord’s agreement, which shall be
reasonably satisfactory in form and substance to Agent, for Borrower’s
headquarters located at 9965 Federal Drive, Colorado Springs, CO 80921.

 

5.                                      Borrowers shall, within thirty (30) days
after the Closing Date (or such later date as Agent may agree in writing), cause
to be filed a Request for Release and Release of Deed of Trust and such other
documents as may be reasonably necessary or desirable to terminate that certain
Deed of Trust issued in favor Wells Fargo Bank, National Association with
respect to the Closing Date Real Property.

 

Borrower’s failure to complete and satisfy any of the above obligations on or
before the date indicated above, or Borrower’s failure to deliver any of the
above listed items on or before the date indicated above, shall constitute an
immediate an automatic Event of Default.

 

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

 

Schedule 9.1 — Collateral

 

The Collateral consists of all of Borrower’s assets, including without
limitation, all of Borrower’s right, title and interest in and to the following,
whether now owned or hereafter created, acquired or arising:

 

(a)                                 all goods, Accounts (including health-care
insurance receivables), Equipment, Inventory, contract rights or rights to
payment of money, leases, license agreements, franchise agreements, General
Intangibles, commercial tort claims, documents, instruments (including any
promissory notes), chattel paper (whether tangible or electronic), cash, deposit
accounts, securities accounts, fixtures, letter of credit rights (whether or not
the letter of credit is evidenced by a writing), securities, and all other
investment property, supporting obligations, and financial assets, whether now
owned or hereafter acquired, wherever located;

 

(b)                                 all of Borrowers’ books and records relating
to any of the foregoing; and

 

(c)                                  any and all claims, rights and interests in
any of the above and all substitutions for, additions, attachments, accessories,
accessions and improvements to and replacements, products, proceeds and
insurance proceeds of any or all of the foregoing.

 

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

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE 1 -  DEFINITIONS

1

 

 

 

Section 1.1

Certain Defined Terms

1

Section 1.2

Accounting Terms and Determinations

30

Section 1.3

Other Definitional and Interpretive Provisions

30

Section 1.4

Time is of the Essence

31

 

 

 

ARTICLE 2 -  LOANS

31

 

 

 

Section 2.1

Loans

31

Section 2.2

Interest, Interest Calculations and Certain Fees

33

Section 2.3

Notes

35

Section 2.4

[Reserved]

36

Section 2.5

[Reserved]

36

Section 2.6

General Provisions Regarding Payment; Loan Account

36

Section 2.7

Maximum Interest

36

Section 2.8

Taxes; Capital Adequacy

37

Section 2.9

Appointment of Borrower Representative

39

Section 2.10

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

39

Section 2.11

Collections and Lockbox Account

42

Section 2.12

Termination; Restriction on Termination

44

 

 

 

ARTICLE 3 -  REPRESENTATIONS AND WARRANTIES

44

 

 

 

Section 3.1

Existence and Power

44

Section 3.2

Organization and Governmental Authorization; No Contravention

45

Section 3.3

Binding Effect

45

Section 3.4

Capitalization

45

Section 3.5

Financial Information

45

Section 3.6

Litigation

46

Section 3.7

Ownership of Property

46

Section 3.8

No Default

46

 

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Section 3.9

Labor Matters

46

Section 3.10

Regulated Entities

46

Section 3.11

Margin Regulations

46

Section 3.12

Compliance With Laws; Anti-Terrorism Laws

47

Section 3.13

Taxes

47

Section 3.14

Compliance with ERISA

47

Section 3.15

Consummation of Operative Documents; Brokers

48

Section 3.16

Reserved

48

Section 3.17

Material Contracts

48

Section 3.18

Compliance with Environmental Requirements; No Hazardous Materials

48

Section 3.19

Intellectual Property and License Agreements

49

Section 3.20

Solvency

49

Section 3.21

Full Disclosure

49

Section 3.22

Interest Rate

50

Section 3.23

Subsidiaries

50

Section 3.24

Reserved

50

Section 3.25

Accuracy of Schedules

50

 

 

 

ARTICLE 4 -  AFFIRMATIVE COVENANTS

50

 

 

 

Section 4.1

Financial Statements and Other Reports

50

Section 4.2

Payment and Performance of Obligations

51

Section 4.3

Maintenance of Existence

51

Section 4.4

Maintenance of Property; Insurance

51

Section 4.5

Compliance with Laws and Material Contracts

53

Section 4.6

Inspection of Property, Books and Records

53

Section 4.7

Use of Proceeds

53

Section 4.8

Estoppel Certificates

53

Section 4.9

Notices of Material Contracts, Litigation and Defaults

54

Section 4.10

Hazardous Materials; Remediation

55

 

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Section 4.11

Further Assurances

55

Section 4.12

Reserved

57

Section 4.13

Power of Attorney

57

Section 4.14

Borrowing Base Collateral Administration

57

Section 4.15

Schedule Updates

58

Section 4.16

Intellectual Property and Licensing

58

Section 4.17

Regulatory Reporting and Covenants

59

 

 

 

ARTICLE 5 -  NEGATIVE COVENANTS

60

 

 

 

Section 5.1

Debt; Contingent Obligations

60

Section 5.2

Liens

60

Section 5.3

Distributions

60

Section 5.4

Restrictive Agreements

60

Section 5.5

Payments and Modifications of Subordinated Debt

61

Section 5.6

Consolidations, Mergers and Sales of Assets; Change in Control

61

Section 5.7

Purchase of Assets, Investments

62

Section 5.8

Transactions with Affiliates

62

Section 5.9

Modification of Organizational Documents

62

Section 5.10

Modification of Certain Agreements

62

Section 5.11

Conduct of Business

62

Section 5.12

Reserved

63

Section 5.13

Limitation on Sale and Leaseback Transactions

63

Section 5.14

Deposit Accounts and Securities Accounts; Payroll and Benefits Accounts

63

Section 5.15

Compliance with Anti-Terrorism Laws

63

 

 

 

ARTICLE 6 -  - FINANCIAL COVENANTS

64

 

 

 

Section 6.1

Additional Defined Terms

64

Section 6.2

Minimum Cash

64

Section 6.3

Minimum Net Revenue

64

 

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Section 6.4

Evidence of Compliance

64

 

 

 

ARTICLE 7 -  CONDITIONS

65

 

 

 

Section 7.1

Conditions to Closing

65

Section 7.2

Conditions to Each Loan

65

Section 7.3

Searches

66

Section 7.4

Post Closing Requirements

66

 

 

 

ARTICLE 8 -  REGULATORY AND LIFE SCIENCES MATTERS

67

 

 

 

Section 8.1

Reserved

67

Section 8.2

Representations and Warranties

67

Section 8.3

Healthcare Operations

69

 

 

 

ARTICLE 9 -  SECURITY AGREEMENT

70

 

 

 

Section 9.1

Generally

70

Section 9.2

Representations and Warranties and Covenants Relating to Collateral

71

 

 

 

ARTICLE 10 -  EVENTS OF DEFAULT

74

 

 

 

Section 10.1

Events of Default

74

Section 10.2

Acceleration and Suspension or Termination of Revolving Loan Commitment

77

Section 10.3

UCC Remedies

78

Section 10.4

[Reserved]

80

Section 10.5

Default Rate of Interest

80

Section 10.6

Setoff Rights

80

Section 10.7

Application of Proceeds

80

Section 10.8

Waivers

81

Section 10.9

Injunctive Relief

83

Section 10.10

Marshalling; Payments Set Aside

83

 

 

 

ARTICLE 11 -  AGENT

83

 

 

 

Section 11.1

Appointment and Authorization

83

Section 11.2

Agent and Affiliates

84

 

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Section 11.3

Action by Agent

84

Section 11.4

Consultation with Experts

84

Section 11.5

Liability of Agent

84

Section 11.6

Indemnification

85

Section 11.7

Right to Request and Act on Instructions

85

Section 11.8

Credit Decision

85

Section 11.9

Collateral Matters

85

Section 11.10

Agency for Perfection

86

Section 11.11

Notice of Default

86

Section 11.12

Assignment by Agent; Resignation of Agent; Successor Agent

86

Section 11.13

Payment and Sharing of Payment

87

Section 11.14

Right to Perform, Preserve and Protect

90

Section 11.15

Reserved

90

Section 11.16

Amendments and Waivers

90

Section 11.17

Assignments and Participations

91

Section 11.18

Funding and Settlement Provisions Applicable When Non-Funding Lenders Exist

94

Section 11.19

Reserved

95

Section 11.20

Definitions

95

 

 

 

ARTICLE 12 -  MISCELLANEOUS

96

 

 

 

Section 12.1

Survival

96

Section 12.2

No Waivers

96

Section 12.3

Notices

97

Section 12.4

Severability

97

Section 12.5

Headings

98

Section 12.6

Confidentiality

98

Section 12.7

Waiver of Consequential and Other Damages

98

Section 12.8

GOVERNING LAW; SUBMISSION TO JURISDICTION

99

Section 12.9

WAIVER OF JURY TRIAL

99

 

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Section 12.10

Publication; Advertisement

100

Section 12.11

Counterparts; Integration

101

Section 12.12

No Strict Construction

101

Section 12.13

Lender Approvals

101

Section 12.14

Expenses; Indemnity

101

Section 12.15

Confession of Judgment

103

Section 12.16

Reinstatement

103

Section 12.17

Successors and Assigns

104

Section 12.18

USA PATRIOT Act Notification

104

Section 12.19

Cross Default and Cross Collateralization

104

 

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