Exhibit 10.2

 

Execution Version

 

 

AMENDED AND RESTATED

 

REVOLVING CREDIT AND SECURITY AGREEMENT

 

dated as of June 9, 2017

 

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 FUNDING IV TRUST,

 

as Agent and as a Lender,

 

and

 

THE ADDITIONAL LENDERS

 

FROM TIME TO TIME PARTY HERETO

 

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ARTICLE 1 -  DEFINITIONS

6

 

 

 

 

Section 1.1

 

Certain Defined Terms

6

 

 

 

 

Section 1.2

 

Accounting Terms and Determinations

35

 

 

 

 

Section 1.3

 

Other Definitional and Interpretive Provisions

36

 

 

 

 

Section 1.4

 

Time is of the Essence

36

 

 

 

 

ARTICLE 2 -  LOANS

36

 

 

 

 

Section 2.1

 

Loans

36

 

 

 

 

Section 2.2

 

Interest, Interest Calculations and Certain Fees

39

 

 

 

 

Section 2.3

 

Notes

41

 

 

 

 

Section 2.4

 

[Reserved]

42

 

 

 

 

Section 2.5

 

[Reserved]

42

 

 

 

 

Section 2.6

 

General Provisions Regarding Payment; Loan Account

42

 

 

 

 

Section 2.7

 

Maximum Interest

42

 

 

 

 

Section 2.8

 

Taxes; Capital Adequacy

43

 

 

 

 

Section 2.9

 

Appointment of Borrower Representative

45

 

 

 

 

Section 2.10

 

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

45

 

 

 

 

Section 2.11

 

Collections and Lockbox Account

48

 

 

 

 

Section 2.12

 

Termination; Restriction on Termination

50

 

 

 

 

ARTICLE 3 -  REPRESENTATIONS AND WARRANTIES

50

 

 

 

 

Section 3.1

 

Existence and Power

50

 

 

 

 

Section 3.2

 

Organization and Governmental Authorization; No Contravention

51

 

 

 

 

Section 3.3

 

Binding Effect

51

 

 

 

 

Section 3.4

 

Capitalization

51

 

 

 

 

Section 3.5

 

Financial Information

51

 

 

 

 

Section 3.6

 

Litigation

52

 

 

 

 

Section 3.7

 

Ownership of Property

52

 

 

 

 

Section 3.8

 

No Default

52

 

 

 

 

Section 3.9

 

Labor Matters

52

 

 

 

 

Section 3.10

 

Regulated Entities

52

 

 

 

 

Section 3.11

 

Margin Regulations

52

 

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Section 3.12

 

Compliance With Laws; Anti-Terrorism Laws

53

 

 

 

 

Section 3.13

 

Taxes

53

 

 

 

 

Section 3.14

 

Compliance with ERISA

53

 

 

 

 

Section 3.15

 

Consummation of Operative Documents; Brokers

54

 

 

 

 

Section 3.16

 

Reserved

54

 

 

 

 

Section 3.17

 

Material Contracts

54

 

 

 

 

Section 3.18

 

Compliance with Environmental Requirements; No Hazardous Materials

54

 

 

 

 

Section 3.19

 

Intellectual Property and License Agreements

55

 

 

 

 

Section 3.20

 

Solvency

55

 

 

 

 

Section 3.21

 

Full Disclosure

55

 

 

 

 

Section 3.22

 

Interest Rate

56

 

 

 

 

Section 3.23

 

Subsidiaries

56

 

 

 

 

Section 3.24

 

Reserved

56

 

 

 

 

Section 3.25

 

Accuracy of Schedules

56

 

 

 

 

ARTICLE 4 -  AFFIRMATIVE COVENANTS

56

 

 

 

 

Section 4.1

 

Financial Statements and Other Reports

56

 

 

 

 

Section 4.2

 

Payment and Performance of Obligations

57

 

 

 

 

Section 4.3

 

Maintenance of Existence

57

 

 

 

 

Section 4.4

 

Maintenance of Property; Insurance

57

 

 

 

 

Section 4.5

 

Compliance with Laws and Material Contracts

59

 

 

 

 

Section 4.6

 

Inspection of Property, Books and Records

59

 

 

 

 

Section 4.7

 

Use of Proceeds

59

 

 

 

 

Section 4.8

 

Estoppel Certificates

59

 

 

 

 

Section 4.9

 

Notices of Material Contracts, Litigation and Defaults

60

 

 

 

 

Section 4.10

 

Hazardous Materials; Remediation

61

 

 

 

 

Section 4.11

 

Further Assurances

61

 

 

 

 

Section 4.12

 

Reserved

63

 

 

 

 

Section 4.13

 

Power of Attorney

63

 

 

 

 

Section 4.14

 

Borrowing Base Collateral Administration

64

 

 

 

 

Section 4.15

 

Schedule Updates

64

 

 

 

 

Section 4.16

 

Intellectual Property and Licensing

65

 

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Section 4.17

 

Regulatory Reporting and Covenants

66

 

 

 

 

ARTICLE 5 -  NEGATIVE COVENANTS

66

 

 

 

 

Section 5.1

 

Debt; Contingent Obligations

66

 

 

 

 

Section 5.2

 

Liens

67

 

 

 

 

Section 5.3

 

Distributions

67

 

 

 

 

Section 5.4

 

Restrictive Agreements

67

 

 

 

 

Section 5.5

 

Payments and Modifications of Subordinated Debt

67

 

 

 

 

Section 5.6

 

Consolidations, Mergers and Sales of Assets; Change in Control

67

 

 

 

 

Section 5.7

 

Purchase of Assets, Investments

68

 

 

 

 

Section 5.8

 

Transactions with Affiliates

68

 

 

 

 

Section 5.9

 

Modification of Organizational Documents

68

 

 

 

 

Section 5.10

 

Modification of Certain Agreements

68

 

 

 

 

Section 5.11

 

Conduct of Business

69

 

 

 

 

Section 5.12

 

Reserved

69

 

 

 

 

Section 5.13

 

Limitation on Sale and Leaseback Transactions

69

 

 

 

 

Section 5.14

 

Deposit Accounts and Securities Accounts; Payroll and Benefits Accounts

69

 

 

 

 

Section 5.15

 

Compliance with Anti-Terrorism Laws

69

 

 

 

 

ARTICLE 6 — FINANCIAL COVENANTS

70

 

 

 

 

Section 6.1

 

Additional Defined Terms

70

 

 

 

 

Section 6.2

 

Minimum Cash

70

 

 

 

 

Section 6.3

 

Minimum Net Revenue

71

 

 

 

 

Section 6.4

 

Evidence of Compliance

71

 

 

 

 

ARTICLE 7 -  CONDITIONS

71

 

 

 

 

Section 7.1

 

Conditions to Closing

71

 

 

 

 

Section 7.2

 

Conditions to Each Loan

72

 

 

 

 

Section 7.3

 

Searches

73

 

 

 

 

Section 7.4

 

Post Closing Requirements

73

 

 

 

 

ARTICLE 8 -  REGULATORY AND LIFE SCIENCES MATTERS

73

 

 

 

 

Section 8.1

 

Reserved

73

 

3

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Section 8.2

 

Representations and Warranties

73

 

 

 

 

Section 8.3

 

Healthcare Operations

76

 

 

 

 

ARTICLE 9 -  SECURITY AGREEMENT

76

 

 

 

 

Section 9.1

 

Generally

76

 

 

 

 

Section 9.2

 

Representations and Warranties and Covenants Relating to Collateral

77

 

 

 

 

ARTICLE 10 -  EVENTS OF DEFAULT

81

 

 

 

 

Section 10.1

 

Events of Default

81

 

 

 

 

Section 10.2

 

Acceleration and Suspension or Termination of Revolving Loan Commitment

84

 

 

 

 

Section 10.3

 

UCC Remedies

84

 

 

 

 

Section 10.4

 

[Reserved]

86

 

 

 

 

Section 10.5

 

Default Rate of Interest

86

 

 

 

 

Section 10.6

 

Setoff Rights

87

 

 

 

 

Section 10.7

 

Application of Proceeds

87

 

 

 

 

Section 10.8

 

Waivers

88

 

 

 

 

Section 10.9

 

Injunctive Relief

90

 

 

 

 

Section 10.10

 

Marshalling; Payments Set Aside

90

 

 

 

 

ARTICLE 11 -  AGENT

90

 

 

 

 

Section 11.1

 

Appointment and Authorization

90

 

 

 

 

Section 11.2

 

Agent and Affiliates

91

 

 

 

 

Section 11.3

 

Action by Agent

91

 

 

 

 

Section 11.4

 

Consultation with Experts

91

 

 

 

 

Section 11.5

 

Liability of Agent

91

 

 

 

 

Section 11.6

 

Indemnification

91

 

 

 

 

Section 11.7

 

Right to Request and Act on Instructions

92

 

 

 

 

Section 11.8

 

Credit Decision

92

 

 

 

 

Section 11.9

 

Collateral Matters

92

 

 

 

 

Section 11.10

 

Agency for Perfection

93

 

 

 

 

Section 11.11

 

Notice of Default

93

 

 

 

 

Section 11.12

 

Assignment by Agent; Resignation of Agent; Successor Agent

93

 

 

 

 

Section 11.13

 

Payment and Sharing of Payment

94

 

4

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Section 11.14

 

Right to Perform, Preserve and Protect

97

 

 

 

 

Section 11.15

 

Reserved

97

 

 

 

 

Section 11.16

 

Amendments and Waivers

97

 

 

 

 

Section 11.17

 

Assignments and Participations

98

 

 

 

 

Section 11.18

 

Funding and Settlement Provisions Applicable When Non-Funding Lenders Exist

101

 

 

 

 

Section 11.19

 

Reserved

102

 

 

 

 

Section 11.20

 

Definitions

102

 

 

 

 

ARTICLE 12 -  MISCELLANEOUS

103

 

 

 

 

Section 12.1

 

Survival

103

 

 

 

 

Section 12.2

 

No Waivers

103

 

 

 

 

Section 12.3

 

Notices

104

 

 

 

 

Section 12.4

 

Severability

104

 

 

 

 

Section 12.5

 

Headings

105

 

 

 

 

Section 12.6

 

Confidentiality

105

 

 

 

 

Section 12.7

 

Waiver of Consequential and Other Damages

105

 

 

 

 

Section 12.8

 

GOVERNING LAW; SUBMISSION TO JURISDICTION

106

 

 

 

 

Section 12.9

 

WAIVER OF JURY TRIAL

106

 

 

 

 

Section 12.10

 

Publication; Advertisement

107

 

 

 

 

Section 12.11

 

Counterparts; Integration

108

 

 

 

 

Section 12.12

 

No Strict Construction

108

 

 

 

 

Section 12.13

 

Lender Approvals

108

 

 

 

 

Section 12.14

 

Expenses; Indemnity

108

 

 

 

 

Section 12.15

 

Confession of Judgment

110

 

 

 

 

Section 12.16

 

Reinstatement

110

 

 

 

 

Section 12.17

 

Successors and Assigns

111

 

 

 

 

Section 12.18

 

USA PATRIOT Act Notification

111

 

 

 

 

Section 12.19

 

Cross Default and Cross Collateralization

111

 

5

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AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT

 

THIS AMENDED AND RESTATED REVOLVING 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 June 9, 2017 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 FUNDING IV 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

 

WHEREAS, Borrowers, Agent and certain Lenders are parties to that certain
Revolving Credit and Security Agreement, dated as of December 7, 2015 (as
amended by that certain Amendment No. 1 to Revolving Credit and Security
Agreement, dated as of December 2, 2016 and as further amended, supplemented or
otherwise modified prior to the date hereof, the “Original Credit Agreement”),
pursuant to which Agent and certain Lenders agreed to make certain financing
facilities available to Borrowers, including a revolving loan in the original
principal amount of Fifty Million Dollars ($50,000,000);

 

WHEREAS, in connection with the continued working capital and other needs of the
Borrowers, Borrowers have requested, among other things, that Agent and Lenders,
(i) refinance the outstanding Revolving Loan under the Original Credit Agreement
and (ii) amend certain other economic terms, covenants and other provisions of
the Original Credit Agreement; and

 

WHEREAS, Agent and Lenders have agreed to the requests of Borrowers on the terms
and conditions set forth herein and in the other Financing Documents.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, the receipt and sufficiency of which is hereby
acknowledged, Borrowers, Lenders and Agent agree to amend and restate the
Original Credit Agreement in its entirety 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

 

6

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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 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.

 

7

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“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.

 

“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

 

8

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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.

 

“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 thirty percent
(30%) of the total Borrowing Base.

 

9

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“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 Closing Date or on the date such Subsidiary 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 March 1, 2021.

 

10

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“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 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
Original Closing Date, 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.

 

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“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-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.

 

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“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.

 

“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

 

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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 two hundred ten (210) days
after the applicable goods or services have been rendered or delivered;

 

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

 

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

 

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

 

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

 

(f)            the Account is subject to a Lien (other than 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;

 

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(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;

 

(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:

 

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(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;

 

(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;

 

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(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 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 two hundred ten (210) days
after the applicable goods or services have been rendered or delivered;

 

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

 

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

 

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(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);

 

(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;

 

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(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, 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.

 

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“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.

 

“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.

 

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

 

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

 

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

 

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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 Original Closing Date between Agent and the Affiliated Financing Agent, as
the same may be amended, restated, supplemented or otherwise modified from time
to time.

 

“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.

 

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“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.

 

“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

 

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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 Funding IV 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.

 

“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 fifty percent (50%).

 

“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).

 

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“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.

 

“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.

 

“Original Closing Date” means December 7, 2015.

 

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“Original Credit Agreement” has the meaning set forth in the recitals hereto.

 

“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.

 

“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;

 

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(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 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.

 

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“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 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,

 

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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 $5,000,000, which
indebtedness may be secured by a letter of credit; (k) Borrowers’ and their
Subsidiaries’ Debt under the Affiliated Financing Documents; and (j) 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 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

 

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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 the extent that the aggregate amount of such Investments with
respect to all Restricted Foreign Subsidiaries does not exceed $3,000,000 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 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) $5,000,000, in the aggregate, with respect to
the litigation disclosed on Schedule 3.6 as of the Closing Date or
(ii) $1,000,000, 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

 

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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, 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.

 

“Reaffirmation Agreement” means that certain Reaffirmation Agreement, dated as
of the date hereof, executed by the Borrowers in favor of Agent, in form and
substance satisfactory to Agent.

 

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“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.

 

“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

 

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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.

 

“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, the Reaffirmation 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

 

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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 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.

 

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“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.

 

“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.

 

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

 

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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.

 

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

 

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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.  Immediately prior
to the effectiveness of this Agreement, the outstanding principal balance of the
Revolving Loans is $30,837,619.12, such amount constituting the outstanding
Revolving Loans under the Original Credit Agreement, which amount shall be
deemed to have been, and hereby is, converted into a portion of the outstanding
principal amount of the Revolving Loans hereunder in like amount without
constituting a novation.  Each Borrower hereby (x) represents, warrants, agrees,
covenants and reaffirms that it has no defense, set off, claim or counterclaim
against the Agent and the Lenders with regard to its Obligations in respect of
such Revolving Loans and (y) reaffirms its obligation to repay such Revolving
Loans in accordance with the terms and provisions of this Agreement and the
other Financing Documents.

 

(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.

 

(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.

 

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(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 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

 

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(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 accruing on such funds during such clearance
period shall accrue for the benefit of Agent, and not for the benefit of the
Lenders.  The Borrowers hereby agree that all accrued and unpaid interest due
and owing to the “Lenders” under and as defined in the Original Credit Agreement
as of the Closing Date shall be paid in cash by the Borrowers to the Agent, for
the benefit of such Lenders, on the first (1st) day of the first calendar month
following the Closing Date.  Any Loans

 

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made under the Original Credit Agreement shall bear interest at the sum of the
LIBOR Rate plus the Applicable Margin starting on and after the Closing Date.

 

(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)            Reserved.

 

(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 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.

 

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(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 (or its designated
servicer or trustee on behalf of a securitization vehicle) 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 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.

 

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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 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

 

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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.

 

(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

 

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

 

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(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 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

 

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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
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

 

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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 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

 

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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.

 

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(i)            Except for any Deposit Accounts or Securities Accounts listed on
Schedule 5.14 on the Closing Date, Borrowers shall maintain all of their Deposit
Accounts 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 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

 

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

 

Section 3.2            Organization and Governmental Authorization; No
Contravention.  The execution, delivery and performance by each Credit Party of
the Operative Documents to which it is a party are within its powers, have been
duly authorized by all necessary action pursuant to its Organizational
Documents, require no further action by or in respect of, or filing with, any
Governmental Authority 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

 

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to normal year-end adjustments and the absence of footnote disclosures).  Since
December 31, 2016, 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 One Million Dollars ($1,000,000) 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

 

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Credit Party of any Environmental Law, (ii) alleged failure by any Credit Party
to have any Permits required in connection with the conduct of its business or
to comply with the terms and conditions thereof, (iii) any generation,
treatment, storage, recycling, transportation or disposal of any Hazardous
Materials, or (iv) release of Hazardous Materials, 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.

 

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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 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

 

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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 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

 

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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 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

 

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(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 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

 

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of interest of the Notes, (c) the date payments of interest and/or principal
were last paid, (d) any offsets or defenses to the payment of the Obligations,
and if any are alleged, the nature thereof, (e) that the Notes and this
Agreement have not been modified or if modified, giving particulars of such
modification, and (f) that there has occurred and is then continuing no Default
or if such Default exists, the nature thereof, the period of time it has
existed, and the action being taken to remedy such Default.  After written
request by Agent, 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 4.9.

 

(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

 

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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-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

 

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and cancellation of such Note or other applicable Financing Document, Borrowers
will issue, in lieu thereof, a replacement Note or other applicable Financing
Document, dated the date of such lost, stolen, destroyed or mutilated Note or
other Financing Document in the same principal amount thereof and otherwise of
like tenor.

 

(c)           Upon 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

 

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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”).

 

(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 $5,000,000.

 

(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.

 

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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.

 

(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.

 

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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 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

 

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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 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.

 

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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, the Affiliated Financing Documents and any
agreements for purchase money debt permitted under clause (c) of the definition
of Permitted Debt) prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired, or (b) create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind (except as provided by the Financing
Documents 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 Original 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, Agent 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.

 

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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.

 

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,

 

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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
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

 

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

 

ARTICLE 6 - - 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, (i) for purposes of calculating the minimum Net Revenue
for purposes of Section 6.3 for any given calendar month, the twelve (12) month
period ending on the last day of such calendar month and (ii) for purposes of
calculating EBITDA for any given calendar month, the six (6) month period ending
on the last day of 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

 

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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 an amount equal to the greater of
(a) seventy-five percent (75%) of the projected revenues for such Defined
Period, calculated based on the projections provided to the Agent pursuant to
Section 4.1(d) hereof (or, until the first delivery thereof following the
Closing Date, calculated based on the projections most recently provided to the
Agent pursuant to Section 4.1(d) of the Original Credit Agreement) and (b) one
hundred four percent (104%) 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,
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 receipt by Agent of executed counterparts of this Agreement,
the other Financing Documents and the Affiliated Financing Documents;

 

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

 

(c)           since December 31, 2016, the absence of any Material Adverse
Effect; and

 

(d)           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.

 

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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;

 

(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).

 

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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.

 

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, 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

 

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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 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)          To the knowledge of such Borrower, no 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)           No Borrower has 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, or, to Borrower’s knowledge, their officers,
directors, employees, shareholders or

 

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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)          No Borrower has 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, except, in each instance with respect
to letters, notices or other correspondence received prior to the Closing Date,
where such observations or violations noted in such letter, notice or other
correspondence has been resolved to the satisfaction of the FDA, DEA, or any
comparable state, local or foreign authority.

 

(vii)         No Borrower has engaged in any Recalls, Market Withdrawals, or
other forms of product retrieval from the marketplace of any Products that are
material to the Borrower’s business.

 

(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 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.

 

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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;

 

(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

 

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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;

 

(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

 

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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, except as set forth on Schedule 9.2(c), 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).

 

(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.

 

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(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 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

 

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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
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.

 

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(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 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

 

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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 $5,000,000 or having an aggregate principal amount in excess of
$10,000,000 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 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

 

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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 $5,000,000 with respect to the litigation
disclosed on Schedule 3.6 as of the Closing Date, or (ii) aggregating in excess
of $1,000,000 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 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

 

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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 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

 

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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, 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

 

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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 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

 

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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 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

 

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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
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

 

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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 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
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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 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.

 

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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
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

 

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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 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.

 

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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 not 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 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

 

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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 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
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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 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.

 

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(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.

 

(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

 

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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:

 

(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;

 

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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 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

 

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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 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.

 

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(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 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

 

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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-

 

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Funding Lender on the date on which such Lender has either revoked the
effectiveness of such notice or acknowledged in writing to each of Agent the
satisfaction of the condition(s) specified in such notice, or Required Lenders
waive the conditions to the funding of such Loans giving rise to such notice by
Non-Funding Lender.  Each Non-Funding Lender shall remain a Lender for purposes
of this Agreement to the extent that such Non-Funding Lender has Revolving 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.

 

“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,

 

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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

 

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or thereby, any Loan or the use of the proceeds thereof.  No Indemnitee shall be
liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications,
electronic or other 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

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WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AND
THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS.  EACH BORROWER, AGENT AND EACH LENDER WARRANTS AND REPRESENTS THAT IT
HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND
THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

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

 

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such time that Borrowers shall have requested MCF or SVB (as applicable) cease
any such further publication.

 

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

 

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

 

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

 

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

 

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connection with any litigation, dispute, suit or proceeding relating to any
Financing Document and in connection with any workout, collection, bankruptcy,
insolvency and other enforcement proceedings under any and all Financing
Documents, whether or not Agent or Lenders are a party thereto.  If Agent or any
Lender uses in-house counsel for any of these purposes, Borrowers further agree
that the Obligations include reasonable charges for such work commensurate with
the fees that would otherwise be charged by outside legal counsel selected by
Agent or such Lender for the work performed.

 

(b)                                 Each Borrower hereby agrees to indemnify,
pay and hold harmless Agent and Lenders and the officers, directors, employees,
trustees, agents, investment advisors 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

 

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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.

 

(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

 

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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 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;

 

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(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 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.

 

Section 12.20                     Existing Agreements Superseded; Exhibits and
Schedules.

 

(a)                                 The Original Credit Agreement, including the
schedules thereto, is superseded by this Agreement, including the schedules
hereto, which has been executed in amendment, restatement and modification of,
but not in novation or extinguishment of, the obligations under the Original
Credit Agreement.  It is the express intention of the parties hereto to reaffirm
the indebtedness created under the Original Credit Agreement which is evidenced
by the notes provided for therein and secured by the Collateral.  Any and all
outstanding amounts under the Original Credit Agreement including, but not
limited to principal, accrued interest, fees (except as otherwise provided
herein) and other charges, as of the Closing Date shall be carried over and
deemed outstanding under this Agreement.

 

(b)                                 Each Borrower reaffirms its obligations
under each Financing Document to which it is a party, including but not limited
to the Security Documents and the schedules thereto.

 

(c)                                  Each Borrower acknowledges and confirms
that (i) the Liens and security interests granted pursuant to the Financing
Documents secure the indebtedness, liabilities and obligations of the Borrowers
to Agent and the Lenders under the Original Credit Agreement, as amended and
restated hereby, and that the term “Obligations” as used in the Financing
Documents (or any other term used therein to describe or refer to the
indebtedness, liabilities and obligations of the Borrowers to Agent and the
Lenders) includes, without limitation, the indebtedness, liabilities and
obligations of the Borrowers under this Agreement and the Notes to be delivered
hereunder, if any, and under the Original Credit Agreement, as amended and
restated hereby, as the same further may be amended, restated, supplemented
and/or modified from time to time, and (ii) the grants of Liens under and
pursuant to the Financing Documents shall continue unaltered, and each other
Financing Document shall continue in full force and effect in accordance with
its terms unless otherwise amended by the parties thereto, and the parties
hereto hereby ratify and confirm the terms thereof as being in full force and
effect and unaltered by this Agreement and all references in the any of the
Financing Documents to the “Credit Agreement” shall be deemed to refer to this
Amended and Restated Credit Agreement.

 

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[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

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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 P. McMahan

 

Name:

Stacy P. McMahan

 

Title:

Chief Financial Officer

 

 

 

ANGIOSCORE INC., as Borrower

 

 

 

By:

/s/ Stacy P. McMahan

 

Name:

Stacy P. McMahan

 

Title:

Chief Financial Officer

 

 

 

Address:

 

 

 

The Spectranetics Corporation

 

9965 Federal Drive

 

Colorado Springs, CO 80921

 

Attn:

 

 

Facsimile:

 

 

E-Mail:

 

 

 

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AGENT:

 

 

MIDCAP FUNDING IV TRUST

 

 

 

By:

Apollo Capital Management, L.P.,

 

 

its investment manager

 

 

 

 

By:

Apollo Capital Management GP, LLC,

 

 

its general partner

 

 

 

 

 

By:

/s/ Maurice Amsellem

 

 

Name: Maurice Amsellem

 

 

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 FUNDING IV TRUST

 

 

 

By:

Apollo Capital Management, L.P.,

 

 

its investment manager

 

 

 

 

By:

Apollo Capital Management GP, LLC,

 

 

its general partner

 

 

 

 

 

By:

/s/ Maurice Amsellem

 

 

Name: Maurice Amsellem

 

 

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

 

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LENDER:

SILICON VALLEY BANK

 

 

 

By:

/s/ Sam Subilca

 

Name: Sam Subilca

 

Title: VP

 

 

 

Address:

 

 

 

380 Interlock Crescent

 

Suite 800

 

Broomfield, CO 80021

 

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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 7.4

Post-Closing Obligations

Schedule 8.2

Exceptions to Healthcare Representations and Warranties

Schedule 9.1

Collateral

Schedule 9.2

Location of Collateral

Schedule 9.2(c)

Chattel Paper, Letter of Credit Rights, Commercial Tort Claims, Instruments,
Documents or Investment Property

 

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ANNEX A TO CREDIT AGREEMENT (COMMITMENT ANNEX)

 

(REVOLVER)

 

Lender

 

Revolving Loan 
Commitment Amount

 

Revolving Loan 
Commitment Percentage

 

MidCap Funding IV Trust

 

$

38,636,363.64

 

77.27

%

Silicon Valley Bank

 

$

11,363,636.36

 

22.73

%

TOTALS

 

$

50,000,000.00

 

100

%

 

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EXHIBIT A TO CREDIT AGREEMENT (RESERVED)

 

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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 Revolving Amended and Restated Credit and Security
Agreement dated as of June 9, 2017 among the Borrower Representative, AngioScore
Inc. and any additional Borrower that may hereafter be added thereto
(collectively, “Borrowers”), MidCap Funding IV 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.

 

Exhibit B - Page 1

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(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.

 

Exhibit B - Page 2

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

 

 

Sincerely,

 

 

 

THE SPECTRANETICS

CORPORATION

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Exhibit B - Page 3

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EXHIBIT C TO CREDIT AGREEMENT (BORROWING BASE CERTIFICATE)

 

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

 

MidCap Funding IV Trust

Borrowing Base Report

 

BBR Date:

 

Name:

The Spectranetics Corporation

 

A/R Category

 

Domestic

 

International

 

Intercompany

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

1.

Summary AR Aging

 

 

 

 

 

 

 

 

 

 

0 - 30 Days

 

 

 

 

 

 

 

 

 

 

31 - 60 Days

 

 

 

 

 

 

 

 

 

 

61 - 90 Days

 

 

 

 

 

 

 

 

 

 

91 - 120 Days

 

 

 

 

 

 

 

 

 

 

121 - 150 Days

 

 

 

 

 

 

 

 

 

 

151 - 180 Days

 

 

 

 

 

 

 

 

 

 

181 - 210 Days

 

 

 

 

 

 

 

 

 

 

> 210 Days

 

 

 

 

 

 

 

 

 

 

Total A/R

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.

(Less): Ineligibles AR

 

 

 

 

 

 

 

 

 

 

Intercompany

 

 

 

 

 

 

 

 

 

 

Crossage < 360 Days

 

 

 

 

 

 

 

 

 

 

A/R over 210 Days

 

 

 

 

 

 

 

 

 

 

Total Ineligible AR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.

Eligible Accounts

 

 

 

 

 

 

 

 

 

 

Liquidity Factor

 

 

 

 

 

 

 

 

 

4.

 

 

 

 

 

 

 

 

 

 

5.

Total Eligible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.

Reserves

 

 

 

 

 

 

 

 

 

 

Credit Balances > 210 Days

 

 

 

 

 

 

 

 

 

 

Total Reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.

Net Eligible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of Availability

 

 

 

 

 

 

 

 

 

8.

Total Eligible Accounts:

 

 

 

 

 

 

 

$

—

 

9a.

(Less): Cash Posted Since Last Aging

 

 

 

 

 

 

 

$

—

 

9b.

Add: Revenues since last aging

 

 

 

 

 

 

 

$

—

 

9c.

Plus/(Minus): Adjustments

 

 

 

 

 

 

 

$

—

 

9d.

Net Eligible Accounts

 

 

 

 

 

 

 

$

—

 

10.

Advance Rate

 

 

 

 

 

 

 

 

 

11.

A/R Availability

 

 

 

 

 

 

 

 

 

12.

Inventory Availability (capped at 20% of Borrowing Base)

 

 

 

 

 

 

 

 

 

13.

Total Availability

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Computation of Loan

 

 

 

 

 

 

 

 

 

14.

Facility Limit

 

 

 

 

 

 

 

$

50,000,000.00

 

15.

Available to Borrow (not to exceed limit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16.

Loan Balance on Prior Borrowing Base Certificate

 

 

 

 

 

 

 

 

 

17.

(Less): Cash Collections since last Borrowing Base Certificate

 

 

 

 

 

 

 

 

 

18.

Increase/(Decrease): Adjustments

 

 

 

 

 

 

 

 

 

19.

Loan Advances

 

 

 

 

 

 

 

 

 

20.

Ending Loan Balance

 

 

 

 

 

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

21.

Letter of Credit Outstandings

 

 

 

 

 

 

 

 

 

22.

Overall Reserve

 

 

 

 

 

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

23.

Remaining Availability (Lines 17-22-23-24)

 

 

 

 

 

 

 

$

—

 

 

 

Pursuant to, and in accordance with, the terms and provisions of the Loan
Documents (“Documents”), between Midcap Funding IV Trust (“Secured Party”) and
The Spectranetics Corporation (“Borrower”), Borrower is executing and delivering
to Secured Party this Borrowing Base Report accompanied by supporting data
(collectively referred to as “Report”).  Borrower warrants and represents to
Secured Party that this Report is true, correct, and based on information
contained in Borrower’s own financial accounting records.

 

Borrower, by the execution of this Report:

 

(a)  Hereby ratifies, confirms, and affirms all of the terms, and further
certifies that the Borrower is in compliance with the Loan Documents as of
December 07, 2015:(b)  Hereby certifies that the Borrower has paid all State and
Federal payroll witholding taxes immediately due and payable through January 00,
1900.Capitalized Terms used herein and not otherwise defined shall have the
meaning ascribed to them in the Loan and Security Agreement between Secured
Party and Borrower dated December 07, 2015.

 

(Responsible Officer’s Signature)

 

 

 

 

 

 

 

Name:

 

 

Title:

 

 

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

 

Spectranetics Inc.

Availability Calculation - Rollup

As of

 

 

 

Domestic

 

International

 

Intercompany

 

Total

 

 

 

 

 

 

 

 

 

 

 

Total A/R

 

 

 

 

 

 

 

 

 

0 - 30 Days

 

 

 

 

 

 

 

 

 

31 - 60 Days

 

 

 

 

 

 

 

 

 

61 - 90 Days

 

 

 

 

 

 

 

 

 

91 - 120 Days

 

 

 

 

 

 

 

 

 

121 - 150 Days

 

 

 

 

 

 

 

 

 

151 - 180 Days

 

 

 

 

 

 

 

 

 

181 - 210 Days

 

 

 

 

 

 

 

 

 

> 210 Days

 

 

 

 

 

 

 

 

 

Total A/R

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Ineligible A/R

 

 

 

 

 

 

 

 

 

Intercompany

 

—

 

—

 

—

 

—

 

Crossage < 360 Days

 

 

 

 

 

 

 

 

 

A/R over 210 Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Ineligible A/R

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Eligible A/R

 

 

 

 

 

 

 

 

 

Liquidity Factor

 

 

 

 

 

 

 

 

 

Net Eligible A/R

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payor Specific Reserves

 

 

 

 

 

 

 

 

 

Credit Balances > 210 Days

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Eligible A/R after Reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advance Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Availability

 

 

 

 

 

 

 

 

 

 

Domestic AR Availability

 

—

 

 

 

 

 

 

 

Max Intl Availability

 

—

 

 

 

 

 

 

 

Applied Intl. Availability

 

—

 

 

 

 

 

 

 

Net A/R Availability

 

—

 

 

 

 

 

 

 

Check

 

 

 

 

 

 

 

 

 

 

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

 

Spectranetics Inc.

Inventory Availability Calculation

Aging Date:

 

Inventory

 

 

 

Finished Goods

 

 

 

Raw Materials

 

 

 

Consignment

 

 

 

Packaging

 

 

 

WIP

 

 

 

Quality Assessment

 

 

 

Demo Products

 

 

 

Items Sold but not Shipped

 

 

 

Receiving Items

 

 

 

Total Inventory

 

 

 

 

 

 

 

Ineligibles

 

 

 

Consignment

 

—

 

Packaging

 

—

 

WIP

 

—

 

Quality Assessment

 

—

 

Demo Products

 

—

 

Items Sold but not Shipped

 

—

 

Receiving Items

 

—

 

Total Ineligibles

 

—

 

 

 

 

 

Total Available

 

—

 

Advance Rate

 

 

 

Total Availability

 

—

 

 

 

 

 

Total Reserves

 

—

 

 

 

 

 

Net Availability

 

—

 

 

 

 

 

A/R Availability

 

—

 

Inventory Max Contribution

 

—

 

Inventory Contribution

 

—

 

 

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

 

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 Amended and Restated Revolving Credit and Security
Agreement dated as of June 9, 2017 among the Borrower Representative, AngioScore
Inc. and any additional Borrower that may hereafter be added thereto
(collectively, “Borrowers”), MidCap Funding IV 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 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.             Borrower shall, by the date that is ten (10) Business Days
following the Closing Date (or such later date as Agent may agree in writing),
cause the Deposit Account maintained at SVB with account number 3302145193 to be
subject to a Deposit Account Control Agreement, in form and substance reasonably
satisfactory to Agent, which such Deposit Account Control Agreement shall
provide that SVB wire, or otherwise transfer, in immediately available funds, on
a daily basis to the Payment Account all funds received or deposited into such
Deposit Account.

 

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.

 

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