Exhibit 10.1

 

REVOLVING CREDIT AGREEMENT

 

among

 

SERACARE LIFE SCIENCES, INC.

 

And

 

BROWN BROTHERS HARRIMAN & CO.

as Lender

 

Dated as of October 8, 2003

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SECTION 1

   DEFINITIONS    1

            1.1

   Defined Terms    1

            1.2

   Other Definitional Provisions    12

SECTION 2.

   AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT; COMMITMENT AMOUNTS    13

            2.1

   Loans and Letters of Credit; Revolving Loan Commitments    13

            2.2

   Issuance of Letters of Credit    14

            2.3

   Optional Prepayments; Optional Commitment Reductions    16

            2.4

   Mandatory Prepayments    16

            2.5

   Conversion and Continuation Options    17

            2.6

   Minimum Amounts of Tranches; Minimum Borrowings    17

            2.7

   Interest Rates and Payment Dates    17

            2.8

   Computation of Interest and Fees    17

            2.9

   Inability to Determine Interest Rate    18

            2.10

   Payments    18

            2.11

   Illegality    18

            2.12

   Increased Costs    18

            2.13

   Taxes    19

            2.14

   Indemnity    20

            2.15

   Mitigation of Costs    20

            2.16

   Upfront Fee; Unused Commitment Fee    20

            2.17

   Pre-Closing Audit and Closing Costs    20

SECTION 3.

   SECURITY INTEREST    20

SECTION 4.

   REPRESENTATIONS AND WARRANTIES    21

            4.1

   Financial Condition    21

            4.2

   Corporate Existence; Compliance with Law    22

            4.3

   Corporate Power; Authorization; Consents; Enforceable Obligations    22

            4.4

   No Legal Bar    22

            4.5

   No Material Litigation    23

            4.6

   Ownership of Property; Liens; Condition of Properties    23

            4.7

   Environmental Matters    23

            4.8

   Intellectual Property    23

            4.9

   Taxes    24

            4.10

   Federal Regulations    24

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            4.11

   ERISA Compliance    24

            4.12

   Investment Company Act; Public Utility Holding Company Act    25

            4.13

   Subsidiaries    25

            4.14

   Purpose of Loans and Letters of Credit    25

            4.15

   Accuracy and Completeness of Information    25

            4.16

   Real Property Assets    25

            4.17

   Permits, Etc.    25

            4.18

   Nature of Business    25

            4.19

   Capital Structure and Equity Ownership    25

            4.20

   Insolvency    26

            4.21

   Labor Matters    26

            4.22

   Condemnation    26

SECTION 5.

   CONDITIONS PRECEDENT    26

            5.1

   Conditions to Closing Date    26

            5.2

   Conditions to Each Loan or Letter of Credit    27

SECTION 6.

   AFFIRMATIVE COVENANTS    28

            6.1

   Financial Statements    28

            6.2

   Certificates; Other Information    29

            6.3

   Payment of Obligations    30

            6.4

   Conduct of Business and Maintenance of Existence    30

            6.5

   Maintenance of Property; Insurance    30

            6.6

   Inspection of Property; Books and Records; Discussions    31

            6.7

   Use of Proceeds    31

            6.8

   Interest Rate Protection    31

            6.9

   Acquisition of Real Property    32

            6.10

   Lease and License Compliance    32

            6.11

   Environmental Laws    32

            6.12

   Covenants Regarding Additional Subsidiaries    32

            6.13

   Landlord Consents; Warehouse Letters    33

            6.14

   Insurance Policies    33

            6.15

   Foreign Qualification Certificate    33

SECTION 7.

   NEGATIVE COVENANTS    33

            7.1

   Financial Condition Covenants    33

            7.2

   Limitation on Indebtedness    34

            7.3

   Limitation on Liens    34

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            7.4

   Limitation on Fundamental Changes    36

            7.5

   Limitation on Sale of Assets    36

            7.6

   Limitation on Restricted Payments    36

            7.7

   Limitation on Acquisitions, Investments, Loans and Advances    37

            7.8

   Management Fees    37

            7.9

   Transactions with Affiliates    37

            7.10

   Fiscal Year    37

            7.11

   Prohibitions on Certain Agreements    37

            7.12

   Sale-Leaseback Transactions    38

            7.13

   Unfunded Liabilities    38

            7.14

   Line of Business    38

SECTION 8

   EVENTS OF DEFAULT    38

SECTION 9.

   MISCELLANEOUS    40

            9.1

   Amendments and Waivers    40

            9.2

   Notices    41

            9.3

   No Waiver; Cumulative Remedies    41

            9.4

   Survival of Representations and Warranties    41

            9.5

   Payment of Expenses and Taxes    41

            9.6

   Successors and Assigns; Participation; Purchasing Lenders    42

            9.7

   Set-Off    42

            9.8

   Counterparts    42

            9.9

   Severability    43

            9.10

   Integration    43

            9.11

   GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES)    43

            9.12

   Consent to Jurisdiction; Waiver of Jury Trial    43

            9.13

   Acknowledgements    43

            9.14

   Headings    44

            9.15

   Confidentiality    44

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TABLE OF CONTENTS

 

Page

 

Exhibits

 

  A Form of Note

  I Letter of Credit Request

  II Loan Request

  III Form of Legal Opinion

  IV Form of Covenant Compliance Certificate

 

Schedules

 

  4.2 Qualification Jurisdictions

  4.5 Litigation

  4.6 Legal and Operating Names

  4.16 Real Property

  4.19 Capital Structure and Equity Ownership

  7.3 Liens

  7.8 Certain Management Fees

 

 

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REVOLVING CREDIT AGREEMENT

 

THIS REVOLVING CREDIT AGREEMENT, dated as of October 8, 2003, among SERACARE
LIFE SCIENCES, INC., a California corporation (the “Borrower”), and Brown
Brothers Harriman & Co. as lender (the “Lender”).

 

RECITALS

 

WHEREAS, the Borrower has requested that the Lender make available to it a
revolving loan and letter of credit facility for its use in funding permitted
acquisitions, and for working capital and general corporate purposes.

 

WHEREAS, the Lender is willing to make available such facilities on the terms
and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto hereby agree as follows:

 

SECTION 1. DEFINITIONS

 

1.1 Defined Terms.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Accountants”: KPMG LLP, or such other firm of independent certified public
accountants of recognized national standing as shall be selected by the Borrower
and reasonably satisfactory to the Lender.

 

“Acquired Person”: as defined in the definition of “Permitted Acquisition”
contained in this Section 1.1.

 

“Acquisition”: any transaction, or any series of related transactions,
consummated after the Closing Date, by which the Borrower and/or any of its
Subsidiaries directly or indirectly (a) acquires any ongoing business or all or
substantially all of the assets of any firm, partnership, joint venture, limited
liability company, corporation or division thereof, whether through purchase of
assets, merger or otherwise, (b) acquires in one transaction or as the most
recent transaction in a series of transactions control of securities of a Person
engaged in an ongoing business representing more than 50% of the ordinary voting
power for the election of directors or other governing position if the business
affairs of such Person are managed by a board of directors or other governing
body or (c) acquires control of more than 50% of the ownership interest in any
partnership, joint venture, limited liability company, business trust or other
Person that is not managed by a board of directors or other governing body.

 

“Affiliate”: as to any Person, (a) any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or (b) any Person who is (i) a director or executive officer of such
Person or of any Subsidiary of such Person or (ii) a shareholder, member or
partner having control of any Person described in the preceding clause (a). For
purposes of this definition, “control” of a Person means the power, directly or
indirectly, either to (i) vote securities having 50% or more of the ordinary
voting power for the election of directors of such Person or (ii) direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.

 

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“Aggregate Revolving Loan Commitment”: the sum of the Revolving Loan Commitment
which is, as of the Closing Date, US$10,000,000.

 

“Agreement”: this Revolving Credit Agreement, as amended, waived, supplemented
or otherwise modified from time to time.

 

“Asset Disposition”: the sale, sale and leaseback, transfer, conveyance,
exchange, long-term lease accorded sales treatment under GAAP or similar
disposition (including by means of a merger, consolidation, amalgamation, joint
venture or other substantive combination) of any of the Properties, business or
assets (other than Cash Equivalents but, including the assignment of any lease,
license or permit relating to any Property) of the Borrower or any of its
Subsidiaries to any Person or Persons other than to the Borrower or any of its
Subsidiaries; provided that Asset Dispositions shall not include (i) the sale of
obsolete or worn-out equipment having a value in the aggregate of $500,000 or
less in any fiscal year of the Borrower or any Subsidiary or (ii) the sale of
inventory in the ordinary course of business.

 

“Available Revolving Loan Commitment”: on any date of determination, the amount
by which (a) the Revolving Loan Commitment of the Lender on such date exceeds
(b) the principal sum of the Lender’s (i) Revolving Loans outstanding, (ii) the
aggregate Letter of Credit Amount of all Letters of Credit outstanding, and
(iii) the aggregate amount of unreimbursed drawings under all Letters of Credit
on such date.

 

“Borrower”: as defined in the preamble hereto.

 

“Borrowing Notice”: a notice from the Borrower to the Lender requesting a
borrowing of Loans, substantially in the form of Exhibit C hereto.

 

“Business Day”: a day other than a Saturday, Sunday or other day on which
commercial banks in the Commonwealth of Massachusetts are authorized or required
by law to close and which, in the case of a LIBOR Loan, is a Eurodollar Business
Day.

 

“Capital Expenditures”: for any period, collectively, for any Person, the
aggregate of all expenditures which are made during such period (whether paid in
cash, debt financing or accrued as liabilities) by such Person for property,
plant or equipment and which would be reflected as additions to property, plant
or equipment on a balance sheet of such Person prepared in accordance with GAAP,
including all Capitalized Lease Obligations.

 

“Capitalized Lease Obligations”: obligations for the payment of rent for any
real or personal property under leases or agreements to lease that, in
accordance with GAAP, have been or should be capitalized on the books of the
lessee and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.

 

“Capital Stock”: any and all shares, interests, participation or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation), any and
all warrants, options or rights to purchase or any other securities convertible
into any of the foregoing.

 

“Cash Collateral Deposit”: cash deposits made by the Borrower to the Lender, to
be held by the Lender as Collateral pursuant to this Agreement, for the
reimbursement of drawings under Letters of Credit.

 

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“Cash Equivalents”: investments having a maturity of not greater than 3 months
from the date of acquisition thereof in (a) obligations issued or
unconditionally guaranteed by the United States of America or any agency
thereof, (b) certificates of deposit of any commercial bank organized under the
laws of the United States of America or any state thereof and having combined
capital and surplus of at least $1 billion, (c) commercial paper with a rating
of at least Prime-1 by Moody’s Investors Service, Inc. or A-1 by Standard &
Poor’s Ratings Group (a division of The McGraw Hill Companies, Inc.) or (d)
other investments agreed to from time to time between the Borrower and the
Lender.

 

“Closing Date”: the date, which shall be on or before October 8, 2003, on which
the conditions set forth in Section 5.1 are satisfied.

 

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

 

“Collateral”: all of the property (tangible or intangible) purported to be
subject to the lien or security interest purported to be created by any
mortgage, deed of trust, security agreement, pledge agreement, assignment or
other security document heretofore or hereafter executed by the Borrower as
security for all or part of the Obligations.

 

“Collateral Documents”: this Agreement, each UCC-1 Financing Statement filed
pursuant thereto and any other document or agreement encumbering the Collateral
or evidencing or perfecting a security interest therein for the benefit of the
Lender executed by the Borrower, as the same may be amended or modified from
time to time in accordance with the terms hereof.

 

“Commonly Controlled Entity”: as to any Person, an entity, whether or not
incorporated, which is under common control with such Person within the meaning
of Section 4001 of ERISA or is part of a group which includes such Person and
which is treated as a single employer under Section 414 of the Code.

 

“Continuation Notice”: a request for continuation or conversion of a Loan as set
forth in Section 2.5, substantially in the form of Exhibit B.

 

“Contractual Obligation”: as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound.

 

“Covenant Compliance Certificate”: a certificate of the Chief Financial Officer
of the Borrower substantially in the form of Exhibit E hereto.

 

“CPLTD”: as of the end of any fiscal quarter, the current portion of long term
debt determined in accordance with GAAP, but excluding the Obligations.

 

“Default”: any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

 

“Dollars” and “$”: dollars in lawful currency of the United States.

 

“Domestic Subsidiary”: each Subsidiary organized under the laws of the United
States or any state thereof. As of the date of this Agreement, the Borrower has
no Subsidiaries.

 

“EBITDA”: for the Borrower and its Subsidiaries on a consolidated basis, for the
fiscal quarter most recently ended and the immediately preceding three fiscal
quarters, the sum of (a) Net Income for

 

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that period, plus (b) any non-recurring loss or charges greater than $50,000
which are reflected in such Net Income, minus (c) any non-recurring income or
gain reflected in such Net Income, plus (d) Interest Expense of the Borrower and
its Subsidiaries for that period, plus (e) the aggregate amount of federal and
state taxes on or measured by income of Borrower and its Subsidiaries for that
period (whether or not payable during that period), plus (f) depreciation and
amortization expense of Borrower and its Subsidiaries for that period, in each
case as determined in accordance with GAAP, consistently applied and, in the
case of items (d), (e) and (f), only to the extent reflected in the
determination of Net Income for that period.

 

“Effective Tangible Net Worth”: as of any date of determination, the stated net
worth of the Borrower as set forth in its financial statements, determined on a
consolidated basis, less all intangible assets (goodwill) of the Borrower and
its Subsidiaries.

 

“Equityholder Agreements” each shareholder agreement, member agreement, partner
agreement, voting agreement, buy-sell agreement, option, warrant, put, call,
right of first refusal, and any other agreement or instrument with conversion
rights into equity of the Borrower or any Subsidiary between the Borrower or any
Subsidiary and any holder or prospective holder of any equity interest of the
Borrower or any Subsidiary (including interests convertible into such equity).

 

“Equity Offering”: the sale or issuance (or reissuance) by the Borrower or any
Subsidiary of any equity interests or beneficial interests (common stock,
preferred stock, partnership interests, member interests or otherwise) or any
options, warrants, convertible securities or other rights to purchase such
equity interests or beneficial interests.

 

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from
time to time.

 

“ERISA Affiliate”: as to any Person, each trade or business including such
Person, whether or not incorporated, which together with such Person would be
treated as a single employer under Section 4001(a)(14) of ERISA.

 

“Eurodollar Business Day”: any day on which banks are open for dealings in
Dollar deposits in the London interbank market.

 

“Event of Default”: any of the events specified in Section 8 hereof, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.

 

“Exchange Act”: the Securities Exchange Act of 1934, as amended (or any
successor statute), and the rules and regulations issued thereunder, as from
time to time in effect.

 

“Excluded Taxes”: all taxes, levies, imposts, duties, charges, fees, deductions
or withholdings and all liabilities with respect thereto (including income
taxes, franchise taxes or branch profits taxes) imposed on or by reference to
the net income of the Lender by any Governmental Authority, including all taxes
on doing business or taxes measured by capital or net worth imposed on the
Lender by any Governmental Authority.

 

“FDA”: the U.S. Food and Drug Administration, and any successor thereto.

 

“Financial Statements”: as defined in Section 4.1 hereof.

 

“Foreign Subsidiary: any Subsidiary other than a Domestic Subsidiary.

 

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“GAAP”: generally accepted accounting principles in the United States in effect
from time to time. If, at any time, GAAP changes in a manner which will
materially affect the calculations determining compliance by the Borrower with
any of its covenants in Section 6.1, such covenants shall continue to be
calculated in accordance with GAAP in effect prior to such changes in GAAP.

 

“Governmental Authority”: any nation or government, any federal, state or other
political subdivision thereof and any federal, state or local entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

 

“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation of (a) the guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) which Person the
guaranteeing person has agreed to reimburse or indemnify for undertaking such
obligation in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the “primary obligations”)
of any other third Person (the “primary obligor”) in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds for the purchase or payment of any such primary
obligation or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv) otherwise
to assure or hold harmless the owner of any such primary obligation against loss
in respect thereof; provided, however, that the term Guarantee Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lesser of (a) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the
maximum amount for which such guaranteeing person may be liable are not stated
or determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person’s maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.

 

“Hedging Agreements”: as defined in the definition of “Hedging Obligations” in
this Section 1.1.

 

“Hedging Obligations”: of any Person, any and all obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, commodity prices, exchange rates or forward
rates applicable to such party’s assets, liabilities or exchange transactions,
including dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts and
warrants or any similar derivative transactions (“Hedging Agreements”), and (ii)
any and all cancellations, buy-backs, reversals, terminations or assignments of
any of the foregoing.

 

“Incremental EBITDA”: for any fiscal period and with respect to any Acquired
Person which is the subject of a Permitted Acquisition, that portion of EBITDA
for such fiscal period that the Borrower reasonably projects in good faith will
be generated as a result of the consummation of such Permitted Acquisition.

 

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“Indebtedness”: as to any Person, (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(excluding any obligations incurred under ERISA), (ii) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments, (iii)
all indebtedness created or arising under any conditional-sale or other
title-retention agreement with respect to property acquired by such Person, (iv)
all Capitalized Lease Obligations of such Person, (v) all Hedging Obligations of
such Person, (vi) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities, (vii) all mandatory
redemption, repurchase or dividend obligations of such Person with respect to
Capital Stock, (viii) all liabilities in respect of unfunded vested benefits
under plans covered by Title IV of ERISA and (ix) all Guarantee Obligations of
such Person in respect of, and obligations (contingent or otherwise) to purchase
or otherwise acquire, or otherwise to secure a credit against loss in respect
of, indebtedness or obligations of others of the kinds referred to in clause
(i), (ii), (iii), (iv), (v), (vi), (vii) or (viii) above.

 

“Insolvency”: with respect to any Multiemployer Plan, the condition that such
Plan is insolvent within the meaning of Section 4245 of ERISA.

 

“Insolvent”: pertaining to a condition of Insolvency.

 

“Interest Coverage Ratio”: for the Borrower and its Subsidiaries on a
consolidated basis, for the fiscal quarter most recently ended, the ratio of (a)
(i) EBITDA less (ii) Capital Expenditures (over the previous four fiscal
quarters of the Borrower) other than Capital Expenditures that are financed with
Indebtedness permitted hereunder divided by (b) Interest Expense during such
period.

 

“Interest Expense”: as of any date, for the fiscal quarter most recently ended
and the immediately preceding three fiscal quarters, (A) the sum of (i) the
amount of all interest on Total Debt which was paid, payable and/or accrued for
such period (without duplication of previous amounts), (ii) all commitment,
letter of credit or line of credit fees paid, payable and/or accrued for such
period (without duplication of previous amounts) to any lender in exchange for
such lender’s commitment to lend and (iii) net amounts payable (or receivable)
under all Hedging Agreements, less (B) all interest income; provided, however,
that if, as at any date (a “calculation date”), fewer than four complete
consecutive fiscal quarters have elapsed subsequent to the Closing Date,
Interest Expense shall be calculated only for the portion of such period
commencing on the Closing Date and ending on the calculation date and shall then
be annualized by multiplying the amount of such Interest Expense by a fraction,
the numerator of which is 365 and denominator of which is the number of days
during the period commencing on the day immediately following the Closing Date
through and including the calculation date.

 

“Interest Payment Date”: (a) as to any Prime Rate Loan, the last day of each
March, June, September and December to occur while the Loans are outstanding,
(b) as to any LIBOR Loan having an Interest Period of 1, 2 or 3 months, the last
day of such Interest Period, and (c) for each of (a) and (b) above, on the day
on which the Loans become due and payable in full or are paid or prepaid in
full.

 

“Interest Period”: with respect to any LIBOR Loan:

 

(a) initially, the period commencing on the borrowing or conversion date, as the
case may be, with respect to such LIBOR Loan and ending one, two or three months
thereafter, as selected by the Borrower in its notice of borrowing or its
Continuation Notice, as the case may be, given with respect thereto; and

 

(b) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such LIBOR Loan and ending one, two or three
months thereafter, as selected by the Borrower in its Continuation Notice given
to the Lender not less than three Eurodollar Business Days prior to the last day
of the then current Interest Period with respect thereto;

 

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provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:

 

(i) if any Interest Period pertaining to a LIBOR Loan would otherwise end on a
day that is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;

 

(ii) any Interest Period for any Loan that would otherwise extend beyond the
date final payment is due on such Loan shall end on the date of such final
payment; and

 

(iii) any Interest Period pertaining to a LIBOR Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.

 

“Investment Company Act”: as defined in Section 3.12 hereof.

 

“Landlord Consent”: each Waiver and Consent or similar agreement executed by the
landlord of the Borrower or any Subsidiary, in form and substance satisfactory
to the Lender, as such agreements may be amended, modified or supplemented from
time to time in accordance with the terms hereof.

 

“Lease Expense”: for any period, the aggregate minimum rental obligations
payable in respect of such period under leases of real and/or personal property
(net of income from subleases thereof), whether or not such obligations are
reflected as liabilities or commitments on a consolidated balance sheet or in
the notes thereto.

 

“Lender”: as defined in the preamble hereto.

 

“Letter of Credit”: as defined in Section 2.1(a).

 

“Letter of Credit Amount”: the stated maximum amount available to be drawn under
a particular Letter of Credit, as such amount may be reduced or reinstated from
time to time in accordance with the terms of such Letter of Credit.

 

“Letter of Credit Request”: a request by the Borrower for the issuance of a
Letter of Credit in the form of Exhibit I hereto,, and containing terms and
conditions satisfactory to the Lender in its sole discretion.

 

“Leverage Ratio”: for the Borrower and its Subsidiaries on a consolidated basis,
for the fiscal quarter most recently ended and the immediately preceding three
fiscal quarters, the ratio of Total Debt to EBITDA.

 

“LIBOR”: shall mean the rate of interest per annum equal to the offered
quotation which appears on the page of the Telerate Screen which displays an
average British Bankers’ Association Interest Settlement Rate for deposits in
dollars for the Interest Period on the date of such quotation..

 

“LIBOR Adjusted Rate”: with respect to each day during each Interest Period
pertaining to a LIBOR Loan, a rate per annum determined for such day in
accordance with the following formula rounded upward to the nearest 1/16th of
1%): LIBOR/1.00 – LIBOR Reserve Requirements.

 

“LIBOR Loans”: Loans the rate of interest applicable to which is based upon
LIBOR.

 

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“LIBOR Reserve Requirements”: for any day as applied to a LIBOR Loan, the
aggregate of the maximum rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the any
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as “Eurocurrency Liabilities” in Regulation D ).

 

“Lien”: any mortgage, pledge, charge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), security agreement or other
security interest of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
Capitalized Lease Obligation having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of any
of the foregoing).

 

“Loan”: as defined in Section 2.1(a) hereof.

 

“Loan Documents”: this Agreement, the Note, the Collateral Documents, the
Landlord Consents, any Hedging Agreements with the Lender or any Affiliate
thereof, any Letter of Credit Requests, and any other agreement executed by a
Loan Party in connection therewith and herewith including, but not limited to,
UCC-1 Financing Statements, as such agreements and documents may be amended,
supplemented and otherwise modified from time to time in accordance with the
terms hereof.

 

“Loan Request”: a request by the Borrower for a Prime Rate Loan or a LIBOR Rate
Loan in the form of Exhibit II hereto, and containing terms and conditions
satisfactory to the Lender in its sole discretion.

 

“Loan Parties”: the Borrower and each Domestic Subsidiary of the Borrower that
executes and delivers any documents pursuant to Section 6.12(b) hereof.

 

“Margin Stock”: as defined in Regulation U.

 

“Material Adverse Effect”: a material adverse effect on (a) the business,
operations, property, condition or prospects (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Borrower
or any Subsidiary to perform its respective obligations under the Loan Documents
or (c) the validity or enforceability of the Loan Documents or the rights or
remedies of the Lender hereunder or thereunder.

 

“Material Agreements”: collectively, any sales, distribution or supply contract
to which the Borrower or any Subsidiary is party, which contract, on an
individual basis, accounts for 5% or more of the aggregate sales or distribution
by, or the supply of materials to, the Borrower and its Subsidiaries on a
consolidated basis.

 

“Material FDA Report”: any report to the FDA of biological product deviations
made or required to be made to the FDA or any other report made or required to
be made to any Governmental Authority in accordance with Requirements of Law
(including, without limitation exception and deficiency reports issued to the
Borrower and/or its Subsidiaries by the FDA) if, in any such case, the matters
disclosed therein would reasonably be expected to have a Material Adverse
Effect.

 

“Maturity Date” October 8, 2005, or such earlier date as the Loan shall become
due and payable in accordance with the terms hereof (whether by acceleration or
otherwise).

 

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“Multiemployer Plan”: a plan which is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

 

“Nature of Business”: for the Borrower and any Subsidiary, the collection,
processing, manufacture, distribution, marketing and sale of (i) plasma-based
and serum-based research, diagnostic, and therapeutic products, (ii) cell
culture-related products, including media and media components, (iii) human and
animal cell lines for research purposes, (iv) diagnostic materials, and (v)
biological materials and associated patient data for research, diagnostic, and
therapeutic purposes.

 

“Net Income”: for the Borrower and its Subsidiaries on a consolidated basis, net
income as determined in accordance with GAAP.

 

“Net Proceeds”: with respect to any Asset Disposition, the net amount equal to
the aggregate amount received in cash (including any cash received by way of
deferred payment pursuant to a note receivable, other non-cash consideration or
otherwise, but only as and when such cash is so received) in connection with
such Asset Disposition minus the sum of (a) the reasonable fees, commissions and
other out-of-pocket expenses incurred by the Borrower or any of its Subsidiaries
in connection with such Asset Disposition (other than amounts payable to
Affiliates of the Person making such disposition), (b) Indebtedness, other than
the Loans, required to be paid as a result of such Asset Disposition and (c)
federal, state and local taxes incurred in connection with such Asset
Disposition.

 

“Note”: as defined in Section 2.1(c).

 

“Obligations”: the unpaid principal of and interest on (including, without
limitation, interest accruing after the maturity of the Loans and interest
accruing on or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding and whether or not at a default rate) the Note,
the obligation to reimburse drawings under Letters of Credit (including the
contingent obligation to reimburse any drawings under outstanding Letters of
Credit), and all other obligations and liabilities of the Borrower and its
Subsidiaries to the Lender, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, this Agreement, the Note, the Letters of
Credit, any other Loan Document and any other document made, delivered or given
in connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all reasonable fees and disbursements of counsel, and the
allocated reasonable cost of internal counsel, to the Lender that are required
to be paid by the Borrower and its Subsidiaries pursuant to the terms of this
Agreement) or otherwise.

 

“Occupancy Agreements”: as defined in Section 6.10.

 

“Organic Documents”: with respect to any entity, in each case to the extent
applicable thereto, its certificate and articles of incorporation or
organization, its by-laws or operating agreement, its partnership agreement, all
other formation and/or governing documents, and all Equityholder Agreements,
voting agreements and similar arrangements applicable to any of its authorized
shares of capital stock, its partnership interests or its member interests, and
any other arrangements relating to the control or management of any such entity
(whether existing as corporation, a partnership, a limited liability company or
otherwise).

 

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor thereto.

 

9

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“Permitted Acquisition”: an Acquisition by the Borrower or any Domestic
Subsidiary of all or any part of the assets of, or all or any part of the
Capital Stock of, a Person (each, an “Acquired Person”), provided that (a) the
Lender has consented to such Acquisition and (b) unless otherwise agreed to by
the Lender, each of the following conditions is satisfied with respect to such
Acquisition:

 

(a) such Acquisition is not opposed by the board of directors of the Acquired
Person;

 

(b) such Acquisition is accretive to the earnings of the Borrower, consistent
with the strategic direction of the Borrower, and can be easily integrated;

 

(c) at the time of such Acquisition, no Default shall have occurred and be
continuing and no Default would occur as a result thereof on either an actual or
pro forma basis immediately after giving effect to such Acquisition, including
under Section 7.14 hereof;

 

(d) Borrower shall have provided to the Lender, no later than ten (10) Business
Days prior to the date of consummation of the Acquisition, the following
information pertaining to the Acquisition, in each case in form and substance
reasonably satisfactory to the Lender: (A) calculations certified by the
Borrower’s Chief Financial Officer indicating pro forma compliance by the
Borrower and its Subsidiaries with the covenants contained in Section 7.1 hereof
subsequent to the Acquisition, (B) to the extent available historical financial
statements of the Acquired Person for the three full fiscal years of the
Acquired Person or for such period in which the Acquired Person has been
operating, each immediately preceding the date of the consummation of the
Permitted Acquisition, (C) consolidated projections of the Borrower and its
Subsidiaries, by fiscal quarter, incorporating the results of operations of the
Acquired Person, and which detail Incremental EBITDA for each relevant fiscal
period for the Acquired Person, (D) a certificate of a Responsible Officer of
the Borrower which sets forth the sources and uses of funds which will be
required to consummate the Acquisition and (E) such other due diligence
information and documentation as the Lender shall reasonably require;

 

(e) the Borrower shall project that Incremental EBITDA for the first two full
fiscal quarters of the Borrower immediately succeeding such Acquisition shall be
greater than $1 with respect to such Acquired Person; and

 

(f) the assets which are the subject of any Acquisition which is an asset sale,
or the assets of any Acquired Person which is the subject of an equity sale, are
located at the time of consummation of the Acquisition in the United States;
provided that, with respect to any Acquisition, up to $500,000 in fair market
value of such assets, as reasonably determined by the Borrower, may be located
outside of the United States.

 

“Person”: any individual, firm, partnership, joint venture, corporation, limited
liability company, association, business enterprise trust, unincorporated
organization, government or department or agency thereof or other entity,
whether acting in an individual, fiduciary or other capacity.

 

“Plan”: as to any Person, any plan (other than a Multiemployer Plan) subject to
Title IV of ERISA maintained for employees of such Person or any ERISA Affiliate
of such Person (and any such plan no longer maintained by such Person or any of
such Person’s ERISA Affiliates to which such Person or any of such Person’s
ERISA Affiliates has made or was required to make any contributions within any
of the five preceding years).

 

“Prime Rate”: the fluctuating variable interest rate per annum announced from
time to time by a New York City money center bank selected from time to time by
the Lender as its Prime Rate. The Prime Rate is set by the Lender and may be
based upon various factors, including, without limitation the

 

10

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Lender’s costs and desired rate of return, general economic conditions, and
other factors, and is used as a reference point for the pricing of some loans,
which may be priced at, above or below the Prime Rate.

 

“Prime Rate Loans”: Loans the rate of interest applicable to which is based upon
the Prime Rate.

 

“Properties”: the collective reference to the real and personal property owned,
leased, used, occupied or operated, under license or permit, by the Borrower or
any of its Subsidiaries.

 

“Quick Ratio”: for the Borrower and its Subsidiaries on a consolidated basis, as
at any date of determination, the ratio of (a) the sum of (i) all unencumbered
and unrestricted cash and Cash Equivalents and (ii) accounts receivable
determined in accordance with GAAP, to (b) current liabilities determined in
accordance with GAAP.

 

“Regulation D”: Regulation D of the Board of Governors of the Federal Reserve
System, as the same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof and any successor regulation thereto.

 

“Regulation U”: Regulation U of the Board of Governors of the Federal Reserve
System, as the same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof and any successor regulation thereto.

 

“Reorganization”: with respect to any Multiemployer Plan, the condition that
such plan is in reorganization within the meaning of Section 4241 of ERISA.

 

“Reportable Event”: any of the events set forth in Section 4043(b) of ERISA,
other than those events as to which the thirty day notice period is waived under
PBGC regulations.

 

“Requirement of Law”: as to any Person, its Organic Documents, and any law,
treaty, rule, order, judgment or regulation of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

 

“Responsible Officer”: the chief executive officer or the president of the
applicable Loan Party, or, with respect to financial matters, the chief
financial officer of the applicable Loan Party, as applicable.

 

“Restricted Payments”: as defined in Section 7.6 hereof.

 

“Revolving Loan Commitment”: subject to Section 2.1(a) hereof, the commitment of
the Lender to make Revolving Loans and issue Letters of Credit hereunder.

 

“Single Employer Plan”: any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan.

 

“Solvent”: when used with respect to any Person, that:

 

(a) the present fair salable value of such Person’s assets is in excess of the
total amount of the probable liability on such Person’s debts;

 

(b) such Person is able to pay its debts as they become due; and

 

(c) such Person does not have unreasonably small capital to carry on such
Person’s business as theretofore operated and all businesses in which such
Person is about to engage.

 

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“Specified Investors”: Institute Grifols, S.A., Pecks Management Partners, Ltd.,
Barry D. Plost, or any investment fund or other Person in either event
controlled, directly or indirectly, by any such Person or their respective
Affiliates.

 

“Subsidiary”: as to any Person at any time of determination, a corporation,
partnership, limited liability company or other entity of which shares of stock
or other ownership interests having ordinary voting power (other than stock or
such other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries or Subsidiaries, or both, by such Person.
Unless otherwise qualified, all references to a “Subsidiary” or to
“Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.

 

“Taxes”: as defined in Section 2.13 hereof.

 

“Termination Event”: (a) a Reportable Event, (b) the institution of proceedings
to terminate a Single Employer Plan by the PBGC under Section 4042 of ERISA, (c)
the appointment by the PBGC of a trustee to administer any Single Employer Plan
or (4) the existence of any other event or condition that would reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment by the PBGC of a trustee to administer, any Single
Employer Plan.

 

“Total Debt”: the aggregate principal amount of all Indebtedness (including all
Obligations and Capitalized Lease Obligations, but excluding trade payables
permitted by Section 7.2(d) hereof) of the Borrower and its Subsidiaries on a
consolidated basis.

 

“Tranche”: the collective reference to LIBOR Loans the Interest Periods with
respect to all of which begin on the same date and end on the same later date
(whether or not such LIBOR Loans shall originally have been made on the same
day).

 

“Type”: as to any Loan, its nature as a Prime Rate Loan or a LIBOR Loan.

 

1.2 Other Definitional Provisions.

 

1.3 (a) Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in any other Loan Document or any
certificate or other document made or delivered pursuant hereto or thereto.

 

(b) As used herein, in any other Loan Document, and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in Section 1.1 above and accounting terms partly defined in Section 1.1
above, to the extent not defined, shall have the respective meanings given to
them under GAAP. Unless otherwise provided herein, all financial calculations
made with respect to the Borrower for the purpose of determining compliance with
the terms of this Agreement shall be made on a consolidated basis and in
accordance with GAAP. For the purpose of determining compliance with financial
covenants hereunder for any period, acquisitions, divestitures, and asset sales
occurring during such period will be included in the calculation of such ratio
for such period on a pro forma basis, and will be deemed to have occurred on the
first day of such period.

 

(c) The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, subsection, Schedule
and Exhibit references are to this Agreement unless otherwise

 

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specified. The words “include,” “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”.

 

(d) Any financial ratios required to be maintained by the Borrower pursuant to
this Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of places
by which such ratio is expressed in this Agreement and rounding the result up or
down to the nearest number (with a round-up if there is no nearest number) to
the number of places by which such ratio is expressed in this Agreement.

 

(e) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

(f) References to agreements, other contractual instruments and other documents
include all subsequent amendments and other modifications to such agreement and
documents, but only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document.

 

SECTION 2.

 

AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT; COMMITMENT

AMOUNTS

 

2.1 Loans and Letters of Credit; Revolving Loan Commitments. (a) Subject to the
terms and conditions hereof, the Lender agrees to (i) make loans on a revolving
credit basis to the Borrower from time to time from and including the Closing
Date to but excluding the Maturity Date (each a “Loan”, and collectively, the
“Loans”) in accordance with the terms of this Agreement and (ii) issue letters
of credit for the account of the Borrower pursuant to Section 2.2 below from
time to time from and including the Closing Date to but excluding the Maturity
Date (each a “Letter of Credit” and, collectively, the “Letters of Credit”);
provided, however, that (A) the sum of (1) the aggregate principal amount of all
Loans outstanding, (2) the aggregate Letter of Credit Amount of all Letters of
Credit outstanding and (3) the aggregate amount of unreimbursed drawings under
all Letters of Credit shall not exceed the Aggregate Revolving Loan Commitment
at any time and (B) the sum of (1) the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and (2) the aggregate amount of unreimbursed
drawings under all Letters of Credit shall not exceed $1,000,000 at any time.
Within the limits of each Lender’s Revolving Loan Commitment, the Borrower may
borrow, have Letters of Credit issued for the Borrower’s account, prepay Loans,
reborrow Loans, and have additional Letters of Credit issued for the Borrower’s
account after the expiration of previously issued Letters of Credit.

 

Subject to Sections 2.9 and 2.11 hereof:

 

(a) The Loans may from time to time be (i) LIBOR Loans, (ii) Prime Rate Loans or
(iii) a combination thereof, as determined by the Borrower and notified to the
Lender in accordance with either Sections 2.1(d) or 2.5 hereof.

 

(b) The Loans made by the Lender to the Borrower shall be evidenced by a
Revolving Credit Promissory Note (Secured) of the Borrower, substantially in the
form of Exhibit A (the “Note”), with appropriate insertions therein as to payee,
date and principal amount, payable to the order of the Lender and representing
the obligation of the Borrower to pay the aggregate unpaid principal amount of
all Loans made by the Lender to the Borrower pursuant to Section 2.1(a) hereof,
with interest thereon as prescribed in Sections 2.7 and 2.8 hereof. The Lender
is hereby authorized (but not required) to record the date and amount of each
payment or prepayment of principal of its Loans made to the Borrower, each
continuation thereof, each conversion of all or a portion thereof to another
Type and, in the case of LIBOR Loans, the

 

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length of each Interest Period with respect thereto, in the books and records of
such Lender, and any such recordation shall constitute prima facie evidence of
the accuracy of the information so recorded. The failure of the Lender to make
any such recordation or notation in the books and records of the Lender (or any
error in such recordation or notation) shall not affect the obligations of the
Borrower hereunder or under the Note.

 

(c) The Borrower shall give the Lender irrevocable written notice, substantially
in the form of a Loan Request (which notice must be received by the Lender prior
to 12:00 a.m., Boston time, one Business Day prior to the proposed borrowing
date or, if all or any part of the Revolving Loans are requested to be made as
LIBOR Loans, three Eurodollar Business Days prior to the proposed borrowing
date) requesting that the Lenders make Loans on the proposed borrowing date and
specifying (i) the aggregate amount of Loans requested to be made, (ii) subject
to Sections 2.9 and 2.11 hereof, whether the Loans are to be LIBOR Loans, Prime
Rate Loans or a combination thereof and (iii) if the Loans are to be entirely or
partly LIBOR Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Periods therefor. Notwithstanding the
foregoing, such notice may be given by telephone, provided it is promptly
confirmed on the same day in writing by delivery to the Lender of a written
notice, substantially in the form of a Loan Request. On the proposed borrowing
date no later than 2:00 p.m., Boston Time, the Lender shall make available to
the Borrower the aggregate borrowing amount in United States dollars in
immediately available funds by wiring such amount to such account as specified
by the Borrower.

 

(d) The Revolving Loan Commitment of the Lender and the Aggregate Revolving Loan
Commitment shall terminate on the Maturity Date.

 

(e) All outstanding Loans shall be due and payable on the Maturity Date.

 

2.2 Issuance of Letters of Credit.

 

(a) Subject to the limitations on Letters of Credit set forth in Section 2.1(a)
above, the Borrower shall be entitled to request the issuance of standby and/or
commercial Letters of Credit from time to time from and including the Closing
Date to but excluding the date three Business Days prior to the Maturity Date,
by giving the Lender a Letter of Credit Request in the form of Exhibit I hereto
at least three Business Days before the requested date of issuance of such
Letter of Credit (which shall be a Business Day). Any Letter of Credit Request
received by the Lender later than 3:00 p.m., Boston time, shall be deemed to
have been received on the next Business Day. Each Letter of Credit Request shall
be signed by a Responsible Officer, shall be irrevocable and shall be effective
upon receipt by the Lender. Provided that a valid Letter of Credit Request has
been received by the Lender and upon fulfillment of the other applicable
conditions set forth in Section 5.2 hereof, the Lender will issue the requested
Letter of Credit. Each Letter of Credit shall have an expiration date as set
forth in the Letter of Credit Request, provided that no Letter of Credit shall
in any event have an expiration date later than the earlier of (i) one year
after the issuance thereof and (ii) two Business Days prior to the Maturity
Date.

 

(b) The payment by the Lender of a draft drawn under any Letter of Credit shall
constitute for all purposes of this Agreement the making by the Lender hereunder
of a Prime Rate Loan in the amount of such payment (but without any requirement
of compliance with the conditions set forth in Section 5.2 hereof).

 

(c) The obligations of the Borrower with respect to any Letter of Credit, any
Letter of Credit Request and any other agreement or instrument relating to any
Letter of Credit and any Prime Rate Loan made under Section 2.2(c) above shall
be absolute, unconditional and irrevocable and shall be paid

 

14

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strictly in accordance with the terms of the aforementioned documents under all
circumstances, including the following:

 

(i) any lack of validity or enforceability of any Letter of Credit, this
Agreement or any other Loan Document;

 

(ii) the existence of any claim, setoff, defense or other right that the
Borrower may have at any time against any beneficiary or transferee of any
Letter of Credit (or any Person for whom any such beneficiary or transferee may
be acting), the Lender (other than the defense of payment to the Lender in
accordance with the terms of this Agreement) or any other Person, whether in
connection with this Agreement, any other Loan Document, the transactions
contemplated hereby or thereby or any unrelated transaction;

 

(iii) any statement or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect, or any
statement therein being untrue or inaccurate in any respect whatsoever; provided
that payment by the Lender under such Letter of Credit against presentation of
such draft or document shall not have constituted gross negligence or willful
misconduct; and

 

(iv) any exchange, release or non-perfection of any Collateral, or other
collateral, or any release, amendment or waiver of or consent to departure from
any other Loan Document or other guaranty, for any of the Obligations of the
Borrower in respect of the Letters of Credit.

 

(d) The Borrower shall pay to the Lender, with respect to each Letter of Credit
issued hereunder, the following fees:

 

(i) for each commercial Letter of Credit, for the account of Lender, on the day
any commercial Letter of Credit is issued or extended, or the face amount
thereof increased, a fee equal to the greater of (i) $250 and (ii) an amount
equal to (x) 1/8% of the Letter of Credit Amount thereof times (y) the number of
calendar quarters (or portions thereof) falling between the date of issuance of
such Letter of Credit and the stated date of expiration thereof;

 

(ii) for each standby Letter of Credit, for the account of Lender, on the day
any standby Letter of Credit is issued, a fee equal to 2.50% per annum of the
Letter of Credit Amount for the period from and including the day such Letter of
Credit is issued to but excluding the day such Letter of Credit expires; and

 

(iii) with respect to each Letter of Credit issued hereunder, for the account of
Lender, from time to time, such additional fees and charges (including cable
charges) as are generally associated with letters of credit, in accordance with
the Lender’s standard internal charge guidelines (as such guidelines may change
from time to time) and the related Letter of Credit Request; and

 

(iv) with respect to each Letter of Credit issued hereunder, from time to time,
such additional fees and charges (including cable charges) as are generally
associated with the issuance, negotiation, amendment and payment of letters of
credit, in accordance with the Lender’s standard internal charge guidelines (as
such guidelines may change from time to time) and the related Letter of Credit
Request.

 

(e) The Borrower agrees to the provisions in the Letter of Credit Request form;
provided, however, that the terms of the Loan Documents shall take precedence if
there is any inconsistency between the terms of the Loan Documents and the terms
of said form.

 

15

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(f) The Borrower assumes all risks of the acts or omissions of any beneficiary
or transferee of any Letter of Credit with respect to its use of such Letter of
Credit. The Lender nor its respective partners, officers or directors shall be
liable or responsible for (i) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; or (ii) the validity, sufficiency or genuineness of documents, or of
any endorsement thereof, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged. In furtherance and not in
limitation of the foregoing, the Lender may accept any document that appears on
its face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.

 

2.3 Optional Prepayments; Optional Commitment Reductions. The Borrower may, at
any time and from time to time, subject to Section 2.14 hereof, prepay the Loans
and/or permanently reduce the Aggregate Revolving Loan Commitment, in whole or
in part, without premium or penalty, upon at least three Business Days’
irrevocable written notice in the case of LIBOR Loans and upon at least one
Business Day’s irrevocable written notice in the case of Prime Rate Loans, from
the Borrower to the Lender, specifying the date and amount of prepayment and/or
commitment reduction, and whether the prepayment is of LIBOR Loans, Prime Rate
Loans or a combination thereof and, if of a combination thereof, the amount
allocable to each. If any such notice is given, the amount specified in such
notice shall be due and payable by the Borrower on the date specified therein,
together with accrued interest to such date on the amount prepaid. Partial
prepayments of Loans shall be in the aggregate principal amount of $100,000 or
an integral multiple of $50,000 in excess thereof.

 

2.4 Mandatory Prepayments.

 

(a) On the date of receipt by the Borrower or any Subsidiary of any Net Proceeds
with respect to an Asset Disposition which would cause the aggregate
consideration for Asset Dispositions consummated by the Borrower or any
Subsidiary during the current fiscal year to exceed $1,000,000 (or, if an Event
of Default has occurred and is continuing, upon the consummation of any Asset
Disposition), the Borrower shall prepay the Loans (and such prepayment shall be
applied as set forth in Section 2.4(c) below and, after all Loans have been
prepaid, make a Cash Collateral Deposit, in an amount equal to 100% of such Net
Proceeds. On or prior to the date of any Asset Disposition, the Borrower agrees
to provide the Lender with calculations used by the Borrower in determining the
amount of any such prepayment under this Section 2.4(a).

 

(b) If the Borrower or any Subsidiary receives insurance proceeds or
condemnation proceeds aggregating more than $250,000 (or in any amount after the
occurrence and during the continuance of a Default) at any time after the
Closing Date with respect to any Collateral which are not fully applied toward
the repair or replacement of such damaged or condemned Collateral by the earlier
of (i) 120 days after the receipt thereof and (ii) the occurrence of a Default,
the Borrower shall prepay the Loans (and such prepayment shall be applied as set
forth in Section 2.4(c) below) and, after all Loans have been prepaid, make a
Cash Collateral Deposit in an amount equal to 100% of the amount of such
proceeds not so applied. The Borrower shall give the Lender prompt written
notice of all insurance and condemnation proceeds received with respect to any
Collateral by it or any Subsidiary on or after the Closing Date in excess of
$50,000 per occurrence.

 

(c) Each prepayment pursuant to this Section 2.4 shall be applied first, to the
outstanding principal balance of the Loans, and second, to make a Cash
Collateral Deposit with respect to outstanding Letters of Credit. Each
prepayment shall be accompanied by payment in full of all accrued interest and,
if applicable, accrued commitment fees thereon to and including the date of such
prepayment, together with any additional amounts owing pursuant to Section 2.14
hereof. Each prepayment of the Loans shall permanently reduce the Aggregate
Revolving Loan Commitment in an amount equal to such prepayment.

 

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2.5 Conversion and Continuation Options.

 

(a) The Borrower may elect from time to time to convert LIBOR Loans to Prime
Rate Loans by the Borrower giving the Lender at least two Business Days’ prior
irrevocable written notice of such election pursuant to a Continuation Notice,
provided that any such conversion of LIBOR Loans may only be made on the last
day of an Interest Period with respect thereto. Subject to Sections 2.9 and 2.11
hereof, the Borrower may elect from time to time to convert Prime Rate Loans to
LIBOR Loans by the Borrower giving the Lender at least three Eurodollar Business
Days’ prior irrevocable written notice of such election pursuant to a
Continuation Notice. Any such notice of conversion to LIBOR Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. All or
any part of outstanding LIBOR Loans and, subject to Sections 2.9 and 2.11
hereof, Prime Rate Loans, may be converted as provided herein, provided that (i)
any such conversion may only be made if, after giving effect thereto, Section
2.6 below shall not have been contravened, (ii) no such Loan may be converted
into a LIBOR Loan after the date that is one month prior to the Maturity Date
and (iii) the Borrower shall not have the right to elect to continue at the end
of the applicable Interest Period, or to convert to, a LIBOR Loan if a Default
shall have occurred and be continuing.

 

(b) Any LIBOR Loan may be continued as such upon the expiration of the then
current Interest Period with respect thereto by the Borrower giving notice to
the Lender, in accordance with the applicable provisions of the term “Interest
Period” set forth in Section 1.1 above, of the length of the next Interest
Period to be applicable to such LIBOR Loan, provided that no LIBOR Loan may be
continued as such (i) if, after giving effect thereto, Section 2.6 below would
be contravened, (ii) after the date that is one month prior to the Maturity Date
or (iii) if a Default shall have occurred and be continuing and provided,
further, that if the Borrower shall fail to give any required notice as
described above in this Section or if such continuation is not permitted
pursuant to the preceding proviso, such Loans shall be automatically converted
to Prime Rate Loans on the last day of such then-expiring Interest Period.

 

2.6 Minimum Amounts of Tranches; Minimum Borrowings. All borrowings, conversions
and continuations of LIBOR Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Tranche shall be equal to $100,000 or a whole
multiple of $50,000 in excess thereof. All borrowings of Prime Rate Loans shall
be in a minimum amount of $100,000 or a whole multiple of $50,000 in excess
thereof.

 

2.7 Interest Rates and Payment Dates.

 

(a) Each Loan shall (i) if a LIBOR Loan, bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the LIBOR
Adjusted Rate plus 3.50% and (ii) if a Prime Rate Loan, bear interest at a rate
per annum equal to the Prime Rate plus 0.50% as adjusted daily.

 

(b) If any Event of Default shall have occurred and be continuing, all amounts
outstanding hereunder shall, at the election of the Lender in its sole
discretion, bear interest at a rate per annum equal to the rate determined
pursuant to Section 2.7(a) above plus 2% per annum, from the date of the
occurrence of such Event of Default until such Event of Default is no longer
continuing (after as well as before judgment).

 

(c) Interest shall be payable in arrears on each Interest Payment Date;
provided, however, that interest accruing pursuant to paragraph (b) of this
Section shall be payable on demand.

 

2.8 Computation of Interest and Fees. Interest on the Loans and all other
Obligations shall be calculated on the basis of a 360-day year for the actual
days elapsed; provided that interest on Prime Rate

 

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Loans shall be calculated on the basis of a year of 365 or 366 days, as
applicable, for the actual days elapsed. Each determination of an interest rate
by the Lender pursuant to any provision of this Agreement shall be conclusive
and binding on the Borrower in the absence of manifest error.

 

2.9 Inability to Determine Interest Rate. In the event that, prior to the first
day of any Interest Period, (a) the Lender shall have determined (which
determination shall be conclusive and binding upon the Borrower absent manifest
error) that, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the LIBOR Adjusted Rate for
such Interest Period or (b) the Lender shall have determined that the LIBOR
Adjusted Rate for such Interest Period will not adequately and fairly reflect
the cost to the Lender (as conclusively certified by such Lender) of making or
maintaining its affected Loans during such Interest Period, the Lender shall
give telecopy or telephonic notice thereof to the Borrower as soon as
practicable thereafter. If such notice is given, (i) any LIBOR Loans requested
to be made on the first day of such Interest Period shall accrue interest at the
Prime Rate, (ii) Loans that were to have been converted on the first day of such
Interest Period to LIBOR Loans shall be continued as Prime Rate Loans and (iii)
any outstanding LIBOR Loans shall be converted, on the first day of such
Interest Period, to Prime Rate Loans. Until such notice has been withdrawn by
the Lender, no further LIBOR Loans shall be made or continued as such, nor shall
the Borrower have the right to convert Prime Rate Loans to LIBOR Loans.

 

2.10 Payments. All payments (including prepayments) to be made by the Borrower
hereunder and under the Note, whether on account of principal, interest, fees or
otherwise, shall be made without setoff, deduction or counterclaim and shall be
made prior to 2:00 p.m., Boston time, on the due date thereof to the Lender at
the Lender’s office specified in Section 9.2, in Dollars and in immediately
available funds. If any payment hereunder (other than payments on the LIBOR
Loans) 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. If any payment on a LIBOR Loan becomes due and
payable on a day other than a Eurodollar Business Day, the maturity thereof
shall be extended to the next succeeding Eurodollar Business Day (and interest
shall continue to accrue thereon at the applicable rate) unless the result of
such extension would be to extend such payment into another calendar month, in
which event such payment shall be made on the immediately preceding Eurodollar
Business Day.

 

2.11 Illegality. Notwithstanding any other provision herein, if any change after
the Closing Date in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for the Lender to maintain LIBOR
Loans as contemplated by this Agreement, (a) the commitment of the Lender
hereunder to continue LIBOR Loans as such and convert Prime Rate Loans to LIBOR
Loans shall forthwith be suspended during such period of illegality and (b) the
Loans of the Lender then outstanding as LIBOR Loans, if any, shall be converted
automatically to Prime Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a LIBOR Loan occurs on a
day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to the Lender such amounts, if any, as may be
required pursuant to Section 2.14 below. To the extent that the Lender’s LIBOR
Loans have been converted to Prime Rate Loans pursuant to this Section 2.11, all
payments and prepayments of principal that otherwise would be applied to the
Lender’s LIBOR Loans shall be applied instead to its Prime Rate Loans.

 

2.12 Increased Costs.

 

(a) In the event that any change after the Closing Date in any Requirement of
Law or in the interpretation or application thereof or compliance by the Lender
with any request or directive (whether or not having the force of law but, if
not having the force of law, generally applicable to and complied

 

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with by banks and financial institutions of the same general type as the Lender
in the relevant jurisdiction) from any central bank or other Governmental
Authority made subsequent to the Closing Date:

 

(i) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirements against assets held by, letters of
credit issued by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other acquisition of
funds by, any office of the Lender which is not otherwise included in the
determination of the LIBOR Adjusted Rate hereunder; or

 

(ii) shall impose on the Lender any other condition;

 

and the result of any of the foregoing is to increase the cost to the Lender of
issuing any Letter of Credit, or increase the cost to the Lender of converting
into, continuing or maintaining LIBOR Loans, or to reduce any amount receivable
hereunder in respect of any of the foregoing, in any case by an amount which the
Lender deems to be material, then, in any such case, the Borrower shall
immediately pay to the Lender, upon the demand of the Lender, any additional
amounts necessary to compensate the Lender for such increased cost or reduced
amount receivable. If the Lender becomes entitled to claim any additional
amounts pursuant to this Section, it shall notify the Borrower of the event by
reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section submitted by the Lender to the
Borrower, which shall demonstrate in reasonable detail the computation of such
amounts, shall be conclusive evidence of the accuracy of the information so
recorded, absent manifest error. This covenant shall survive the termination of
this Agreement, the expiration of the Letters of Credit and the payment of the
Note and all other amounts payable hereunder.

 

(b) If, after the date of this Agreement, the introduction of or any change in
any applicable law, rule, regulation or guideline regarding capital adequacy, or
any change in the interpretation or administration thereof by any Governmental
Authority charged with the interpretation or administration thereof, affects the
amount of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender, and the Lender (taking into consideration
its or such corporation’s policies with respect to capital adequacy) determines
that the amount of capital maintained by the Lender or such corporation which is
attributable to or based upon the Loans, the Letters of Credit or this Agreement
must be increased as a consequence of such introduction or change by an amount
deemed by the Lender to be material, then, upon demand of the Lender the
Borrower shall immediately pay to the Lender additional amounts sufficient to
compensate the Lender or such corporation for the increased costs to the Lender
or corporation of such increased capital. Any such demand shall be accompanied
by a certificate of the Lender setting forth in reasonable detail the
computation of any such increased costs, which certificate shall be conclusive,
absent manifest error. This obligation of the Borrower under this Section shall
survive the termination of this Agreement, the expiration of the Letters of
Credit and the payment of the Note and all other amounts payable hereunder.

 

2.13 Taxes. All payments made by the Borrower in respect of the Obligations
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority or any
political subdivision or taxing authority thereof or therein, other than
Excluded Taxes (all such non-Excluded Taxes being hereinafter called “Taxes”).
If any Taxes are required to be withheld from any amounts payable to the Lender
in respect of the Obligations, the amounts so payable to the Lender shall be
increased to the extent necessary to yield to the Lender (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the Note. The Borrower agrees to
indemnify the Lender for the full amount of Taxes (including any Taxes imposed
or asserted by any Governmental Authority on amounts payable under this
Section), paid by the Lender.

 

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Whenever any Taxes are payable by the Borrower, as promptly as possible
thereafter, the Borrower shall send to the Lender a copy of an original official
receipt received by the Borrower showing payment thereof or such other evidence
of payment reasonably satisfactory to the Lender. If the Borrower fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Lender the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lender for any incremental taxes, interest or
penalties (and related reasonable fees and expenses of counsel) that may become
payable by the Lender as a result of any such failure. The agreements in this
Section shall survive the termination of this Agreement, the expiration of the
Letters of Credit and the payment of the Note and all other amounts payable
hereunder.

 

2.14 Indemnity. The Borrower agrees to indemnify the Lender and to hold the
Lender harmless from and to pay the Lender on demand the amount of any
liability, loss or expense arising from the reemployment of funds obtained by it
or from fees payable to terminate the deposits from which such funds were
obtained (including reasonable fees and expenses of counsel) which the Lender
may sustain or incur as a consequence of (a) default by the Borrower in payment
when due of the principal amount of or interest on any LIBOR Loan, (b) default
by the Borrower in making a borrowing of, conversion into or continuation of
LIBOR Loans after the Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (c) default by the Borrower in
making any prepayment after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (d) the making by the
Borrower of a prepayment or conversion of LIBOR Loans on a day which is not the
last day of an Interest Period with respect thereto (including any prepayment
required as a result of acceleration of the Loans under Section 7 hereof). The
Lender’s certificate as to such liability, loss or expense shall be deemed
conclusive, absent manifest error. This covenant shall survive the termination
of this Agreement, the expiration of the Letters of Credit and the payment of
the Note and all other amounts payable hereunder.

 

2.15 Mitigation of Costs. If the Lender, by taking any other reasonable action,
so long as making such change or taking such other action is not disadvantageous
to it in any financial, regulatory or other respect, can mitigate any adverse
effect on the Borrower under Sections 2.11, 2.12 or 2.13 hereof, the Lender
shall take such action.

 

2.16 Upfront Fee; Unused Commitment Fee. The Borrower agrees to pay to the
Lender a (i) upfront fee based on the Aggregate Revolving Loan Commitment and
computed at a rate equal to 1.25%, and (ii) an unused commitment fee for the
period from and including the Closing Date to but excluding the Maturity Date,
based on the average aggregate amount, for each day during such period, of the
Available Revolving Loan Commitment, and computed at a rate equal to 0.50% per
annum. Such upfront fee shall be due and payable to the Lender on the Closing;
the unused commitment fee shall be payable in installments quarterly in arrears
on the last day of each March, June, September and December and on the Maturity
Date, commencing on the first such date to occur after the Closing Date.

 

2.17 Pre-Closing Audit and Closing Costs. The Borrower agrees to pay to the
Lender on the Closing Date the sum of (a) $2,500 to reimburse the Lender for its
pre-closing audit of the Borrower’s books and records, and (b) the Lender’s
closing costs and legal fees in connection with this Agreement which shall not
exceed $25,000 in the aggregate.

 

SECTION 3. SECURITY INTEREST

 

As security for the payment and performance of the Obligations, the Borrower,
for valuable consideration, the receipt of which is acknowledged, hereby grants
to the Lender a security interest in all of the Borrower’s tangible and
intangible property, whether now owned or existing, or hereafter acquired or
arising, including:

 

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(a) all goods (which shall mean and include all inventory, merchandise, raw
materials, supplies, work in process, finished goods and other tangible personal
property held by the Borrower for processing, sale or lease or furnished or to
be furnished by the Borrower under the contracts of sale or service or to be
used or consumed in the Borrower’s business), as well as all goods in transit,
and all returned or rejected goods, and all documents which represent any of the
foregoing;

 

(b) all accounts (which shall mean and include all accounts receivable, notes,
drafts, acceptances and other instruments representing or evidencing a right to
payment for goods sold or leased or for services rendered whether or not earned
by performance), as well as all right, title and interest of the Borrower in the
goods which have given rise thereto, including the right of stoppage in transit;

 

(c) all equipment, machinery, tools, dies, molds, furniture, furnishings, all
tangible personal property similar to any of the foregoing, and all equipment as
defined in Section 9-109(2) of the Massachusetts General Laws, Chapter 106,
wherever the same may be located;

 

(d) all general intangibles including, without limitation, customer lists,
contract rights, causes of action, goodwill, royalties, licenses, franchises,
permits, intellectual property, blueprints, drawings, manuals, technical data,
trade secrets, trade names, trademarks, and copyrights;

 

(e) all chattel paper of every kind and description, including all additions
thereto and substitutions therefor;

 

(f) all rights to the payment of money, including without limitation, amounts
due from affiliates, all tax refunds of every kind and nature including loss
carryback refunds, insurance policies and proceeds, factoring agreements, and
all rights to deposit or advance payments;

 

(g) all business records and files (including, without limitation, computer
programs, disks, tapes and related electronic data processing media) and writing
of the Borrower in which the Borrower has an interest in any way relating to the
foregoing property, and all rights of the Borrower to retrieval from third
parties of electronically processed and recorded information pertaining to any
such property;

 

(h) all documents, documents of title, and instruments (whether negotiable or
non-negotiable);

 

(i) all liens, guaranties and securities for any of the foregoing (a) through
(h); and

 

(j) all products of, accessions to, and proceeds of any of the foregoing (a)
through (i).

 

All of such property in (a) through (j) above is collectively referred to as the
“Collateral.”

 

SECTION 4. REPRESENTATIONS AND WARRANTIES

 

To induce the Lender to enter into this Agreement and to make the Loans and
issue the Letters of Credit, the Borrower hereby represents and warrants to the
Lender that:

 

4.1 Financial Condition. The Borrower’s financial statements for (i) the 12
month period ended September 30, 2002, audited by KPMG and (ii) its fiscal
quarter ended June 30, 2003, copies of which have heretofore been furnished to
the Lender, present fairly in all material respects the financial condition of
the Borrower, on a consolidated basis, as at such respective dates, and the
results of the operations and cash flows of the Borrower, on a consolidated
basis, for the respective fiscal periods then ended, subject,

 

21

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in the case of such quarterly financial statements, to changes resulting from
audit and normal year-end adjustments. Such financial statements (the “Financial
Statements”), including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved. Neither the Borrower nor any Subsidiary has any Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the Financial Statements, or in the notes thereto (with respect to the periods
covered thereby), or in future financial statements or the notes thereto
delivered to the Lender (in the case of subsequent periods), except, in any
case, to the extent otherwise disclosed to the Lender in writing. Since June 30,
2003 there has been no event or condition resulting in a Material Adverse
Effect.

 

4.2 Corporate Existence; Compliance with Law. The Borrower and each Subsidiary,
(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (b) has the corporate, partnership or
limited liability company power, as the case may be, and authority, and the
legal right, to own and operate its Properties, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and in which it proposes to be engaged after the Closing Date, (c) is duly
qualified as a foreign entity and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification, each of which jurisdictions is set
forth on Schedule 4.2 hereto, except for those jurisdictions where the failure
to be so qualified or in good standing has not had and will not result in a
Material Adverse Effect and (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith could not reasonably
be expect to have a Material Adverse Effect.

 

4.3 Corporate Power; Authorization; Consents; Enforceable Obligations.

 

(a) The Borrower and each of its Subsidiaries has the corporate, partnership or
limited liability company power, as the case may be, and authority, and the
legal right, to make, deliver and perform the Loan Documents, in each case to
which it is or will be a party, and to borrow hereunder (in the case of the
Borrower), and each Loan Party has taken all necessary corporate, partnership or
limited liability action, as applicable, to authorize (i) the borrowings on the
terms and conditions of this Agreement and the Note and (ii) the execution,
delivery and performance of the Loan Documents to which it is or will be a
party.

 

(b) No consent or authorization of, filing with or other act by or in respect
of, any Governmental Authority or any other Person is required in connection
with the borrowings hereunder or the execution, delivery, performance, validity
or enforceability of this Agreement, the Note or the other Loan Documents except
for any consent, authorization, filing or other act which has been made or
obtained and is in full force and effect. This Agreement has been, and each of
the Note and the other Loan Documents to which the Borrower or any Subsidiary is
or will be a party will be, duly executed and delivered by it. This Agreement
constitutes, and each of the Note and the other Loan Documents when executed and
delivered will constitute, a legal, valid and binding obligation of the Borrower
and each Subsidiary (to the extent the Borrower or such Subsidiary is a party
thereto) enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

4.4 No Legal Bar. The execution, delivery and performance of this Agreement, the
Note and the other Loan Documents, and the borrowings hereunder and the use of
the proceeds thereof, will not violate any Requirement of Law or material
Contractual Obligation of the Borrower or any Subsidiary, and will not result
in, or require, the creation or imposition of any Lien on any of its properties
or revenues pursuant to any such Requirement of Law or such Contractual
Obligation, except pursuant to the Loan Documents.

 

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4.5 No Material Litigation. Except as set forth in Schedule 4.5 hereto, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any Subsidiary or against any of its or
their properties or revenues or by or against any Affiliate of the Borrower or
any Subsidiary, (a) with respect to this Agreement, the Note or the other Loan
Documents, or any of the transactions contemplated hereby or thereby or (b)
which could reasonably be expected to have a Material Adverse Effect.

 

4.6 Ownership of Property; Liens; Condition of Properties. The Borrower and each
Subsidiary has good title to all Properties purported to be owned thereby, free
and clear of any Liens, except those permitted by Section 7.3 hereof. The
Property and assets of the Borrower and its Subsidiaries constitute all property
and assets reasonably necessary for the business of the Borrower and its
Subsidiaries, are in good order and repair in all material respects(ordinary
wear and tear excepted) and are fully covered by the insurance required under
the Loan Documents. Neither the Borrower nor any Subsidiary has used (or
permitted the filing of any financing statement under) any legal or operating
name at any time during the five years immediately preceding the execution of
this Agreement, except as identified on Schedule 4.6.

 

4.7 Environmental Matters.

 

(a) Each Property, and all operations at each Property, are in compliance in all
material respects with all applicable Environmental Laws.

 

(b) There is no contamination at, under or about such Properties, or violation
of any Environmental Law with respect to such Properties or the business
conducted at such Properties which involves a matter or matters which has caused
or could reasonably be expect to cause a Material Adverse Effect.

 

(c) No Loan Party has received any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Properties or
the business conducted at the Properties, nor does the Borrower have knowledge
that any such notice will be received or is being threatened which has caused or
could reasonably be expected to cause a Material Adverse Effect.

 

(d) No judicial proceedings or governmental or administrative action is pending,
or, to the knowledge of the Borrower, threatened, under any Environmental Law to
which any Loan Party is named as a party with respect to the Properties or the
business conducted at the Properties, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to such Properties or such business which has caused or could
reasonably be expected to cause a Material Adverse Effect.

 

4.8 Intellectual Property. The Borrower and each Subsidiary owns, or is licensed
to use, all trademarks, trade names, patents and copyrights necessary for the
conduct of its business as currently conducted in all material respects (the
“Intellectual Property”). No claim which could reasonably be expected to have a
Material Adverse Effect has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does the
Borrower or any Subsidiary know of any valid basis for any such claim. To the
Borrower’s knowledge, the use of such Intellectual Property by the Borrower and
its Subsidiaries does not infringe in any material respect on the rights of any
Person, nor, to the Borrower’s knowledge, does the use by other Persons of such
Intellectual Property infringe in any material respect on the rights of the
Borrower or any Subsidiary. In the event of the enforcement by the Lender of its
rights as a secured creditor under the Loan Documents, the Lender will not be
required to own or otherwise

 

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possess the right to use any patent, trademark or other intellectual property,
or any license to use the same, in each case of any third party, in order to
sell any inventory of any Loan Party.

 

4.9 Taxes. The Borrower and each Subsidiary has filed or caused to be filed all
tax returns which are required to be filed and has paid all taxes shown to be
due and payable on said returns or on any assessments made against it or any of
its property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority (other than any not yet delinquent or
the amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Borrower or such Subsidiary, as
appropriate); as of the Closing Date, no tax Lien has been filed, and no claim
which could reasonably be expected to have a Material Adverse Effect is being
asserted with respect to any such tax, fee or other charge.

 

4.10 Federal Regulations. No Loan, no Letter of Credit, and no part of the
proceeds thereof are intended to be or will be used, directly or indirectly, for
“purchasing” or “carrying” any Margin Stock within the respective meanings of
each of the quoted terms under Regulation U for any purpose which violates the
provisions of the Regulations of the Board of Governors of the Federal Reserve
System. If requested by the Lender, the Borrower will furnish to the Agent a
statement to the foregoing effect in conformity with the requirements of Form
U-1 referred to in Regulation U.

 

4.11 ERISA Compliance.

 

(a) The Borrower and each Subsidiary is in compliance in all respects with all
applicable provisions of ERISA, and all rules, regulations and orders
implementing ERISA, except to the extent that the failure to comply therewith
could not be reasonably expected to, in the aggregate, have a Material Adverse
Effect.

 

(b) Neither the Borrower, nor any Subsidiary or any ERISA Affiliate thereof
maintains or contributes to (or has maintained or contributed to) any
Multiemployer Plan under which the Borrower, any Subsidiary or any ERISA
Affiliate thereof has any withdrawal liability.

 

(c) Neither the Borrower, nor any Subsidiary or any ERISA Affiliate thereof
sponsors or maintains any defined benefit pension plan under which there is an
accumulated funding deficiency within the meaning of Section 412 of the Code,
whether or not waived.

 

(d) The liability for accrued benefits under each defined benefit pension plan
that will be sponsored or maintained by the Borrower, any Subsidiary or any
ERISA Affiliate thereof (determined on the basis of the actuarial assumptions
utilized by the PBGC) does not exceed the aggregate fair market value of the
assets under each such defined benefit pension plan.

 

(e) The aggregate liability of the Borrower, each Subsidiary and each ERISA
Affiliate thereof arising out of or relating to a failure of any employee
benefit plan within the meaning of Section 3(2) of ERISA to comply with
provisions of ERISA or the Code will not have a Material Adverse Effect.

 

(f) There does not exist any unfunded liability (determined on the basis of
actuarial assumptions utilized by the actuary for the plan in preparing the most
recent annual report) of the Borrower, any Subsidiary or any ERISA Affiliate
thereof under any plan, program or arrangement providing post-retirement, life
or health benefits.

 

(g) No Reportable Event and no Prohibited Transaction (as defined in ERISA) has
occurred or is occurring with respect to any plan with which the Borrower or any
Subsidiary is associated.

 

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4.12 Investment Company Act; Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is an “investment company”, or a company
“controlled” by an “investment company”, within the meaning of the Investment
Company Act of 1940, as amended (the “Investment Company Act”). Neither the
Borrower nor any Subsidiary is a “holding company,” or an “affiliate” of a
“holding company” or a “subsidiary company” of a “holding company,” within the
meaning of the Public Utility Holding Company Act of 1935, as amended.

 

4.13 Subsidiaries. As of the Closing Date, the Borrower has no Subsidiaries.

 

4.14 Purpose of Loans and Letters of Credit.

 

(a) The proceeds of the Loans are intended to be and shall be used by the
Borrower as follows: (i) for working capital and general corporate purposes of
the Borrower and its Subsidiaries and (ii) to finance, in part, Permitted
Acquisitions.

 

(b) The Letters of Credit shall be used for general corporate purposes of the
Borrower and its Subsidiaries.

 

4.15 Accuracy and Completeness of Information. All information contained in any
application, schedule, report, certificate, or any other document given to the
Lender by or on behalf of the Borrower or any Subsidiary in connection with the
Loan Documents is in all material respects true, accurate and complete as of the
date referred to therein, and no such Person has omitted to state therein (or
failed to include in any such document) any material fact or any fact necessary
to make such information not misleading. All projections given to the Lender by
or on behalf of the Borrower or any Subsidiary have been prepared with a
reasonable basis and in good faith making use of such information as was
available at the date such projection was made. The projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by the Borrower to be reasonable at the time
made and as of the Closing Date, it being recognized that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected
results.

 

4.16 Real Property Assets. Schedule 4.16 sets forth all real property that, as
of the Closing Date, is owned, leased, occupied, used, controlled, managed or
operated by the Borrower and its Subsidiaries.

 

4.17 Permits, Etc. The Borrower and its Subsidiaries have all permits, licenses,
authorizations and approvals required for each of them lawfully to own, lease,
control, manage and operate its Properties and businesses, except for such
permits, licenses, authorizations or approvals for which the failure to obtain
or maintain could not reasonably be expected to have a Material Adverse Effect.
No condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license, authorization
or approval.

 

4.18 Nature of Business. Neither the Borrower nor any Subsidiary is engaged in
any business other than the Nature of the Business unless otherwise agreed by
the Lender.

 

4.19 Capital Structure and Equity Ownership. Schedule 4.19 hereto accurately and
completely discloses as of the Closing Date the number and classes of equity
ownership rights and interests in the Borrower (whether existing as common or
preferred stock, general or limited partnership interests, or limited liability
company membership interests, or warrants, options or other instruments
convertible into such equity). All such shares and interests are validly
existing, fully paid and non-assessable. As of the

 

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Closing Date, Schedule 4.19 describes all warrants, options or other similar
rights that are outstanding and issued pursuant to any Equityholder Agreements.

 

4.20 Insolvency. After giving effect to the funding of Loans and the issuance of
any Letters of Credit on the Closing Date, the application of the proceeds of
such Loans as provided herein, and the payment of all estimated legal,
underwriting, investment banking, accounting and other fees related hereto and
thereto, the Borrower and each other Loan Party will be Solvent as of and on the
Closing Date.

 

4.21 Labor Matters. There are no strikes or other labor disputes against the
Borrower or any Subsidiary pending, or to the Borrower’s knowledge, threatened
against it or any Subsidiary as of the Closing Date or that could reasonably be
expected to have a Material Adverse Effect.

 

4.22 Condemnation. No taking of any of the Properties or any part thereof
through eminent domain, conveyance in lieu thereof, condemnation or similar
proceeding is pending or, to the knowledge of the Borrower, threatened by any
Governmental Authority as of the Closing Date or that could reasonably be
expected to have a Material Adverse Effect.

 

SECTION 5. CONDITIONS PRECEDENT

 

5.1 Conditions to Closing Date. The agreement of the Lender to make the Loans
requested to be made by it and to issue any Letters of Credit to be issued
hereunder, in each case in accordance with the terms hereof, is subject to the
satisfaction, in each case in form and substance acceptable to the Lender, of
the following conditions precedent:

 

(a) Credit Agreement. The Lender shall have received this Agreement, executed
and delivered by an officer of the Borrower and the Lender.

 

(b) Other Loan Documents. The Lender shall have received the Note and each other
Loan Document, in each case dated as of the Closing Date and executed and
delivered by an officer of the relevant Loan Party.

 

(c) Certificate as to Corporate Organization, Standing and Proceedings. The
Lender shall have received (i) an incumbency certificate with respect to each
Loan Party, each dated the Closing Date, executed by an appropriate officer
thereof, and (ii) a copy of the resolutions of the Board of Directors, or
similar governing body, of each Loan Party authorizing (a) the Loan Documents to
which it is or will be a party, and (b) in the case of the Borrower, the
borrowings contemplated hereunder, in each case certified by an appropriate
officer of such Loan Party as of the Closing Date, which certificate states that
the resolutions thereby certified have not been amended, modified, revoked or
rescinded and are in full force and effect.

 

(d) Organic Documents. The Lender shall have received copies of the Organic
Documents of each Loan Party, in each case certified as of the Closing Date as
complete and correct copies thereof, and in full force and effect, by an
appropriate officer of the relevant Loan Party; provided that Borrower shall not
be required to deliver copies of the warrant and option agreements expressly
referred to in Schedule 4.19 hereto.

 

(e) Costs. The Lender shall have received payment or evidence of payment by the
Borrower of all costs, expenses and taxes accrued and unpaid and otherwise due
and payable on or before the Closing Date by the Borrower pursuant to this
Agreement.

 

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(f) Fees. The Lender shall have received the fees to be paid on the Closing Date
pursuant to the terms of this Agreement.

 

(g) Legal Opinions. The Lender shall have received the following executed legal
opinions, each dated the Closing Date:

 

(A) the executed legal opinion of O’Melveny & Myers LLP, counsel to the
Borrower, in form substantially similar to Exhibit III hereto satisfactory to
the Lender; and

 

(B) such other legal opinions as the Lender may reasonably request.

 

(h) Filings, Recordings, Etc. The Lender shall have received as of the Closing
Date evidence of the recording, or of the provision acceptable to the Lender for
the recording, of the Landlord Consent(s) and any other documents reasonably
necessary to be recorded in such office or offices as may be necessary or
desirable to perfect each Lien purported to be created thereby or to otherwise
protect the rights of the Lender thereunder and evidence of the filing, or of
provision acceptable to the Lender for the filing, of appropriate UCC financing
statements, and fixture filings, if requested by the Lender, naming the Lender
as secured party, in such office or offices as may be necessary or desirable to
perfect the security interests purported to be created by any of the Collateral
Documents.

 

(i) Lien Searches. The Lender shall have received such UCC searches, and other
Lien searches, as it shall request.

 

(j) Good Standing Certificates. The Lender shall have received, with respect to
each Loan Party, a certificate, dated a recent date, of the Secretary of State
(or other relevant state authority) of the state of formation of such Loan Party
and subject to Section 6.15 hereof, each other jurisdiction where such Loan
Party is required to be qualified to do business under such jurisdiction’s law
(each of which is set forth on Schedule 4.2 hereto), certifying as to the
existence and good standing of, and the payment of taxes by, each Loan Party in
such state.

 

(k) No Default/Representations. No Default shall have occurred and be continuing
on the Closing Date or would occur after giving effect to the funding of Loans
and the issuance of any Letters of Credit on the Closing Date, the application
of the proceeds of such Loans as provided herein, and the payment of all
estimated legal, underwriting, investment banking, accounting and other fees
related hereto and thereto, and the representations and warranties contained in
this Agreement and each other Loan Document, and the representations and
warranties contained in each certificate or other writing delivered to the
Lender in satisfaction of the conditions set forth in this Section 5.1 prior to
or on the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date, shall be correct in all material respects
on and as of the Closing Date, and the Lender shall have received a certificate
of a Responsible Officer of the Borrower to such effect, dated as of the Closing
Date.

 

(l) Audit. The Lender shall have received a pre-funding audit by the Lender’s
Banking Group, which shall be in form and substance satisfactory to the Lender.

 

(m) Additional Proceedings. The Lender shall have received such other approvals,
opinions and documents as the Lender may reasonably request and all legal
matters incident to the making of such Loans and issuance of such Letters of
Credit shall be reasonably satisfactory to the Lender.

 

5.2 Conditions to Each Loan or Letter of Credit. The agreement of the Lender to
make the Loans requested to be made by it and to issue any Letters of Credit to
be issued hereunder, is also subject to the

 

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satisfaction, immediately prior to or concurrently with the making of such Loan
or the issuance of such Letter of Credit, of the following conditions precedent:

 

(a) Representations and Warranties; No Default. The following statements shall
be true and the Borrower’s acceptance of the proceeds of such Loan or its
delivery of an executed Letter of Credit Request shall be deemed to be a
representation and warranty of the Borrower, on the date of such Loan or as of
the date of issuance of such Letter of Credit, as applicable, that:

 

(i) The representations and warranties contained in this Agreement, each other
Loan Document and each certificate or other writing delivered to the Lender in
connection herewith are correct on and as of such date in all material respects
as though made on and as of such date except to the extent that such
representations and warranties expressly relate to an earlier date; and

 

(ii) No Default has occurred and is continuing or would result from the making
of the Loan or the issuance of such Letter of Credit to be made or issued on
such date.

 

(b) Legality. The making of such Loan or the issuance of such Letter of Credit,
as applicable, shall not contravene any law, rule or regulation applicable to
any Lender or the Borrower or any other Loan Party.

 

(c) Loan Request or Letter of Credit Request. The Lender shall have received a
Loan Request or Letter of Credit Request, as applicable, pursuant to the
provisions of this Agreement from the Borrower.

 

SECTION 6. AFFIRMATIVE COVENANTS

 

The Borrower hereby agrees that from and after the Closing Date, so long as any
Note remains outstanding and unpaid, any Letter of Credit is outstanding or any
other amount is owing to the Lender hereunder:

 

6.1 Financial Statements. The Borrower shall furnish to the Lender:

 

(a) as soon as available, but in any event within 120 days after the end of each
fiscal year of the Borrower, a copy of the audited consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such year and the related
audited income statement, statement of shareholders’ equity and operating cash
flow statement, reported on without qualification or exception by the
Accountants and accompanied by a certificate signed by such Accountants in a
form reasonably acceptable to the Lender, at the time of the completion of the
annual audit, stating that (i) the financial statements fairly present, in all
material respects, the consolidated financial condition of the Borrower as of
the date thereof and for the period covered thereby and (ii) to the knowledge of
such Accountants, no Default exists under Section 6.1 below, to the extent such
Section relates to accounting matters or, if such a condition or event has come
to their attention, specifying the nature and period of existence thereof; and

 

(b) as soon as available, but in any event not later than 60 days after the end
of each fiscal quarter of the Borrower, the unaudited consolidated balance sheet
of the Borrower and its Subsidiaries for such quarter and the unaudited income
statement, statement of shareholders’ equity and operating cash flow statement
for such quarter and the portion of the fiscal year through the end of such
quarter, all certified by a Responsible Officer of the Borrower substantially in
the form of Exhibit V hereto stating that (i) the financial statements are
fairly stated in all material respects (subject to normal year-end audit
adjustments), (ii) the representations and warranties set forth in this
Agreement remain true and correct, and (iii) no Event of Default has occurred
and is continuing, each as of such date.

 

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All such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods.

 

6.2 Certificates; Other Information. The Borrower shall:

 

(a) furnish to the Lender, concurrently with the delivery of the financial
statements referred to in Sections 6.1(a) and (b) above, a Covenant Compliance
Certificate in the form of Exhibit IV hereto with respect to such quarter or
fiscal year, as the case may be;

 

(b) furnish to the Lender, as soon as available, but in any event within the
first 30 days of each fiscal year of the Borrower, a copy of (i) the annual
operating budget for the Borrower and its Subsidiaries for such fiscal year and
the immediately succeeding fiscal year and (ii) a complete financial forecast of
the results of the Borrower and its Subsidiaries for such fiscal year and the
immediately succeeding fiscal year, in each case in form and detail reasonably
satisfactory to the Lender;

 

(c) furnish to the Lender, within five Business Days after the same are filed
and publicly available, copies of all financial statements and reports which the
Borrower or any Subsidiary may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental Authority,
including all reports on Form 10-K or 10-Q (it being understood that the
Borrower shall have met its requirements under clauses (a) and (b) of this
Section 6.1 to the extent it provides the Lender with copies of the Company’s
Annual report on Form 10-K or Quarterly Report on Form 10-K as filed with the
Securities and Exchange Commission in lieu of the financial statements required
by said clauses);

 

(d) furnish to the Lender, within five Business Days after the same are filed,
copies of all Material FDA Reports;

 

(e) furnish to the Lender, promptly but, in any event, within five days, after
the Borrower’s receipt thereof, copies of all financial reports (including,
without limitation, management letters), if any, submitted to the Borrower by
the Accountants in connection with any annual or interim audit of the books
thereof;

 

(f) furnish to the Lender, immediately upon a Responsible Officer’s gaining
knowledge of the occurrence of a Default or, in the good faith determination of
a Responsible Officer of the Borrower, a Material Adverse Effect, the written
statement by a Responsible Officer of the Borrower, setting forth the details of
such Default or Material Adverse Effect and the action which the Borrower
proposes to take with respect thereto;

 

(g) furnish to the Lender, (i) as soon as possible and in any event within five
days after the Borrower knows or has reason to know that any Termination Event
with respect to any Plan has occurred, a statement of a Responsible Officer of
the Borrower describing such Termination Event and the action, if any, which the
Borrower proposes to take with respect thereto, (ii) promptly and in any event
within five days after receipt thereof by the Borrower, any Subsidiary or any of
its or their ERISA Affiliates from the PBGC, copies of each notice received by
the Borrower, any Subsidiary or any of its or their ERISA Affiliates of the
PBGC’s intention to terminate any Plan or to have a trustee appointed to
administer any Plan, (iii) promptly and in any event within five days after the
filing thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with respect to
each Single Employer Plan maintained for or covering employees of the Borrower
or any of its Subsidiaries if the present value of the accrued benefits under
the Plan exceeds its assets by an amount which could cause a Material Adverse
Effect and (iv) promptly and in any event within five days after receipt thereof
by the Borrower, any Subsidiary or any of its or their ERISA Affiliates from a
sponsor of a

 

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Multiemployer Plan or from the PBGC, a copy of each notice received by the
Borrower, any Subsidiary or any of its ERISA Affiliates concerning the
imposition or amount of withdrawal liability under Section 4202 of ERISA or
indicating that such Multiemployer Plan may enter reorganization status under
Section 4241 of ERISA;

 

(h) furnish to the Lender, promptly after the commencement thereof, but in any
event not later than five days after service of process with respect thereto on,
or the obtaining of knowledge by, the Borrower, notice of each action, suit or
proceeding before any court or governmental authority or other regulatory body
or any arbitrator as to which there is a reasonable possibility of a
determination that could have a Material Adverse Effect;

 

(i) furnish to the Lender, as soon as possible and in any event within five days
after the Borrower has knowledge thereof, any termination of, or material
amendment to, any Material Agreement; and

 

(j) furnish to the Lender, promptly such additional financial and other
information as the Lender may from time to time reasonably request.

 

6.3 Payment of Obligations. The Borrower shall, and shall cause each of its
Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all its obligations of
whatever nature, except where the failure to so satisfy such obligations could
not reasonably be expected to have a Material Adverse Effect or except where the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Borrower or such Subsidiary, as
applicable.

 

6.4 Conduct of Business and Maintenance of Existence. The Borrower shall, and
shall cause each of its Subsidiaries to, (i) continue to engage in business of
the same general type as conducted by the Borrower and its Subsidiaries as of
the Closing Date, (ii) preserve, renew and keep in full force and effect its
corporate or other legal existence, as applicable, (iii) take all action
necessary to maintain all rights, registrations, licenses, privileges and
franchises necessary or desirable in the normal conduct of its business,
including those granted by the FDA, except to the extent that the failure to
comply could not reasonably be expected to have a Material Adverse Effect and
(iv) except to the extent that failure to comply therewith would not reasonably
be expected, in the aggregate, have a Material Adverse Effect, comply with all
Contractual Obligations and Requirements of Law, such compliance to include,
without limitation (a) paying before the same become delinquent all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any of its Properties, (b) paying all lawful claims
which if unpaid might become a Lien upon any of its Properties and (c)
conducting its business, in all material respects, in accordance with those
regulations of the FDA set forth in 21 C.F.R. Part 606 and known as “Current
Good Manufacturing Practice for Blood and Blood Components”, as it may be
revised or replaced from time to time.

 

6.5 Maintenance of Property; Insurance.

 

(a) The Borrower shall, and shall cause each of its Subsidiaries to, keep all
property material or necessary to its business in good working order and
condition (ordinary wear and tear excepted).

 

(b) The Borrower shall, and shall cause each of its Subsidiaries to, maintain
with financially sound and reputable insurance companies or associations
insurance on such of its property in at least such amounts and against such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to the Lender, upon
request, full information as to the insurance carried. In addition, the Borrower
shall maintain, and shall cause its Subsidiaries to maintain

 

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with such insurance companies or associations, foreign credit insurance with
regard to each of its foreign accounts receivable (excluding accounts receivable
by (x) Dong Shen or (y) account debtors with a AA- credit rating or the highest
short term credit rating) which accounted for 5% or more of the accounts
receivable of the Borrower and its Subsidiaries on a consolidated basis as of
both of the most recently ended fiscal quarters of the Borrower, in form and
substance, and in amounts reasonably acceptable to, the Lender, it being
understood that Borrower shall obtain such insurance as soon as practicable
following the end of such fiscal quarter but in any event within 30 days after
the end of such fiscal quarter. All such policies of insurance shall designate
the Lender as additional insured or loss payee, as appropriate. In the event
that such insurance companies cancel any such policy or policies of insurance,
the Borrower will promptly notify the Lender thereof. The Borrower shall deliver
to the Lender insurance certificates certified by the Borrower’s insurance
brokers, as to the existence and effectiveness of each policy of insurance and
evidence of payment of all premiums then due and payable therefor. In addition,
the Borrower shall notify the Lender promptly of any occurrence causing a
material loss of any insured Property and the estimated (or actual, if
available) amount of such loss.

 

(c) Except as provided in Section 2.4(b) hereof, each policy for liability
insurance shall provide for all losses to be paid on behalf of the Lender and
the Borrower, as their respective interests may appear, and each policy for
property damage insurance shall, to the extent applicable to equipment and
inventory, provide for all losses (except for losses of during the continuance
of an Event of Default) to be paid directly to the Borrower.

 

(d) Reimbursement under any liability insurance maintained by the Borrower or
any Subsidiary pursuant to this Section 6.5 may be paid directly to the Person
who shall have incurred liability covered by such insurance. In the case of any
loss involving damage to equipment or inventory as to which Section 6.5(e) below
is not applicable, the Borrower will make or cause to be made the necessary
repairs to or replacements of such equipment or inventory, and any proceeds of
insurance maintained by the Borrower pursuant to this Section 6.5 shall be paid
by the Lender to the Borrower, upon presentation of invoices and other evidence
of obligations, as reimbursement for the costs of such repairs or replacements.

 

(e) Upon the actual or constructive total loss of any equipment or inventory
during the continuance of an Event of Default, all insurance proceeds in respect
of such equipment or inventory shall be paid to the Lender and applied in the
manner set forth in Section 2.4(c) above.

 

6.6 Inspection of Property; Books and Records; Discussions. The Borrower shall,
and shall cause each Subsidiary to, keep proper books of records and account in
which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all material dealings and transactions in
relation to its business and activities; and upon reasonable notice and at such
reasonable times during usual business hours, permit representatives of the
Lender to visit and inspect any of its properties and examine and make abstracts
from any of its books and records.

 

6.7 Use of Proceeds. The Borrower will use the Letters of Credit, and the
proceeds of the Loans, as set forth in Section 4.14 hereof, and not for the
purchasing or carrying of any Margin Stock that does not comply with Section
4.14 hereof.

 

6.8 Interest Rate Protection. The Borrower shall not, and shall not permit any
of its Subsidiaries to, incur any Hedging Obligation, except that the Borrower
or any Subsidiary may enter into any Hedging Obligation that (i) is of a
non-speculative nature and (ii) is for the purpose of hedging the Borrower’s or
such Subsidiary’s reasonably estimated interest rate exposure.

 

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6.9 Acquisition of Real Property. The Borrower shall submit to the Lender for
the prior approval any documents relating to any fee simple real property
interest to be acquired by the Borrower or any Subsidiary for consideration in
excess of $1,000,000. The Lender may require that any such property interest
become part of the Collateral, and that the Borrower provide the Lender with
title insurance, a favorable environmental report, opinion(s) of counsel and
such other information and documentation as the Lender may reasonably request
with respect thereto.

 

6.10 Lease and License Compliance. The Borrower shall, and shall cause each
Subsidiary to, perform and carry out in all material respects the provisions of
all leases, licenses, permits and other occupancy agreements relating to real
property or real property interests which are material to the business of the
Borrower or any Subsidiary (the “Occupancy Agreements”), and shall appear in and
defend any action in which the validity of any Occupancy Agreement is at issue
and shall commence and maintain any action or proceeding necessary to establish
or maintain the validity of any Occupancy Agreement and to enforce the material
provisions thereof. The Borrower shall immediately give notice to the Lender of
any material default by it or any of its Subsidiaries or, to the knowledge of
the Borrower, by any other party to an Occupancy Agreement. With respect to
premises leased by the Borrower or any Subsidiary at which Collateral having a
value in excess of $50,000 is located, the Borrower shall cause a Landlord
Consent to be executed and delivered to the Lender with respect thereto and, if
requested by the Lender, recorded against the relevant real property.

 

6.11 Environmental Laws. The Borrower shall, and shall cause each Subsidiary to:

 

(a) comply with, and take reasonable steps to ensure compliance by all tenants
and subtenants of Borrower or such Subsidiary, if any, with, all applicable
Environmental Laws and obtain and comply with any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, except to the extent that such failure to do so could not reasonably be
expected to have a Material Adverse Effect;

 

(b) conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other reasonable actions required under Environmental
Laws and timely comply in all material respects with all orders and directives
of all Governmental Authorities regarding Environmental Laws, except to the
extent that the same are being contested in good faith by appropriate
proceedings; and

 

(c) defend, indemnify and hold harmless the Lender and its employees, agents,
officers, partners and directors, successors, attorneys and assigns from and
against any and all claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to (i) the
presence of contamination on any of the Properties, (ii) any violation of,
noncompliance with or liability under any Environmental Laws applicable to the
operations of the Borrower or any Subsidiary, or the Properties, or (iii) any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable attorneys’ and consultants’ fees,
investigation and laboratory fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing arise out of the gross
negligence or willful misconduct of the party seeking indemnification therefor.
This indemnity shall continue in full force and effect and survive the
termination of this Agreement, expiration of the Letters of Credit and the
payment of the Note and all other amounts payable hereunder.

 

6.12 Covenants Regarding Additional Subsidiaries.

 

(a) The Borrower will cause each of its Domestic Subsidiaries hereafter formed
or acquired to execute and deliver to the Lender, concurrently with the
formation or acquisition thereof, such other agreements, instruments, approvals
or other documents as the Lender may reasonably request with respect

 

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thereto, and certified copies of the organizational documents, resolutions and
incumbency certificates of such Domestic Subsidiary.

 

(b) The Borrower will cause each of its Foreign Subsidiaries hereafter formed or
acquired to execute and deliver to the Lender, concurrently with the formation
or acquisition thereof, a pledge of 65% of the Capital Stock having voting power
in such Foreign Subsidiary (or such greater amount of such equity interests as
shall not cause the Borrower to incur material adverse tax consequences under
Section 956 of the Code) and 100% of any other Capital Stock in such in such
Foreign Subsidiary, along with (A) such agreements, certificates, filings,
notices, consents and other actions as the Lender may request to evidence and
perfect such pledge and (B) an executed legal opinion of local counsel to such
pledgor, in form and substance, and from a firm of attorneys, reasonably
satisfactory to the Lender.

 

6.13 Landlord Consents; Warehouse Letters. Within 60 days after the Closing
Date, the Lender shall have received (i) a Landlord Consent executed by the
landlord with respect to its premises known as (a) 1935 Avenida del Oro,
Oceanside, California and (b) 21 North York Road, Hatboro, Pennsylvania, and
(ii) a letter of notification and agreement from each warehouse or storage
facility at which Collateral is located as of the Closing Date.

 

6.14 Insurance Policies. Within 10 days after the Closing Date, the Lender shall
have received evidence that the insurance policies provided for in Section 6.5
hereof are in full force and effect, certified by the insurance broker therefor,
together with appropriate evidence showing the Lender as an additional named
insured or loss payee.

 

6.15 Foreign Qualification Certificate. Within 45 days after the Closing Date,
the Lender shall have received a certificate, dated as of the recent date of the
Closing Date, of the Secretary of State of the Commonwealth of Pennsylvania
certifying that the Borrower is qualified to do business under the law of such
jurisdiction.

 

SECTION 7. NEGATIVE COVENANTS

 

The Borrower hereby agrees that from and after the Closing Date, so long as the
Note remains outstanding and unpaid, any Letter of Credit is outstanding, or any
other amount is owing to the Lender hereunder:

 

7.1 Financial Condition Covenants. The Borrower shall not:

 

(a) Effective Tangible Net Worth. Permit Effective Tangible Net Worth, as of the
end of any fiscal quarter of the Borrower, to be less than the sum of (i)
$12,500,000, (ii) on a cumulative basis, on the date the Lender receives (or
should have received) the financial statements referred to in Section 5.1(b)
with respect to any quarter (beginning with such statements delivered for the
fiscal quarter ended September 30, 2003), 75% of the Net Income of the Borrower
and the Subsidiaries (disregarding any loss) in such fiscal quarter and (iii) on
a cumulative basis, 100% of the Net Proceeds of any Equity Offering consummated
by the Borrower or any Subsidiary during such fiscal quarter.

 

(b) Leverage Ratio. Permit the Leverage Ratio, as of the end of any fiscal
quarter of the Borrower, to be greater than 3.00:1.

 

(c) Interest Coverage Ratio. Permit the Interest Coverage Ratio, as of the end
of any fiscal quarter of the Borrower, to be less than 4.0:1.

 

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(d) Quick Ratio. Permit the Quick Ratio, as of the end of any fiscal quarter of
the Borrower, to be less than 1.25:1.

 

(e) Profit. Permit Net Income, as of the end of any fiscal quarter of the
Borrower, to be less than $1.

 

(f) Capital Expenditures. Permit Capital Expenditures of the Borrower and its
Subsidiaries on a consolidated basis for any fiscal year to be more than
$1,500,000.

 

7.2 Limitation on Indebtedness. The Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any Indebtedness except
for:

 

(a) Indebtedness created hereunder and under the other Loan Documents;

 

(b) Indebtedness owing by any wholly-owned Subsidiary to the Borrower or any
other wholly-owned Subsidiary, and Indebtedness owing by the Borrower to any
wholly-owned Subsidiary;

 

(c) Indebtedness (i) under any Hedging Agreement, (ii) evidenced by performance
bonds issued in the ordinary course of business or reimbursement obligations in
respect thereof, in an aggregate amount at any time not exceeding $100,000 or
(iii) for bank overdrafts incurred in the ordinary course of business that are
promptly repaid;

 

(d) trade credit incurred to acquire goods, supplies, services and incurred in
the ordinary course of business which is not more than 120 days past due and, if
past due, for which adequate reserves have been posted under GAAP;

 

(e) Capitalized Lease Obligations and purchase money Indebtedness in a principal
amount not exceeding $1,500,000 outstanding at anytime;

 

(f) Subordinated debt on terms acceptable to the Lender; and

 

(g) Indebtedness, which shall be unsecured, not otherwise permitted in any other
provision of this Section 7.2; provided that the sum of the principal amount of
such Indebtedness, plus the principal amount of Indebtedness outstanding under
Section 7.2(e) above, shall at no time exceed $1,500,000 in the aggregate; and

 

(h) The Borrower or a Subsidiary of the Borrower may become and remain liable
with respect to Indebtedness of any Person assumed in connection with any
acquisition of such Person permitted under subsection 7.7(d) hereof and a Person
that becomes a direct or indirect wholly-owned Subsidiary of the Borrower as a
result of any acquisition permitted under subsection 7.7(d) hereof may remain
liable with respect to Indebtedness existing on the date of such acquisition;
provided that such Indebtedness is not created in anticipation of such
acquisition.

 

7.3 Limitation on Liens. The Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, except
for:

 

(a) Liens created hereunder or under any of the other Loan Documents;

 

(b) Liens for taxes, assessments, governmental charges or levies not yet
delinquent or which are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect

 

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thereto are maintained on the books of the Borrower or a Subsidiary, as
applicable, in conformity with GAAP;

 

(c) Liens created by operation of law not securing the payment of Indebtedness
for money borrowed or guaranteed, including carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s or other like Liens arising in the
ordinary course of business which are not overdue for a period of more than 45
days and, if overdue, for which adequate reserves have been posted under GAAP;

 

(d) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation and deposits securing liability
to insurance carriers under insurance or self-insurance arrangements;

 

(e) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

 

(f) easements, rights-of-way, restrictions and other similar encumbrances on
real property incurred in the ordinary course of business which, in the
aggregate, could not reasonably be expected to cause a Material Adverse Effect;

 

(g) Liens securing Indebtedness permitted under Section7.2(e); provided that (i)
any such Lien attaches to the property financed thereby concurrently with or
within thirty days after the acquisition thereof, (ii) such Lien attaches solely
to such property and is not spread to cover additional property and (iii) the
principal amount of the debt secured thereby does not exceed 100% of the cost of
such property;

 

(h) any interest or title of a lessor or sublessor under any lease permitted by
this Agreement;

 

(i) Liens arising in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods by the Borrower or the Subsidiaries; provided that the
duties secured thereby do not exceed at any time $50,000;

 

(j) attachment and judgment Liens not otherwise constituting an Event of Default
any of which Liens are in existence less than sixty (60) days after the entry
thereof of with respect to which execution has been stayed, payment is covered
in full by insurance, or the Borrower shall in good faith be prosecuting an
appeal or proceedings for review and shall have set aside on its books such
reserves as may be required by GAAP with respect to such judgment or award;

 

(k) Liens on assets of a Person that becomes a direct or indirect Subsidiary of
the Borrower after the date of this Agreement, provided, however, that such
Liens exist at the time such Person becomes a Subsidiary and are not created in
anticipation thereof;

 

(l) Liens described in Schedule 7.3 annexed hereto;

 

(m) licenses (with respect to Intellectual Property and other property), leases
or subleases granted to third parties in accordance with any applicable terms of
the Collateral Documents and not interfering in any material respect with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries or
resulting in a material dimunition in the value of any Collateral as security
for the Obligations;

 

(n) Liens arising from filing UCC financing statements relating solely to leases
not prohibited by this Agreement; and

 

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(o) any zoning or similar law or right reserved to or vested in any governmental
office or agency to control or regulate the use of any real property.

 

7.4 Limitation on Fundamental Changes. The Borrower shall not, and shall not
permit any Subsidiary to, (a) amend its Organic Documents in any way that could
have a Material Adverse Effect, (b) enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution) except any merger, consolidation or amalgamation of
a Subsidiary into the Borrower, or of a Subsidiary or the Borrower with another
entity as a result of a Permitted Acquisition, provided that in all cases
involving the Borrower the Borrower is the survivor thereof, or between or among
the Domestic Subsidiaries; provided that the Borrower shall give the Lender
thirty days’ prior written notice thereof (or, in the case of a Permitted
Acquisition, the notice required under the definition of Permitted Acquisition)
and shall comply with all reasonable actions requested by the Lender to protect
and maintain its Liens granted pursuant to the Loan Documents; or (d) except as
permitted by Section7.5 below, convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets.

 

7.5 Limitation on Sale of Assets. The Borrower shall not, and shall not permit
any of its Subsidiaries to, make any Asset Disposition unless (A) (i) such Asset
Disposition is for fair market value, (ii) the consideration for such Asset
Disposition is (a) all cash, or (b) not less than 25% cash with the balance
payable over the remaining useful life of the asset pursuant to the terms of a
promissory note payable to the Borrower or its order secured by the assets
disposed of, or other assets of substantially similar or greater quality, value
and utility, (iii) no Default has occurred and is continuing or would result
from such Asset Disposition and a Responsible Officer has provided to the Lender
a Covenant Compliance Certificate to such effect and (iv) the consideration for
such Asset Disposition, when aggregated with the consideration for all previous
Asset Dispositions during the same fiscal year, does not exceed $1,000,000 or
(B) such Asset Disposition is consented to by the Lender, which consent shall
not be unreasonably withheld.

 

7.6 Limitation on Restricted Payments. The Borrower shall not, and shall not
permit any of its Subsidiaries to, (a) if a corporation, declare or pay any
dividend (other than dividends or other distributions payable solely in common
stock or warrants or similar interests of the Borrower or its Subsidiaries) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or its
Subsidiaries or any warrants or options to purchase any such Capital Stock,
whether now or hereafter outstanding (excluding the Borrower’s existing
$2,000,000 Capital Stock buy-back plan), and (b) if a partnership or a limited
liability company, make any distribution with respect to the ownership interests
therein, or, in either case, any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any Subsidiary (such declarations, payments, setting apart,
purchases, redemptions, defeasance, retirements, acquisitions and distributions
being herein called “Restricted Payments”); provided, however, that (i) the
Subsidiaries may make Restricted Payments to the Borrower or to any wholly-owned
Subsidiary, (ii) the Borrower may make Restricted Payments to redeem from
current or former officers, employees or directors shares of the Borrower’s
common stock, warrants or options to acquire any such shares, provided that the
following conditions are satisfied with respect to this clause (ii): (A) no
Event of Default has occurred and is continuing and (B) the aggregate Restricted
Payments permitted under this clause (ii) during the term of this Agreement
shall not exceed $500,000 and (iii) subject to the Lender’s prior written
consent which may not be unreasonably withheld, the Borrower may make Restricted
Payments consisting of dividends on the Borrower’s common stock; provided that
the following conditions are satisfied with respect to this clause (iii): (A) no
Event of Default has occurred and is continuing as of the date of any such
declared dividend and (B) the aggregate Restricted Payments permitted under this
clause (iii) during the term of this Agreement shall not exceed $2,000,000.

 

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7.7 Limitation on Acquisitions, Investments, Loans and Advances. The Borrower
shall not, and shall not permit any Subsidiary to, consummate any Acquisition,
make any advance, loan, extension of credit or capital contribution to, or
purchase any stock, bonds, notes, debentures or other securities of or any
assets constituting a business unit of, or make any other investment in (any of
the foregoing, an “investment”), any Person, except:

 

(a) Cash Equivalents;

 

(b) extensions of trade credit in the ordinary course of business;

 

(c) the Borrower’s ownership interest in its Subsidiaries;

 

(d) Permitted Acquisitions;

 

(e) investments received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the ordinary course of
business; provided that the aggregate amount of such investments at any time
outstanding shall not exceed $100,000;

 

(f) advances to employees of the Borrower and the Subsidiaries in the ordinary
course of business; provided that the aggregate amount of such advances at any
time outstanding shall not exceed $100,000; and

 

(g) Restricted Payments permitted by Section 7.6 hereof.

 

7.8 Management Fees. The Borrower and its Subsidiaries shall not pay any
management fees to any Affiliate thereof for services rendered, except as set
forth on Schedule 7.8 hereof.

 

7.9 Transactions with Affiliates. The Borrower shall not, and shall not permit
any Subsidiary to, enter into any transaction, including, without limitation,
any purchase, sale, lease or exchange of property or the rendering of any
service, with any Subsidiary (other than wholly-owned Subsidiaries) or any
Affiliate, unless such transaction is in the ordinary course of the Borrower’s
or such Subsidiary’s business and is upon terms no less favorable to the
Borrower or such Subsidiary, than it would obtain in a comparable arm’s length
transaction with a Person not an Affiliate, except (i) the Borrower may pay to
its directors compensation in the ordinary course of business and (ii) this
Section 7.9 shall not apply to the issuance of any equity securities of the
Borrower or transactions permitted by Section 7.6 hereof.

 

7.10 Fiscal Year. The Borrower shall not permit the fiscal year of the Borrower
or any Subsidiary to end on a day other than September 30.

 

7.11 Prohibitions on Certain Agreements. The Borrower shall not, nor shall it
permit any Subsidiary to, enter into any indenture, agreement, instrument or
other arrangement that, directly or indirectly, prohibits or restrains, or has
the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence or payment of indebtedness, the granting of
Liens, the declaration or payment of dividends, the making of loans, advances or
investments or the sale, assignment, transfer or other disposition of Property,
or which imposes any financial covenants on the Borrower or any Subsidiary;
provided that this Section 7.11 shall not prohibit customary restrictions in
connection with an agreement to make an Asset Disposition permitted hereunder,
and negative pledges incurred or provided in favor of any holder of Indebtedness
permitted under Section 7.2(e) above solely to the extent any such negative
pledge relates to the property financed by or the subject of such Indebtedness.

 

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7.12 Sale-Leaseback Transactions. The Borrower shall not, and shall not permit
any Subsidiary to, sell, assign or otherwise transfer any of its Properties,
rights or assets (whether now owned or hereafter acquired) to any Person and
thereafter directly or indirectly lease back the same or similar property.

 

7.13 Unfunded Liabilities. The Borrower shall not permit unfunded liabilities
for any and all Plans maintained for or covering employees of the Borrower or
any Subsidiary to exceed $250,000 in the aggregate at any time.

 

7.14 Line of Business. Neither the Borrower nor any of its Subsidiaries shall
engage in any business other than as described in Section 4.17 hereof.

 

SECTION 8. EVENTS OF DEFAULT

 

If any of the following events shall occur and be continuing:

 

(a) The Borrower shall fail to pay any principal of the Note when due, or the
Borrower shall fail to pay any interest on the Note when due, or any other
amount payable hereunder or under any Loan Document within five Business Days
after any such interest or other amount becomes due; or

 

(b) Any representation or warranty made by any Loan Party herein or in any other
Loan Document, as applicable, or which is contained in any certificate, document
or financial or other statement furnished at any time under or in connection
with this Agreement or any other Loan Document shall prove to have been
incorrect in any material respect when made and which is not remedied by such
Loan Party within five (5) Business Days notice thereof; or

 

(c) The Borrower shall default in the observance or performance of any agreement
contained in Sections 6.2(f), 6.4(ii), 6.5 (other than Section 6.5(a)), 6.7 or
6.13, or any provision of Section 7 hereof and which is not remedied by such
Loan Party within ten (10) Business Days notice thereof; or

 

(d) Any Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or the other Loan Documents (other than as
provided in paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after the earlier of (i) notice
thereof from the Lender to the Borrower and (ii) actual knowledge thereof by a
Responsible Officer of such Loan Party; or

 

(e) Any material provision of any Loan Document shall at any time for any reason
be declared null and void, or the validity or enforceability of any Loan
Document shall at any time be contested by any Loan Party in writing, or a
proceeding shall be commenced by any Loan Party, or by any Governmental
Authority or other Person having jurisdiction over any Loan Party, seeking to
establish the invalidity or unenforceability thereof, or any Loan Party shall
deny in writing that it has any liability or obligation purported to be created
under any Loan Document or any Loan Document shall cease to be in full force and
effect; or

 

(f) Any Loan Party shall (i) default in any payment of principal or interest,
regardless of the amount, due in respect of any (A) Indebtedness (other than the
Note), under the same indenture or other agreement, if the maximum principal
amount of Indebtedness covered by such indenture or agreement is $250,000 or
greater (or $500,000 in the aggregate) or (B) Guarantee Obligation with respect
to an amount of $250,000 or greater (or $500,000 in the aggregate), in either
case beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness or Guarantee Obligation was created, whether or
not such default has been waived by the holders of such Indebtedness or

 

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Guarantee Obligation; or (ii) default in the observance or performance of any
other material agreement or condition relating to any such Indebtedness or
Guarantee Obligation or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable or such
Indebtedness to be required to be defeased or purchased; or

 

(g) (i) The Borrower or any other Loan Party shall commence any voluntary case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or the Borrower or any
other Loan Party shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any other
Loan Party any involuntary case, proceeding or other action of a nature referred
to in clause (i) above which (A) results in the entry of an order for relief or
any such adjudication or appointment and (B) remains undismissed, undischarged,
unstayed or unbonded for a period of 60 days; or (iii) there shall be commenced
against the Borrower or any other Loan Party any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) the Borrower or any other Loan Party shall take any action in
writing in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any other Loan Party shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due or there shall be a general assignment for the benefit of creditors;
or

 

(h) (i) Any Person shall engage in any non-exempt “prohibited transaction” (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or to
terminate any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee would reasonably be expected to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA (other
than a standard termination) or (v) the Borrower or any Commonly Controlled
Entity would reasonably be expected to incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan;
or

 

(i) One or more judgments or decrees shall be entered against the Borrower
involving in the aggregate a liability for the Borrower (not paid or fully
covered by insurance under which the insurer has acknowledged liability in
writing) of $500,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof or in any event five days before the date of any sale pursuant
to such judgment or decree; or any non-monetary judgment or order shall be
entered against any Loan Party that could have a Material Adverse Effect and
either (i) enforcement proceedings shall have been commenced by any Person upon
such judgment which has not been stayed pending appeal or (ii) there shall be
any period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or

 

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(j) (i) any Person (including, for the purposes of this paragraph, a
partnership, limited partnership, syndicate or other group deemed a “person” for
the purposes of Section 13(d) of the Exchange Act) other than the Specified
Investors shall in any way acquire beneficial ownership of securities of the
Borrower that, together with all other securities of the Borrower then
beneficially owned by such Person, constitute 35% or more of the securities
having ordinary voting power to elect a majority of the Borrower’s Board of
Directors or (ii) both Michael Crowley and Barry D. Plost shall cease to be the
President, the Chief Executive Officer or the Chairman of the Board of the
Borrower, and 90 days shall have elapsed without a replacement for such former
officer or officers, as the case may be, acceptable to the Majority Lenders in
their reasonable discretion, having been appointed and having assumed such
office; or

 

(k) Any material provision of any Loan Document, after delivery thereof pursuant
to the provisions hereof, shall, for any reason other than pursuant to the terms
thereof, cease to be valid or enforceable in accordance with its terms, or any
Lien created under any Loan Document shall for any reason other than pursuant to
the terms thereof, cease to be a valid and perfected first priority (except for
as permitted by Section 7.3 hereof) Lien in any material portion of the
Collateral or the property purported to be covered thereby; or

 

(l) Any event or condition shall occur that has a Material Adverse Effect;

 

then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (g) above, automatically each Revolving Loan Commitment and the
commitment to issue Letters of Credit shall immediately terminate and the Loans
made to the Borrower hereunder (with accrued interest thereon) and all other
Obligations shall immediately become due and payable and, to the extent any
Letters of Credit are then outstanding, the Borrower shall make a Cash
Collateral Deposit, to be held by the Lender as collateral under this Agreement,
in the amount equal to the aggregate Letter of Credit Amount of such Letters of
Credit and (B) if such event is any other Event of Default, the Lender shall
take any or all of the following actions: (i) by written notice to the Borrower
declare the Revolving Loan Commitments and the commitment to issue Letters of
Credit to be terminated forthwith, whereupon the Revolving Loan Commitments and
the commitment to issue Letters of Credit shall immediately terminate; and (ii)
by written notice to the Borrower, declare the Loans (with accrued interest
thereon) and all other Obligations under this Agreement and the Note to be due
and payable forthwith, whereupon (x) the same shall immediately become due and
payable and (y) to the extent any Letters of Credit are then outstanding, the
Borrower shall make a Cash Collateral Deposit, to be held by the Lender as
collateral under this Agreement, in an amount equal to the aggregate Letter of
Credit Amount of the Letters of Credit outstanding. In all cases, the Lender may
enforce any or all of the Liens and other rights and remedies created pursuant
to any Loan Document or available at law or in equity. Except as expressly
provided above in this Section, presentment, demand, protest and all other
notices of any kind are hereby expressly waived by the Borrower.

 

SECTION 9. MISCELLANEOUS

 

9.1 Amendments and Waivers. Neither this Agreement, the Note, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section. With the
prior written consent of the Lender and the Borrower, the Borrower may, from
time to time, enter into written amendments, supplements or modifications hereto
and to the other Loan Documents for the purposes of adding any provisions to
this Agreement or the other Loan Documents or changing in any manner the rights
of the Lender, the Borrower or any other Loan Party hereunder or thereunder or
waiving, on such terms and conditions as may be specified in such instrument,
any of the requirements of this Agreement or the Note or the other Loan
Documents or any Default and

 

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its consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall: (a) except to the extent contemplated by
Section 2.4 hereof, reduce the amount or extend the maturity of the Note or any
installment due thereon, or reduce the rate or extend the time of payment of
interest thereon, or reduce the amount or extend the time of payment of any fee,
indemnity or reimbursement payable to the Lender hereunder, in each case without
the written consent of the Lender; or (b) (i) amend, modify or waive any
provision of this Section 9.1 or consent to the assignment or transfer by any
Loan Party of any of its rights and obligations under this Agreement and the
other Loan Documents; or (ii) release any Loan Party from any liability under
its respective Loan Documents; or (iii) release any material portion of the
Collateral, except in connection with any Asset Disposition permitted by this
Agreement; or (iv) amend, modify or waive any provision of this Agreement
requiring the consent or approval of the Lender, in each case without the
written consent of the Lender. Any such waiver and any such amendment,
supplement or modification shall be binding upon the Borrower, the Lender and
all future holders of the Note. In the case of any waiver, the Borrower and the
Lender shall be restored to their former position and rights hereunder and under
the outstanding Note and any other Loan Documents, and any Default waived shall
be deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default, or impair any right consequent thereon.

 

9.2 Notices. All notices, requests and demands or other communications to or
upon the respective parties hereto to be effective shall be in writing
(including notices given by facsimile which are preceded by telephone
notification to the recipient), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or 3
days after being deposited in the United States mail, certified and postage
prepaid and return receipt requested, in each case addressed to the parties at
their addresses as set forth on the signature pages hereof, or to such other
address as may be hereafter notified by the respective parties hereto; provided
that any notice, request or demand to or upon the Lender pursuant to Sections
2.1, 2.2, 2.3, 2.4 or 2.5 hereof shall not be effective until received.

 

The Lender shall be entitled to rely and act upon telephonic notices purportedly
given by or on behalf of the Borrower even if (i) such notices were not made in
a manner specified herein, were incomplete or were not preceded or followed by
any other form of notice specified herein, (ii) such notices are found not to
have been authorized by the Borrower or (iii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof. The Borrower shall
indemnify the Lender from all losses, costs, expenses and liabilities resulting
from the reliance by the Lender on any such notice.

 

9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

9.4 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement.

 

9.5 Payment of Expenses and Taxes. The Borrower agrees, whether or not the
transactions contemplated hereby are consummated, (a) subject to clause (b) of
Section 2.17 hereof, to pay or reimburse the Lender for all its reasonable costs
and out-of-pocket expenses incurred in connection with the preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the Note and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby (including the transactions to
occur on the Closing Date and including syndication costs), including,

 

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without limitation, the reasonable fees and disbursements of outside counsel to
the Lender (including any foreign counsel to the Lender) and as to any
amendment, supplement or modification to this Agreement or any other Loan
Document and the administration of the transactions contemplated thereby, and
with respect to the foregoing, the allocated reasonable costs of internal
counsel to the Lender, (b) after the occurrence and during the continuance of a
Default, to pay or reimburse the Lender, for all its reasonable costs and
out-of-pocket expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents or in connection with any refinancing or restructuring
of the credit arrangements provided under this Agreement in the nature of a
“work-out” or of any insolvency or bankruptcy proceeding, including, without
limitation, reasonable legal fees and disbursements of outside counsel to the
Lender and the allocated reasonable cost of internal counsel to the Lender, (c)
to pay, and indemnify and hold harmless the Lender from, any and all recording
and filing fees, the cost of the audit of the Borrower’s assets performed prior
to closing and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes (but not including Excluded
Taxes), if any, which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation or administration of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the Note,
the other Loan Documents and any such other documents and (d) to pay, and
indemnify and hold harmless the Lender from and against, any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs (including, without limitation, the allocated reasonable cost of internal
counsel and the reasonable legal fees and disbursements of outside counsel to
the Lender), expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery and enforcement of this Agreement, the Note,
the other Loan Documents or the use of the Letters of Credit or the proceeds of
the Loans and any such other documents (all the foregoing, collectively, the
“indemnified liabilities”), provided, that the Borrower shall have no obligation
hereunder to the Lender with respect to indemnified liabilities arising from the
gross negligence or willful misconduct of the Lender or its agents or
attorneys-in-fact. The agreements in this Section shall survive the termination
of this Agreement, the expiration of the Letters of Credit and the payment of
the Note and all other amounts payable hereunder.

 

9.6 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Borrower, the Lender, all future holders of the Note and
their respective successors and assigns, except that the Borrower may not
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Lender.

 

9.7 Adjustments; Set-Off. In addition to any rights and remedies of the Lender
provided by law, the Lender shall have the right, exercisable upon the
occurrence and during the continuance of an Event of Default, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, to set-off and appropriate and apply
against any such Obligations any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims in any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held or owing by the
Lender or any branch or agency thereof or bank controlling the Lender to or for
the credit or the account of the Borrower. The Lender agrees promptly to notify
the Borrower after any such set-off and application made by the Lender, provided
that the failure to give such notice shall not affect the validity of such
set-off and application.

 

9.8 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

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9.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

9.10 Integration. This Agreement, together with the other Loan Documents,
represents the entire agreement of the Borrower and the Lender with respect to
the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Lender relative to the subject matter
hereof not expressly set forth or referred to herein or in the other Loan
Documents.

 

9.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTE AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES).

 

9.12 Consent to Jurisdiction; Waiver of Jury Trial.

 

(a) Each party hereto hereby irrevocably and unconditionally

 

(i) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the Commonwealth of
Massachusetts, the courts of the United States of America for the District of
Massachusetts, and appellate courts from any thereof;

 

(ii) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient forum and agrees not to plead or claim the same;

 

(iii) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to any party at its
address set forth in Section 9.2 hereof;

 

(iv) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

 

(v) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
subsection any punitive damages.

 

(b) THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM HEREIN OR THEREIN.

 

9.13 Acknowledgements. The Borrower hereby acknowledges that:

 

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents;

 

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(b) the Lender does not have any fiduciary relationship to the Borrower solely
by virtue of any of the Loan Documents, and the relationship pursuant to the
Loan Documents between the Lender, on one hand, and the Borrower on the other
hand, is solely that of creditor and debtor; and

 

(c) no joint venture exists among the Borrower and the Lender.

 

9.14 Headings. Section headings herein are included for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.

 

9.15 Confidentiality. The Lender shall take normal and reasonable precautions to
maintain the confidentiality of all non-public information obtained pursuant to
the requirements of this Agreement which has been identified in writing as such
by the Borrower but may, in any event, make disclosures (a) reasonably required
by any bona fide transferee, assignee or participant in connection with the
contemplated transfer or assignment of any of the Revolving Loan Commitments,
the Loans, any participation in Letters of Credit or participation in any of the
foregoing or (b) as required or requested by any governmental agency or
representative thereof or as required pursuant to legal process or (c) to its
attorneys and accountants or (d) as required by law or (e) in connection with
litigation involving the Lender; provided that (i) such transferee, assignee or
participant agrees in writing to comply with the provisions of this Section 9.15
unless specifically prohibited by applicable law or court order and (ii) in no
event shall the Lender be obligated or required to return any materials
furnished by the Borrower and its Subsidiaries.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their proper and duly authorized officers as of the day and year
first above written.

 

SERACARE LIFE SCIENCES, INC.

By: /s/ Michael F. Crowley, Jr.

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Name: Michael F. Crowley, Jr.

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Title: Chief Executive Officer

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Address for Notices:

1935 Avenida del Oro, Suite F

Oceanside, CA 92056

Attention: Tim T. Hart

Telephone: (760) 806-8922

Facsimile: (760) 806-8933

BROWN BROTHERS HARRIMAN & CO.,
as Lender

By: /s/ Joseph E. Hall

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Name: Joseph E. Hall

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

Title: Managing Director

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Address for Notices:

40 Water Street

Boston, MA 02109

Attention: J. Edward Hall

Telephone:

Facsimile:

 

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